|Securities
        and Exchange CommissionWashington,
        D.C. 20549
      FORM
        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)
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| | Nevada                                             |  | 88-0444079                            | 
| | -------------------------------------------------- |  | ------------------------------------- | 
| | State
      or other jurisdiction of incorporation |  | (I.R.S.
      Employer Identification | 
| | or
      organization)                             |  | Number)                               | 
| | 5101
      N.W. 21st Avenue, Suite 350             |  |                                       | 
| | Fort
      Lauderdale, Florida                     |  | 33309                                 | 
| | (Address
      of Principal executive offices)     |  | (Zip
      Code)                      | 

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(Registrants
        Telephone Number Including Area Code):(954)
        315-2300
      Securities
        registered under Section 12(b) of the Exchange Act:  NONE
      Securities registered
        under Section 12(g) of the Exchange Act:  COMMON STOCK, $.001
        PAR VALUE
      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

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|TABLE
      OF CONTENTS
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|                       
|                       
|PART
      I           
|                       
|ITEM 1.                
|                       
|ITEM 2.                
|                       
|ITEM 3.                
|                       
|ITEM 4.                
|                       
|PART
      II          
|                       
|ITEM 5.                
|                       
|ITEM 6.                
|                       
|ITEM 7.                
|                       
|ITEM 7A.               
|                       
|ITEM 8.                
|                       
|ITEM 9.                
|                       
|ITEM 9A.               
|                       
|PART
      III         
|                       
|ITEM 10.               
|                       
|ITEM 11.               
|                       
|ITEM 12.               
|                       
|ITEM 13.               
|                       
|ITEM 14.               
|                       
|PART
      IV          
|                       
|ITEM 15.               
|                       
|SIGNATURES             
|                       

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|CERTIFICATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
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|PART
      I                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Cautionary
        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 composition 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
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| | (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:
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| |  | 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
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|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:
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| |   |                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 services. This service fee is invoiced to the
      client together with the salaries and wages of the worksite employees and
      the clients portion of health and retirement benefit plan costs.
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|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
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|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.
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|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
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|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.
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|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
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|--------------

| |  | 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
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|--------------

|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 | PERCENTAGE    
|-------- | --------------
|         |               
|         | Transportation
|         | Services(1)   
|         | Professional  
|         | Hospitality   
|         | Construction  
|         | Manufacturing 
|         | Retail        
|         | Agricultural  
|         | Healthcare    
|         | Other         
|         |               
|         | Total         

| | (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 Fund v. 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 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., et al. v. ABP Group, Inc. and William L. Baumgardner*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 $4,833,823.87.
        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 | Dividends
|---------------------------------- |  | -------------- | ------------- | ---------
|Year Ended
      December 31, 2003 |  |                |               |          
|                                   |  |                |               |          
|Fourth
      Quarter               |  | 0.84           | .78           | .00      
|Third
      Quarter                |  | 1.01           | .76           | .00      
|Second
      Quarter               |  | 1.55           | .85           | .00      
|First
      Quarter                |  | 1.29           | .52           | .00      
|                                   |  |                |               |          
|Year Ended
      December 31, 2002 |  |                |               |          
|                                   |  |                |               |          
|Fourth
      Quarter               |  | 1.01           | .52           | .00      
|Third
      Quarter                |  | 1.37           | .51           | .00      
|Second
      Quarter               |  | 1.35           | .65           | .00      
|First
      Quarter                |  | 1.8            | .38           | .00      
|                                   |  |                |               |          
|Year Ended
      December 31, 2001 |  |                |               |          
|                                   |  |                |               |          
|Fourth
      Quarter               |  | 0.4            | .03           | .00      
|Third
      Quarter                |  | 0.16           | .04           | .00      
|Second
      Quarter               |  | 0.25           | .12           | .00      
|First
      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 the Registrants common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|The
      trading of shares of the Registrants common stock is subject to limitations
      set forth in Rule 1 Sg-9 of the Securities Exchange Act. This rule imposes
      sales practice requirements on broker-dealers who sell so-called penny
      stocks to persons other than established customers, accredited investors
      or institutional investors. For any transaction involving a penny stock,
      unless exempt, the rules require that a broker or dealer: (i) approve a
      persons account for transactions in penny stocks; and (ii) receive
      from the investor a written agreement to the transaction, setting forth
      the identity and quantity of the penny stock to be purchased. In order to
      approve a persons account for transactions in penny stocks, the broker
      or dealer must: (i) obtain financial information and investment experience
      and objectives of the person; and (ii) make a reasonable determination that
      the transactions in penny stocks are suitable for that person and that person
      has sufficient knowledge and experience in financial matters to be capable
      of evaluating the risks of transactions in penny stocks. The broker or dealer
      must also deliver, prior to any transaction in a penny stock, a disclosure
      schedule relating to the penny stock market, which, in highlight form, (i)
      sets forth the basis on which the broker or dealer made the suitability
      determination; and (ii) that the broker or dealer received a signed, written
      agreement from the investor prior to the transaction. Disclosure also has
      to be made about the risks of investing in penny stocks in both public offerings
      and in secondary trading, and about commissions payable to both the broker-dealer
      and the registered representative, current quotations for the securities
      and the rights and remedies available to an investor in cases of fraud in
      penny stock transactions. Finally, monthly statements have to be sent disclosing
      recent price information for the penny stock held in the account and information
      on the limited market in penny stocks.

|- 21 -
|------

|(b) Holders                                                                                                                                                                                                                                                  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                             
|As
      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
      Holders
| |                                     |                               
| | Common
      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) Dividends                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|The
      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
      6.  SELECTED FINANCIAL DATA                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|ITEM
      7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
      RESULTS OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(a)   Full
      Fiscal Years Ended December 31, 2003 and 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|The
      Registrant has adopted a new revenue recognition policy under which the
      salaries, wages and certain payroll taxes of worksite employees will no
      longer be recognized as revenue components (net method). The
      change in policy was made in response to an industry wide SEC comment letter
      requesting the change to the net method of revenue recognition which was
      based in part on the collective weight of the indicators included in Emerging
      Issues Task Force Issue No. 99-19, Reporting Revenues Gross as a Principal
      versus Net as an Agent (EITF 99-19). The policy has been applied
      to the current financial statement and retroactively applied to the previous
      years financial statement. Accordingly the company netted $866,000,000
      of payroll and related taxes for the year ended December 31, 2003 and $502
      million for the year ended December 31, 2002. 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.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|- 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 was3.3 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 Sheets |  
|-------------------------------------------------------------------------------- | -
|
|
|
|
|
|Assets                                                                           |  
|Current Assets                                                                  
|Cash                                                                             | $
|Cash,
      restricted                                                           |  
|Accounts
      receivable                                                        |  
|Insurance
      deposits                                                         |  
|Related
      party receivables                                                  |  
|Other
      current assets                                                       |  
|                                                                                 |  
|Total
      Current Assets                                                       |  
|Property
      and equipment, at cost, net accumulated                          
|depreciation
      of $2,029,155 and $774,158, respectively                      |  
|Excess purchase
      price over net book value of assets required               |  
|Other assets                                                                     |  
|                                                                                 |  
|Total
      Assets                                                               | $
|                                                                                 |  
|**Liabilities
      and Shareholders Equity**                                  
|Current liabilities                                                             
|Current
      portion of notes payable                                           | $
|Accounts
      payable                                                           |  
|Accrued
      expenses                                                           |  
|                                                                                 |  
|Current
      portion of capital lease obligations                               |  
|                                                                                 |  
|Total
      Current Liabilities                                                  |  
|Long term
      notes payable                                                    |  
|Long term
      portion of capital lease obligations                             |  
|Long term
      portion of workers compensation claims                          |  
|                                                                                 |  
|Total
      Liabilities                                                          |  
|                                                                                 |  
|Commitments
      and Contingencies                                             
|Shareholders
      Equity                                                      
|Preferred
      shares, $.001 par, 5,000,000 authorized                          |  
|Common
      shares, $.001 par, 100,000,000 authorized,                         
|_9,547,811
      and 8,447,811 issued and outstanding in 2003                   
|and
      2002, respectively                                                     |  
|Additional
      paid in capital                                                 |  
|Accumulated
      earnings                                                       |  
|                                                                                 |  
|Total
      Shareholders Equity                                                 |  
|                                                                                 |  
|Total
      Liabilities and Shareholders Equity                                 | $
|                                                                                 |  
|                                                                                 |  
|See notes
      to the consolidated financial statements.                       
|                                                                                

|- 27-
|-----

|Certified
        Services, Inc. and SubsidiariesConsolidated
        Statements of Operations
|----------------------------------------------------------------------------------------------

|                                                             | For the
      Years Ended December 31, |           
|------------------------------------------------------------ | -------------------------------------- | ----------
|
|
|
|Revenue (gross
      billings of $945 million,$542 million   |                                        |           
|and $180
      million, less worksite employee              
|payroll
      costs of $866 million,                        
|$502
      million and $166 million, respectively)           | $                                      | 78,510,210
|                                                             |                                        |           
|Cost of service                                              |                                        | 42,445,615
|                                                             |                                        |           
|Gross profit                                                 |                                        | 36,064,595
|                                                             |                                        |           
|Operating
      expenses                                    
|Compensation
      and benefits                              |                                        | 11,914,059
|Marketing
      and selling                                  |                                        | 5,847,286 
|General
      and administrative                             |                                        | 15,300,810
|Interest,
      net                                          |                                        | 590,737   
|                                                             |                                        |           
|Total
      Operating Expenses                               |                                        | 33,652,892
|                                                             |                                        |           
|Net income
      (loss)                                      | $                                      | 2,411,703 
|                                                             |                                        |           
|                                                             |                                        |           
|Net income
      (loss) per share  basic and fully diluted  | $                                      | 0.27      
|                                                             |                                        |           
|Weighted
      average number of common shares outstanding -
|Basic
      and fully diluted                                |                                        | 8,976,978 
|                                                             |                                        |           
|                                                             |                                        |           
|See notes
      to the consolidated financial statements.   
|                                                            

|- 28 -
|------

|Certified
        Services, Inc. and SubsidiariesConsolidated
        Statement of Stockholders Equity (Impairment)
|--------------------------------------------------------------------------------------------------------------------

|                                                          |  |  |            | **Preferred** |            |   | **Common
      Stock** |  |            |           |                                            |   |                                             |  |   |             |  
|--------------------------------------------------------- |  |  | ---------- | ------------- | ---------- | - | ---------------------- |  | ---------- | --------- | ------------------------------------------ | - | ------------------------------------------- |  | - | ----------- | -
|                                                          |  |  |            |               |            |   |                        |  |            |           |                                            |   |                                             |  |  
|                                                          |  |  | **Shares** |               | **Amount** |   | **Shares**             |  | **Amount** |           | **Additional
      Paid-in
      Capital** |   | **Retained
      Earnings
      (Deficit)** |  |   | **Total**   |  
|                                                          |  |  |            |               |            |   |                        |  |            |           |                                            |   |                                             | 
|                                                          |  |  |            |               |            |   |                        |  |            |           |                                            |   |                                             |  |   |             |  
|Balance,
      January 1, 2001                            |  |  |            |              |            | $ |                       |  |            | 3,421,145 |                                            | $ | 3,421                                       |  |   | 95,885      |  
|Issuance
      of shares in completion                    |  | 
|of
      reorganization in 2001                           |  |  |            |              |            |   |                       |  |            | 725,000   |                                            |   | 725                                         |  |   | 35,525      |  
|Issuance
      of shares for services in                  |  | 
|reorganization
      and acquisitions                     |  |  |            |              |            |   |                       |  |            | 945,000   |                                            |   | 945                                         |  |   | 93,555      |  
|Issuance
      of shares for purchase                     |  | 
|The
      Cura Group, Inc.                                |  |  |            |              |            |   |                       |  |            | 2,000,000 |                                            |   | 2,000                                       |  |   | 498,000     |  
|Shares
      issued for cash                              |  |  |            |              |            |   |                       |  |            | 281,666   |                                            |   | 282                                         |  |   | 91,700      |  
|Exchange
      of shares resolving                        |  | 
|purchase
      of APEO Holdings, Inc.                     |  |  |            | -406.667      |            |   | -1                     |  |            | 850,000   |                                            |   | 850                                         |  |   | (849        | )
|Issuance
      of shares for cash and                     |  | 
|additional
      consideration                            |  |  |            | 1,578         |            |   | 2                      |  |            |          |                                            |   |                                            |  |   | 19,719,998  |  
|Issuance
      of shares for services                     |  |  |            |              |            |   |                       |  |            | 225,000   |                                            |   | 225                                         |  |   | 67,275      |  
|Net
      income                                          |  |  |            |               |            |   |                        |  |            |           |                                            |   |                                             |  |   |             |  
|                                                          |  |  |            |               |            |   |                        |  |            |           |                                            |   |                                             | 
|Balance,
      December 31, 2002                          |  |  |            | 2,678         |            | $ | 3                      |  |            | 8,447,811 |                                            | $ | 8,448                                       |  | $ | 22,107,754  |  
|                                                          |  |  |            |               |            |   |                        |  |            |           |                                            |   |                                             |  |   |             |  
|Issuance
      of shares for services                     |  |  |            |               |            |   |                        |  |            | 450,000   |                                            |   | 450                                         |  |   | 359,550     |  
|Issuance
      of shares for Assets                       |  |  |            | 1,520         |            |   | 1                      |  |            |           |                                            |   |                                             |  |   | 18,999,999  |  
|Issuance
      of shares in                               |  | 
|connection
      with forming                             |  | 
|American
      HR Holdings                                |  |  |            |              |            |   |                       |  |            | 650,500   |                                            |   | 650                                         |  |   | 577,850     |  
|Cancellation
      of shares issued for                   |  | 
|Assets                                                    |  |  |            | -3018         |            |   | -2                     |  |            |           |                                            |   |                                             |  |   | (37,719,998 | )
|Preferred
      Series B  Issuance                       |  |  |            | 350           |            |   | 1                      |  |            |           |                                            |   |                                             |  |   | 3,499,999   |  
|of
      shares for cash and                              |  | 
|additional
      consideration                            |  | 
|Preferred
      Series D  issuance                       |  |  |            | -300          |            |   | 1                      |  |            |           |                                            |   |                                             |  |   | 2,999,999   |  
|of
      shares for surplus note                          |  | 
|Preferred
      Series E  issuance                       |  |  |            | -100          |            |   | 1                      |  |            |           |                                            |   |                                             |  |   | 999,999     |  
|of
      shares issued for cash                           |  | 
|                                                          |  |  |            |               |            |   |                        |  |            |           |                                            |   |                                             |  |   |             |  
|Net
      income                                          |  |  |            |               |            |   |                        |  |            |           |                                            |   |                                             |  |   |             |  
|                                                          |  |  |            |               |            |   |                        |  |            |           |                                            |   |                                             | 
|Balance,
      December 31, 2003                          |  |  |            | 1,930         |            |   | 5                      |  |            | 9,547,811 |                                            |   | 9,548                                       |  | $ | 11,825,152  |  
|                                                          |  |  |            |               |            |   |                        |  |            |           |                                            |   |                                             | 
|                                                          |  |  |            |               |            |   |                        |  |            |           |                                            |   |                                             | 
|See notes
      to the consolidated financial statements.

|- 29-
|-----

|Certified
        Services, Inc. and SubsidiariesConsolidated
        Statements of Cash Flows
|----------------------------------------------------------------------------------------------

|                                                        | For
      the Year Ended December 31, |             |  
|------------------------------------------------------- | ------------------------------------- | ----------- | -
|                                                        |                                       |             |  
|                                                        |                                       | **2003**    |  
|                                                        |                                       |             |  
|Cash
      flows from operating activities              |                                       |             |  
|Net
      income (loss)                                 | $                                     | 2,411,703   |  
|Adjustments
      to reconcile net income (loss) to net
|cash
      provided by operations:                     
|Transitional
      net income of acquired subsidiary    |                                       |            |  
|Reorganization
      pursuant to reverse acquisition    |                                       |            |  
|Depreciation
      and amortization                     |                                       | 737,146     |  
|Bad
      debt expense                                  |                                       | 775,094     |  
|Issuance
      of stock to employees                    |                                       |             |  
|Issuance
      of stock for services                    |                                       | 103,333     |  
|Severance
      expense                                 |                                       |             |  
|Decrease
      (increase) in assets                     |                                       |             |  
|Accounts
      receivable                               |                                       | 7,942,610   |  
|Other
      current assets                              |                                       | 249,735     |  
|Restricted
      cash                                   |                                       | (396,779    | )
|Insurance
      Deposits                                |                                       | (2,357,128  | )
|                                                        |                                       |             |  
|Other
      assets                                      |                                       | (901,324    | )
|                                                        |                                       |             |  
|Increase
      (decrease) in liabilities               
|Accounts
      payable                                  |                                       | (12,989,652 | )
|Accrued
      expenses                                  |                                       | 1,096,536   |  
|                                                        |                                       |             |  
|Net
      cash provided by (used in) operating         
|activities                                              |                                       | (3,328,726  | )
|                                                        |                                       |             |  
|Cash
      flows from investing activities             
|Purchase
      of property and equipment                |                                       | (499,072    | )
|Proceeds
      from deposits                            |                                       |            |  
|Cash
      paid for business acquisition                |                                       | (350,000    | )
|Cash
      paid pursuant to reverse merger              |                                       |            |  
|Proceeds
      from stockholder                         |                                       |            |  
|Net
      proceeds from affiliates                      |                                       |            |  
|                                                        |                                       |             |  
|Net
      cash (used in) investing activities           |                                       | (849,072    | )
|                                                        |                                       |             |  
|Cash
      flows from financing activities             
|Net
      proceeds from line of credit                  |                                       | 2,283,000   |  
|Repayment
      of notes payable                        |                                       | (1,902,186  | )
|Proceeds
      of long-term debt                        |                                       |            |  
|Payments
      of capital lease obligations             |                                       | (211,884    | )
|Cash
      outlay for related party note receivable     |                                       | (1,221,045  | )
|Loan
      proceeds from related parties                |                                       | 1,000,000   |  
|Issuance
      of preferred stock                       |                                       | 4,000,000   |  
|                                                        |                                       |             |  
|Net
      cash provided by (used in) financing         
|activities                                              |                                       | 3,947,885   |  
|                                                        |                                       |             |  
|Net
      increase (decrease) in cash                   |                                       | (229,913    | )
|Cash
      at beginning of year                         |                                       | 662,327     |  
|                                                        |                                       |             |  
|Cash
      at end of year                               | $                                     | 432,414     |  
|                                                        |                                       |             |  

|                                                         
|---------------------------------------------------------
|See notes
      to the consolidated financial statements.

|- 30-
|-----

|Certified
        Services, Inc. and SubsidiariesSupplemental
        Schedule of Non-cash Investing and Financing Activities
      SUPPLEMENTAL
        DISCLOSURE OF CASH FLOW INFORMATION
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                     | 2003 |         | 2002 |   | 2001    | 
|------------------------------------ | ---- | ------- | ---- | - | ------- | 
|
|Cash paid
      during the year for: |      |         |      |   |         | 
|Interest
      Expense               | $    | 609,101 |      | $ | 115,997 | 
|Income
      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 | $ | 9,204,620 | 
|--------------------------------------------- | - | --------- | 
|Stock issued  650,000
      of common stock  |   | 578,500   | 
|Cash                                          |   | 350,000   | 
|Promissory note                               |   | 3,500,000 | 
|Acquisition 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  | $ | 5,248,449 | 
|---------------------------------------- | - | --------- | 
|Stock issued  2,000,000 of common stock |   | 500,000   | 
|Promissory note                          |   | 2,313,889 | 
|Promissory 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    |  |   | 2002    | 
|----------------------------------------------------------------- | - | ------- |  | - | ------- | 
|                                                                  |   |         |  |   |         | 
|Capitalized 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
        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** |   | **2001**    
| |                          |                                                                    |             |          |   |             
| | Revenues                 | $                                                                  | 88,143,544  |          | $ | 73,488,987  
| | Cost of service          |                                                                    | (55,007,171 | )        |   | (37,122,344 
| |                          |                                                                    |             |          |   |             
| | Gross profit             |                                                                    | 33,136,373  |          |   | 36,366,643  
| | Operating
      expenses |                                                                    | (38,738,659 | )        |   | (32,6778,677
| |                          |                                                                    |             |          |   |             
| | Net income
      (loss)  | $                                                                  | (5,602,286  | )        | $ | 3,587,966   
| |                          |                                                                    |             |          |   |             

|-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, |        
| | ------------------------ | ------------------------------------------------------------------ | -------
|
|
|
| | Revenues                 | $                                                                  | 52,299 
| | Cost of service          |                                                                    | (31,039
| |                          |                                                                    |        
| | Gross profit             |                                                                    | 21,260 
| | Operating
      expenses |                                                                    | (21,229
| |                          |                                                                    |        
| | Net income
      (loss)  | $                                                                  | 31     
| |                          |                                                                    |        
| |                          |                                                                    |        

|NOTE 7-PROPERTY
        AND EQUIPMENT
      Property and equipment, at cost, consists of the following:
|-------------------------------------------------------------------------------------------------------

| |                                                  | 2003 |            | 2002 |  
| | ------------------------------------------------ | ---- | ---------- | ---- | -
|
| | Furniture,
      fixtures and computer equipment | $    | 3,634,391  |      | $
| | Less: accumulated
      depreciation             |      | (2,016,554 | )    |  
| |                                                  |      |            |      |  
| | Total                                            | $    | 1,617,837  |      | $
| |                                                  |      |            |      |  

|Depreciation expense charged to operations amounted to $637,146,
        $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** |           | **2002** |  
|----------------------------------------------- | -------- | --------- | -------- | -
|                                                |          |           |          |  
|**APEO
      Holdings, Inc.**                   |          |           |          |  
|Cash                                            | $        | 1,100,000 |          | $
|Non-interest
      bearing promissory note     
|subjected
      to an 8% present value discount |          | 821,990   |          |  
|Shares of
      Common Stock                    |          | 406,667   |          |  
|Transaction
      costs                         |          | 88,781    |          |  
|                                                |          |           |          |  
|                                                |          | 2,417,438 |          |  
|Less: Net
      assets                          |          | (8,250    | )        |  
|                                                |          |           |          |  
|                                                | $        | 2,409,188 |          | $
|                                                |          |           |          |  

|- 37-
|-----

|**The
      Cura Group, Inc.**       |   |           |  |   |           | 
|------------------------------------ | - | --------- |  | - | --------- | 
|6% three
      year promissory note  | $ | 2,313,889 |  | $ | 2,313,889 | 
|6% three
      month promissory note |   | 136,111   |  |   | 136,111   | 
|Shares of
      Common Stock         |   | 500,000   |  |   | 500,000   | 
|                                     |   |           |  |  
|                                     |   | 2,950,000 |  |   | 2,950,000 | 
|Add: Net
      Liabilities           |   | 5,248,449 |  |   | 5,248,449 | 
|                                     |   |           |  |  
|                                     |   | 8,198,449 |  |   | 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** |           | **2002** |  
| | --------------------------- | -------- | --------- | -------- | -
| |                             |          |           |          |  
| | Note receivable             | $        | 148,920   |          | $
| | Investments                 |          | 1,005,000 |          |  
| | Prepaid expenses            |          | 940,627   |          |  
| | Noncomplete covenant        |          | 72,355    |          |  
| | Acquisition
      costs     |          | 542,277   |          |  
| | Deposits                    |          | 84,124    |          |  
| |                             |          |           |          |  
| | Total                       |          | 2,793,303 |          |  
| | Less: current
      portion |          | 1,153,627 |          |  
| |                             |          |           |          |  
| |                             | $        | 1,639,676 |          | $
| |                             |          |           |          |  

|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, 2005
      b.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** |            | **2002** |  
|------------------------------------------ | -------- | ---------- | -------- | -
|                                           |          |            |          |  
|Accrued payroll                            | $        | 14,710,418 |          | $
|Accrued
      payroll taxes                |          | 6,269,868  |          |  
|Client claims
      funds                  |          | 1,208,401  |          |  
|Workers compensation
      payable         |          | 1,014,511  |          |  
|Employee
      benefits payable            |          | 467,946    |          |  
|Accrued health
      insurance plan claims |          | 32,355     |          |  
|Customer
      Deposits                    |          | 3,655,711  |          |  
|Income Tax
      Payable                   |          | 193,773    |          |  
|Other accrued
      expenses               |          | 889,872    |          |  
|                                           |          |            |          |  
|Total                                      | $        | 28,442,855 |          | $
|                                           |          |            |          |  
|                                           |          |           

|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 
      Price |  
| | ------------------------------------ | ------ |  | --------------------------------------------- | -
|
| | Outstanding,
      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 workman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:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                    |  
|----------------------------------- | -
|                                    |  
|Furniture
      and fixtures        | $
|Computer
      equipment            |  
|                                    |  
|Subtotal                            |  
|Less accumulated
      amortization |  
|                                    |  
|Total                               | $
|                                    |  

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

|Year Ending December 31,                                       |          |         |          |   |         | 
|-------------------------------------------------------------- | -------- | ------- | -------- | - | ------- | 
|2004                                                           | $        | 187,276 |          | $ | 226,166 | 
|2005                                                           |          | 53,912  |          |   | 110,224 | 
|2006                                                           |          | 31,393  |          |   | 20,265  | 
|2007                                                           | 26,113   |         | —        |  
|                                                               |          |         |          |  
|                                                               |          |         |          |  
|Total net minimum capital lease payments                       | 298,744  |         | 356,655  |  
|Less amounts representing interest                             | (74,939  | )       | (47,698  | )
|                                                               |          |         |          |  
|Present value of net minimum capital lease payments            | 223,805  |         | 308,957  |  
|Less 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:
|------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          
|$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
|$1,000,000
      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 $0, respectively                                                                                                                                                                                                                                                                                                                                                                              |          
|$                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 1,000,000
|Non-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  
|6%
      interest bearing acquisition promissory note of $2,313,889 originally payable
      in equal monthly installments over 34 months commencing January 3, 2003
      and on January 27, 2004 amended whereby the obligation is payable over 55
      months commencing February 15, 2004                                                                                                                                                                                                                                                                              |          
|$                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 1,847,608
|6.5%
      interest bearing acquisition promissory note amount of $1,430,000 due in
      5 equal annual installments commencing March 20, 2003                                                                                                                                                                                                                                                                                                                                                                                                                             |          
|$                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 1,144,000
|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 $3,500,000 payable in 59 equal monthly
      installments commencing August 1, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                            |          
|$                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 3,403,362

|
|

|Installment
      note payable secured by equipment | $ | 188,598    |   | $         | 7,665    
|--------------------------------------------------- | - | ---------- | - | --------- | ---------
|                                                    |   |            |  
|                                                    |   | 11,354,910 |   |           | 4,223,581
|Less:
      current portion                         |   | 5,127,382  |   |           | 2,153,571
|                                                    |   |            |  
|                                                    | $ | 6,227,528  | $ | 2,070,010
|                                                    |   |            |  

|- 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                                                    | $ | 5,127,382  |  | 
|2005                                                    |   | 1,715,407  |  | 
|2006                                                    |   | 1,777,607  |  | 
|2007                                                    |   | 1,585,779  |  | 
|2008                                                    |   | 1,148,735  |  | 
|                                                        |   |            |  | 
|Total                                                   | $ | 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:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                      |  
|------------------------------------- | -
|                                      |  
|2004                                  | $
|2005                                  |  
|2006                                  |  
|2007                                  |  
|2008                                  |  
|2009                                  |  
|2010                                  |  
|                                      |  
|Total
      minimum payments required | $
|                                      |  

|Rent
        expense charged to operations were $1,297,751 and $475,978 for the years
        ended December 31, 2002 and 2001, 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 Stock                 |                |         |                 | 
|------------------------------- | -------------- | ------- | --------------- | 
|                                | **Shares**     |         |                 | 
|                                | **Designated** |         | **Outstanding** | 
|Series A,
      $.001 par value |                | 100     |                 | 
|Series B,
      $.001 par value |                | 100,000 |                 | 
|Series D,
      $.001 par value |                | 10,000  |                 | 
|Series E,
      $.001 par value |                | 10,000  |                 | 
|                                |                |         |                 | 
|                                |                | 120,010 |                 | 
|                                |                |         |                 | 



|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 |   | 2001       | 
|----------------------- | ---- | ---------- | ---- | - | ---------- | 
|
|Employee
      benefits | $    | 11,421,889 |      | $ | 5,499,070  | 
|Insurance               |      | 31,023,726 |      |   | 16,323,144 | 
|Other                   |      |            |     |   | 93,655     | 
|                        |      |            |      |   |            | 
|                        | $    | 42,445,615 |      | $ | 21,822,214 | 
|                        |      |            |      |   |            | 

|NOTE 19-INCOME
        TAXES
      The income tax provision (benefit) is comprised of the following:
|----------------------------------------------------------------------------------------------------

|         | **2003** |   | **2002** |   | **2001** | 
|-------- | -------- | - | -------- | - | -------- | 
|         |          |   |          |   |          | 
|Federal  |          |   |          |   |          | 
|Current  | $        |  |          | $ |         | 
|Deferred |          |  |          |   |         | 
|         |          |   |          |   |          | 
|State   
|Current  | $        |  |          | $ |         | 
|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    |   | 2001      | 
|-------------------------------------- | ------- | --------- | ------- | - | --------- | 
|
|Federal Deferred Tax Asset             |         |           |         |   |           | 
|Net
      operating loss carry forward | $       | (680,000) |         | $ | (935,000) | 
|Total
      deferred assets            |         | (680,000) |         |   | (935,000) | 
|Less
      Valuation Allowance         | 680,000 |           | 935,000 |   | 20,000    | 
|Total
      Net deferred assets        |         |           |         |   |           | 
|                                       |         |           |         |   |           | 
|                                       | $       |          |         | $ |          | 
|                                       |         |           |         |   |           | 



|                                       | 2003    |           | 2002    |   | 2001      | 
|-------------------------------------- | ------- | --------- | ------- | - | --------- | 
|
|State Deferred Tax Asset               |         |           |         |   |           | 
|Net
      operating loss carry forward | $       | (680,000) |         | $ | (145,000) | 
|Total
      deferred assets            |         | (680,000) |         |   | (145,000) | 
|Less
      Valuation Allowance         | 680,000 |           | 145,000 |   | 9,000     | 
|Total
      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** |           | **State**
|----------------- | ----------- | --------- | ---------
|Available through |             |           |          
|2018              |             | 4,500,000 |          
|                  |             |           |          

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 |   | 2001        | 
|-------------------------------------------------------------- | ---- | --------- | ---- | - | ----------- | 
|
|Tax 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.
      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
      and    |                              |                      
|-------------------- | --------------------- | ---------------------------- | ---------------------
|                     | Date of Expiration    | Position & Office            | Age and              
|Name                 | of Present Term       | with Registrant              | Director Since       
|                     |                      
|William
      Keywan | One year              | President
      and Director | 63                   
|                     | April 27, 2002 (1)    |                              | Nov. 21, 2001        
|                     |                       |                              |                      
|Judson Wagenseller   | One year              | Executive Vice President     | 51                   
|                     | April 27, 2002 (2)    |                              | Nov. 21, 2001        
|                     |                       |                              |                      
|Scott Zoppoth        | One year              | Secretary, Treasurer         | 43                   
|                     | Aug. 7, 2002(3)       | and Director                 | Nov. 21, 2001        
|                     |                       |                              |                      
|Anthony R. Russo     | One year              | Chief Executive and          | 61                   
|                     | May 1, 2003 (4)       | Financial Officer            | Aug. 7, 2002         
|                     |                       | and Director                 |                      
|                     |                       |                              |                      
|Danny L. Pixler      | One year              | President, Chief Operating   | 55                   
|                     | May 1, 2003 (5)       | Officer and Director         | Nov. 20, 2002        
|                     |                       |                              |                      
|Peter Campitiello    | One year              | Secretary                    | 34                   
|                     |                       |                              | September 1, 2003 (6)
|                     |                       |                              |                      
|O. Ray McCartha      | One year (7)          | Director                     | 54                   
|                     |                       |                              | April 27, 2002       
|                     |                       |                              |                      
|Thomas Cunningham    | One year              | Director                     | 43                   
|                     | November 20, 2002 (8) |                              | April 27, 2002       
|                     |                       |                              |                      
|Ivan Dobrin          | One year (9)          | Director                     | 58                   
|                     | May 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 Compensation |  
|---------------------------------- | ------------------------- | -------- | ------- | ---------------------------- | -
|                                   |                           |          |         |                              |  
|                                   | Annual
      Compensation |          | Awards  | Payments                     |  
|                                   |                           |          |         |                              |  
|Name and Position                  | Year                      | Salary   | Bonuses | Other                        |  
|                                   |                           |          |         |                              |  
|William
      Keywan, President    | 2001                      |         |        |                             | 
|Director, (resigned                | 2002                      |         |        |                             |  
|August 7, 2002)                    | 2003                      | - 47,000 |        | - 45,600                     |  
|                                   |                           |          |         |                              |  
|Thomas Cunningham,
      Chief     |                           |          |         |                              |  
|Financial 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,
      CEO        |                           |          |         |                              |  
|and CFO since Aug.
      7,        | 2001                      |         |        |                             |  
|2002, and Director
      since     | 2002                      | 30,000   |        |                             | 
|April 27, 2002                     | 2003                      | 38,000   |         | 100,000                      |  
|                                   |                           |          |         |                              |  
|Danny L. Pixler, President         |                           |          |         |                              |  
|And 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 | UNDERLYING
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | ---------------------- | ---------------------------- | ----------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                     |                                                                                    |                        |                              |           
|Brentwood                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                     |                                                                                    |                        |                              |           
|Capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                     |                                                                                    |                        |                              |           
|Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 600,000                                                                             | 100%                                                                               | $.10                   | 2/15/03                      |           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                     |                                                                                    |                        |                              |           
|(1) The
      option was granted under the Registrants 2002 Stock Option Plan (the
      SOP)at an exercise price equal to 100% of the market value of
      the Registrants Common Stock on the date of grant, has a one year
      term and vests immediately.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|The
      Registrants SOP provides for options that may be granted to eligible
      employees and non-employee directors and advisors of the Registrant or its
      subsidiaries. An aggregate of 10,000,000 shares of common stock of the Registrant
      are authorized to be issued under the SOP. At December 31, 2002, 9,400,000
      shares of common stock were available for future grants under the SOP. The
      SOP became effective on September 9, 1998, and options may be granted through
      the tenth anniversary date that the SOP became effective. The stock options
      are intended to qualify as incentive stock options within the
      meaning of Section 422 of the Internal Revenue Code. The purposes of
      the SOP is to retain and attract persons of training, experience and ability
      to serve as employees of the Registrant and its subsidiaries and to serve
      as non-employee directors and advisors of the Registrant, to encourage the
      sense of proprietorship of such persons and to stimulate the active interest
      of such persons in the development and financial success of the Registrant
      and its subsidiaries.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|The
      SOP is administered by the SOP Committee of the Board of Directors (the
      Committee). The Committee has the power to determine which eligible
      employees will receive awards, the timing and manner of the grant of such
      awards, the exercise price of stock options (which may not be less than
      market value on the date of grant), the number of shares, the vesting of
      the shares and all of the terms of the awards. The Registrant may at any
      time amend or terminate the SOP. However, no amendment that would impair
      the rights of any participant, with respect to outstanding grants, can be
      made without the participants prior consent. Stockholder approval
      of an amendment to the SOP is necessary only when required by applicable
      law or stock exchange rules.                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(2) The
      percentage reflects the percent of total options granted by the Registrant
      during fiscal 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(d) Aggregate
      Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table.  During
      the fiscal year ended December 31, 2002, no stock options or freestanding
      SARs were exercised by any executive officer or director of the Registrant.
      However, the following table contains information concerning the only options
      exercised during the fiscal year ended December 31, 2002, under any stock
      option plan:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

|- 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)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------ | ------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                        |                                      |                                                                                                                                                 |                                                                                                           
|Brentwood                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                        |                                      |                                                                                                                                                 |                                                                                                           
|Capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                        |                                      |                                                                                                                                                 |                                                                                                           
|Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 600,000                                                | $60,000                              | -0-                                                                                                                                             | -0-                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                        |                                      |                                                                                                                                                 |                                                                                                           
|(e) Long-Term
      Incentive Plan (LTIP) Awards Table. During the three fiscal
      years ended December 31, 2002, the Registrant made no LTIP awards.                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(f) Compensation
      of Directors. (1) and (2). During the three fiscal years ended December
      31, 2002, no director of the Registrant received any compensation pursuant
      to any standard or other arrangement.                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(g) Employment
      Contracts and Termination of Employment, and Change-in Control Arrangements.
      (1) and (2). No executive officer of the Registrant was employed pursuant
      to the terms of an employment agreement with the Registrant. The April 19,
      2002, transaction between the six former principal stockholders of the Registrant
      and Midwest, previously disclosed in Item 1 and hereinafter disclosed in
      Item 12, may be deemed to be a change of control of the Registrant.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|ITEM
      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
      Nature |                               | 
|----------------------------------------- | ----------------------- | ----------------------------- | 
|of Beneficial Owner                       | of Beneficial Ownership | Percentage of Class
      (1) | 
|                                          |                         |                               | 
|                                          |                         |                               | 
|Midwest Merger
      Management, LLC      |                         |                               | 
|10602 Timberwood
      Circle, Suite # 9  |                         |                               | 
|Louisville, KY  40223                     | 2,050,000               | 24.2%                         | 
|                                          |                         |                               | 
|Alan B. Willard                           |                         |                               | 
|5101 Northwest 21st
      St. - Suite 350 |                         |                               | 
|Ft. Lauderdale, FL  33309                 | 1,000,000               | 10.4%                         | 
|                                          |                         |                               | 
|Danny L. Willard                          |                         |                               | 
|5101 Northwest 21st
      St. - Suite 350 |                         |                               | 
|Ft. Lauderdale, FL  33309                 | 1,000,000               | 10.4%                         | 
|                                          |                         |                               | 
|Thomas Cunningham                         |                         |                               | 
|200 Lake Drive East
       Suite 110     |                         |                               | 
|Cherry 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 December 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;
      and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|J.   100%
      on or after the lowest average of the closing bid prices of the Registrants
      common stock on any ten consecutive trading days during the 20 trading days
      immediately preceding the conversion date shall have been a minimum of $55.00;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|3. Liquidation.  Upon any liquidation,
      dissolution or winding up of the Registrant, whether voluntary or involuntary,
      the holders of Series B Shares shall be entitled to be paid an amount equal
      to two times the amount payable on each share of common stock;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|4. Dividend Provisions. The holders
      of the Series B Shares are not entitled to receive any dividends;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|5. Stockholder Approval.  The holders of
      the Series B Shares have the right to demand that the Registrant call a
      special meeting of its stockholders for the purpose of approving the conversion
      privileges of the Series B Shares;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|6. Poison Pill.  If, at any time during
      the first ten years following the issuance of the Series B Shares, any of
      the following events shall occur, then, on five days prior written notice
      to the Registrant, all of the Series B Shares shall be convertible into
      11,000,000 shares of common stock; (i) the Registrant shall become the subject
      of a tender offer by any individual, firm or entity; (ii) a proxy contest
      or any other effort to unseat the Board of Directors of the Registrant as
      then constituted; (iii) any consolidation or merger of the Registrant with
      or into another entity or any merger of another entity into the Registrant
      (iv) any sale or transfer of all of the assets of the Registrant; or (v)
      any compulsory share exchange, pursuant to which any holders of common stock
      shall be entitled to receive other securities, cash or other property;
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|7. Redemption .  At any time after
      the tenth anniversary of the issuance of the Series B Shares (the Anniversary
      Date), the Registrants Board of Directors shall have the right
      and option, on written notice to the holders of the Series B Shares, to
      either: (i) redeem all of the outstanding Series B Shares at a price per
      Series B Share equal to 75% of the average of the closing bid and asked
      prices of the Registrants common stock on any ten consecutive trading
      days during the 20 trading days immediately preceding the Anniversary Date
      times 10,000; or (ii) exchange ten thousand (10,000) shares of its authorized
      but unissued common stock for each Series B Share then issued and outstanding;
      or (iii) renewing the conversion terms and conditions of Section 1 for an
      additional five years; or (iv) any combination of the foregoing.                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|If
      the assets of the Registrant shall prove insufficient under Nevada law to
      permit the Registrant to effect redemption, of all of the Series B Shares
      which are outstanding at the time the notice of the redemption is sent by
      the Registrant, the Registrant may redeem, on a pro rata basis, that percentage
      of the Series B Shares, if any, which its Board of Directors elects to redeem;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(b)  Security
      Ownership of Management.  The following information is furnished
      as of December 31, 2002, as to the number of shares of the Registrants
      Common Stock, $.001 par value per share owned beneficially by each executive
      officer and director of the Registrant and by all executive officers and
      directors as a group:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|- 54
        -
|--------------

|Name and
      Address                                                                                                                                                                                                                                                                                                                                                                                                              | Amount and
      Nature |                               | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------- | ----------------------------- | 
|of Beneficial Owner                                                                                                                                                                                                                                                                                                                                                                                                                 | of Beneficial Ownership | Percentage of Class
      (1) | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |                         |                               | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |                         |                               | 
|Anthony R. Russo                                                                                                                                                                                                                                                                                                                                                                                                                    |                         |                               | 
|477 Madison Ave. - 12th
      Floor                                                                                                                                                                                                                                                                                                                                                                                                 |                         |                               | 
|New York, NY 10022                                                                                                                                                                                                                                                                                                                                                                                                                  |                        | 0.0%                          | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |                         |                               | 
|Danny L. Pixler                                                                                                                                                                                                                                                                                                                                                                                                                     |                         |                               | 
|5101 NW 21st Ave. -
      Suite 350                                                                                                                                                                                                                                                                                                                                                                                                 |                         |                               | 
|Ft. Lauderdale, FL 33309                                                                                                                                                                                                                                                                                                                                                                                                            |                        | 0.0%                          | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |                         |                               | 
|O. Raymond McCartha                                                                                                                                                                                                                                                                                                                                                                                                                 |                        | 0.0%                          | 
|477 Madison Avenue,
      12th Floor                                                                                                                                                                                                                                                                                                                                                                                                |                         |                               | 
|New York, NY 10022                                                                                                                                                                                                                                                                                                                                                                                                                  |                         |                               | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |                         |                               | 
|Ivan Dobrin                                                                                                                                                                                                                                                                                                                                                                                                                         |                        | 0.0%                          | 
|5101 NW 21st
      Ave.  Suite 350                                                                                                                                                                                                                                                                                                                                                                                                 |                         |                               | 
|Ft. Lauderdale, FL 
      33309                                                                                                                                                                                                                                                                                                                                                                                                     |                         |                               | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |                         |                               | 
|Scott Zoppoth                                                                                                                                                                                                                                                                                                                                                                                                                       |                        | 0.0%                          | 
|477 Madison Avenue,
      12th Floor                                                                                                                                                                                                                                                                                                                                                                                                |                         |                               | 
|New York, NY 10022                                                                                                                                                                                                                                                                                                                                                                                                                  |                         |                               | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |                         |                               | 
|All officers and directors
      as a group                                                                                                                                                                                                                                                                                                                                                                                         |                         |                               | 
|of five persons                                                                                                                                                                                                                                                                                                                                                                                                                     |                        | 0.0%                          | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                    |                         |                               | 
|_________________________                                                                                                                                                                                                                                                                                                                                                                                                          
|(c) Changes
      in Control. The April 19, 2002, transaction between the six former principal
      stockholders of the Registrant and Midwest, previously disclosed in Item
      1 and hereinafter disclosed in Item 12, may be deemed to be a change of
      control of the Registrant.                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(d) Securities
      Authorized for Issuance Under Equity Compensation Plans                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                   
|The
      following table sets forth information as of December 31, 2002, with respect
      to compensation plans (including individual compensation arrangements) under
      which the Registrants common stock is authorized for issuance, aggregated
      as follows: (i) all compensation plans previously approved by security holders;
      and (ii) all compensation plans not previously approved by security holders.
|                                                                                                                                                                                                                                                                                                                                                                                                                                   

|EQUITY
      COMPENSATION PLAN INFORMATION
|------------------------------------------
|                                          
|                                          
|                                          
|                                          
|                                          
|Equity compensation
      plans           
|approved by security
      holders        
|                                          
|Equity compensation
      plans not       
|approved by security
      holders        
|                                          
|                                          
|Total                                     
|                                          

|- 55
        -
|--------------

|ITEM
      13.              
      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|On
      December 31, 2002, Midwest Merger Management, LLC, the Registrants
      principal stockholder, executed and delivered a $210,000 promissory note
      to the Registrant. The note, which bears interest at the rate of 6% per
      annum, is due on January 2, 2004, is payable in four equal quarterly installment
      of $55,550, and memorializes accommodation advances made during 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Risk
      Management Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|On
      January 1, 2002, the Registrant entered into a Risk Management Agreement
      with Midwest Merger Management, LLC, a Kentucky limited liability company
      and the Registrants principal and controlling stockholder (Midwest),
      wherein the Registrant engaged Midwest to assume all responsibility for
      managing the cost of workplace accidents that occur during the five year
      term of the agreement. In consideration for a negotiated percentage of the
      Registrants gross payroll (the Service Fee) and reimbursement
      for expenses, Midwest agreed to: (i) retain and service such Workers
      compensation Insurance coverage as Midwest deems reasonable and prudent
      at its sole cost and expense; (ii) establish such deductible levels as Midwest
      deems reasonable and prudent; (iii) assume responsibility for and promptly
      make all required payments below the applicable deductibles; (iv) engage
      and utilize the services of a reputable independent third party administrator
      to timely pay all approved workers claims; and (v) arrange with such third
      party administrator for CSRVs examination and copying, during normal
      business hours and on reasonable advanced written notice, of the agents
      books and records.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|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
      IV                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|ITEM
      15.              
      EXHIBITS AND REPORTS ON FORM 8K                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(a)
      Exhibits:                        
      None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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|SIGNATURES                                                                                                                                                                               
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                         
|In accordance with the
      Exchange Act, this report has been signed below by the following persons
      on behalf of the Registrant and in the capacities and on the dates indicated.
|                                                                                                                                                                                         
|Dated:   
      March 29, 2004                                                                                                                                                           
|                                                                                                                                                                                         
|Certified
      Services, Inc.                                                                                                                                                           
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|By:  /s/ Danny
      L. Pixler                                                                                                                                                           
|Danny L. Pixler, President,                                                                                                                                                              
|Chief Executive Officer                                                                                                                                                                  
|and Director                                                                                                                                                                             
|                                                                                                                                                                                         
|                                                                                                                                                                                         
|By:  /s/ Richard
      M. Steen                                                                                                                                                          
|Richard M. Steen,                                                                                                                                                                        
|Acting Chief Financial Officer                                                                                                                                                           

|- 57
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|CERTIFICATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|I, 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; and                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|6. The Registrants
      other certifying officers and I have indicated in this annual report whether
      or not there were significant changes in internal controls or in other factors
      that could significantly affect internal controls subsequent to the date
      of our most recent evaluation, including any corrective actions with regard
      to significant deficiencies and material weaknesses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Date: 
      March 29, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|/s/ 
      Danny L. Pixler                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Chief
      Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|- 58
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|--------------

|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 being prepared; b) evaluated the effectiveness of
      the Registrants disclosure controls and procedures as of a date within
      90 days prior to the filing date of this annual report (the Evaluation
      Date); and c) presented in this annual report our conclusions about
      the effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|5. The Registrants
      other certifying officers and I have disclosed, based on our most recent
      evaluation, to the Registrants auditors and the audit committee of
      Registrants board of directors (or persons performing the equivalent
      function): a) all significant deficiencies in the design or operation of
      internal controls which could adversely affect the Registrants ability
      to record, process, summarize and report financial data and have identified
      for the Registrants auditors any material weaknesses in internal controls;
      and b) any fraud, whether or not material, that involves management or other
      employees who have a significant role in the Registrants internal
      controls; and                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|6. The Registrants
      other certifying officers and I have indicated in this annual report whether
      or not there were significant changes in internal controls or in other factors
      that could significantly affect internal controls subsequent to the date
      of our most recent evaluation, including any corrective actions with regard
      to significant deficiencies and material weaknesses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Date: 
      March 29, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|/s/ 
      Richard M. Steen                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Acting
      Chief  Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|- 59
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|--------------