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

FORM 10-Kx ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
ORo TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to

Commission file number 000-21407
LASON, INC.
(Exact name of registrant as specified in its charter)

|                                         |  |                       
|---------------------------------------- |  | ----------------------
|DELAWARE                                 |  | 38-3214743            
|(State or other jurisdiction of          |  | (I.R.S. Employer      
|incorporation or organization)           |  | identification number)
|                                        
|1305 Stephenson Highway, Troy, Michigan  |  | 48083                 
|(Address of principal executive offices) |  | (Zip Code)            

Telephone: (248) 837-7100
(Registrants telephone number, including area code)



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Securities Registered Pursuant to Section 12(b) of the Exchange Act:None

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

Common Stock, Par Value $0.01 per share
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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 o No x

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. o

State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within 60 days prior to the date of the filing:

There is currently no market for registrants common stock.

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes o No x

Indicate by check mark whether the registrant has filed all documents and
report required to be filed by Sections 12,13,or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes o No x

As of March 28, 2003, 30,000,000 shares of Common Stock, $.01 par value
were reserved for issuance according to the Companys Plan of Reorganization
and 45,000 shares were issued and outstanding.

Portions of the definitive 2003 Proxy Statement which is required to be
filed with the Securities and Exchange Commission pursuant to Regulation 14A in
connection with a 2003 Annual Meeting of Stockholders are incorporated by
reference into Part III as set forth in Part III. Such definitive Proxy
Statement or an amendment to this report on Form 10-K containing the
information to be incorporated by reference will be filed with the Commission
not later than 120 days after the conclusion of registrants fiscal year ended
December 31, 2002.



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TABLE OF CONTENTS



|                                                                                          |  |  |  |  |  |  |  | 
|----------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|FORWARD-LOOKING STATEMENTS                                                               
|PART I                                                                                   
|PART II                                                                                  
|PART III                                                                                 
|SIGNATURES                                                                               
|POWER OF ATTORNEY                                                                        
|CERTIFICATION                                                                            
|INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
|CONSOLIDATED BALANCE SHEETS                                                              
|CONSOLIDATED STATEMENT OF INCOME                                                         
|CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY                                
|CONSOLIDATED STATEMENT OF CASH FLOWS                                                     
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                               
|EXHIBIT INDEX                                                                            
|Credit Agreement Between Bank One, N.A.                                                  
|CEO and CFO Certification Pursuant to Section 906                                        



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FORWARD-LOOKING STATEMENTS

Lason may from time to time provide information including certain
statements included in or incorporated by reference in this Form 10-K which
constitute 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. Those forward-looking statements include the intent,
belief or current expectations of the company and its management. Prospective
investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve a number of risks and
uncertainties, and that actual results could differ materially from those
indicated by such forward-looking statements. Among the important factors that
could cause actual results to differ materially from those indicated by such
forward looking statements are: (1) important information is of a preliminary
basis and subject to further adjustment, (2) the assimilation of business
units, (3) the economic, political and regulatory environment, (4) competitive
risks and uncertainties, (5) dependence on key customers and management, (6)
fluctuations in paper prices, (7) price and availability of qualified temporary
labor, (8) reliability of Company data, (9) changes in the business outsourcing
industry, (10) managements ability to implement its business plan, (11) the
financial and legal effect of any outstanding litigation, (12) ultimate
resolution and settlement of administrative and priority claims, including
priority tax claims, whether known or unknown as a result of the Companys
previous Chapter 11 filing, (13) status of the Companys financing, (14) other
important factors beyond the control of Lason and (15) other risks identified
from time to time in the Companys reports and registration statements filed
with the Securities and Exchange Commission. Actual future results may vary
significantly from those set forth herein.




PART I

ITEM 1: BUSINESS

Background

Lason, Inc., a
Delaware Corporation was formed in 1995. In October 1996,
the Company became publicly-traded through an initial public offering. During
the period of 1996 through 1999, the Company completed approximately 76
acquisitions. These acquisitions were financed primarily through the issuance
of secured debt. As a result, Lasons total debt increased from approximately
$21 million to approximately $320 million during this period.

Around December 1999, as a result of the acquisitions and earnout payments
owed under such acquisitions, the Company began experiencing operational and
financial difficulties. These difficulties continued and culminated in the
Company and certain of its direct and indirect North American subsidiaries
filing on December 5, 2001, (the Petition Date) a voluntary petition to
reorganize under Chapter 11 of the United States Bankruptcy Code
for the
United States Bankruptcy Court for the District of Delaware in Wilmington.

On April 30, 2002, the Bankruptcy Court approved the Companys Plan of
Reorganization. On May 17, 2002, the Bankruptcy Court entered an order
confirming the First Amended Joint Plan of Reorganization of Lason, Inc. and
its Subsidiary Debtors, as modified (the Plan). From the Petition Date to
June 30, 2002, the Company and the applicable direct and indirect subsidiaries
operated the business as debtors-in-possession under the Bankruptcy Code. On
July 1, 2002, (the Effective Date) the Company and the North American
subsidiaries emerged from proceedings under Chapter 11 of the Bankruptcy Code
pursuant to the terms of the Plan.

Generally, under the Plan, the Companys senior secured lenders have
agreed to write-off in excess of $170 million of the Companys debt. The
Companys old outstanding common stock, effective on July 1, 2002, was canceled
and new shares in Lason are to be issued. Approximately 87.5% of the new
shares (26,250,000 shares) will be issued to the Companys unsecured creditors,
including its senior secured lenders, and 12.5% of the new shares (3,750,000
shares) will be issued to the Companys management team pursuant to the
Executive Management Incentive Plan.

In addition, pursuant to the Plan, the Company entered into a new Credit
Agreement dated as of June 30, 2002 pursuant to which it issued Senior Notes to
its senior secured lenders in an amount equal to $90 million, maturing five
years after the Effective Date and bearing interest at the prime rate of Bank
One, NA plus 2.5% (floating). The amount of the Senior Notes was reduced by
proceeds of asset sales by the Company from November 1, 2001 to the Effective
Date. As of December 31, 2002, the amount outstanding under the Senior Notes
is $45.9 million. In addition, on the Effective Date, the Company issued a
Junior Note in the principal amount of $3.1 million to certain key managers
(who are also ex-owners of businesses acquired by the Company) in full
satisfaction of their claims against the Company. The Junior Note is a non-

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interest bearing, unsecured note, maturing within five years following the
Effective Date. The Junior Note is supported by an Indenture Agreement dated
as of June 30, 2002. For further details regarding the Senior Notes, the
Credit Agreement, the Junior Notes and the Indenture Agreement, see Part II 
Item 7 Managements Discussion and Analysis of Financial Condition and Results
of Operations below.

General

Lason is a leading provider of integrated information outsourcing
solutions through in excess of 60 locations and facilities management sites in
26 states, India, China (service relationship), Mexico and Canada. The Company
serves over 5,500 active customers primarily in the healthcare, financial
services, government and manufacturing and industrial vertical markets. The
Companys core competency resides in its ability to enhance the performance of
its customers business by outsourcing their non-core business processes and
back office operations. The Companys primary services are data, document and
image capture, web-based document repository services via its Document DNA
(digital network access) product, analog services, on-site facilities
management, print and mail type services, database management and other
professional services. The Companys service capabilities across a broad range
of data and media types allows its customers to fulfill their business process
and information outsourcing needs with a single vendor regardless of geography.
Lasons capability to capture, manage and output information includes both
traditional and digital services that support customer migration to new
technologies including internal-based applications.

The Companys strategy is to be a value-added business partner to its
customers by leveraging its integrated business process outsourcing
capabilities across a broad geographical spectrum to continually assist them in
reducing their information management and back office costs and minimize their
on-going technology and capital requirements. Key components to this strategy
are the Companys strategically located off-shore capabilities and solution
offerings, such as Document DNA (its web-based document repository), which
allow it to fulfill customers business process outsourcing needs cost
effectively twenty-four hours a day, seven days a week.

Solutions and Services

Lason enables organizations to secure their decisions and their future by
improving business processes through outsourced services in industries that are
data and document intensive such as, financial services and healthcare where
accuracy, privacy and security are top concerns. Lasons solutions are
uniquely customized to provide its customers with substantial and identifiable
cost savings. Lasons integrated suite of solutions utilizes the latest
technology surrounding data input, scanning, digital storage, retrieval and
delivery of sensitive data and documents to increase the efficiency and
effectiveness of back-office and administrative functions.

The Company employs a broad range of services in delivering its
customized business process solutions including electronic conversion services,
electronic document storage and retrieval, database management, web-based
services, micrographic conversion services, high-volume, quick turnaround
reprographics and on-site facilities management.

A key part of Lasons integrated approach is Document DNA. Document DNA
is a unique browser based data and document management service that improves
information accessibility and enhances workflow in business processes. This
proven, encrypted system handles billions of documents, stores virtually any
type of data or document and enables secure and instant access to critical
information  all conveniently at a clients desktop.

Fresh Start Reporting and Factors that Affect Comparability of Financial
Information

As previously disclosed, the Debtors emerged from Chapter 11 bankruptcy
proceedings on July 1, 2002, which for financial reporting purposes, the
Company deemed the Effective Date of the Plan. Fresh start reporting has been
implemented as of the Effective Date and accordingly, at such date, all assets
and liabilities of the Debtors were restated to their respective fair values.
See Note 3 to the consolidated financial statements, included elsewhere in this
Form 10-K, for a discussion of the fresh start adjustments. For financial
reporting purposes references to Predecessor refer to Old Lason on and
prior to June 30, 2002. References to Successor refer to New Lason on and
after July 1, 2002, after giving effect to the implementation of fresh start
reporting. Successor financial statements are therefore not comparable to
Predecessor financial statements.

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The accompanying consolidated financial statements of Lason, Inc.
(together with its subsidiaries, Lason or the Company) have been prepared
in conformity with generally accepted accounting principles for financial
information, but not in conformity with the instructions for Form 10-K of
Regulation S-K and S-X, as the Company has not presented information for the
twelve months ending December 31, 2002, 2001, and 2000.

As previously disclosed in the Companys Form 8-K filed, on March 26,
2001, the Company informed the U.S. Securities and Exchange Commission (SEC)
and U.S. Attorney for the Eastern District of Michigan of accounting
irregularities and system deficiencies that affected certain portions of the
Predecessors financial statements. Some of these items were material to the
Predecessors financial statements for at least the third quarter of 1999 and
may also have been material to statements for other periods. The
irregularities and deficiencies were found in accounting records of the
Companys North American operations.

A Special Committee of the Companys Board of Directors determined that
these irregularities and deficiencies may have occurred during some periods
between late 1997 and 1999. The Committee also found that the Predecessors
financial statements for at least the third quarter of 1999 requires
restatement. The Committee and Company do not believe that any such
irregularities have extended beyond the first half of 2000. The extent of any
misstatements is still being investigated and evaluated by the Company. As a
result, the Predecessors financial statements for the years ended December 31,
2001 and December 31, 2000 have not been reviewed or audited by an independent
public accounting firm and do not reflect the impact resulting from the
correction of, if any, accounting irregularities or system deficiencies, which
are under investigation. As such, the Company has not provided financial
information in this Form 10-K for the twelve months ended December 31, 2002,
2001, and 2000. Accordingly, the discussion of results of operations and
liquidity and capital resources is limited to the six month period ended
December 31, 2002 or subsequent periods. As a result of adopting fresh start
reporting, the Company believes the ultimate effects, if any, from the alleged
accounting irregularities during 1997  1999, as discussed above, have been
eliminated in the Successors financial statements as of and for the six month
period ended December 31, 2002.

Customers

The Company currently has over 5,500 active customers primarily in the
healthcare, financial services, governmental, transportation, manufacturing,
retailing and professional services vertical markets. The Company services
accounts of all sizes, from small business and professional groups to Fortune
100 companies. No single customer accounted for more than ten percent of the
Companys total consolidated net revenues for the six month period ended
December 31, 2002.

Competition

The business process outsourcing industry, in which the Company competes,
is a highly fragmented and competitive industry. A significant source of
competition is the in-house document handling capability of the Companys
target customer base. In addition, with respect to those services that are
outsourced, the Company has a variety of competitors, including large national
or multinational companies, which vary by market segment and services provided,
and small regional or local companies. The Companys businesses compete on the
basis of price, service, quality, security, and innovation. As a result of
this competitive environment we may lose customers or have difficulty acquiring
new customers, which may adversely affect our operations.

Proprietary Rights and Processes

The Company regards the systems, workflow capabilities, information and
know-how underlying its services as proprietary and relies primarily on a
combination of contract, trade secrets, confidentiality agreements and
contractual provisions to protect its rights. The Companys business is not
materially dependent on any patents. Despite the Companys efforts to protect
its proprietary rights, unauthorized parties may attempt to obtain and use
information that the Company regards as proprietary, and policing unauthorized
use of the Companys proprietary information is difficult. Litigation may be
necessary for the Company to protect its proprietary information and could
result in substantial cost to, and diversion of resources by, the Company.

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Environmental Matters

The Company is subject to federal, state and local laws, regulations and
ordinances that: (i) govern activities or operations that may have adverse
environmental effects, such as discharges to air and water, as well as handling
and disposal practices for solid and hazardous wastes; or (ii) impose liability
for the costs of cleaning up, and certain damages resulting from, sites of past
spills, disposal or other release of solid wastes and hazardous substances.

The Company is not aware of any environmental conditions that would be
likely to have a material adverse effect on the business, financial condition
or results of operations of the Company. However, there can be no assurance
that environmental liabilities in the future will not have a material adverse
effect on the business, financial condition or results of operations of the
Company.

Employees

As of March 28, 2003, the Company had approximately 3,500 employees,
including approximately 1,600 in foreign countries. No domestic employees of
the Company are represented by a labor union, however, some foreign employees
are represented by local labor unions in certain countries. The Company
considers its relationship with its employees to be good. The Company further
has a relationship and access to an additional 4,800 individuals (i.e.,
business associates) located in certain foreign countries.

Executive Officers of the Registrant

The following table sets forth certain information concerning the
Companys executive officers as of March 28, 2003:

|                   |  |     |    |  |          |                                                                                         |  |  |      | 
|------------------ |  | --- | -- |  | -------- | --------------------------------------------------------------------------------------- |  |  | ---- | 
|Name               |  | Age |    |  | Position | Executive Officer Since                                                                 | 
|                   |  |     |    |  |          |                                                                                         | 
|Ronald D. Risher   |  |     | 46 |  |          | President, Chief Executive Officer and Director                                         |  |  | 2001 | 
|                   |  |     |    |  |          |                                                                                         |  |  |      | 
|Douglas S. Kearney |  |     | 34 |  |          | Executive Vice President, Chief Financial
Officer and Secretary                         |  |  | 2001 | 
|                   |  |     |    |  |          |                                                                                         |  |  |      | 
|Michael H. Riley   |  |     | 55 |  |          | Executive Vice President, President Imaging
Services and Products Division              |  |  | 2001 | 
|                   |  |     |    |  |          |                                                                                         |  |  |      | 
|Mark J. Clinton    |  |     | 43 |  |          | Executive Vice President, President of Data
Capture Services Division                   |  |  | 2002 | 
|                   |  |     |    |  |          |                                                                                         |  |  |      | 
|Thomas W. Denomme  |  |     | 42 |  |          | Executive Vice President, Chief Information
Officer, President Output Services Division |  |  | 2001 | 
|                   |  |     |    |  |          |                                                                                         |  |  |      | 
|Kenneth L. Shaw    |  |     | 55 |  |          | Executive Vice President of Human Resources                                             |  |  | 2001 | 

Ronald D. Risherwas appointed President, Chief Executive Officer and Director
in May 2001. Mr. Risher joined the Company in November 2000 as
its Executive Vice President and Chief
Financial Officer. Prior to joining the Company, Mr. Risher was a founder and a
principal of Franklin Advisors, L.L.C., a Michigan limited liability company
formed in 2000 providing executive management and consulting services. From
1983 to 1999, Mr. Risher was the Vice President, Corporate Controller,
Treasurer and Secretary of Thorn Apple Valley, Inc., a producer of processed
meat and poultry. From 1978 to 1983, Mr. Risher was employed by Price
Waterhouse performing assurance services on various organizations. Mr. Risher
is a graduate of Western Michigan University and is a Certified Public
Accountant.

Douglas S. Kearneywas appointed Chief Financial Officer in July 2002. Mr.
Kearney served as the Companys Interim Chief Financial Officer since May 2001.
From May 2000 to July 2002, Mr. Kearney was employed by Conway, MacKenzie &
Dunleavy (CMD), a leading Michigan-based crisis management and turnaround
consulting firm. From January 1999 to May 2000, Mr. Kearney worked in the Corporate
Financial Analysis and Activities department of DaimlerChrysler Corporation,
the U.S. subsidiary of one of the worlds leading automotive companies. Prior
to 1999, Mr. Kearney was a Senior Manager in the Business Advisory Services
practice of PricewaterhouseCoopers. Mr. Kearney has over 10 years experience,
including his tenure with CMD, providing financial, operational and strategic
assistance as senior management of Fortune 500 and middle market businesses,
either as an outside consultant or as part of the internal management team. Mr.
Kearney is a graduate of the University of Michigan, is a Certified Public
Accountant and received his MBA from Yale University.

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Michael H. Rileywas appointed Executive Vice President, President of Lasons
Imaging Services and Products Division in September, 2001. Mr. Riley was
previously the Executive Vice President of this division, as well as
responsible for all of Lasons strategic marketing efforts. Mr. Riley joined
Lason in 1997 as part of the Image Conversion Systems acquisition where he
served as Executive Vice President. Prior to joining Image Conversion Systems,
Mr. Riley served in positions including President of the Strategic Partners
Group and Senior Vice President of Marketing and Product Development of
Anacomp, Inc. Mr. Riley recently served a three-year term on the board of
directors of AIIM, the prominent industry trade group. Mr. Riley holds a
liberal arts degree from the University of Massachusetts.

Mark J. Clintonwas appointed Executive Vice President and President of Lasons
Data Capture Services Division in December 2002. Mr. Clinton was previously
the President of Master Data Center, a leading global provider of intellectual
property management software and an application service provider (ASP), since
1993. Prior to becoming President of Master Data he was Vice President of
Operations. Prior to joining Master Data Center, Mr. Clinton held several key
management positions with Accenture, a world leading management and technology
services organization specializing in customer relationship management, supply
chain management, business strategy, technology and outsourcing, from 1984 to
1991. Mr. Clinton holds a BS in Mathematics and an MBA in Finance from the
University of Michigan.

Thomas W. Denommewas appointed Executive Vice President, Chief Information
Officer and President of Lasons Output Services Division in July, 2002.
Prior to joining Lason in December 2000, Mr. Denomme was a principal with
Franklin Advisors, L.L.C., a Michigan limited liability company, formed in 2000
providing executive management and consulting services. Mr. Denomme previously
was employed by IBP, Inc. from 1986 to 2000. During this period of time he held
various operational, financial, and strategic positions including Vice
President and Controller of IBP Foods Inc., a subsidiary of IBP, Inc., Vice
President of Product Management, and Vice President of Planning and Integration
at Thorn Apple Valley, Inc., which was acquired by IBP in 1999. Mr. Denomme holds
an executive MBA from Michigan State Universitys Advanced Management Program.

Kenneth L. Shawhas served as Executive Vice President of Human Resources since
he joined the Company in 2001. Mr. Shaw was previously employed by IBP, Inc.
from 1981 to 2001. During this period of time he held various human resource
positions including the responsibility of Corporate Director of Human Resources
for Thorn Apple Valley, Inc. which was acquired by IBP, Inc. in 1999. Prior to
joining IBP, Inc. Mr. Shaw had been employed by Burlington Industries, Inc. in
various human resource management assignments for approximately eight years. He
holds a bachelors degree in Social Science from Elon University in North
Carolina. He served as an assistant district executive with the Boy Scouts of
America following his graduation from college and is currently a member of the
Society of Human Resources Management (SHRM).

Risk Factors

If any of the following risks actually occur, our business, financial
condition or results of operations could be negatively impacted. You should
also refer to the other information contained in this report and incorporated
in this report by reference, including our consolidated financial statements
and the related notes.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Volatility of Available Temporary Labor and Paper Prices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | The Company is dependent primarily upon two basic supplies:
temporary labor and paper. The Company uses and relies on temporary labor
to manage fluctuations in its business. The supply and price of available
and trained temporary labor is dependent upon general economic conditions
that are beyond the Companys control. There can be no assurance that the
Company will continue to have access to the trained temporary labor
necessary to manage its business as it would expect, nor assurance that it
will be available at the prices the Company would like. Further, the
price of paper can be highly volatile. There can be no assurance that the
price of paper will not change in the future. Any significant price
increase in either temporary labor or paper that cannot be passed on to
customers or a shortage in the supply of available temporary labor could
have a material adverse effect on the Companys business, financial
condition or results of operations.
|
| | Effect of Potential Fluctuations in Quarterly Operating Results;
Seasonality                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | The Company has experienced, and in the future may experience,
significant quarter to quarter fluctuations in its operating results.
Quarterly operating results may fluctuate as a result of a variety of
factors, including but not limited to, the size and timing of customer
contracts, changes in customer budgets, variations in the cost of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | temporary labor and paper, the integration of acquired businesses
into the Companys operations, the demand for the Companys services, the
timing and introduction of new services, the market acceptance of new
services, the introduction and timing of new services by the Companys
competitors, competitive conditions in the industry and general economic
conditions. The Companys businesses are also typically seasonal as sales
and profitability are typically lower during the fourth quarters of the
year. Negative trends or variations in these items could have a material
adverse effect on the Companys business, financial condition or results
of operations.                                                                                                                                                                                                                                                                                                                    
|
| | Importance of Continued Development of New Services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | The introduction of competing services incorporating new technologies
and the emergence of new technical standards could render some or all of
the Companys services unmarketable. The Company believes that its future
success depends upon its ability to enhance its current services and
develop new services that address the increasingly sophisticated needs of
its customers. The failure of the Company to continue to service its
customers, develop and enhance its existing services and introduce new
services in a timely and cost effective manner in response to changing
technologies, competition and customer requirements could have a material
adverse effect on the Companys business, financial condition or results
of operations.                                                                                                                                                                                                                                            
|
| | Potential Liability for Unauthorized Disclosure of Confidential
Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | A substantial portion of the Companys business involves the handling
of documents containing confidential information. Although the Company
has established procedures intended to eliminate any unauthorized
disclosure of confidential information and, in some cases, has
contractually limited its potential liability for unauthorized disclosure
of such information, there can be no assurance that unauthorized
disclosures will not result in liability to the Company. It is possible
that such liabilities could have a material adverse effect on the
Companys business, financial condition or results of operations.                                                                                                                                                                                                                                                                                                                                                                    
|
| | Risk of Business Interruptions and Dependence on Single Facilities for
Certain Services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | The Company believes that its ability and its future ability to
retain customers has been due to and will be dependent upon the continued
delivery of prompt, efficient, high value services to its customers.
Certain of the Companys operations are performed at a single location and
are dependent on continuous computer, electrical, telephone and data
communication service. As a result, any disruption of the Companys
day-to-day operations could have a material adverse effect upon the
Company. There can be no assurance that a fire, flood, earthquake, power
loss, phone or data service loss or other disaster affecting one or more
of the Companys facilities would not disable these functions. Any
significant damage to any such facility or other failure that causes
significant interruptions in the Companys operations may not be covered
by insurance and could have a material adverse effect on the Companys
business, financial condition or results of operations.
|
| | Lack of Continued Growth in the Information Management Outsourcing
Industry                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | The Company believes, based upon independent market research that the
information management and business process outsourcing industries will
continue to experience sizable growth for the next several years. The
industry growth assumptions are based upon, among other things, the
continued advancement of technology, increased government regulations
regarding document retention and increased customer expectations regarding
low-cost and efficient electronic access to records. There can be no
assurance that these factors will ultimately facilitate industry growth or
that other foreseen or unforeseen changes in the market dynamics will not
negatively impact projected market growth. Any negative impact upon
general market trends for the information management and business process
outsourcing industries will have a material adverse effect on the
Companys business, financial condition and results of operations.                                                   
|
| | HIPPA Regulations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | As a result of statutory authority granted pursuant to the Health
Insurance Portability and Accountability Act of 1996 (HIPAA), the United
States Department of Health and Human Services has recently issued
regulations regarding the use and disclosure of personal health
information by health care providers, health plans,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | and certain other covered entities operating in the health care
industry. The HIPAA regulations require covered entities to take steps to
maintain the privacy and security of personal health information. While we
are not a covered entity directly governed by these regulations, many of
our customers are covered entities under the HIPAA regulations and these
customers are required to adjust their business arrangements to comply
with HIPAA. These customers will be required to enter into business
associate arrangements with us that conform to the requirements of HIPAA.
The requirements of HIPAA, and the costs of complying with HIPAA, may
adversely affect the business operations of these customers, which could
have a negative impact on our business operations. Furthermore, the
requirements of the business associate arrangements, and the changes we
will have to make in our operations to comply with such agreements, will
increase our costs of operations. To the extent we are unable to comply
with the provisions of such agreements, we could lose the business
generated by those clients or could be subject to damages for violation of
its business associate agreements with those clients.
|
| | Future Financial Covenants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | Under our Credit Agreement, we are subject to certain reporting
requirements and financial covenants, including requirements that we
maintain minimum levels of earnings before interest, taxes, depreciation
and amortization (EBITDA) and cash-flow and certain other restrictions.
Certain of these covenants become more restrictive over time. The Company
is currently in compliance with such covenants as of December 31, 2002.
While we are currently in compliance with such covenants, an erosion of
our business could place the Company out of compliance in the future.
Potential remedies for the lenders include declaring all outstanding
amounts immediately payable, terminating commitments and enforcing any
liens; however, in the event of any future noncompliance the Company would
seek a waiver from such lenders related to these types of technical
covenant violations.                                                                                                                                                                                                                                                                                                                                            
|
| | International Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | The Company operates in four countries outside the United States:
India, China (service relationship), Mexico and Canada. Political
economic instability in these countries could have a material adverse
impact on our results of operations. The Companys future revenues, costs
of operations and profits could be affected by a number of factors related
to its international operations, including changes in foreign currency,
exchange rates, changes in economic conditions from country to country,
changes in a countrys political condition, trade protection measures,
licensing and other legal requirements and local tax issues.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | Future Risks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | The Company identifies and evaluates the material risks potentially
impacting its business on an on-going basis. Certain risks which are
material to the Companys business today may become immaterial in the
future. Additionally, certain risks which are immaterial to the Companys
business today may become material in the future. Further, new risks to
the Companys business, which it is currently unaware of today, could
develop in the future and dramatically impact its business,
operations or
financial condition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

ITEM 2: PROPERTY

The Company has direct operations in 26 U.S. states, Canada, Mexico and
India. Except for two facilities that are owned by the Company, all the
facilities are leased and are used for operations and general administrative
functions.

ITEM 3: LEGAL PROCEEDINGS

With respect to litigation brought by Future Image Holding Corporation and
DASA Holdings, Inc. (Plaintiffs) against the Company and Lason Canada Company
and litigation brought against Plaintiffs by the Company previously disclosed
in the Companys Form 10-Q for the quarter ended
September 30, 2002, during
the first quarter of 2003, this matter was resolved in an out of court
settlement with no material impact to the Company.

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The Company is a defendant in a proceeding in the Bankruptcy Court for the
District of Delaware in Wilmington. The plaintiff is Ark 2000-1 CLO Limited,
(Ark), one of the Companys senior note holders. The nature of the dispute is
over certain provisions in the Companys pre-petition credit agreement and
First Amended Joint Plan of Reorganization of Lason, Inc. and its Subsidiary
Debtors, as modified (the Plan), which call for the sharing of net proceeds
from certain designated asset sales between the Company and the senior note
holders. Ark alleges, among other things, that the Company is not entitled to
the use of or share of such net sale proceeds. The net proceeds currently in
dispute are approximately $1.7 million, of which approximately $1.5 million is
being held in escrow by the Pre-Petition Agent. The Company believes that Arks
arguments are without merit and it is vigorously defending itself in this
matter. Final arguments are scheduled for April 2003. Any unfavorable outcome
or settlement in this matter could result in a charge to current earnings.

On December 21, 1999 and various dates thereafter, several individuals
filed complaints against the Company and certain executive officers in various
United States District Courts. The complaints purport to be brought as class
actions on behalf of purchasers of shares of the Companys common stock during
periods ranging from August 14, 1998 through December 17, 1999. The complaints
generally allege that the Company and certain of its officers made public
statements concerning the Companys revenues and earnings and inflated the
market price of the shares of the Companys common stock. The complaints allege
violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder, and one complaint alleges violations of the Securities Act of 1933.
The complaints seek unspecified damages allegedly incurred as a result of the
decline in the market price of shares of the Companys common stock after the
Company announced on December 17, 1999 that it expected lower fourth quarter
earnings per share as compared with consensus analysts estimates.

Recently, all of the parties to the litigation agreed upon the terms of a
settlement. Pursuant to the settlement, a Settlement Fund of $12,680,000 in
cash, plus interest, has been established. This Settlement Fund was created
strictly from the proceeds of insurance with no contribution from the Company.
Judge Arthur Tarnow of the United States District Court for the Eastern
District of Michigan has entered an order preliminarily approving the
settlement. Notice of the proposed settlement and the Courts order have been
sent to the proposed class. A hearing has been scheduled for March 31, 2003 at
which it is anticipated that the Court will grant final approval to the
settlement. Whether the settlement is approved or not, management does not
believe that this litigation will have a material adverse effect on the
Companys business or its future consolidated financial statements as the
Companys First Amended Joint Plan of Reorganization of Lason, Inc. and its
Subsidiary Debtors, as modified, limited the Plaintiffs ability to recover
damages from the Company to monies made available under certain Directors and
Officers liability insurance policies owned by the Company, if any.

As described in Item 1  Business  Fresh Start Reporting and Factors
that Affect Comparability of Financial Information the Company previously
notified the SEC and U.S. Attorney for the Eastern District of Michigan (U.S.
Attorney) of accounting irregularities and system deficiencies that affected
certain portions of the Predecessors financial statements in 1999 and may have
affected its financial statements for other periods up to and through the first
half of 2000. The SEC and U.S. Attorney have on-going investigations into
these matters. The Companys new executive management team has been and
continues to fully cooperate with such investigations. The Company is not
privy to the status of these investigations and cannot predict when they will
be completed, the results thereof, or actions that might be taken against the
Company, if any. Criminal actions that result in claims against the Company
are not dischargeable under the Bankruptcy Code. The SEC and U.S. Attorney
have the ability, depending upon the nature of the claims, to take actions
against the Company that could have a material adverse effect upon its results
of operations, financial position or liquidity. Based upon the Companys
cooperation with these authorities, its new executive management team is
hopeful that such actions will not, in fact, have a material adverse effect
upon its results of operations, financial position or liquidity. However, no
assurances can be given at this time.

Various other claims have been made against the Company in the normal
course of business which management believes will not have a material adverse
effect on the Companys business, financial condition or results of operations.

ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of the Companys shareholders
during the six month period ending December 31, 2002.

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PART II

ITEM 5: MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

As of March 28, 2003, 100,000,000 shares of Common Stock were authorized,
with 30,000,000 shares of Common Stock reserved for distribution, and 45,000
shares issued to its three outside directors. Of the 30,000,000 shares
reserved for distribution, the Companys Plan called for 87.5% or 26,250,000
shares to be issued in respect of general unsecured claims against the Company
and 12.5% or 3,750,000 shares to be issued to management of the Company as part
of an Executive Management Incentive Plan. At December 31, 2002, the
30,000,000 shares have not been issued by the Company. The Company is in the
final stages of reconciling its unsecured claims in order to determine the
amount of disputed and undisputed claims. The Company currently cannot
speculate as to the ultimate completion date for such analysis and the initial
or final issuance of such shares as called for under the Plan. The Company
desires to complete this process as soon as reasonably practical.

In August 2002, the Company issued 15,000 shares of Common Stock to each
of Robert H. Naftaly and to David P. Williams, outside directors of the
Company, and in January 2003, the Company issued 15,000 shares of Common Stock
to Gary D. DeGourse, an outside director of the Company, for the purchase price
of $0.01 per share. No commissions were paid with respect to the sale of such
shares. The sales were made pursuant to exemptions from registration under
Sections 4(2) and 4(6) of, and under Section 506 of Regulation D, promulgated
under the Securities Act of 1933, as amended.

There is currently no trading market for the Common Stock. There can be
no assurance regarding the future development of a market for or as to the
liquidity of the Common Stock when the 30,000,000 shares are distributed. The
Company is currently not in compliance with certain regulations of the SEC
necessary for its securities to be listed and traded on a national securities
exchange or on NASDAQ. The Company cannot provide any assurances as to if or
when it would meet such requirements.

Dividend Policy

The Company has never declared or paid cash dividends on its Common Stock.
The Company currently intends to retain all future earnings for the operation
and expansion of its business. The Company does not anticipate declaring or
paying cash dividends on its Common Stock in the foreseeable future. Any
payment of cash dividends on the Common Stock will be at the discretion of the
board of directors and will depend on its results of operations, earnings,
capital requirements, contractual restrictions and other factors deemed
relevant by the board of directors. Further, the Companys Credit Agreement
prohibits the payment of cash dividends.

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ITEM 6: SUMMARIZED FINANCIAL INFORMATION

The following table sets forth selected consolidated financial data of the
Company. The selected consolidated financial data presented below is as of and
for the six month period ending December 31, 2002. This information has been
derived from the Companys consolidated financial statements, which have been
audited by Grant Thornton and should be read in conjunction with Managements
Discussion and Analysis of Financial Condition and Results of Operations and
the consolidated financial statements and notes thereto included in this Form
10-K. As discussed throughout this Form 10-K, the Company has not provided
financial information in this Form 10-K for the twelve months ended December
31, 2002, 2001, 2000, 1999 and 1998. Accordingly, the discussion of results of
operations and liquidity and capital resources is limited to the six month
period ended December 31, 2002.

|                                                 |                        |   |                         |        | 
|------------------------------------------------ | ---------------------- | - | ----------------------- | ------ | 
|                                                 |                        |   | For the Six Months      |       
|                                                 |                        |   | Ended December 31, 2002 |       
|                                                 |                        |   |                         |       
|Income Statement Data                            |                        |   |                         |       
|Revenues, net                                    |                        | $ | 96,934                  |       
|Cost of revenues                                 |                        |   | 69,949                  |       
|                                                 |                        |   |                        
|                                                 | Gross profit           |   |                         | 26,985 | 
|Selling, general and administrative expenses (1) |                        |   | 24,808                  |       
|                                                 |                        |   |                        
|                                                 | Income from operations |   |                         | 2,177  | 
|Interest expense, net                            |                        |   | 1,506                   |       
|Provision for income taxes                       |                        |   |                        |       
|                                                 |                        |   |                        
|                                                 | Net income             |   | $                       | 671    | 
|                                                 |                        |   |                        
|Earnings per share: (2)                          |                        |   |                         |       
|                                                 | Basic                  |   | $                       | .02    | 
|                                                 | Diluted                |   | $                       | .02    | 
|Balance Sheet Data                               |                        |   |                         |       
|Cash and cash equivalents                        |                        | $ | 25,931                  |       
|Working capital                                  |                        |   | 41,344                  |       
|Total assets                                     |                        |   | 77,547                  |       
|Long term obligations, net of current maturities |                        |   | 45,001                  |       
|Net senior debt (3)                              |                        |   | 19,994                  |       



---

|(1) |  | Selling, general and administrative expenses includes approximately
$0.3 million of a special charge related to certain integration and
restructuring activities. See Note 9 to the Companys consolidated
financial statements for further details.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Assumes weighted average common shares of 30,032,500 shares.                                                                                                                                                                                        
|   
|(3) |  | Defined as total Senior Notes (which are part of the Companys long
term obligations) less cash and cash equivalents.                                                                                                                               

ITEM 7: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Overview

Lason is a leading provider of integrated information outsourcing
solutions through in excess of 60 locations and facilities management sites in
26 states, India, China (service relationship), Mexico and Canada. The Company
serves over 5,500 active customers primarily in the healthcare, financial
services, government and manufacturing and industrial vertical markets. The
Companys core competency resides in its ability to enhance the performance of
its customers business by outsourcing their non-core business processes and
back office operations. The Companys primary services are data, document and
image capture, web-based document repository services via its Document DNA
(digital network access) product, analog services, on-site facilities
management, print and mail type services, database management and other
professional services. The Companys service capabilities across a broad range
of data and media types allows its customers

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to fulfill their business process and information outsourcing needs with a
single vendor regardless of geography. Lasons capability to capture, manage
and output information includes both traditional and digital services that
support customer migration to new technologies including internal-based
applications.

The Companys strategy is to be a value-added business partner to its
customers by leveraging its integrated business process outsourcing
capabilities across a broad geographical spectrum to continually assist them in
reducing their information management and back office costs and minimize their
on-going technology and capital requirements. Key components to this strategy
are the Companys strategically located off-shore capabilities and solution
offerings, such as Document DNA (its web-based document repository), which
allow it to fulfill customers business process outsourcing needs cost
effectively twenty-four hours a day, seven days a week.

Development of Code of Ethics and Compliance Program

The Company engaged outside corporate counsel to assist it in the
development of a new corporate Code of Business Conduct, Compliance and Ethics.
The Company adopted such Code in late 2002, which included among other things
the establishment of a corporate Compliance Officer, the basic obligations and
responsibilities of all Lason employees to the Corporation, provisions
regarding the accuracy and completeness of company records, and guidelines for
avoiding conflicts of interest and protecting and preserving all Company
assets. The Company is in the process of implementing such program.

Results of OperationsSix Months Ended December 31, 2002

Consolidated net revenues were $97.0 million for the six months ended
December 31, 2002. The Companys revenues are generally based upon transaction
volumes of information and data sent to it by third parties. For the most
part, these volumes are not contractually required or guaranteed. In addition,
the mix of the Companys revenue is dependent upon the application or service
being provided and can vary between project and recurring type work. In many
cases, the work being performed by the Company for an individual customer
contains elements of both project and recurring type work. Project work
represents one-time services. Recurring work represents services being
provided to a customer on a consistent basis that are generally under contract
or have been regularly provided by the Company to the customer through a long
standing relationship.

Gross profit was $27.0 million for the six months ended December 31, 2002.
The Companys cost of revenues consist primarily of wages and benefits to its
employees, the cost of materials and equipment and other items related to
directly providing services and products to its customers.

Selling, general and administrative expenses were $24.8 million for the
six months ended December 31, 2002. In connection with its Plan, the Company
has undertaken certain integration and restructuring activities to realign
organizationally, eliminate excess capacity and streamline its operations and
further enhance its off-shore service capabilities. As such, the Company has
been and is in the process of closing certain operating locations. As of
December 31, 2002, the Company has accrued $0.5 million related to its
commitment to these activities, of which approximately $0.3 million was
included as a special charge in the results of operations for the six months
ended December 31, 2002. The Company anticipates being substantially completed
with such activities during the second quarter of 2003. However, the exact
completion date is dependent upon a number of factors, some of which are beyond
the control of the Company.

Net interest expense was $1.5 million for the six month period ended
December 31, 2002, consisting principally of interest on the Companys Senior
Notes. Included in the results of operations for the six months ended December
31, 2002 was approximately $1.2 million in depreciation expense related to
property and equipment.

Liquidity and Capital Resources

At December 31, 2002 the Company had net working capital of $41.3 million,
a current ratio of 2.4 to 1.0 and cash and cash equivalents of $25.9 million.
The Companys net senior debt (defined as total Senior Notes less cash and cash
equivalents) was $20 million at December 31, 2002. The Company has funded its
operations and integration and restructuring activities through a combination
of cash from operations and net proceeds from sales of non-core assets. Net
cash provided by operating activities for the six months ended December 31,
2002 was $0.5 million. The net cash provided by operating activities was
reduced by payments made with respect to the Companys previous bankruptcy
proceedings for

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professional and administrative fees, cure costs and other administrative
type claims. These payments totaled approximately $6.1 million for the six
month period ended December 31, 2002. The Company expects these payments to
substantially decrease over time as certain administrative claims related to
Companys cases are settled. The Company estimates that its total remaining
obligation related to these types of items is approximately $1 million at
December 31, 2002 and that these will be paid over the remainder of 2003.

Net cash used in investing activities totaled $0.2 million for the six
months ended December 31, 2002. For the six months ended December 31, 2002,
approximately $1.5 million was used for investments in capital assets. These
investments were off-set by approximately $1.3 million of net cash proceeds
from the sale of certain non-core assets of the Company. At December 31, 2002,
the Company has completed its non-core asset divestiture program, which was
committed to as part of its Plan of Reorganization. According to the terms of
certain sale agreements, part of the consideration was deferred, contingent
upon certain future events or structured as a future royalty. At December 31,
2002, the Company estimates that approximately $1.2 million in additional net
proceeds from these sales could be received, primarily over the remainder of
2003 and first part of 2004. As called for under the Companys Plan, most of
the net cash proceeds are required to be applied as principal payments against
the Companys Senior Notes.

Cash used in financing activities was $4.3 million for the six months
ended December 31, 2002 and consisted principally of payments on the Companys
Senior Notes.

The Companys long term obligations as of December 31, 2002 consist of
five-year Senior Notes in the aggregate outstanding amount of $45.9 million,
which are collateralized by a lien on all property of the Company, guarantees
of certain of the Companys subsidiaries, as well as pledges of the capital
stock of certain subsidiaries and a unsecured, non-interest bearing
non-negotiable Junior Note, maturing within four years, in the principal amount
of $3.1 million issued to certain key managers (who were also ex-owners of
businesses acquired by Lason). The Senior Notes bear interest at the prime
rate (floating) plus 2.5 percent (6.75% at December 31, 2002). The Senior
Notes require quarterly principal payments of $1.0 million and mature on June
30, 2007. No lender is required to advance any additional loans to the Company
or re-lend any principal payment. The Credit Agreement contains restrictions
on acquisitions, disposition of assets, and the incurrence of other liabilities
and contains certain financial covenants. In addition to quarterly principal
payments, the Credit Agreement calls for principal reductions from net cash
proceeds received from the sale or disposition of assets.

The Junior Note Indenture Agreement provides that the principal payments
will be made subject to the express condition that certain performance tests
are satisfied by the key managers on an individual basis. Based upon the
Companys current information, it believes that it is probable that such
conditions for payment will be met by the key managers.

Management believes that it has sufficient liquidity through its cash from
operations and cash on hand of $25.9 million at December 31, 2002 to meet its
on-going business needs, including satisfying its long term obligations as they
become due. The Company consistently monitors and evaluates its capital
structure and options for maximizing the efficiency and availability of such.
Should the Company require future financing, no assurances can be given that
the terms or availability of such would be favorable to the Company.

Inflation

Certain of the Companys expenses, such as wages and benefits, occupancy
costs, and equipment repair and replacement, are subject to normal inflation.
Supplies, such as paper and related products, can be subject to significant
price fluctuations. There can be no assurance that the Company will be able to
offset any future cost increases through efficiencies or increased charges for
its services and products.

Market Risk

The Company believes one of its strategic advantages is its long-standing
off-shore service capabilities, which are used to service certain of its North
American customers. Operations in these countries are subject to certain
economic and political risks unlike its operations in the United States. The
Company does not hedge its investment in these operations or other risks
arising out of operating in these foreign countries. The Company has not
experienced significant economic or political difficulties in these operations
to date. However, the Company cannot predict changes in the economic or
political conditions in these foreign countries or the ultimate impact they may
have on its business, financial condition or results of operations.

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Speculative Nature of Common Stock; Lack of Trading Market; Issuance to
Disbursing Agent

The Companys Plan reserved 30,000,000 shares of Common Stock for
distribution. Of the 30,000,000 shares reserved for distribution, the
Companys Plan called for 87.5% or 26,250,000 shares to be issued in respect of
general unsecured claims against the Debtors and 12.5% or 3,750,000 shares to
be issued to management of the Company as part of an Executive Management
Incentive Plan. The Plan called for such shares to be distributed to Allowed
Claim Holders via a Disbursing Agent when reasonably practical.

At December 31, 2002, the 30,000,000 shares have not been distributed by
the Company. The Company is in the final stages of reconciling its unsecured
claims in order to determine the amount of disputed and undisputed claims. The
Company currently cannot speculate as to the ultimate completion date for such
analysis and the initial or final distributions of such shares as called for
under the Plan. The Company desires to complete this process as soon as
reasonably practical.

There is currently no trading market for the Common Stock. There can be
no assurance regarding the future development of a market for or as to the
liquidity of the Common Stock when the 30,000,000 shares are distributed. The
Company is currently not in compliance with certain regulations of the SEC
necessary for its securities to be listed and traded on a national securities
exchange or on NASDAQ. The Company cannot provide any assurances as to if or
when it would meet such requirements.

Non-Core Asset Sales

The Predecessor was created through approximately 76 acquisitions during
the period of 1996 through 1999, with 55 of those acquisitions occurring in
1998-1999. A significant part of the Companys Plan was the divesture of
certain non-core assets and businesses. The Company has completed the
divestiture of in excess of 30 non-core businesses and fulfilled its commitment
as outlined under the Plan.

Earnout Obligations

In executing its acquisition strategy, the Predecessor generally entered
into additional purchase price arrangements as part of the purchase agreement.
Such additional purchase price arrangements would pay the former owner of the
business additional amounts depending upon the post-acquisition performance of
the business (i.e., an earnout). The Companys financial obligation related to
these agreements has been extinguished under the Plan, with the exception of
those key manager claims that have been allowed and are represented by the
Companys Junior Note, in the principal amount of $3.1 million at December 31,
2002.

Critical Accounting Policies

The Company has identified the following significant accounting policies
set forth below that, as a result of complexities, judgments and uncertainties
of the accounting standards and operations involved could result in material
changes to its financial condition or results of operations under different
conditions, assumptions or estimates. The Company applies a consistent
methodology at the end of each quarter to determine the account balances that
require judgment:

Cash and Cash Equivalents. Cash equivalents consist of short-term liquid
investments with a maturity at date of purchase of three months or less.

Revenue Recognition. The Companys revenues are driven primarily by
transaction volumes. The Company records revenues when the services are
provided and all significant obligations of the Company have been satisfied.
In certain circumstances, depending upon contractual terms or billing cycle
cut-off, the Company is unable to bill for work completed in a certain period.
In these cases, the Company recognizes revenue when the work is performed in
order to match revenues with the services and related expenses. The work
ultimately will be billed according to the contractual terms or the next
possible billing cycle, as applicable.

Allowance for Doubtful Accounts. The Companys allowance for doubtful
accounts is generally established during the period in which the loss is
expected to occur and is overall provided at a level for which management has
deemed appropriate based upon all currently available information such as,
historical trends, subsequent collections, viability of the

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customer and other such relevant factors. The evaluation of these factors
involves subjective judgments and changes in these factors may significantly
impact the Companys consolidated financial statements.

Supplies. Supplies are valued at the lower of cost or market, using the
first-in, first-out method. From time to time, due to changes in market
demand, technology or other such factors it may be necessary for the Company to
write-down the carrying value of its supplies. The evaluation of these factors
involves subjective judgments and changes in these factors may significantly
impact the Companys consolidated financial statements.

Property and Equipment. The Debtors property and equipment, including
significant improvements as of the Effective Date have been stated at their
fair values. The Debtors additions subsequent to such date are recorded at
cost to acquire. Expenditures for normal repairs and maintenance are charged
to operations as incurred. Adjustments of the asset and related accumulated
depreciation accounts are made for retirements of property and equipment with
the resulting gain or loss included in operations.

Self-insurance Liabilities and Reserves. The Company is self-insured for
its healthcare obligations and covers its workers compensation obligations
through an incurred loss retro policy, under which the Company is obligated to
cover losses on an actual basis up to a prescribed amount. The Company
accounts for these programs based upon actuarial estimates of the loss inherent
in the claims during the period, including an estimate for losses incurred but
not yet reported. These loss estimates rely on observations of historical loss
experience for similar events. The Company mitigates its ultimate exposure by
carrying certain stop loss coverage. The evaluation of these factors and
establishment of the loss estimates involves subjective judgments and changes
in these factors may significantly impact the Companys consolidated financial
statements.

Other Loss Contingencies.The Company records liabilities when it is
probable that a loss has been incurred and the amount of that loss can be
reasonably estimated. These types of losses can develop over long periods of
time, with potentially significant changes occurring in the facts of each case.
Estimates of probable losses often include analysis and judgments about
actions or potential actions of third parties, including governmental
regulators, which are beyond the control or influence of the Company.

Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the periods presented. Actual
results could differ materially from those estimates.

New Accounting Standards. In June 2002, the Financial Accounting
Standards Board (FASB) issued Statements of Financial Accounting Standards
(SFAS) No. 146, Accounting for Costs Associated with Exit or Disposal
Activities. SFAS No. 146 applies to costs associated with an exit activity
(including a restructuring) or with a disposal of long-lived assets. Under
SFAS No. 146, a company will record a liability for a cost associated with an
exit or disposal activity when that liability is incurred and can be measured
at fair value. A liability is incurred when an event obligates the entity to
transfer or use assets. Under current accounting guidance, a liability can be
recorded when management has committed to an exit plan. The requirements under
SFAS No. 146 are effective prospectively for exit and disposal activities
initiated subsequent to December 31, 2002. Restatement of previously issued
financial statements is not permitted. We anticipate adopting SFAS No. 146 in
the second quarter of fiscal year 2003 and do not expect it to have a material
impact on our financial position or results of operations.

ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Lason has exposure to interest rate risk on its Senior Notes, which bear
interest at a variable rate. Based on the Companys outstanding balance on
December 31, 2002 of $45.9 million, a one-percent increase or decrease in
interest rates would decrease or increase, respectively, the Companys pre-tax
earnings and operating cash flows by appropriately $0.5 million on an
annualized basis.

ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

The financial statements and supplemental financial information included
in this report are set forth on the Index to Financial Statements and Financial
Statement Schedules included in this report.

14



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##### Table of Contents



ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

The disclosures required by this Item 9 have been previously disclosed by
the Company in its Form 8-K filed on July 30, 2002 and its Form 8-K/A filed on
May 3, 2002.

15



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##### Table of Contents






PART III

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information with respect to executive officers of the Company is
included in Part I of this Form 10-K under the heading Executive Officers of
the Registrant and the information about directors of the Company and
compliance with Section 16(a) of the Securities Exchange Act of 1934 will
either be included in the Companys 2003 definitive Proxy Statement under the
headings Information About the Nominee and the Incumbent Directors,
Committees and Meetings of Directors, and Section 16(a) Beneficial Ownership
Reporting Compliance which are incorporated herein by reference or will be
included by amendment to this Form 10-K.

ITEM 11: EXECUTIVE COMPENSATION

The information regarding executive compensation will either be included
in the Companys 2003 definitive Proxy Statement under the headings Executive
Compensation, and Compensation of Directors which are incorporated herein by
reference or will be included by amendment to this Form 10-K.

ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The information with respect to the security ownership of certain
beneficial owners and management and with respect to equity compensation plans
will either be included in the Companys 2003 definitive Proxy Statement under
the sections Security Ownership of Certain Beneficial Owners and Management
and Equity Compensation Plan Information which are incorporated herein by
reference or will be included as an amendment to this Form 10-K.

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information with respect to certain relationships and related
transactions will either be included in the Companys 2003 definitive Proxy
Statement under the heading Transactions of Directors, Executive Officers and
Certain Beneficial Owners which are incorporated herein by reference or will
be include as an amendment to this Form 10-K.

ITEM 14: CONTROLS AND PROCEDURES

The term disclosure controls and procedures is defined in Rules
13a-14(c) and 15(d)-14(c) of the Securities Exchange Act of 1934 (the Exchange
Act). These Rules refer to the controls and procedures of a company that are
designed to ensure that information required to be disclosed by a company in
the reports that it files under the Exchange Act is recorded, processed,
summarized and reported within required time period. Our Chief Executive
Officer and Our Chief Financial Officer have evaluated the effectiveness of our
disclosure controls and procedures as of a date within 90 days before the
filing of this annual report (the Evaluation Date), and have concluded that
our disclosure controls and procedures are effective in providing them with
material information relating to the Company known to others within the
Company which is required to be included in our periodic reports filed under
the Exchange Act. Reference is made to: Item 7: Managements Discussion and
Analysis of Financial Condition and Results of OperationsFresh Start Reporting
and Factors that Affect Comparability of Financial Information for a
discussion of the Companys inability to provide financial information in the
Form 10-K for the years ending December 31, 2002, 2001 and 2000.

There have been no significant changes in the Companys internal controls
or in other factors which could significantly affect internal controls
subsequent to the Evaluation Date.

ITEM 15: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

A. (1) Consolidated Financial Statements

The consolidated financial statements applicable to the Company and its
consolidated affiliates filed with this report are set forth on the Index to
Consolidated Financial Statements of this report.

16



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##### Table of Contents



(2)  Consolidated Financial Statement Schedules

The consolidated financial statement schedule and report of independent
accountants have been filed as part of this Annual Report on Form 10-K as
indicated in the Index to Consolidated Financial Statements and of this report.

(3) Exhibits

The following exhibits are filed as part of this report as required by
Item 601 of Regulation S-K.

|     |  |                                                                                                                                                                       
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a.   |  | Exhibits                                                                                                                                                              
|    
|3.1  |  | Amended and Restated Certificate of Incorporation (1)                                                                                                                 
|     |  |                                                                                                                                                                       
|3.2  |  | Amended and Restated By-Laws (1)                                                                                                                                      
|     |  |                                                                                                                                                                       
|10.1 |  | Executive Management Incentive Plan (1)                                                                                                                               
|     |  |                                                                                                                                                                       
|10.2 |  | Junior Note Indenture (1)                                                                                                                                             
|     |  |                                                                                                                                                                       
|10.3 |  | Employment Agreement between Lason Systems, Inc. and Ronald D. Risher (1)                                                                                             
|     |  |                                                                                                                                                                       
|10.4 |  | Employment Agreement between Lason Systems, Inc. and Michael H. Riley (1)                                                                                             
|     |  |                                                                                                                                                                       
|10.5 |  | Employment Agreement between Lason Systems, Inc. and Jerry L. Hon (1)                                                                                                 
|     |  |                                                                                                                                                                       
|10.6 |  | Employment Agreement between Lason Systems, Inc and Kenneth L. Shaw(1)                                                                                                
|     |  |                                                                                                                                                                       
|10.7 |  | Employment Agreement between Lason Systems, Inc. and Thomas W. Denomme (1)                                                                                            
|     |  |                                                                                                                                                                       
|10.8 |  | Employment Agreement between Lason Systems, Inc. and Douglas S. Kearney (1)                                                                                           
|     |  |                                                                                                                                                                       
|10.9 |  | Credit Agreement between Lason and the Lenders named therein, Bank One, N.A. as
Agent dated as of June 30, 2002 (+)                                                   
|     |  |                                                                                                                                                                       
|99.1 |  | Chief Executive Officer and Chief Financial Officer Certification Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (+)                                       
|     |  |                                                                                                                                                                       
|     |  | (+) Filed herewith                                                                                                                                                    
|     |  |                                                                                                                                                                       
|     |  | (1) Incorporated by reference from Exhibits to Form 10-Q filed on November 19,
2002 as Commission File No. 0-21407                                                    
|     |  |                                                                                                                                                                       
|b.   |  | Reports on Form 8-K                                                                                                                                                   
|     |  |                                                                                                                                                                       
|     |  | On December 16, 2002, the Company
filed a Form 8-K disclosing in Item 5
thereof the appointment of Mark J.
Clinton as the Companys President of
Data Capture Services

17



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 on the 28th day of March,
2003



| | LASON, INC.
| | -----------
|
| | By:        

18



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##### Table of Contents






POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Ronald D. Risher and Douglas S. Kearney, and each of
them, this 28th day of March, 2003, his true and lawful attorney(s)-in-fact and
agent(s), with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any or all
amendments to this report and to file the same, with all exhibits and schedules
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney(s)-in-fact and agent(s) full
power and authority to do and perform each and every act and thing requisite
and necessary to be done, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney(s)-in-fact and agent(s), or their substitutes(s), may lawfully do or
cause to be done by virtue hereof.

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

|                                           |  |                                                                                                             
|------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------
|/s/ Ronald D. Risher

Ronald D. Risher     |  | Director, President and Chief Executive Officer (Principal
Executive Officer)                               
|                                          
|/s/ Douglas S. Kearney

Douglas S. Kearney |  | Executive Vice President, Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)
|                                          
|/s/ Gary D. DeGourse

Gary D. DeGourse     |  | Director                                                                                                    
|                                          
|/s/ Robert H. Naftaly

Robert H. Naftaly   |  | Director                                                                                                    
|                                          
|/s/ David P. Williams

David P. Williams   |  | Director                                                                                                    

19



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##### Table of Contents






CERTIFICATION

I, Ronald D. Risher, the Chief Executive Officer of Lason, Inc. (the
registrant) certify that:



|1. |  | I have reviewed this annual report on Form 10-K of the registrant;                                                                                                                                                                                                                                                      
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this 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 are 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 is
made known to us by others, 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 the board of directors (or persons fulfilling 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.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The foregoing Certification is subject to and qualified by the disclosure in
Part I, Item 1. Business  Fresh Start Reporting and Factors that Affect
Comparability of Financial Information and in Note 3 of Notes to the
Consolidated Financial Statements, which provide that the consolidated
financial statements of the registrant accompanying this annual report on Form
10-K have been prepared in conformity with generally accepted accounting
principles for financial information, but not in conformity with the
instructions for Form 10-K and Rule 10-01 of Regulation S-X, as the registrant
has not presented financial information for the twelve months ending December
31, 2002, 2001 and 2000. In addition, the financial information for the twelve
months ended December 31, 2002, 2001, 2000, 1999 and/or 1998 have been omitted
from those applicable items of the Form 10-K requiring such information.
Reference is made to the disclosure  Part I, Item 1. Business  Fresh Start
Reporting and Factors that Affect Comparability of Financial Information and in
Note 3 of Notes to the Consolidated Financial Statements for a more complete
discussion and explanation.

|               |  |                        
|-------------- |  | -----------------------
|March 28, 2003 |  | /s/ Ronald D. Risher   
|               |  | Ronald D. Risher       
|               |  | Chief Executive Officer

20



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##### Table of Contents



CERTIFICATION

I, Douglas S. Kearney, the Chief Financial Officer of Lason, Inc. (the
registrant) certify that:



|1. |  | I have reviewed this annual report on Form 10-K of the registrant;                                                                                                                                                                                                                                                      
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this 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 are 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 is
made known to us by others, 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 the board of directors (or persons fulfilling the
equivalent function):
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) |  | 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
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (e) |  | 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.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The foregoing Certification is subject to and qualified by the disclosure in
Part I, Item 1. Business  Fresh Start Reporting and Factors that Affect
Comparability of Financial Information and in Note 3 of Notes to the
Consolidated Financial Statements, which provide that the consolidated
financial statements of the registrant accompanying this annual report on Form
10-K have been prepared in conformity with generally accepted accounting
principles for financial information, but not in conformity with the
instructions for Form 10-K and Rule 10-01 of Regulation S-X, as the registrant
has not presented financial information for the twelve months ending December
31, 2002, 2001 and 2000. In addition, the financial information for the twelve
months ended December 31, 2002, 2001, 2000, 1999 and/or 1998 have been omitted
from those applicable items of the Form 10-K requiring such information.
Reference is made to the disclosure  Part I, Item 1. Business  Fresh Start
Reporting and Factors that Affect Comparability of Financial Information and in
Note 3 of Notes to the Consolidated Financial Statements for a more complete
discussion and explanation.

|               |  |                        
|-------------- |  | -----------------------
|March 28, 2003 |  | /s/ Douglas S. Kearney 
|               |  | Douglas S. Kearney     
|               |  | Chief Financial Officer

21



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##### Table of Contents



LASON, INC.




INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

|                                                                                                |  |            
|----------------------------------------------------------------------------------------------- |  | -----------
|Financial Statements:                                                                           |  |            
|                                                                                                |  |            
|Consolidated Balance Sheets as of December 31, 2002 and June 30, 2002                           |  | F-2        
|                                                                                                |  |            
|Consolidated Statement of Income for the six month period
ended December 31, 2002               |  | F-3        
|                                                                                                |  |            
|Consolidated Statement of Stockholders Equity for the six month period
ended December 31, 2002 |  | F-4        
|                                                                                                |  |            
|Consolidated Statements of Cash Flows for the six month period ended
December 31, 2002          |  | F-5        
|                                                                                                |  |            
|Notes to consolidated financial statements                                                      |  | F-6 to F-13
|                                                                                                |  |            
|Other Financial Information:                                                                    |  |            
|                                                                                                |  |            
|Report of independent accountants                                                               |  | F-14       

F-1



---



##### Table of Contents






LASON, INC.

CONSOLIDATED BALANCE SHEETS
As of December 31, 2002 and June 30, 2002
(In thousands, except for shares)

|                                                                                                                                              |                                            |   |                   |        |  |               |        |        | 
|--------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | - | ----------------- | ------ |  | ------------- | ------ | ------ | 
|                                                                                                                                              |                                            |   | December 31, 2002 |        |  | June 30, 2002 |       
|                                                                                                                                              |                                            |   |                   |        |  |               |       
|ASSETS                                                                                                                                        |                                            |   |                   |        |  |               |        |       
|Cash and cash equivalents                                                                                                                     |                                            | $ | 25,931            |        |  | $             | 29,972 |       
|Accounts receivable (net of allowance of $4,010 and $4,437, respectively)                                                                     |                                            |   | 35,962            |        |  |               | 43,460 |       
|Supplies                                                                                                                                      |                                            |   | 4,021             |        |  |               | 3,860  |       
|Prepaid expenses and other                                                                                                                    |                                            |   | 5,440             |        |  |               | 6,077  |       
|                                                                                                                                              |                                            |   |                   |        |  |              
|                                                                                                                                              | Total current assets                       |   |                   | 71,354 |  |               |        | 83,369 | 
|Property and equipment (net)                                                                                                                  |                                            |   | 6,193             |        |  |               | 5,913  |       
|                                                                                                                                              |                                            |   |                   |        |  |              
|                                                                                                                                              | Total assets                               |   | $                 | 77,547 |  |               | $      | 89,282 | 
|                                                                                                                                              |                                            |   |                   |        |  |              
|                                                                                                                                              |                                            |   |                   |        |  |               |        |       
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                          |                                            |   |                   |        |  |               |        |       
|Accounts payable                                                                                                                              |                                            | $ | 7,095             |        |  | $             | 8,938  |       
|Accrued expenses                                                                                                                              |                                            |   | 14,094            |        |  |               | 20,501 |       
|Customer deposits                                                                                                                             |                                            |   | 2,557             |        |  |               | 2,510  |       
|Deferred revenue                                                                                                                              |                                            |   | 2,892             |        |  |               | 3,037  |       
|Current portion of long-term obligations                                                                                                      |                                            |   | 3,372             |        |  |               | 1,073  |       
|                                                                                                                                              |                                            |   |                   |        |  |              
|                                                                                                                                              | Total current liabilities                  |   |                   | 30,010 |  |               |        | 36,059 | 
|Long-term obligations                                                                                                                         |                                            |   | 45,001            |        |  |               | 51,358 |       
|                                                                                                                                              |                                            |   |                   |        |  |              
|                                                                                                                                              | Total liabilities                          |   |                   | 75,011 |  |               |        | 87,417 | 
|                                                                                                                                              |                                            |   |                   |        |  |              
|                                                                                                                                              |                                            |   |                   |        |  |               |        |       
|STOCKHOLDERS EQUITY                                                                                                                          |                                            |   |                   |        |  |               |        |       
|Preferred stock, $.01 par value; 5,000,000 shares authorized, none issued
and outstanding                                                     |                                            |   |                  |        |  |               |       |       
|Common stock, $.01 par value; 100,000,000 shares authorized, 30,000,000
shares reserved for issuance and 45,000 shares issued and outstanding |                                            |   | 300               |        |  |               | 300    |       
|Additional paid-in capital                                                                                                                    |                                            |   | 1,565             |        |  |               | 1,565  |       
|Retained earnings                                                                                                                             |                                            |   | 671               |        |  |               |       |       
|                                                                                                                                              |                                            |   |                   |        |  |              
|                                                                                                                                              | Total stockholders equity                 |   |                   | 2,536  |  |               |        | 1,865  | 
|                                                                                                                                              |                                            |   |                   |        |  |              
|                                                                                                                                              | Total liabilities and stockholders equity |   | $                 | 77,547 |  |               | $      | 89,282 | 
|                                                                                                                                              |                                            |   |                   |        |  |              

The accompanying Notes are an integral part of the consolidated financial statements.

F-2



---



##### Table of Contents






LASON, INC.

CONSOLIDATED STATEMENT OF INCOME
Six Months Ended December 31, 2002
(In thousands, except per share amounts)

|                                             |                                            |   |        |        | 
|-------------------------------------------- | ------------------------------------------ | - | ------ | ------ | 
|Revenues, net                                |                                            | $ | 96,934 |       
|Cost of revenues                             |                                            |   | 69,949 |       
|                                             |                                            |   |       
|                                             | Gross profit                               |   |        | 26,985 | 
|Selling, general and administrative expenses |                                            |   | 24,808 |       
|                                             |                                            |   |       
|                                             | Income from operations                     |   |        | 2,177  | 
|Interest expense, net                        |                                            |   | 1,506  |       
|                                             |                                            |   |       
|                                             | Income from operations before income taxes |   |        | 671    | 
|                                             |                                            |   |       
|Provision for income taxes                   |                                            |   |       |       
|                                             |                                            |   |       
|                                             | Net income                                 |   | $      | 671    | 
|                                             |                                            |   |       
|Basic and diluted earnings per common share  |                                            | $ | .02    |       
|                                             |                                            |   |       

The accompanying Notes are an integral part of the consolidated financial statements.

F-3



---



##### Table of Contents






LASON, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
For the Six Month Period Ended December 31, 2002
(In thousands, except for shares)

|                                         |  |              |            |  |            |   |     |          |  |   |          |  |  |          |   |  |       |   |     |  |  |   |       | 
|---------------------------------------- |  | ------------ | ---------- |  | ---------- | - | --- | -------- |  | - | -------- |  |  | -------- | - |  | ----- | - | --- |  |  | - | ----- | 
|                                         |  | Common Stock |            |  | Additional |   |     |          |  |   |          |  |  |          |   |  |       |  
|                                         |  |              |            |  | Paid-in    |   |     | Treasury |  |   | Retained |  |  |          |   | 
|                                         |  | Shares       |            |  | Amount     |   |     | Capital  |  |   | Stock    |  |  | Earnings |   |  | Total |  
|                                         |  |              |            |  |            |   |     |          |  |   |          |  |  |          |   |  |       |  
|Balances at July 1, 2002                 |  |              | 30,000,000 |  |            | $ | 300 |          |  | $ | 1,565    |  |  | $        |  |  |       | $ |    |  |  | $ | 1,865 | 
|Common stock issued to outside
directors |  |              | 45,000     |  |            |   |    |          |  |   |         |  |  |          |  |  |       |   |    |  |  |   |      | 
|Net income                               |  |              |           |  |            |   |    |          |  |   |         |  |  |          |  |  |       |   | 671 |  |  |   | 671   | 
|                                         |  |              |            |  |            |   |     |          |  |   |          |  |  |          |   |  |       |  
|Balances at December 31, 2002            |  |              | 30,045,000 |  |            | $ | 300 |          |  | $ | 1,565    |  |  | $        |  |  |       | $ | 671 |  |  | $ | 2,536 | 
|                                         |  |              |            |  |            |   |     |          |  |   |          |  |  |          |   |  |       |  

The accompanying Notes are an integral part of the consolidated financial statements.

F-4



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##### Table of Contents






LASON, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended December 31, 2002
(In thousands)

|                                                                                  |                                                         |   |        |        |  
|--------------------------------------------------------------------------------- | ------------------------------------------------------- | - | ------ | ------ | -
|Cash flows from operating activities:                                             |                                                         |   |        |       
|Net income                                                                        |                                                         | $ | 671    |       
|Adjustments
to reconcile net income to net cash provided by
operating activities: |                                                         |   |        |       
|                                                                                  | Depreciation and amortization                           |   |        | 1,199  |  
|                                                                                  | Interest
on Junior Note                                 |   |        | 117    |  
|Changes in operating assets and liabilities:                                      |                                                         |   |        |       
|                                                                                  | Accounts receivable                                     |   |        | 6,241  |  
|                                                                                  | Supplies                                                |   |        | (161   | )
|                                                                                  | Prepaid expenses and other                              |   |        | 637    |  
|                                                                                  | Accounts payable                                        |   |        | (1,843 | )
|                                                                                  | Accrued expenses and other liabilities                  |   |        | (6,349 | )
|                                                                                  |                                                         |   |       
|Net cash flows provided by operating activities                                   |                                                         | $ | 512    | 1     
|                                                                                  |                                                         |   |       
|Cash Flows From Investing Activities:                                             |                                                         |   |        |       
|                                                                                  | Investments in property and equipment                   |   |        | (1,479 | )
|                                                                                  | Proceeds from sales of non-core assets, net of expenses |   |        | 1,257  |  
|                                                                                  |                                                         |   |       
|Net cash used in investing activities                                             |                                                         |   | (222   | )     
|                                                                                  |                                                         |   |       
|Cash Flows From Financing Activities:                                             |                                                         |   |        |       
|                                                                                  | Repayments of long-term obligations                     |   |        | (4,176 | )
|                                                                                  | Payment on capital lease liabilities and other debt     |   |        | (155   | )
|                                                                                  |                                                         |   |       
|Net cash used in financing activities                                             |                                                         |   | (4,331 | )     
|                                                                                  |                                                         |   |       
|                                                                                  | Net decrease in cash and cash equivalents               |   |        | (4,041 | )
|Cash and cash equivalents at beginning of period                                  |                                                         |   | 29,972 |       
|                                                                                  |                                                         |   |       
|Cash and cash equivalents at end of period                                        |                                                         | $ | 25,931 |       
|                                                                                  |                                                         |   |       
|Supplemental information:                                                         |                                                         |   |        |       
|                                                                                  | Interest payments                                       |   | $      | 1,680  |  
|                                                                                  |                                                         |   |       
|                                                                                  | Income tax payments                                     |   | $      |       |  
|                                                                                  |                                                         |   |       

The accompanying Notes are an integral part of the consolidated financial statements.



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LASON, INC.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: NATURE OF OPERATIONS

Lason, Inc., a Delaware corporation, together with its subsidiaries
(Lason or the Company) is a leading provider of integrated information
outsourcing solutions through in excess of 60 locations and facilities
management sites in 26 states, India, China (service relationship), Mexico and
Canada. The Company serves over 5,500 active customers primarily in the
healthcare, financial services, government and manufacturing and industrial
vertical markets. The Companys core competency resides in its ability to
enhance the performance of its customers business by outsourcing their
non-core business processes and back office operations. The Companys primary
services are data, document and image capture, web-based document repository
services via its Document DNA (digital network access) product, analog
services, on-site facilities management, print and mail type services, database
management and other professional services. The Companys service capabilities
across a broad range of data and media types allows its customers to fulfill
their business process and information outsourcing needs with a single vendor
regardless of geography.

NOTE 2: CHAPTER 11 PROCEEDINGS AND REORGANIZATION

On December 5, 2001 (the Petition Date), Lason, Inc. and certain of its
direct and indirect subsidiaries incorporated in the United States
(collectively referred to as the Debtors) filed voluntary petitions to
reorganize under Chapter 11 of the United States Bankruptcy Code (the
Bankruptcy Code) with the Bankruptcy Court for the District of Delaware in
Wilmington (the Bankruptcy Court). The Bankruptcy Court approved the
Companys Plan of Reorganization (the Plan) at its Confirmation Hearing on
April 30, 2002. On May 17, 2002, the Bankruptcy Court entered an order
confirming its First Amended Joint Plan of Reorganization of Lason, Inc. and
its Subsidiary Debtors, as modified (the Plan). From the Petition Date
through June 30, 2002, the Debtors operated their businesses as
debtors-in-possession pursuant to the Bankruptcy Code. On July 1, 2002 (the
Effective Date), the Plan became effective and the Debtors successfully
emerged from their Chapter 11 bankruptcy proceedings. For periods prior to the
Effective Date, the Company is referred to as Old Lason or the Predecessor
in these financial statements and footnotes and in the Companys Management
Discussion and Analysis. For periods including and subsequent to the Effective
Date, the Company is referred to as New Lason or the Successor in these
financial statements and footnotes and in the Companys Management Discussion
and Analysis. Please refer to the Companys Plan for capitalized terms not
defined herein.

Pursuant to the Plan, the following transactions were completed on or
about the Effective Date:

|   |  |                                                                                                                                                      
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|a. |  | all of Old Lasons issued and outstanding common stock
was cancelled;                                                                                
|b. |  | certain indebtedness of the Debtors was cancelled in
exchange for cash and/or common stock, par value $0.01 per share,
of New Lason (Common Stock);
|c. |  | executory contracts or unexpired leases to which any
Debtor was a party were assumed or rejected; and                                                
|d. |  | members of the board of directors and officers of New
Lason were elected and began serving their respective terms.                                   

On the Effective Date, 100,000,000 shares of Common Stock were authorized,
with 30,000,000 shares of Common Stock reserved for distribution. Of the
30,000,000 shares reserved for distribution, the Companys Plan called for
87.5% or 26,250,000 shares to be issued in respect of general unsecured claims
against the Debtors and 12.5% or 3,750,000 shares to be issued to management of
the Company as part of an Executive Management Incentive Plan
(EMIP) for past services. At
December 31, 2002, the 30,000,000 shares have not been issued by the Company.
The Company is in the final stages of reconciling its unsecured claims in order
to determine the amount of disputed and undisputed claims. The Company
currently cannot speculate as to the ultimate completion date for such analysis
and the initial or final issuance of such shares as called for under the Plan.
The Company desires to complete this process as soon as reasonably practical.

In addition, on the Effective Date the Companys Plan called for it to
issue New Senior Notes (the Senior Notes) to the Holders of its Allowed
Secured Lender Claims (i.e., its senior secured lenders) in an amount equal to
$90 million, maturing five years after the Effective Date and bearing interest
at the Agents prime rate plus 2.5% (floating). The amount of the Senior Notes
was reduced by proceeds of asset sales received by Holders of the Allowed
Secured Lender Claims from November 1, 2001 to the Effective Date and
thereafter as set forth in a new Credit or Note Agreement. The amount
outstanding under the Senior Notes as of December 31, 2002 is $45.9 million.
The terms of the Senior Notes are governed by a Credit Agreement.

F-6



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##### Table of Contents



Lastly, on the Effective Date, Lason issued a Junior Note in the principal
amount of $3.1 million to certain key managers (who were also ex-owners of
businesses acquired by Lason) in full satisfaction of their Allowed Key Manager
Claims against the Debtors. The Junior Note is a non-interest bearing,
unsecured note, maturing within five years following the Effective Date. The
Junior Note is supported by an Indenture Agreement dated as of June 30, 2002.
For further details regarding the Senior Notes and Junior Note see Note 8.

NOTE 3: FRESH START ADJUSTMENTS

The Debtors emerged from their Chapter 11 bankruptcy proceedings on July
1, 2002, which for financial reporting purposes was deemed the Effective Date
of the Plan. In accordance with the American Institute of Certified Public
Accountants Statement of Position 90-7, Financial Reporting by Entities in
Reorganization under the Bankruptcy Code (SOP 90-7), the Company adopted
fresh start reporting because holders of existing voting shares of Lason
immediately before filing and confirmation of the Plan received less than 50%
of the Common Stock distributed under the Plan and the Companys reorganization
value was less than the Debtors post-petition liabilities and allowed claims
in the aggregate on a consolidated basis.

Fresh start reporting requires that the reorganization value of the
Company be allocated to its assets in conformity with Statement of Financial
Accounting Standard (SFAS) No. 141, Business Combinations. The excess of
the fair value of the specific tangible or identifiable intangible net assets
over reorganization value, or negative goodwill, is to be allocated to
non-current non-monetary assets on a pro rata basis. Based on the consideration
of many factors and various valuation methods, including a discounted cash
flow, a comparable public company analysis, a comparable acquisitions analysis,
and other applicable analyses believed by the Companys management to be
appropriate for the Companys business and industry, the Company and its
financial advisors determined the reorganization value of the Debtors to be
approximately $33 million, which served as the basis for the Plan approved by
the Bankruptcy Court. The fair value of the Debtors net assets approximates
its reorganization value as of the Effective Date.

The following table reflects the adjustments to Old Lasons balance sheet as of
June 30, 2002:

|                                                |                                              |                                                      |   |             |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       |         |             |       |   |          |          |   |  |           |       |  |   |        |        | 
|----------------------------------------------- | -------------------------------------------- | ---------------------------------------------------- | - | ----------- | ------- |  | -------------- | -------- | -------- | - |  | -- | - |  |  |  |  | ----------- | ----- | ------- | ----------- | ----- | - | -------- | -------- | - |  | --------- | ----- |  | - | ------ | ------ | 
|                                                |                                              |                                                      |   |             |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       |         |             |       |   | Fresh    |          |   |  |           |       |  |   |        |       
|                                                |                                              |                                                      |   |             |         |  |                | Plan of  |          |   |  |    |   |  |  |  |  |             | Total |         |             | Start |   |          |          |   |  |           | Total | 
|                                                |                                              |                                                      |   | Predecessor |         |  | Reorganization |          |          |   |  |    |   |  |  |  |  | Predecessor |       |         | Adjustments |       |   |          |          |   |  | Successor |      
|                                                |                                              |                                                      |   |             |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       |         |             |       |   |          |          |   |  |          
|Assets:                                         |                                              |                                                      |   |             |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       |         |             |       |   |          |          |   |  |           |       |  |   |       
|                                                | Current assets                               |                                                      | $ | 83,369      |         |  |                |          |          |   |  |    |   |  |  |  |  |             | $     | 83,369  |             |       |   |          |          |   |  |           |       |  | $ | 83,369 |       
|                                                | Property and equipment                       |                                                      |   | 23,654      |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       | 23,654  |             |       | $ | (17,741  | )        |   |  | (d        | )     |  |   | 5,913  |       
|                                                | Other assets                                 |                                                      |   | 88,801      |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       | 88,801  |             |       |   | (88,801  | )        |   |  | (d        | )     |  |   |       |       
|                                                |                                              |                                                      |   |             |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       |         |             |       |   |          |          |   |  |          
|                                                |                                              | Total assets                                         |   | $           | 195,824 |  |                |          |         |   |  |    |   |  |  |  |  |             |       | $       | 195,824     |       |   | $        | (106,542 | ) |  |           |       |  |   | $      | 89,282 | 
|                                                |                                              |                                                      |   |             |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       |         |             |       |   |          |          |   |  |          
|Liabilities and Shareholders Equity (Deficit): |                                              |                                                      |   |             |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       |         |             |       |   |          |          |   |  |           |       |  |   |       
|                                                | Accounts payable                             |                                                      | $ | 8,938       |         |  |                |          |          |   |  |    |   |  |  |  |  |             | $     | 8,938   |             |       |   |          |          |   |  |           |       |  | $ | 8,938  |       
|                                                | Accounts payable pre-petition                |                                                      |   | 25,063      |         |  | $              | (25,063  | )        |   |  | (a | ) |  |  |  |  |             |       |         |             |       |   |          |          |   |  |           |       |  |   |        |       
|                                                | Accrued expenses                             |                                                      |   | 20,501      |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       | 20,501  |             |       |   |          |          |   |  |           |       |  |   | 20,501 |       
|                                                | Customer deposits                            |                                                      |   | 2,510       |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       | 2,510   |             |       |   |          |          |   |  |           |       |  |   | 2,510  |       
|                                                | Deferred revenue                             |                                                      |   | 3,037       |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       | 3,037   |             |       |   |          |          |   |  |           |       |  |   | 3,037  |       
|                                                | Earnout obligations                          |                                                      |   | 33,306      |         |  |                | (33,306  | )        |   |  | (a | ) |  |  |  |  |             |       |         |             |       |   |          |          |   |  |           |       |  |   |        |       
|                                                | Pre-petition debt                            |                                                      |   | 266,319     |         |  |                | (213,888 | )        |   |  | (b | ) |  |  |  |  |             |       | 52,431  |             |       | $ | (52,431  | )        |   |  | (e        | )     |  |   |       |       
|                                                | Current portion of new long-term
obligations |                                                      |   |            |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       |         |             |       |   | 1,073    |          |   |  | (e        | )     |  |   | 1,073  |       
|                                                | New long-term obligations                    |                                                      |   |            |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       |         |             |       |   | 51,358   |          |   |  | (e        | )     |  |   | 51,358 |       
|                                                |                                              |                                                      |   |             |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       |         |             |       |   |          |          |   |  |          
|                                                |                                              | Total liabilities                                    |   |             | 359,674 |  |                |          | (272,257 | ) |  |    |   |  |  |  |  |             |       |         | 87,417      |       |   |          |         |   |  |           |       |  |   |        | 87,417 | 
|                                                |                                              |                                                      |   |             |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       |         |             |       |   |          |          |   |  |          
|                                                | Shareholders Equity (Deficit)               |                                                      |   | (163,850    | )       |  |                | 272,257  |          |   |  | (c | ) |  |  |  |  |             |       | 108,407 |             |       |   | (106,542 | )        |   |  | (f        | )     |  |   | 1,865  |       
|                                                |                                              |                                                      |   |             |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       |         |             |       |   |          |          |   |  |          
|                                                |                                              | Total liabilities and shareholders
equity (deficit) |   | $           | 195,824 |  |                |          |         |   |  |    |   |  |  |  |  |             |       | $       | 195,824     |       |   | $        | (106,542 | ) |  |           |       |  |   | $      | 89,282 | 
|                                                |                                              |                                                      |   |             |         |  |                |          |          |   |  |    |   |  |  |  |  |             |       |         |             |       |   |          |          |   |  |          



|(a) |  | To record elimination of pre-petition liabilities which were
cancelled.                       
|--- |  | ----------------------------------------------------------------------------------------------
|   
|(b) |  | To record extinguishment of debt.                                                             
|   
|(c) |  | To record gain on cancellation of pre-petition liabilities and gain
on extinguishment of debt.
|   
|(d) |  | To reflect assets and liabilities at fair value.                                              
|   
|(e) |  | To record new long-term obligations.                                                          
|   
|(f) |  | To record common stock to be issued and adjust opening equity.                                

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NOTE 4: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

In the opinion of the Company, the accompanying financial statements
include all adjustments, of a normal, recurring nature, necessary to present
fairly its financial position as of December 31, 2002 and the results of
operations for the six months ended December 31, 2002.

The accompanying consolidated financial statements of Lason have been
prepared in conformity with generally accepted accounting principles for
financial information, but not in conformity with the instructions for Form
10-K and Rule 10-01 of Regulation S-K and S-X, as the Company has not presented
financial information for the twelve months ending December 31, 2002, 2001 and
2000.

As previously disclosed, in Lasons Form 8-K filed on March 26, 2001, the
Company informed the U.S. Securities and Exchange Commission and U.S. Attorney
for the Eastern District of Michigan of accounting irregularities and system
deficiencies that affected certain portions of the Predecessors financial
statements. Some of these items were material to the Predecessors financial
statements for at least the third quarter of 1999 and may also have been
material to statements for other periods. The irregularities and deficiencies
were found in accounting records of the Companys North American operations.

A Special Committee of the Companys Board of Directors determined that
these irregularities and deficiencies may have occurred during some periods
between late 1997 and 1999. The Committee also found that the Predecessors
financial statements for at least the third quarter of 1999 requires
restatement. The Committee and Company do not believe that any such
irregularities have extended beyond the first half of 2000. The extent of any
misstatements is still being investigated and evaluated by the Company. As a
result, the Predecessors financial statements for the years ended December 31,
2001 and December 31, 2000, have not been reviewed or audited by an independent
public accounting firm and do not reflect the impact resulting from the
correction of, if any, accounting irregularities or system deficiencies, which
are under investigation. As such, the Company has not provided financial
information in this Form 10-K for the twelve months ending December 31, 2002,
2001 and 2000. As a result of adopting fresh start reporting, the Company
believes the ultimate effects, if any, from the alleged accounting
irregularities during 1997  1999, as discussed above, have been eliminated in
the Successors financial statements as of and for the six month period ended
December 31, 2002.

Revenue Recognition

The Companys revenues are driven primarily by transaction volumes. The
Company records revenues when the services are provided and all significant
obligations of the Company have been satisfied. In certain circumstances,
depending upon contractual terms or billing cycle cut-off, the Company is
unable to bill for work completed in a certain period. In these cases, the
Company recognizes revenue when the work is performed in order to match
revenues with the services and related expenses. The work ultimately will be
billed according to the contractual terms or the next possible billing cycle,
as applicable. In addition, cash received from customers in advance of
services performed are recorded as deferred revenue and credited to income when
the related service is provided or according to the term of the agreement.

Cash and Cash Equivalents

Cash equivalents consists of short-term liquid investments with a maturity
at date of purchase of three months or less.

Accounts Receivable

Accounts receivable are generally due within 30
days and are stated at amounts due from customers net of an allowance
for doubtful accounts. The Company determines its allowance by
considering a number of factors, including the length of time
trade account receivable are past due, the Companys previous
collection history, current economic trends and the customers ability
to pay its obligation.  The accounts receivable balance was $36.0
million and $43.5 million, net of an allowance for doubtful accounts
of $4.0 million and $4.4 million at December 31, 2002 and June 30, 2002,
respectively. During the six months ended December 31, 2002, approximately
$0.4 million of accounts receivable were written-off.

Supplies

Supplies are valued at the lower of cost or market, using the first-in,
first-out method. From time to time, due to changes in market demand,
technology or other such factors it may be necessary for the Company to
write-down the carrying value of its supplies.

Property and Equipment

The property and equipment at June 30, 2002 have been stated at their fair
values adjusted by the excess of the fair value of the specific tangible or
identifiable intangible net assets over reorganization value in accordance with
the American Institute of Certified

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##### Table of Contents



Public Accountants Statement of Position 90-7, Financial Reporting by Entities
in Reorganization under the Bankruptcy Code (SOP 90-7) under fresh start
reporting.

Effective July 1, 2002, additions to property and equipment are recorded
at cost and are depreciated using a straight-line method over the estimated
lives of the related assets which range from 3 to 7 years. Expenditures for
normal repairs and maintenance are charged to operations as incurred.
Adjustments of the asset and related accumulated depreciation accounts are made
for retirements of property and equipment with the resulting gain or loss
included in operations.

Self-insurance Liabilities and Reserves

The Company is self-insured for its healthcare obligations and covers its
workers compensation obligations through an incurred loss retro policy, under
which the Company is obligated to cover losses on an actual basis up to a
prescribed amount. The Company accounts for these programs based upon
actuarial estimates of the loss inherent in the claims during the period,
including an estimate for losses incurred but not yet reported. These loss
estimates rely on observations of historical loss experience for similar
events. The Company mitigates its ultimate exposure by carrying certain stop
loss coverage.

Other Loss Contingencies

The Company records liabilities when it is probable that a loss has been
incurred and the amount of that loss can be reasonably estimated. These types
of losses can develop over long periods of time, with potentially significant
changes occurring in the facts of each case. Estimates of probable losses
often include analysis and judgments about actions or potential actions of
third parties, including governmental regulators, which are beyond the control
or influence of the Company.

Use of Estimates

The preparation of the consolidated financial statements is in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the reported amounts of revenue and expenses at the date of the
reporting period. Estimates have been prepared on the basis of the most
current available information and actual results could differ materially from
those estimates.

New Accounting Standards

In June 2002, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards (SFAS) No. 146, Accounting for
Costs Associated with Exit or Disposal Activities. SFAS No. 146 applies to
costs associated with an exit activity (including a restructuring) or with a
disposal of long-lived assets. Under SFAS No. 146, a company will record a
liability for a cost associated with an exit or disposal activity when that
liability is incurred and can be measured at fair value. A liability is
incurred when an event obligates the entity to transfer or use assets. Under
current accounting guidance, a liability can be recorded when management has
committed to an exit plan. The requirements under SFAS No. 146 are effective
prospectively for exit and disposal activities initiated subsequent to December
31, 2002. Restatement of previously issued financial statements is not
permitted. We anticipate adopting SFAS No. 146 in the second quarter of fiscal
year 2003 and do not expect it to have a material impact on our financial
position or results of operations. We anticipate adopting SFAS No. 146 in the
second quarter of fiscal year 2003 and do not expect it to have a material
impact on our financial position or results of operations. We anticipate
adopting SFAS No. 146 in the second quarter of fiscal year 2003 and do not
expect it to have a material impact on our financial position or results of
operations.

NOTE 5: PROPERTY AND EQUIPMENT

At December 31, 2002 and June 30, 2002, property and equipment consists of the
follow:

|                                |                               |   |                   |        |   |               |       |       | 
|------------------------------- | ----------------------------- | - | ----------------- | ------ | - | ------------- | ----- | ----- | 
|                                |                               |   | December 31, 2002 |        |   | June 30, 2002 |      
|                                |                               |   |                   |        |   |               |      
|Computer equipment and software |                               | $ | 1,984             |        |   | $             | 1,591 |      
|Production and office equipment |                               |   | 3,674             |        |   |               | 3,181 |      
|Furniture and fixtures          |                               |   | 397               |        |   |               | 472   |      
|Leasehold improvements          |                               |   | 635               |        |   |               | 476   |      
|Other                           |                               |   | 702               |        |   |               | 193   |      
|                                |                               |   |                   |        |   |              
|Total property and equipment    |                               |   | 7,392             |        |   |               | 5,913 |      
|                                | Less accumulated depreciation |   |                   | (1,199 | ) |               |       |      | 
|                                |                               |   |                   |        |   |              
|                                | Net property and equipment    |   | $                 | 6,193  |   |               | $     | 5,913 | 
|                                |                               |   |                   |        |   |              

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NOTE 6: INCOME TAXES

In connection with the reorganization, a gain on cancellation of
indebtedness was realized by the Predecessor in the amount of approximately
$272.3 million. The ultimate gain realized by the Company will depend upon the
final resolution of claims in the Bankruptcy Court and could vary from that
currently realized. This gain will not be taxable since the gain resulted from
reorganization under the Bankruptcy Code. However, the Company will be
required, as of the beginning of its 2003 taxable year, to reduce certain
attributes including net operating loss carry forwards (NOLs), certain tax
credits and tax basis in assets in an amount equal to such gain on
extinguishment. As of December 31, 2002, the Company estimates that its NOLs
aggregate approximately $240 million which will expire in 2021.

The components of the consolidated income tax provision related for the
six month period ended December 31, 2002 are as follows (in thousands):

|                           |  |              |      |  
|-------------------------- |  | ------------ | ---- | -
|                           |  | December 31, |     
|                           |  | 2002         |     
|                           |  |              |     
|Current provision          |  | $            | 144  |  
|Deferred provision         |  |              | (144 | )
|                           |  |              |     
|Total income tax provision |  | $            |     |  
|                           |  |              |     

The difference between the Companys statutory federal income tax rate and
its effective federal income tax rate results from travel and entertainment
expenses and certain goodwill amortization that is not deductible for federal
income tax purposes.

Deferred income taxes represent the net tax effects of temporary
differences between the carrying value amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax return
purposes. Significant components of the Companys deferred federal income tax
assets are as follows (in thousands):

|                                           |                                             |   |              |          |  
|------------------------------------------ | ------------------------------------------- | - | ------------ | -------- | -
|                                           |                                             |   | December 31, |         
|                                           |                                             |   | 2002         |         
|                                           |                                             |   |              |         
|Deferred tax assets related to:            |                                             |   |              |         
|                                           | Goodwill                                    |   | $            | 28,523   |  
|                                           | Allowance for doubtful accounts             |   |              | 1,540    |  
|                                           | Deferred revenue                            |   |              | 1,110    |  
|                                           | Depreciation and amortization               |   |              | 5,063    |  
|                                           | Accrued expenses                            |   |              | 5,688    |  
|                                           | Net operating loss carryforwards            |   |              | 84,458   |  
|                                           |                                             |   |             
|Total deferred tax assets                  |                                             |   | 126,382      |         
|Deferred tax liabilities, prepaid expenses |                                             |   | 1,079        |         
|                                           |                                             |   |             
|                                           | Net deferred tax assets                     |   |              | 125,303  |  
|                                           | Valuation allowance for deferred tax assets |   |              | (125,303 | )
|                                           |                                             |   |             
|Total
net deferred taxes                   |                                             | $ |             |         
|                                           |                                             |   |             

The reorganization of the Company on the Effective Date constituted an
ownership change under Section 382 of the Internal Revenue Code. Consequently,
the use of any of the NOLs and tax credits generated prior to the ownership
change, that are not reduced pursuant to the provisions discussed above, will
be subject to an annual limitation.

The Companys management, in assessing the realizability of deferred tax
assets, must consider whether it is more likely than not that part or all of
the deferred tax assets may not be realized. This assessment includes
consideration for the scheduled reversal of temporary taxable difference,
projected future taxable income, and tax planning strategies. At December 31,
2002, due to the high degree of uncertainty surrounding their realizability, a
full valuation allowance has been established on all of the deferred taxes.

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NOTE 7: ACCRUED EXPENSES

Accrued expenses at December 31, 2002 and June 30, 2002 consist of the
following (in thousands):

|                                  |       |   |                   |        |  |               |       |        | 
|--------------------------------- | ----- | - | ----------------- | ------ |  | ------------- | ----- | ------ | 
|                                  |       |   | December 31, 2002 |        |  | June 30, 2002 |      
|                                  |       |   |                   |        |  |               |      
|Accrued compensation and benefits |       | $ | 7,278             |        |  | $             | 8,273 |       
|Accrued taxes and other           |       |   | 1,535             |        |  |               | 2,971 |       
|Accrued expenses                  |       |   | 5,281             |        |  |               | 9,257 |       
|                                  |       |   |                   |        |  |              
|                                  | Total |   | $                 | 14,094 |  |               | $     | 20,501 | 
|                                  |       |   |                   |        |  |              

NOTE 8: LONG TERM OBLIGATIONS

The Companys long term obligations as of December 31, 2002 and June 30,
2002 consist of five-year Senior Notes in the aggregate outstanding amount of
$45.9 million and $50.1 million, respectively, which are collateralized by a
lien on all property of the Company, guarantees of certain of the Companys
subsidiaries, as well as pledges of the capital stock of certain subsidiaries
and a unsecured, non-interest bearing Junior Note, maturing within five years,
in the principal amount of $3.1 million issued to certain key managers (who
were also ex-owners of businesses acquired by Lason). The Senior Notes are
supported by a Credit Agreement. The notes bear interest at the prime rate
(floating) plus 2.5 percent (6.75% at December 31, 2002). The Credit Agreement
contains restrictions on acquisitions, disposition of assets, and the
incurrence of other liabilities and contain certain financial covenants related
to minimum EBITDA and cash-flow levels and certain restrictions on capital
expenditures. As of December 31, 2002, the Company was in compliance with all
financial covenants.

The Senior Notes call for quarterly principal payments with final maturity
at June 30, 2007, as follows (in thousands):

|      |  |   |        | 
|----- |  | - | ------ | 
|2003  |  | $ | 3,000  | 
|2004  |  |   | 4,000  | 
|2005  |  |   | 4,000  | 
|2006  |  |   | 4,000  | 
|2007  |  |   | 30,925 | 
|      |  |   |       
|Total |  | $ | 45,925 | 
|      |  |   |       

In addition to the quarterly principal payments, the Credit Agreement
calls for principal reductions from net cash proceeds received from the sale or
disposition of assets.

The Junior Note calls for semi-annual principal payments with final
maturity at December 31, 2006, as follows (in thousands):

|      |                                           |   |       |       |  
|----- | ----------------------------------------- | - | ----- | ----- | -
|2003  |                                           | $ | 624   |      
|2004  |                                           |   | 624   |      
|2005  |                                           |   | 624   |      
|2006  |                                           |   | 1,246 |      
|      |                                           |   |      
|Total |                                           | $ | 3,118 |      
|      | Unamortized Discount at December 31, 2002 |   |       | (670  | )
|      |                                           |   |      
|      | Junior Note Balance                       |   | $     | 2,448 |  
|      |                                           |   |      

The Junior Note Indenture Agreement provides that the principal payments
outlined above will be made, subject to the express condition that
certain tests are satisfied. Based upon the Companys current information, it believes that
the payments will be made.

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NOTE 9: INTEGRATION ACTIVITIES

In connection with its Plan, the Company has undertaken certain
integration and restructuring activities to realign organizationally, eliminate
excess capacity and streamline its operations and further enhance its off-shore
service capabilities. As such, the Company has been and is in the process of
closing certain operating locations. As of December 31, 2002 and June 30,
2002, the Company has accrued $0.5 million and $0.9 million, respectively,
related to its commitment to these activities, of which approximately $0.3
million was included as a special charge in the results of operations in
September of 2002. The Company anticipates being substantially completed with
such activities during the second quarter 2003. However, the exact completion
date is dependent upon a number of factors, some of which are beyond the
control of the Company.

NOTE 10: EARNINGS PER SHARE

Basic earnings per share have been computed in accordance with SFAS No.
128, Earnings per Share. The weighted average common shares used for the
period were 30,032,500, which includes shares reserved for distribution under
the Companys Plan in addition to shares issued during the period to the
Companys new outside directors.

NOTE 11: EMPLOYEE BENEFIT PLAN

The Company has a 401 (k) profit-sharing plan and trust (the Plan). Each
employee who is 21 years of age or older who has worked for the Company for
three months and performed 1,000 hours of service or, has an adjusted service
date with the equivalent or greater term of service, is eligible to participate
in the Plan. Eligible participants may contribute not less than 1 percent and
up to 25 percent of their pre tax compensation to the Plan. The Plan is
contributory and the Company, at its discretion, can match up to 25 percent of
eligible participant contributions not to exceed 8 percent of the participants
earnings. The Companys match contributions for the six months ended December
31, 2002 totaled approximately $0.3 million.

NOTE 12: LEASE COMMITMENTS

The Company has various operating lease agreements related primarily to
equipment and buildings. As of December 31, 2002, future minimum rental
payments required under non-cancelable operating leases with initial or
remaining lease terms in excess of one year are as follows (in thousands):

|                    |  |                   |        | 
|------------------- |  | ----------------- | ------ | 
|                    |  | December 31, 2002 |       
|                    |  |                   |       
|2003                |  | $                 | 5,843  | 
|2004                |  |                   | 4,053  | 
|2005                |  |                   | 2,493  | 
|2006                |  |                   | 2,054  | 
|2007 and thereafter |  |                   | 2,728  | 
|                    |  |                   |       
|Total               |  | $                 | 17,171 | 
|                    |  |                   |       

In addition, the Company has a number of equipment leases that are on a
month-to-month basis. Total rent expense on operating lease agreements for the
six months ended December 31, 2002 was approximately $3.4 million.

NOTE 13: COMMITMENTS AND CONTINGENCIES

As a consequence of the Debtors Plan, any claims from actions or
proceedings against the Companys domestic operations, related to periods prior
to or on the Petition Date, will be treated according to such Plan, which
generally provides unsecured claims to be settled in common shares of New Lason
and claims related to Old Lason common stock or securities to be discharged.

On May 14, 2001, plaintiffs Future Image Holding Corporation and DASA
Holdings Inc., the former owners of Datacom Imaging Systems Company
(Datacom), brought an action against the Company and Lason Canada
Company (Lason Canada) in the Ontario Superior Court of Justice. The Action
related to the acquisition of Datacom Imaging Systems Company by Lason Canada
which was guaranteed by the Company and the non-payment of three additional
purchase payments, which plaintiffs assert they were owed for having achieved
certain performance levels as provided in the acquisition agreement.
Plaintiffs sought approximately $450,000 U.S. for the first additional purchase
payment. On Mach 12. 2002, the plaintiffs were granted a summary judgment of
their claim for the $450,000. The Company appealed this ruling, but was
required to deposit $275,000 U.S. with the Court of Appeals of

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Ontario as security. On September 30, 2002, the Court of Appeals of Ontario
ruled in favor of the Company and reversed the lower courts grant of summary
judgment. Accordingly, plaintiffs lawsuit returned to the trial court. On
July 8, 2002, the Company filed a separate action against plaintiffs to recover
amounts the Company alleges it overpaid plaintiffs in connection with the first
additional purchase payment. During the first quarter of 2003, all of the
above matters were resolved in an out of court settlement with no material
impact to the Company.

The Company is a defendant in an adversary proceeding in the Bankruptcy
Court for the District of Delaware in Wilmington. The plaintiff is Ark 2000-1
CLO, Limited (Ark), one of the Companys senior note holders. The nature of
the dispute is over certain provisions in the Companys Pre-petition Credit
Agreements and Plan, which call for the sharing of net proceeds from certain
designated asset sales between the Company and the senior note holders. Ark
alleges, among other things, that the Company is not entitled to the use or
share of such net sale proceeds. The net proceeds in dispute are approximately
$1.7 million, of which approximately $1.5 million is currently being held in
escrow by the Pre-petition Agent. The Company believes the plaintiffs
arguments are without merit and it is vigorously defending itself in this
matter. Final arguments are scheduled in April 2003. Any unfavorable outcome
or settlement, if any, in this matter could result in a charge to current
earnings.

As described in Note 4, the Company previously notified the SEC and U.S.
Attorney for the Eastern District of Michigan (U.S. Attorney) of accounting
irregularities and system deficiencies that affected certain portions of the
Companys financial statements in 1999 and may have affected its financial
statements for other periods up to and through the first half of 2000. The SEC
and U.S. Attorney have on-going investigations into these matters. The
Companys new executive management team has been and continues to fully
cooperate with such investigations. The Company is not privy to the status of
these investigations and cannot predict when they will be completed, the
results thereof, or actions that might be taken against the Company, if any.
Criminal actions that result in claims against the Company are not
dischargeable under the Bankruptcy Code. The SEC and U.S. Attorney have the
ability, depending upon the nature of the claims, to take actions against the
Company that could have a material adverse effect upon its results of
operations, financial position or liquidity. Based upon the Companys
cooperation with these authorities, its new executive management team is
hopeful that such actions will not, in fact, have a material adverse effect
upon its results of operations, financial position or liquidity. However, no
assurances can be given at this time.

In addition to the foregoing, the Company is subject to lawsuits and
pending or asserted claims with respect to matters arising out of the ordinary
course of business. Although the Company cannot predict the outcomes of these
legal proceedings, it is not currently aware of any claim or action, in the
aggregate, that would have a material adverse effect on its financial position,
results of operations or liquidity.

NOTE 14: SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

The following is a summary of unaudited quarterly results of operations
for the third and fourth quarter of 2002. As discussed throughout this Form
10-K, the Company has not provided financial information in this Form 10-K for
the first and second quarter of 2002, nor any quarterly information related to
2001.

|                                             |                                      |   |                         |        |  |                          |        |        | 
|-------------------------------------------- | ------------------------------------ | - | ----------------------- | ------ |  | ------------------------ | ------ | ------ | 
|                                             |                                      |   | For the three Months    |        |  | For the three Months     |       
|                                             |                                      |   | Ended December 31, 2002 |        |  | Ended September 30, 2002 |       
|                                             |                                      |   |                         |        |  |                          |       
|Revenues, net                                |                                      | $ | 46,612                  |        |  | $                        | 50,322 |       
|Cost of revenues                             |                                      |   | 34,486                  |        |  |                          | 35,463 |       
|                                             |                                      |   |                         |        |  |                         
|                                             | Gross profit                         |   |                         | 12,126 |  |                          |        | 14,859 | 
|Selling, general and administrative expenses |                                      |   | 11,243                  |        |  |                          | 13,565 |       
|                                             |                                      |   |                         |        |  |                         
|                                             | Income from operations               |   |                         | 883    |  |                          |        | 1,294  | 
|Interest expense, net                        |                                      |   | 691                     |        |  |                          | 815    |       
|Provision for income taxes                   |                                      |   |                        |        |  |                          |       |       
|                                             |                                      |   |                         |        |  |                         
|                                             | Net income                           |   | $                       | 192    |  |                          | $      | 479    | 
|                                             |                                      |   |                         |        |  |                         
|                                             | Basic and diluted earnings per share |   | $                       | 0.00   |  |                          | $      | 0.02   | 

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Lason, Inc.

We have audited the accompanying consolidated
balance sheets of Lason, Inc. as of
December 31, 2002 and June 30, 2002 and the related consolidated statement
of earnings, stockholders equity and cash flows for the six months in the
period ended December 31, 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 Lason, Inc.
as of December 31, 2002 and June 30, 2002 and the results of their operations
and their cash flows for the six months in the period ended December 31, 2002,
inconformity with accounting principles generally accepted in the United States
of America.

As further discussed in Note 12, and as previously disclosed by the Company
on March 26, 2001, the Company is under investigation by the Securities
and Exchange Commission and the U.S. Attorney for the Eastern District of
Michigan for accounting irregularities and systems deficiencies, which occurred
primarily in 1999 and prior.

/s/ Grant Thornton LLP

Southfield, Michigan
March 7, 2003

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EXHIBIT INDEX

|            |  |                                                                                                                            
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                
|            |  |                                                                                                                            
|10.9        |  | Credit Agreement Between Lason, the Lenders named therein, Bank One,
N.A., as Agent, dated as of June 30, 2002             
|            |  |                                                                                                                            
|99.1        |  | Chief Executive Officer and Chief Financial Officer Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

S-1