UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

|X|   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

                        For the quarterly period ended June 30, 2001
                                                       -------------------------

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

                        For the transition period from __________ to __________

                        Commission file number          001-15789
                                             -----------------------------------

                          STRATUS SERVICES GROUP, INC.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

          Delaware                                        22-3499261
--------------------------------------------------------------------------------
(State of other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

             500 Craig Road, Suite 201, Manalapan, New Jersey 07726
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (732) 866-0300
--------------------------------------------------------------------------------
                           (Issuer's telephone number)

--------------------------------------------------------------------------------
   (Former name, former address and former fiscal year, if changed since last
                                    report)

As of August 14, 2001, 7,965,680 shares of the Registrant's common stock were
outstanding.

<Page>

PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS

                          STRATUS SERVICES GROUP, INC.
                            Condensed Balance Sheets
                                     Assets

<Table>
<Caption>
                                                                                     June 30,
                                                                                       2001        September 30, 2000
                                                                                   ------------    ------------------
Current assets                                                                     (Unaudited)
<S>                                                                                <C>                <C>
     Cash and cash equivalents                                                     $     83,853       $  1,030,722
     Due from factor - less allowance for recourse
         obligation of $ -0- and $30,000                                                     --          1,154,012
     Accounts receivable - less allowance for doubtful
         accounts of $710,000 and $255,000                                            7,389,550            852,876
     Unbilled receivables                                                             1,435,340          1,236,002
     Loans to related parties                                                            64,500             64,500
     Loans receivable                                                                    17,000             56,000
     Prepaid insurance                                                                1,401,918            432,674
     Prepaid expenses and other current assets                                          171,797            278,169
     Deferred taxes                                                                          --            340,000
                                                                                   ------------       ------------
                                                                                     10,563,958          5,444,955

Property and equipment, net of accumulated depreciation                               1,549,329          1,118,625
Investment - at cost                                                                     61,000                 --
Goodwill, net of accumulated amortization                                             4,552,982          3,716,538
Deferred financing costs, net of accumulated amortization                               507,047                 --
Deferred taxes                                                                          340,000                 --
Other assets                                                                             88,203             38,163
                                                                                   ------------       ------------
                                                                                   $ 17,662,519       $ 10,318,281
                                                                                   ============       ============

                                           Liabilities and Stockholders' Equity

Current liabilities
     Loans payable (current portion)                                               $    326,600       $     27,012
     Notes payable - acquisitions (current portion)                                     129,605            275,000
     Line of credit                                                                   6,143,810                 --
     Insurance obligation payable                                                       728,400            367,100
     Accounts payable and accrued expenses                                            2,665,356          1,172,148
     Accrued payroll and taxes                                                        1,270,523          1,105,363
     Payroll taxes payable                                                              267,780            412,513
                                                                                   ------------       ------------
                                                                                     11,532,074          3,359,136

Loans payable (net of current portion)                                                  318,153            134,700
Notes payable - acquisition (net of current portion)                                         --             25,000
Convertible debt                                                                      1,934,926                 --
                                                                                   ------------       ------------
                                                                                     13,785,153          3,518,836

Temporary equity - put options                                                           69,000                 --
Commitments and contingencies
Stockholders' equity
     Preferred stock, $.01 par value, 5,000,000 shares authorized; Series A,
        liquidation preference of $3.00 per share; 1,458,933 designated; none
        issued and outstanding                                                               --                 --
     Common stock, $.01 par value, 25,000,000 shares
        authorized; 5,981,765 and 5,712,037 shares
        issued and 5,873,099 and 5,712,037 shares outstanding                            59,818             57,120
     Additional paid-in capital                                                      11,529,292         10,554,782
     Deferred compensation                                                              (20,530)           (67,900)
     Accumulated deficit                                                             (7,108,214)        (3,744,557)
     Less treasury stock, at cost                                                      (652,000)                --
                                                                                   ------------       ------------
         Total stockholders' equity                                                   3,808,366          6,799,445
                                                                                   ------------       ------------
                                                                                   $ 17,662,519       $ 10,318,281
                                                                                   ============       ============
</Table>

                  See notes to condensed financial statements.


                                       1
<Page>

                          STRATUS SERVICES GROUP, INC.
                       Condensed Statements of Operations
                                   (Unaudited)

<Table>
<Caption>
                                                                     Three Months Ended              Nine Months Ended
                                                                          June 30,                        June 30,
                                                                   2001            2000             2001             2000
                                                               ------------     -----------     ------------     ------------
<S>                                                            <C>              <C>             <C>              <C>
Revenues (including $-0-, $-0-,
$-0- and $399,000 from related parties)                        $ 14,596,631     $ 8,859,979     $ 47,717,198     $ 25,785,217

Cost of revenue (including $-0-, $-0-
$-0- and $358,000 from related parties)                          11,762,699       6,507,622       37,646,484       19,045,005

                                                               ------------     -----------     ------------     ------------
Gross Profit                                                      2,833,932       2,352,357       10,070,714        6,740,212

Selling, general and administrative expenses                      3,365,385       2,022,530       11,396,040        5,621,552
Other charges                                                       288,912              --          288,912               --
                                                               ------------     -----------     ------------     ------------

Earnings (loss) from operations                                    (820,365)        329,827       (1,614,238)       1,118,660
                                                               ------------     -----------     ------------     ------------

Other income (expenses)
  Finance charges                                                        --         (93,565)        (100,934)        (373,356)
  Interest and financing costs                                     (592,331)        (82,162)      (1,627,844)        (278,849)
  Other income (expense)                                            (23,812)         23,796          (20,641)          28,980
                                                               ------------     -----------     ------------     ------------
                                                                   (616,143)       (151,931)      (1,749,419)        (623,225)
                                                               ------------     -----------     ------------     ------------

Earnings (loss) before income taxes                              (1,436,508)        177,896       (3,363,657)         495,435

Income taxes                                                         88,000              --               --               --
                                                               ------------     -----------     ------------     ------------

Net earnings (loss)                                            $ (1,524,508)    $   177,896     $ (3,363,657)    $    495,435
                                                               ============     ===========     ============     ============

Net earnings (loss) per common share -
  Basic                                                        $       (.26)    $       .03     $       (.59)    $        .11
  Diluted                                                              (.26)            .03             (.59)             .10

Weighted average shares, outstanding per common share share
  Basic                                                           5,700,027       5,345,400        5,674,781        4,666,244
  Diluted                                                         5,700,027       5,670,833        5,724,889        4,900,908
</Table>

                  See notes to condensed financial statements.


                                       2
<Page>

                          STRATUS SERVICES GROUP, INC.
                       Condensed Statements of Cash Flows
                                   (Unaudited)

<Table>
<Caption>
                                                                        Nine Months Ended
                                                                  June 30, 2001     June 30, 2000
                                                                  -------------     -------------
<S>                                                                <C>               <C>
Cash flows from operating activities

  Net earnings (loss)                                              $(3,363,657)      $   495,435
                                                                   -----------       -----------
  Adjustments to reconcile net earnings to net cash used
  by operating activities
         Depreciation                                                  286,263           111,984
         Amortization                                                  247,418           125,371
         Provision for doubtful accounts                               459,000            37,500
         Deferred financing costs amortization                         100,650                --
         Loss on extinguishment of convertible debt                     34,756                --
         Imputed interest                                              979,129            57,652
         Accrued interest                                               51,534            41,522
         Compensation - stock options                                   47,370            35,100
  Changes in operating assets and liabilities
         Due from factor/Accounts receivable                          (865,575)       (2,267,683)
         Prepaid insurance                                            (969,244)         (496,700)
         Prepaid expenses and other current assets                     106,372          (260,649)
         Other assets                                                  (50,040)           11,098
         Insurance obligation payable                                  361,300           352,528
         Accrued payroll and taxes                                     165,160           275,476
         Payroll taxes payable                                        (144,733)           65,569
         Accounts payable and accrued expenses                       1,452,233          (742,252)
                                                                   -----------       -----------
              Total adjustments                                      2,261,593        (2,653,484)
                                                                   -----------       -----------
                                                                   $(1,102,064)      $(2,158,049)
                                                                   ===========       ===========
Cash flows (used in) investing activities
  Purchase of property and equipment                                  (674,317)         (458,724)
  Payments for business acquisitions                                  (976,512)       (1,002,408)
  Loans receivable                                                    (105,000)         (230,500)
                                                                   -----------       -----------
                                                                    (1,755,829)       (1,691,632)
                                                                   -----------       -----------
Cash flows from financing activities
  Proceeds from initial public offering                                     --         6,063,479
  Proceeds from loans payable                                          240,000         1,125,000
  Payments of loans payable                                            (48,958)       (2,354,600)
  Proceeds from temporary equity put options                            60,000                --
  Payments of notes payable - acquisitions                            (320,395)               --
  Net proceeds from line of credit                                     865,104                --
  Net proceeds from convertible debt                                 2,682,908                --
  Purchase of treasury stock                                          (265,125)         (250,000)
  Redemption of convertible debt                                    (1,400,510)               --
  Proceeds from issuance of common stock                                98,000                --
                                                                   -----------       -----------
                                                                     1,911,024         4,583,879
                                                                   -----------       -----------
Net change in cash and cash equivalents                               (946,869)          734,198
Cash and cash equivalents - beginning                                1,030,722           423,072
                                                                   -----------       -----------
Cash and cash equivalents - ending                                 $    83,853       $ 1,157,270
                                                                   ===========       ===========
Supplemental disclosure of cash paid
    Interest                                                       $   499,648       $   388,285
Schedule of Noncash Investing and Financing Activities             ===========       ===========
    Fair value of assets acquired                                  $ 1,126,512       $ 1,502,408
    Less: cash paid                                                    976,512        (1,002,408)
                                                                   -----------       -----------
    Liabilities assumed                                            $   150,000       $   500,000
                                                                   -----------       -----------
    Issuance of common stock in exchange for notes payable         $        --       $ 1,000,000
                                                                   ===========       ===========
    Purchase of treasury stock in exchange for loans               $   402,000       $        --
                                                                   ===========       ===========
    Issuance of common stock in exchange for investment            $    61,000                --
                                                                   ===========       ===========
    Issuance of common stock in exchange for convertible debt      $    50,000       $        --
                                                                   ===========       ===========
</Table>

                  See notes to condensed financial statements.


                                       3
<Page>

                          STRATUS SERVICES GROUP, INC.
                     Notes to Condensed Financial Statements
                                   (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or
omitted pursuant to such rules and regulations. These condensed consolidated
financial statements reflect all adjustments (consisting only of normal
recurring adjustments) that, in the opinion of management, are necessary to
present fairly the financial position, the results of operations and cash flows
of the Company for the periods presented. It is suggested that these condensed
consolidated financial statements be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-KSB/A.

The results of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the full year.

Certain items in the condensed statement of operations for the three and nine
months ended June 30, 2000 have been reclassified to conform to the three and
nine months ended June 30, 2001 presentation.

NOTE 2 - EARNINGS/LOSS PER SHARE

Basic "Earnings Per Share" ("EPS") excludes dilution and is computed by dividing
earnings available to common stockholders by the weighted-average number of
common shares outstanding during the period. Diluted EPS assumes conversion of
dilutive options and warrants, and the issuance of common stock for all other
potentially dilutive equivalent shares outstanding. Dilutive shares were -0- and
50,108 for the three and nine months ended June 30, 2001 and 325,433 and 234,664
for the three and nine months ended June 30, 2000.

NOTE 3 - ACQUISITIONS

On October 27, 2000, the Company purchased substantially all of the tangible and
intangible assets, excluding accounts receivable, of seven offices of Tandem, a
division of Outsource International, Inc. The initial purchase price for the
assets was $125,000; of which $50,000 was paid in cash at the closing and the
remaining $75,000 was represented by a promissory note secured by the assets
purchased by the Company. The note was payable in twenty-four equal monthly
installments of principal and interest at a variable rate of prime plus two
percent beginning December 1, 2000. In January 2001, the Company exercised an
option to repay the outstanding balance of the note plus $175,000 in lieu of an
earnout payment of thirty percent of the Earnings Before Interest, Taxes,
Depreciation and Amortization ("EBITDA") of the acquired business for a two year
period. The excess of cost paid over net assets acquired resulted in goodwill of
$855,718, computed as follows:

<Table>
<S>                                                                   <C>
Net assets acquired
    Furniture and equipment                                           $  31,650
    Accrued holiday and vacation pay                                    (21,758)
                                                                      ---------
                                                                          9,892
                                                                      ---------

    Amounts paid
           Cash                                                          50,000
           Note payable                                                  75,000
           Earnout payable                                              175,000
           Finder's fees and other costs                                565,610
                                                                      ---------
                                                                        865,610
                                                                      ---------
    Excess of amounts paid over net assets acquired - goodwill        $ 855,718
                                                                      =========
</Table>


                                       4
<Page>

On January 2, 2001, the Company purchased substantially all of the tangible and
intangible assets of Cura Staffing, Inc. and The WorkGroup Professional
Services, Inc. The purchase price was $175,000 of which $100,000 was paid in
cash at the closing and the remaining $75,000 was represented by a 90-day
promissory note for $50,000 and $25,000 payable $5,000 a month beginning after
the payment of the 90-day promissory note. The promissory note bears annual
interest at 6%.

The excess of cost paid over net assets acquired resulted in goodwill of
$228,144, computed as follows:

<Table>
<S>                                                                   <C>
Net assets acquired
    Furniture and equipment                                           $  11,000
    Accrued holiday and vacation pay                                    (12,000)
                                                                      ---------
                                                                         (1,000)
                                                                      ---------

    Amounts paid
           Cash                                                         100,000
           Note and other payables                                       75,000
           Finder's fees and other costs                                 52,144
                                                                      ---------
                                                                        227,144
                                                                      ---------
    Excess of amounts paid over net assets acquired - goodwill        $ 228,144
                                                                      =========
</Table>

NOTE 4 - FACTORING AGREEMENT

The Company had a factoring agreement under which it was able to sell qualified
trade accounts receivable, with limited recourse provisions. The Company was
required to repurchase or replace any receivable remaining uncollected for more
than 90 days.

On December 12, 2000, the Company terminated its agreement with the factor. As
part of the termination agreement, the Company repurchased all accounts
receivable from the factor with proceeds from a new line of credit (see Note 5).

NOTE 5 - LINE OF CREDIT

On December 12, 2000, the Company entered into a loan and security agreement
with a lending institution whereby the Company can borrow up to 85% of eligible
accounts receivable, as defined, not to exceed $12 million. Borrowings under the
agreement bear interest at 1 1/2% above the prime rate and are collateralized by
substantially all of the Company's assets. Approximately $5,100,000 of the
initial borrowing under this agreement was used to repurchase accounts
receivable from the factor (see Note 4). The prime rate at June 30, 2001 was
6.75%.

NOTE 6 - CONVERTIBLE DEBT

On December 4, 2000, the Company issued $1,987,400 of convertible debt,
comprised of 6% convertible debentures ("Debentures"). The Debentures have a
maturity date of five years from issuance. Each debenture is convertible after
120 days from issuance into the number of shares of common stock determined by
dividing the principal amount of the debenture by the lesser of (a) $4.65 or (b)
75% of the average closing bid price of the common stock for the five trading
days immediately preceding the date of conversion.

In accordance with generally accepted accounting principles, the discount
arising from the 75% beneficial conversion feature, amounting to $662,000, is
considered to be interest expense and is recognized in the statement of
operations during the period from the issuance of the debt to the earliest time
at which the debt becomes convertible.

In April and May 2001, the Company redeemed $1,212,400 of the outstanding
convertible debt plus $188,110 redemption premium for cash and a holder
converted $50,000 of convertible debt plus accrued interest of $1,559


                                       5
<Page>

into 58,061 shares of the Company's common stock. In connection therewith, a
loss on extinguishment of debt of $34,756 was realized and is included in other
income (expense). The principal source of funds for the redemption was the
issuance of $1,356,002 of new convertible debt. The new convertible debt has
similar terms as the original issue. The discount arising from the seventy-five
percent (75%) beneficial conversion feature amounted to $452,000.

NOTE 7 - OTHER CHARGES

In the three months ended June 30, 2001, the Company discontinued negotiations
to sell the Engineering Division and discontinued efforts to acquire a certain
staffing company. In this connection, costs associated with these activities
were charged to operations. The Company also charged operations for costs
incurred in connection with various financing not obtained. The total charged to
operations for the foregoing was $288,912.

NOTE 8 - INCOME TAXES

There was no provision for income taxes for the nine months ended June 30, 2000,
because the Company has net operating loss carryforwards with a corresponding
valuation allowance against them. The income tax expense for the three months
ended June 30, 2001 is the result of an increase in the valuation allowance.

NOTE 9 - SUBSEQUENT EVENTS

a.    On June 26, 2001, the Company entered into an agreement to purchase
      63,025,000 ordinary shares, representing 26.4% of the outstanding shares
      of enterpriseAsia.com, a London AIM listed company, from Artisan (UK) plc
      ("Artisan"). In exchange, the Company agreed to issue to Artisan 850,837
      shares of the Company's Series A preferred stock. The Series A preferred
      stock pays cumulative dividends at $.21 per share per year, payable
      semi-annually, commencing on December 31, 2001. Beginning on October 1,
      2001 the preferred stock shares are convertible at the option of the
      holder into shares of the Company's common stock on a one-for-one basis.
      On June 30, 2008, the Company will be required to redeem any shares of
      Series A preferred stock outstanding at a redemption price of $3.00 per
      share together with accrued and unpaid dividends, payable, at the
      Company's option either in cash or in shares of common stock. As of August
      13, 2001, the exchange of shares has not yet been consummated.

b.    On July 3, 2001, the Company received $900,000 from Artisan.com Limited
      ("Artisan.com"), a company affiliated with Artisan, in exchange for
      900,000 shares of the Company's common stock. The transaction was in
      accordance with an agreement dated June 26, 2001 between the Company and
      Artisan.com. The agreement provides that the Company may offer and
      Artisan.com may buy additional shares of the Company's common stock not
      exceeding $1,200,000 between August 15, 2001 and December 31, 2001. The
      price per share is the average market price per share over the five
      trading days immediately preceding the issuance of the shares.

c.    In connection with the transactions with Artisan and Artisan.com, the
      Company agreed to issue 608,096 shares of its Series A preferred stock and
      30,000 shares of its common stock for finders' fees to third parties.

d.    On July 5, 2001, the Company redeemed $563,033 of the outstanding
      convertible debt. The total cash paid was $700,000 which included accrued
      interest of $24,360 and a redemption premium of $112,607. In connection
      with the redemption, a loss on extinguishments of debt of approximately
      $20,000 was realized.

e.    On July 27, 2001, the Company purchased substantially all of the tangible
      and intangible assets, excluding accounts receivable of eight offices of
      Source One Personnel, Inc. ("Source One"). The initial purchases price for
      the assets was $3.4 million, of which $200,000, in cash, and 400,000
      shares of Stratus Services Group, Inc. restricted common stock were paid
      at the closing and the remaining $2.4 million was represented by
      promissory notes. The first note, representing $600,000, is payable in one
      installment of $600,000 plus accrued interest at 7% per year, at 180 days
      after the closing. The second note, representing $1.8 million bears
      interest at 7% per year and is payable over a four-year period in equal
      quarterly payments beginning 120 days after the closing.


                                       6
<Page>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

This Form 10-Q contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements relate to future
economic performance, plans and objectives of management for future operations
and projections of revenue and other financial items that are based on the
beliefs of our management, as well as assumptions made by, and information
currently available to, our management. The words "expect", "estimate",
"anticipate", "believe", "intend", and similar expressions are intended to
identify forward-looking statements. Such statements involve assumptions,
uncertainties and risks. If one or more of these risks or uncertainties
materialize or underlying assumptions prove incorrect, actual outcomes may vary
materially from those anticipated, estimated or expected. Among the key factors
that may have a direct bearing on our expected operating results, performance or
financial condition are economic conditions facing the staffing industry
generally; uncertainties related to the job market and our ability to attract
qualified candidates; uncertainties associated with our brief operating history;
our ability to raise additional capital; our ability to achieve and manage
growth; our ability to successfully identify suitable acquisition candidates,
complete acquisitions or integrate the acquired business into our operations;
our ability to attract and retain qualified personnel; our ability to develop
new services; our ability to cross-sell our services to existing clients; our
ability to enhance and expand existing offices; our ability to open new offices;
general economic conditions; and other factors discussed from time to time in
our filings with the Securities and Exchange Commission. These factors are not
intended to represent a complete list of all risks and uncertainties inherent in
our business. The following discussion and analysis should be read in
conjunction with the Condensed Financial Statements and notes appearing
elsewhere in this report.

INTRODUCTION

We provide a wide range of staffing, engineering and productivity consulting
services nationally through a network of offices located throughout the United
States. We recognize revenues based on hours worked by assigned personnel.
Generally, we bill our customers a pre-negotiated, fixed rate per hour for the
hours worked by our temporary employees. We are responsible for workers'
compensation, unemployment compensation insurance, Medicare and Social Security
taxes and other general payroll related expenses for all of the temporary
employees we place. These expenses are included in the cost of revenue. Because
we pay our temporary employees only for the hours they actually work, wages for
our temporary personnel are a variable cost that increases or decreases in
proportion to revenues. Gross profit margin varies depending on the type of
services offered. Our Engineering Services division typically generates higher
margins while Staffing Services division typically generates lower margins. In
some instances, temporary employees placed by us may decide to accept an offer
of permanent employment from the customer and thereby "convert" the temporary
position to a permanent position. Fees received from such conversions are
included in our revenues. Selling, general and administrative expenses include
payroll for management and administrative employees, office occupancy costs,
sales and marketing expenses and other general and administrative costs.


                                       7
<Page>

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS ENDED JUNE 30, 2000

REVENUES. Revenues increased 64.7% to $14,596,631 for the three months ended
June 30, 2001 from $8,859,979 for the three months ended June 30, 2000. Revenues
increased primarily as a result of acquisitions.

GROSS PROFIT. Gross profit increased 20.5% to $2,833,932 for the three months
ended June 30, 2001 from $2,352,357 for the three months ended June 30, 2000.
Gross profit as a percentage of revenues decreased to 19.4% for the three months
ended June 30, 2001 from 26.6% for the three months ended June 30, 2000. This
decrease was due to lower gross profit percentages realized by the acquired
businesses as compared to our historical gross profit percentages.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses, not including depreciation and amortization, increased
64.3% to $3,173,451 for the three months ended June 30, 2001 from $1,930,927 for
the three months ended June 30, 2000. Selling, general and administrative
expenses, not including depreciation and amortization, as a percentage of
revenues decreased to 21.7% for the three months ended June 30, 2001 from 21.8%
for the three months ended June 30, 2000. The increase in the amount is
primarily attributable to acquisitions.

OTHER CHARGES. In the three months ended June 30, 2001, we discontinued
negotiations to sell our Engineering Division and discontinued our effort to
acquire a certain staffing company and we wrote off costs associated with those
activities. We also wrote off costs we incurred in connection with various
financing not obtained. The total of these costs were $288,912.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses increased
109.5% to $191,934 for the three months ended June 30, 2001 from $91,603 for the
three months ended June 30, 2000. Depreciation and amortization as a percentage
of revenues increased to 1.3% for the three months ended June 30, 2001 from 1.0%
for the three months ended June 30, 2000. The increase was primarily due to the
amortization of goodwill associated with the acquisitions in June 2000, October
2000 and January 2001, and the impact of increased capital expenditures.

FINANCE CHARGES. Finance charges were the amounts charged under an agreement
with a factor, which was terminated on December 12, 2000. Accordingly, there
were no finance charges for the three months ended June 30, 2001. Finance
charges were $93,565 for the three months ended June 30, 2000 or 1.1% of
revenues.

INTEREST AND FINANCING COSTS. Interest and financing costs increased to $592,331
for the three months ended June 30, 2001 from $82,162 for the three months ended
June 30, 2000. Included in the amount for the three months ended June 30, 2001
is $328,767, which is the portion of the discount on the beneficial conversion
feature of convertible debt issued on December 4, 2000 and April 4, 2001.
Interest and financing costs, not including the discount on the beneficial
conversion feature of convertible debt, as a percentage of revenue increased to
1.8% for the three months ended June 30, 2001 from 0.9% for the three months
ended June 30, 2000. The increase was primarily attributable to the line of
credit agreement which replaced the agreement with the factor (see "Finance
Charges" above) on December 12, 2000.

INCOME TAXES. Income tax expense of $88,000 for the three months ended June 30,
2001 is the result of a change in judgment about the realizability of deferred
tax assets.

NET EARNINGS (LOSS). As a result of the foregoing, we had a net loss of
($1,524,508) for the three months ended June 30, 2001 compared to net earnings
of $177,896 for the three months ended June 30, 2000.


                                       8
<Page>

NINE MONTHS ENDED JUNE 30, 2001 COMPARED TO NINE MONTHS ENDED JUNE 30, 2000

REVENUES. Revenues increased 85.1% to $47,717,198 for the nine months ended June
30, 2001 from $25,785,217 for the nine months ended June 30, 2000. Revenues
increased primarily as a result of acquisitions and the growth of our
SMARTSolutions(TM) division.

GROSS PROFIT. Gross profit increased 49.4% to $10,070,714 for the nine months
ended June 30, 2001 from $6,740,212 for the nine months ended June 30, 2000.
Gross profit as a percentage of revenues decreased to 21.0% for the nine months
ended June 30, 2001 from 26.1% for the nine months ended June 30, 2000. This
decrease was due to a decrease in the gross profit percentage being generated by
our Engineering Division and lower gross profit percentages realized by the
acquired businesses as compared to our historical gross profit percentages.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses, not including depreciation and amortization, increased
101.7% to $10,862,359 for the nine months ended June 30, 2001 from $5,384,197
for the nine months ended June 30, 2000. Selling, general and administrative
expenses, not including depreciation and amortization, as a percentage of
revenues increased to 22.8% for the nine months ended June 30, 2001 from 20.9%
for the nine months ended June 30, 2000. The increase is primarily attributable
to costs associated with the integration of the acquisitions, increase in credit
losses and additional management and other costs in anticipation of future
growth and acquisitions.

OTHER CHARGES. See three months ended June 30, 2001 compared to three months
ended June 30, 2000.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses increased
134.1% to $533,681 for the nine months ended June 30, 2001 from $237,355 for the
nine months ended June 30, 2000. Depreciation and amortization as a percentage
of revenues increased to 1.1% for the nine months ended June 30, 2001 from 0.9%
for the nine months ended June 30, 2000. The increase was primarily due to the
amortization of goodwill associated with the acquisitions in June 2000, October
2000 and January 2001, and the impact of increased capital expenditures.

FINANCE CHARGES. Finance charges were the amounts charged under an agreement
with a factor, which was terminated on December 12, 2000. Finance charges
decreased 73.0% to $100,934 for the nine months ended June 30, 2001 from
$373,356 for the nine months ended June 30, 2000. As a percentage of revenues,
finance charges decreased to 0.2% for the nine months ended June 30, 2001, from
1.4% for the nine months ended June 30, 2000. This decrease was due to the
agreement being terminated December 12, 2000.

INTEREST AND FINANCING COSTS. Interest and financing costs increased to
$1,627,844 for the nine months ended June 30, 2001 from $278,849 for the nine
months ended June 30, 2000. Included in the amount for the nine months ended
June 30, 2001 is $979,129, which is the portion of the discount on the
beneficial conversion feature of convertible debt issued on December 4, 2000 and
April 4, 2001. Interest and financing costs, not including the discount on the
beneficial conversion feature of convertible debt, as a percentage of revenue
increased to 1.4% for the nine months ended June 30, 2001 from 1.1% for the nine
months ended June 30, 2000. The increase was primarily attributable to the line
of credit agreement which replaced the agreement with the factor (see "Finance
Changes" above) on December 12, 2000.

NET EARNINGS (LOSS). As a result of the foregoing, we had a net loss of
($3,363,657) for the nine months ended June 30, 2001 compared to net earnings of
$495,435 for the nine months ended June 30, 2000.


                                       9
<Page>

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2001, we had limited liquid resources. Current liabilities were
approximately $11.5 million and current assets were approximately $10.5 million.
The difference of approximately $1.0 million is a working capital deficit which
is primarily the result of the losses we had during the last two quarters. This
situation has also made it difficult for us to make timely payments to our
vendors.

We believe that our liquidity position is currently manageable, but the working
capital deficit will remain until additional capital is raised.

Net cash used in operating activities was $1,102,064 and $2,158,049 in the nine
months ended June 30, 2001 and 2000, respectively. The change in operating cash
flow was primarily a result of a net increase of $2,062,000 in net (loss)
adjusted by non-cash items, including depreciation, amortization and imputed
interest. This change was substantially offset by the change in the working
capital component "due from factor/accounts receivable" which resulted from the
replacement of our prior factoring agreement with a line of credit and the
increase in payroll taxes payable and accounts payable and accrued expenses.
Approximately $1,200,000 of the net proceeds from the initial public offering
(IPO) in April 2000 was used to reduce trade and other payables in the nine
months ended June 30, 2000.

Net cash used in investing activities was $1,755,829 and $1,691,632 in the nine
months ended June 30, 2001 and 2000, respectively. Cash used for acquisitions
was $976,512 and $1,002,408 in the nine months ended June 30, 2001 and 2000,
respectively. The balance in both periods was primarily for capital
expenditures.

Net cash provided by financing activities was $1,1911,024 and $4,583,879 in the
nine months ended June 30, 2001 and 2000, respectively. We had net borrowings of
$865,104 under the line of credit obtained on December 12, 2000. We also
received net proceeds less redemptions of $1,282,398 from the issuance of
convertible debt and $398,000 from loans and the issuance of common stock in the
nine months ended June 30, 2001. We used $265,125 to purchase treasury stock and
$320,395 to reduce our notes payable acquisitions in the nine months ended June
30, 2001. Net proceeds of the IPO in the nine months ended June 30, 2000 were
$6,063,479, of which $1,125,000 was used to repay notes and loans payable and
$250,000 was used to purchase treasury stock.

Our principal uses of cash are to fund temporary employee payroll expense and
employer related payroll taxes; investment in capital equipment; start-up
expenses of new offices; expansion of services offered; and costs relating to
other transactions such as acquisitions. Temporary employees are paid weekly.

In December 2000, we sold $1,987,400 of 6% convertible debentures in a private
offering. The debentures mature in December 2005 and are convertible commencing
in April 2001 into a number of shares, which is determined by dividing the
principal amount by the lesser of (a) $4.65 or (b) 75% of the average closing
bid price of the common stock for the five trading days immediately preceding
the conversion.

On December 12, 2000, we entered into a loan and security agreement with a
lending institution which replaced our prior factoring arrangement and provides
for a line of credit up to 85% of eligible accounts receivable, as defined, not
to exceed $12,000,000. Advances under the credit agreement bear interest at a
rate of prime plus one and one-half percent (1 1/2 %). The credit agreement
restricts our ability to incur other indebtedness, pay dividends and repurchase
stock. Borrowings under the agreement are collateralized by substantially all of
our assets.

Because we have a working capital deficit, we need to raise additional capital
to continue our operations. We are currently seeking sources of capital to
eliminate the working capital deficit. There can be no assurance that we will be
able to obtain additional capital at acceptable rates. If we cannot raise
additional capital, we will seek other alternatives such as the sale of assets.

SEASONALITY


                                       10
<Page>

Our business follows the seasonal trends of our customers business.
Historically, Staffing Services has experienced lower revenues in the first
calendar quarter with revenues accelerating during the second and third calendar
quarters and then starting to slow again during the fourth calendar quarter.

SMARTSolutions(TM) and Engineering Services do not experience the same level of
seasonality associated with Staffing Services.

IMPACT OF INFLATION

We believe that since our inception, inflation has not had a significant impact
on our results of operations.


                                       11
<Page>

ITEM 2 - CHANGES IN SECURITIES

In June 2001, we agreed to issue 1,458,933 shares of Series A preferred stock to
Artisan (UK) plc ("Artisan") in exchange for 1,458,933 ordinary shares of
enterpriseASIA.com, a London AIM listed company. Upon issuance, holders of the
Series A preferred stock are entitled to cumulative dividends of $.21 per share
per annum, payable semi-annually, commencing December 31, 2001. Holders of the
Series A preferred stock will vote with the holders of Common Stock as a single
class based upon the number of shares of common stock into which the Series A
preferred stock is then convertible, and will be entitled to vote as a separate
class on certain specified matters. Beginning on October 1, 2001, the Series A
preferred shares are convertible at the option of the holder into shares of
common stock on a one-for-one basis. Until such time as the Company obtains
stockholder approval pursuant to the rules of the Nasdaq Stock Market of the
issuance of the full amount of shares issuable upon conversion, the Company may
not issue more than 1,221,712 shares upon conversion of the Series A preferred
stock. We have agreed to register the shares issuable upon conversion of the
Series A preferred stock for public resale under the Securities Act of 1933.

In July 2001, we sold 900,000 shares of common stock to Artisan.com Limited, an
affiliate of Artisan, at an aggregate purchase price of $900,000. We have agreed
to register these shares for public resale under the Securities Act of 1933. If
the registration statement is not effective within 120 days of the issuance of
the common stock, the Company will be required to pay Artisan.com Limited of an
amount equal to 2% of the purchase price for each month thereafter that the
registration is not effective.

In connection with the transactions described above, we have agreed to issue
1,824,288 shares of Series A preferred stock and 30,000 shares of common stock
as finders fees to third parties.

Each of the transactions described above was made in reliance upon the exemption
provided by Section 4(2) of the Securities Act of 1933 as a transaction not
involving a public offering.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

We are subject to the risk of fluctuating interest rates in the ordinary course
of business for borrowings under our Loan and Security Agreement with Capital
Tempfunds, Inc. This credit agreement provides for a line of credit up to 85% of
eligible accounts receivable, not to exceed $12,000,000. Advances under this
credit agreement bear interest at a rate of prime plus one and one-half percent
(1 1/2 %).

We believe that our business operations are not exposed to market risk relating
to foreign currency exchange risk, commodity price risk or equity price risk.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

The Company held its 2001 Annual Meeting of Shareholders (the "Meeting") on May
1, 2001. At the Meeting, shareholders were asked to reelect Joseph J. Raymond as
Director, Michael J. Rutkin as Director, Harry Robert Kingston as Director,
Donald W. Feidt as Director, and Sanford I. Feld as Director until the 2002
annual meeting. In addition, the shareholders were asked to approve the 2001
Equity Incentive Plan and to approve the issuance to the holders of the
Company's 6% Convertible Debentures due December 1, 2005 (the "6% Debentures")
of the full number of shares of Common Stock, $.01 par value per share ("Common
Stock"), to which such holders are entitled upon conversion of the 6%
Debentures.


                                       12
<Page>

<Table>
<Caption>
                                                                                                     Broker
                                        For            Against      Withheld       Abstain         Non-Votes
<S>                                   <C>               <C>          <C>           <C>             <C>
Joseph J. Raymond                     4,125,636                      44,971
Michael J. Rutkin                     4,125,636                      44,971
Harry Robert Kingston                 4,125,636                      44,971
Donald W. Feidt                       4,125,636                      44,971
Sanford I. Feld                       4,125,636                      44,971

Adoption of the 2001 Equity           2,538,587        103,329                      24,967         1,503,774
Incentive Plan

Approval of the Issuance of
Common Stock Upon Conversion          2,393,480         80,029                     193,324         1,503,774
of 6% Debentures
</Table>

ITEM 5 - OTHER INFORMATION

None.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits

Number      Description
------      -----------

2.1         Asset Purchase Agreement, dated July 27, 2001, by and between
            Stratus Services Group, Inc. and Source One Personnel, Inc. (1)

3           Certificate of Designation, Preferences and Rights of Series A
            Preferred Stock

4.1         Agreement dated as of June 26, 2001 between Stratus Services Group,
            Inc. and Artisan (UK) plc

4.2         Subscription Agreement dated as of June 26, 2001 between Stratus
            Services Group, Inc. and Artisan.com Limited

10.1        Non-Competition Agreement, dated July 27, 2001, between Stratus
            Services Group, Inc. and Source One Personnel, Inc. (1)

10.2        Promissory Note and Security Agreement in the amount of $600,000,
            dated as of July 27, 2001, issued by Stratus Services Group, Inc. to
            Source One Personnel Services, Inc. (1)

10.3        Promissory Note and Security Agreement in the amount of $1.8
            million, dated as of July 27, 2001, issued by Stratus Services
            Group, Inc. to Source One Personnel, Inc. (1)

(b)         Reports on Form 8-K

            On August 9, 2001, the Company filed Form 8-K with the Securities
            and Exchange Commission reflecting the July 27, 2000 purchase of
            certain assets of Source One Personnel, Inc.

----------
Footnote 1  Incorporated by reference to similarly numbered Exhibits filed on
            Form 8-K (Commission File No. 001-15789) as filed with the
            Securities and Exchange Commission on August 9, 2001.


                                       13
<Page>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        STRATUS SERVICES GROUP, INC


Date: August 14, 2001                   By: /s/ Joseph J. Raymond
                                           -------------------------------------
                                            Joseph J. Raymond
                                            Chairman of the Board of Directors,
                                            President and Chief Executive
                                            Officer

Date:  August 14, 2001                  By: /s/ Michael A. Maltzman
                                           -------------------------------------
                                            Michael A. Maltzman
                                            Chief Financial Officer
                                            (Principal Financial and Accounting
                                            Officer)


                                       14