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


                               FORM 10-K/A- NO. 1


                 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 29, 2001

                         COMMISSION FILE NUMBER: 0-21533


                                TEAM MUCHO, INC.
                (Name of registrant as specified in its charter)


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                                 OHIO                                              31-1209872
                    (State or other jurisdiction of                   (I.R.S. Employer Identification No.)
                    incorporation or organization)

              110 E. WILSON BRIDGE ROAD WORTHINGTON, OHIO                             43085
               (Address of principal executive offices)                            (Zip Code)

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                                 (614) 848-3995
              (Registrant's telephone number, including area code)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

                              SECURITIES REGISTERED
                     PURSUANT TO SECTION 12(g) OF THE ACT:
                           COMMON STOCK, NO PAR VALUE


         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 for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to the
filing requirements for at least the past 90 days. Yes [X] No [  ]

         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 registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K/A or any
amendment to this Form 10-K/A. [X]

         Aggregate market value of the Company's voting stock held by its
non-affiliates as of March 22, 2002 was approximately $14,678,303.

         There were 8,048,961 shares of the Company's common stock outstanding
at March 22, 2002.




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                                EXPLANATORY NOTE

The purpose of this Amendment No. 1 to the Annual Report on Form 10-K/A of TEAM
Mucho, Inc. (the "Company") for the year ended December 29, 2001 is to restate
the Company's fiscal 2000 and 2001 consolidated balance sheets and statements of
changes in shareholders' equity, the Company's fiscal 2000 consolidated
statement of operations and correspondingly modify related disclosures. The
restatement does not affect revenues or operating results previously reported in
the Company's audited financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 29, 2001 originally filed with
the Securities and Exchange Commission (the "SEC") on March 28, 2002 (the
"Original 2001 Annual Report").

On April 17, 2002, after filing the Original 2001 Annual Report with audited
financial statements, the Company terminated its former independent public
accountant, Arthur Andersen LLP, and engaged as its new independent public
accountant, Ernst & Young LLP, the Company determined that its prior accounting
treatment of its December 29, 2000 issuance of 100,000 Series A Preferred Shares
with detachable warrants to purchase 1,481,481 common shares and 600,000 common
shares did not comply with generally accepted accounting principles. As a
result, the Company has reclassified certain accounts and restated its fiscal
2000 and 2001 consolidated balance sheets and statements of changes in
shareholders' equity, its fiscal 2000 consolidated statement of operations and
corresponding disclosures.

The Company has amended and restated in its entirety each item of the Original
2001 Annual Report that has been affected by the restatement and
reclassifications. With respect to those restated portions of the Company's
financial statements, this filing includes unaudited financial statements in
lieu of audited financial statements because the Company replaced Arthur
Andersen LLP as its independent public accountant. The Company is working
diligently with its new independent public accountant, Ernst & Young LLP, to
have its financial statements reaudited in connection with the restatement. This
filing does not reflect events occurring after the filing of the Original 2001
Annual Report, or modify or update those disclosures (including disclosures
relating to risks, uncertainties and other facts that may affect the Company's
future performance) in any way, except as required to reflect the effects of the
restatement and reclassifications.



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                                TABLE OF CONTENTS
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PART I
Item 1.        Business......................................................................................         1
Item 2.        Properties....................................................................................        11
Item 3.        Legal Proceedings.............................................................................        11
Item 4.        Submission of Matters to a Vote of Security Holders...........................................        12

PART II
Item 5.        Market for the Registrant's Common Equity and Related Stockholder Matters.....................        13
Item 6.        Selected Financial Data.......................................................................        13
Item 7.        Management's Discussion and Analysis of Financial Condition and Results of Operation..........        14
Item 7A.       Quantitative and Qualitative Disclosures About Market Risk....................................        23
Item 8.        Financial Statements and Supplementary Data...................................................        23
Item 9.        Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..........        46

PART III
Item 10.       Directors and Executive Officers of the Registrant............................................        47
Item 11.       Executive Compensation........................................................................        47
Item 12.       Security Ownership of Certain Beneficial Owners and Management................................        47
Item 13.       Certain Relationships and Related Transactions................................................        47

PART IV
Item 14.       Exhibits, Financial Statement Schedules and Reports on Form 8-K...............................        49

Signatures     ..............................................................................................        52



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                                     PART I

This document contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. You can identify such forward-looking statements by the words
"expects," "intends," "plans," "projects," "believes," "estimates," and similar
expressions. It is important to note that the Company's actual results could
differ materially from those projected in such forward-looking statements. In
the normal course of business, we, in an effort to help keep the Company's
shareholders and the public informed about our operations, may from time to time
issue such forward-looking statements, either orally or in writing. Generally,
these statements relate to business plans or strategies, projected or
anticipated benefits or other consequences of such plans or strategies, or
projections involving anticipated revenues, earnings or other aspects of
operating results. We base the forward-looking statements on our current
expectations, estimates and projections. We caution you that these statements
are not guarantees of future performance and involve risks, uncertainties and
assumptions that we cannot predict. In addition, we have based many of these
forward-looking statements on assumptions about future events that may prove to
be inaccurate. Therefore, the actual results of the future events described in
the forward-looking statements in this Annual Report on Form 10-K/A, or
elsewhere, could differ materially from those stated in the forward-looking
statements. Among the factors that could cause actual results to differ
materially are the risks and uncertainties discussed in this Annual Report on
Form 10-K/A, including, without limitation, factors discussed under the caption
"Risk Factors," beginning on page 19. Shareholders are cautioned not to put
undue reliance on forward-looking statements. In addition, the Company does not
have any intention or obligation to update forward-looking statements after the
date hereof, even if new information, future events, or other circumstances have
made them incorrect or misleading. For those statements, the Company claims the
protection of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995.

As used in this Annual Report on Form 10-K/A and except as the context otherwise
may require, "Company," "we," "us," and "our" refer to TEAM Mucho, Inc. and its
subsidiaries.

ITEM 1. BUSINESS.

GENERAL

TEAM Mucho, Inc. is a Business Process Outsourcing company that specializes in
human resource management and administration. The Company operates primarily as
a Professional Employer Organization ("PEO") that provides comprehensive human
resource services, including payroll and payroll administration, benefits
administration, on-site and on-line employee and employer communications,
employment practices and human resource risk management, workforce compliance
administration and severance management. The Company provides these services by
becoming co-employer of its clients employees.

The Company was formed by the December 2000 acquisition of TEAM America
Corporation by Mucho.com, Inc. As a result of the acquisition, the Company began
focusing its efforts on the PEO business of TEAM America Corporation.

By becoming the co-employer of its clients' employees, the Company is able to
take advantage of certain economies of scale in the "business of employment" and
to pass those benefits on to its clients and worksite employees. As a result,
clients are able to obtain, at an economical cost, services and expertise
similar to those provided by the human resource departments of large companies.
These services provide substantial benefits to both the client and its worksite
employees. The Company believes its services assist business owners by:

         -        permitting the managers of the client to concentrate on the
                  client's core business as a result of the reduced time and
                  effort that they are required to spend dealing with complex
                  human resource, legal and regulatory compliance issues and
                  employee administration; and

         -        managing escalating costs associated with unemployment,
                  workers' compensation, health insurance coverage, worksite
                  safety programs and employee-related litigation.

The Company also believes that worksite employees benefit from their
relationship with the Company by having access to better, more affordable
benefits, enhanced benefit portability, improved worksite safety and employment
stability.

The Company provides its services by entering into a client services agreement,
which establishes a three-party relationship whereby it and the client act as
co-employers of the employees who work at the client's location ("worksite
employees"). Under



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the client services agreement, the Company assumes responsibility for personnel
administration and compliance with most employment-related governmental
regulations, while the client company retains the employees' services in its
business and remains the employer for various other purposes. The Company
charges a comprehensive service fee, which is invoiced concurrently with the
processing of payroll for the worksite employees of the client. The fee is based
upon the gross payroll of each client by employee and the Company's estimated
cost of providing the services included in the client services agreement as
elected by the client.

The Company believes that there is an increasing trend of businesses to
outsource non-core activities and functions. Only a relatively small percentage
of businesses, however, currently utilize PEOs, although there is significant
growth in the number of small businesses. The Company believes that these
factors, coupled with the ever increasing complexity of the human resource legal
and regulatory framework and the costs associated with implementing the
necessary management information systems to deal with these issues, will lead to
growth opportunities in the PEO industry.

The Merger. On June 16, 2000, TEAM America Corporation entered into an agreement
and plan of merger with TEAM Merger Corporation, a wholly owned subsidiary, and
Mucho.com, Inc., pursuant to which TEAM Merger would be merged with and into
Mucho, and Mucho would become a wholly owned subsidiary. Under the terms of the
merger agreement, TEAM America Corporation agreed to acquire all of the stock
(including options and warrants) of Mucho in exchange for up to 5,925,925 shares
of TEAM America's common stock. The merger was completed on December 28, 2000,
and the Company's name was changed to TEAM Mucho, Inc.

Pursuant to the terms of the merger agreement, 3,643,709 shares of common stock
were issued, 196,105 shares were reserved for future issuance for Mucho.com
options and 1,111,111 shares were placed in escrow (the "Escrow"). In July 2001,
these shares were released from escrow.

Simultaneous with the merger, the Company announced an issuer tender offer to
all of its existing shareholders. Under the terms of the issuer tender offer,
the Company offered to purchase up to 2,175,492 shares of its common stock,
representing 50% of its outstanding common stock on November 10, 2000, at a
price of $6.75 per share. In connection with the issuer tender offer, a total of
1,721,850 shares of its common stock were tendered and accepted for payment at
$6.75 per share, for a total redemption of $11,622,488.

On December 28, 2000, immediately following the merger, the Company received a
$10 million investment from Stonehenge Opportunity Fund, LLC and Provident Bank
for 100,000 shares of its Class A cumulative convertible redeemable preferred
stock which are convertible into 1,481,481 shares of its common stock. As
additional consideration for the purchase of the preferred stock, the Company
issued a warrant to purchase an additional 1,481,481 shares of its common stock
at an exercise price of $6.75 per share, exercisable for a period of ten years
from December 28, 2000. The Company also secured up to $18 million of senior
secured credit from Provident and from Huntington National Bank for acquisitions
and other uses.

In March 2001, the Company acquired substantially all of the assets of a
Utah-based PEO, Professional Staff Management, Inc. (PSMI). As of December 29,
2001, the Company provided PEO services to approximately 1,600 clients and
approximately 13,000 worksite employees throughout the United States. The
Company had worksite employees in 47 states.

On March 1, 2002, the Company acquired certain assets and assumed certain
liabilities from Strategic Staff Management, Inc. (SSMI) in Omaha, Nebraska. The
purchase price of $472,000, included cash of $300,000 and deposits from certain
SSMI customers of $172,000.

On February 15, 2002, the Company entered into a letter of intent to acquire
certain assets from Inovis Corporation. A maximum down payment of $200,000 will
be paid in cash at closing. In addition to the down payment, the Company will
pay additional amounts based upon the operating performance relative to the
customers acquired over a defined period of time. The Company anticipates that
this transaction will close on or around April 1, 2002.

On March 14, 2002, the Company entered into a letter of intent to acquire
certain assets from Group 4, Inc. A maximum down payment of $120,000 will be
paid in cash at closing. In addition to the down payment, the Company will pay
additional amounts based upon the operating performance of the customers
acquired over a defined period of time. The Company anticipates that this
transaction will close in the second quarter of 2002.






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THE COMPANY'S STRATEGIC PLAN

The Company's strategic plan for 2002 will continue to be characterized by the
acronym "MAGIC." Each letter represents a particularly important part of the
overall strategy.

"M" = Merge, through effective and well-targeted acquisitions in the PEO
industry.

The PEO industry is highly fragmented, with in excess of 2,500 companies
providing a variety of PEO services. The Company believes significant
opportunities for additional consolidation exist in the PEO industry. This
industry consolidation will be driven by growing human resource, legal and
regulatory complexities, by increasing capital requirements, and by the
significant economies of scale available to PEOs with a regional concentration
of clients. The Company's acquisition strategy focuses on expanding its current
markets by acquiring the accounts of competitors through "fold in" acquisitions,
and by entering selected new markets by acquiring established high-quality PEOs
in order to provide a platform for future regional consolidation. Certain
fundamental attributes characterize attractive markets, such as:

         -        proximity to a major metropolitan area;

         -        regulatory receptivity to PEOs;

         -        prior successful introduction of the PEO concept;

         -        favorable economic conditions; and

         -        a high concentration of small to medium-sized businesses.

"A" = Automate, web enable its proprietary PEO operating system, TEAM Direct, so
clients and employees can perform all human resource tasks online.

The Company plans to continue to develop its proprietary information systems
which will enable it to integrate all aspects of the administration of payroll,
human resources and employee benefits, thereby providing a significant
competitive advantage in managing costs and delivering a full range of
high-quality services. See "Information Technology."

"G" = Grow, by improving the productivity of its proprietary sales force and
establishing strategic business alliances with selected organizations to offer
the Company's services. The following are key elements of its growth strategy:

         -        web enabling of TEAM Direct system so clients and employees
                  can perform all human resource tasks online, reducing the
                  Company's overhead;

         -        active pursuit of acquisition candidates in the PEO industry;

         -        cross-selling of other outsourcing services to human resource
                  outsourcing clients and their employees to help boost gross
                  margins;

         -        enhancing its internal growth rate; and

         -        offering of non-PEO human resource services to clients who are
                  not candidates for the PEO service.

In order to further strengthen its position in various U.S. markets, the Company
plans to pursue the following growth strategies:

Deliver High-Quality Services and Expand Client Base. By offering a broad range
of high-quality services, the Company believes it is attractive to employers who
are seeking a single-source solution to their human resource needs. The Company
will continue to focus on providing high-quality, value-added services as a
means to differentiate itself from competitors. Certain PEOs compete primarily
by offering comparatively lower-cost health and workers' compensation insurance
coverage to high-risk industries or by providing principally basic payroll and
payroll tax administration with only limited additional services. In contrast,
the Company provides comprehensive and integrated human resource management to
clients who are selected after a significant risk management assessment. The
Company believes that its strategy of emphasizing the quality and breadth of



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services will result in lower client turnover and more consistent growth and
profits than the strategy of certain PEOs which compete by offering
comparatively lower-cost coverage or limited services.

Increase Penetration in Existing Markets. Additional market penetration in the
Company's established markets, California, Intermountain West and Ohio, offers
significant growth potential. Less than 2.0% of the total number of businesses
having between 20 and 500 employees utilize a PEO. In established markets, the
Company's ability to achieve growth objectives is enhanced by a larger number of
referrals, a higher client retention rate, a more experienced sales force and
greater momentum in the marketing efforts than that which occurs in new markets.
In order to capitalize on these advantages and to achieve higher penetration in
existing markets, the Company plans to hire additional sales personnel and
improve sales productivity. In addition, the Company plans to continue its
advertising and promotional efforts in order to educate the market place
regarding the quality and breadth of its services and the benefits to companies
of outsourcing their human resource function. By increasing its penetration in
existing markets, the Company believes it will leverage its current economies of
scale, thereby increasing cost effectiveness and profit margins.

Target Selected Clients in Growth Industries. The Company targets and tailors
its services to meet the needs of businesses with between 5 and 500 employees in
industries which have the potential for significant growth. As of December 29,
2001, the Company's clients had an average of approximately eight worksite
employees. Targeted businesses are likely to:

         -        desire the wide range of employee benefits;

         -        recognize the burden of their human resource administration
                  costs;

         -        experience greater employment-related regulatory burdens; and

         -        be more financially stable.

"I" = Integrate, that the various new acquisitions be effectively managed to
capture the intended benefits of these transactions.

"C" = Cross Sell, by offering the existing prospective and acquired clients and
their employees new products and services.

PEO INDUSTRY

The PEO industry began to evolve in the early 1980's largely in response to the
burdens placed on small and medium-sized employers by an increasingly complex
legal and regulatory environment. While various service providers were available
to assist these businesses with specific tasks, PEOs emerged as providers of a
more comprehensive range of services relating to the employer/employee
relationship. PEO arrangements generally transfer broad aspects of the
employer/employee relationship to the PEO. Because PEOs provide employee-related
services to a large number of employees, they can achieve economies of scale
that allow them to perform employment-related functions more efficiently,
provide employee benefits at a level typically available only to large
corporations with substantial resources and devote more attention to human
resources management.

Growth in the PEO industry has been significant. The Company believes that the
key factors driving demand for PEO services include (i) trends relating to the
growth and productivity of the small and medium-sized business community in the
United States, such as outsourcing and a focus on core competencies, (ii) the
need to provide competitive health care and related benefits to attract and
retain employees, (iii) the increasing costs associated with health and workers'
compensation insurance coverage, workplace safety programs, employee-related
complaints and litigation and (iv) complex regulation of labor and employment
issues and the related costs of compliance, including the allocation of time and
effort to such functions by owners and key executives.

A significant factor in the growth of the PEO industry has been increasing
recognition and acceptance of PEOs and the co-employer relationship by federal
and state governmental authorities. The Company and other industry leaders, in
concert with the National Association of Professional Employer Organizations, or
NAPEO, have worked with the relevant governmental entities for the establishment
of a regulatory framework that protects clients and employees, discourages
unscrupulous and financially unsound companies, and promotes the legitimacy and
further development of the industry. While 47 states have recognized PEOs in
their employment laws, many states do not explicitly regulate PEOs. However, 21
states have enacted legislation containing licensing, registration, or
certification requirements, and several others are considering such regulation.
Such laws vary from state to state but generally provide for monitoring the
fiscal responsibility of PEOs. State regulation assists



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in screening insufficiently capitalized PEO operations and, in the Company's
view, has the effect of legitimizing the PEO industry by resolving interpretive
issues concerning employee status for specific purposes under applicable state
law. The Company has actively supported such regulatory efforts and is currently
licensed or registered in 47 of these states. The cost of compliance with these
regulations is not material to the Company's financial position or results of
operations.

There is currently proposed H.R. 2807 and S. 1305 that promise to formally
legislate PEOs nationally. Currently, PEOs are subject to a variety of state
laws that require the Company to submit filings, maintain state specific data
and incur the expense of auditing certain states separately. The Company
believes that enacted federal legislation will facilitate the development of the
PEO industry.

PEO SERVICES

Client Service Teams. The Company has nine regional directors who oversee a
service staff consisting of Human Resource Consultants (HRC) and Human Resource
Assistants (HRA). A team consisting of an HRC and HRA is assigned to each
client. The client service team is responsible for the client's personnel
administration, for coordinating the Company's response to client needs for
administrative support and for responding to any questions or problems
encountered by the client.

The HRC acts as the principal client contact and typically is on call and in
contact with each client throughout the week. This individual serves as the
communication link between the Company's corporate departments and the client's
on-site supervisor, who in many cases is the owner of the client's business.
Accordingly, this individual is involved in every aspect of delivery of services
to clients. For example, the HRC is responsible for gathering all information
necessary to process each payroll of the client and for all other information
needed by the Company's human resources, accounting and other departments with
respect to such client and to worksite employees. An HRC also actively
participates in hiring, disciplining and terminating worksite employees;
administering employee benefits; and responding to employee complaints and
grievances.

Core Activities. The Company provides professional employer services through six
core activities:

         -        human resources administration;

         -        regulatory compliance management;

         -        employee benefits administration;

         -        risk management services and employer liability protection;

         -        payroll and payroll tax administration; and

         -        placement services.

Human Resources Administration. The Company, as an employer, provides its
clients with a broad range of human resource services including on-going
supervisory education and training regarding risk management and employment
laws, policies and procedures. In addition, the Company's Human Resources
Department handles sensitive and complicated employment issues such as employee
discipline, termination, sexual harassment, and wage and salary planning and
analysis. The Company is in the process of expanding its human resources
services to assist clients in areas such as employee morale and worksite
employee training. The Company provides a comprehensive employee handbook,
including customized, site-specific materials concerning each worksite, to all
worksite employees. In addition, extensive files and records regarding worksite
employees for compliance with various state and federal laws and regulations are
maintained. This extensive record keeping is designed to substantially reduce
legal actions arising from lack of proper documentation.

Regulatory Compliance Management. Under its standard client agreement, the
Company assumes responsibility for complying with many employment related
regulatory requirements. As an employer, it must comply with numerous federal,
state and local laws, including:

         -        certain tax, workers' compensation, unemployment, immigration,
                  civil rights, and wage and hour laws;

         -        the Americans with Disabilities Act of 1990;



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         -        the Family and Medical Leave Act;

         -        laws administered by the Equal Employment Opportunity
                  Commission; and

         -        employee benefits laws such as ERISA and COBRA.

The Company provides bulletin boards to its clients and maintains them for
compliance with required posters and notices. It also assists clients in their
efforts as employers to comply with and understand certain other laws and
responsibilities with respect to which it does not assume liability and
responsibility. For example, while the Company provides significant safety
training and risk management services to its clients, it does not assume
responsibility for compliance with the Occupational Safety and Health Act
because the client controls its worksite facilities and equipment.

Employee Benefits Administration. The Company offers a broad range of employee
benefit programs to its worksite employees. The Company administers such benefit
programs, thereby reducing the administrative responsibilities of its clients
for maintaining complex and tax-qualified employee benefit plans. By combining
multiple worksite employees, the Company is able to take advantage of certain
economies of scale in the administration and provision of employee benefits. As
a result, the Company is able to offer to its worksite employees benefit
programs that are comparable to those offered by large corporations. In fact,
some programs offered by the Company would not otherwise be available to the
worksite employees of many clients if such clients were the sole employers.
Eligible worksite and corporate staff employees are entitled to participate in
the Company's employee benefit programs without discrimination. Such programs
include life insurance coverage as well as a cafeteria plan that offers a choice
of different health plans and dental, vision and prescription card coverage. In
addition, each eligible employee may participate in a 401(k) retirement plan and
a medical and dependent care reimbursement program. Each worksite employee is
given:

         -        the opportunity to purchase group-discounted, payroll-deducted
                  optional life insurance and long-term disability insurance;
                  and

         -        access to store discount programs, free checking accounts with
                  participating banks, a prepaid legal services plan, and
                  various other employee benefits.

By offering its worksite employees a broad range of large corporation style
benefit plans and programs, the Company believes it is able to reduce worksite
employee turnover, which results in cost savings for its clients. The Company
performs regulatory compliance and plan administration in accordance with state
and federal benefit laws.

Risk Management Services and Employer Liability Protection. The Company's risk
management of the worksite includes policies and procedures designed to
proactively prevent and control costs of lawsuits, fines, penalties, judgments,
settlements and legal and professional fees. In addition, it controls benefit
plan costs by attempting to prevent fraud and abuse by closely monitoring
claims. Other risk management programs include effectively processing workers'
compensation and unemployment claims and aggressively contesting any suspicious
or improper claims. The Company believes that such risk management efforts
increase its profitability by reducing liability exposure and by increasing the
value of services to its clients.

Many of the Company's direct competitors in both the public and private sector
are self-insured for health care, workers' compensation and employment practices
risks. In 1999, the Company became self-insured for Ohio workers' compensation.
The Company also maintains insurance for employment practices risks, including
liability for employment discrimination and wrongful termination. The Company
believes that historically it has been able to achieve a higher level of client
satisfaction and security by being insured for such risks. It believes that
being insured with this type of coverage has greatly reduced liability exposure
and, consequently, the potential volatility of income from operations because it
is not required to rely exclusively on contractual indemnification from clients.
Many of these clients do not carry insurance which covers employment practices
liability or do not have sufficient net worth to support their indemnification
obligations. For this coverage, the Company has arranged for a large surplus
lines insurance company rated A++ (superior) by A.M. Best Company to provide to
it, and to its clients as additional insureds, employment practices liability
insurance. The Company believes that this arrangement is better received by
clients who are seeking to reduce their employment liability exposures and also
prevents it from becoming involved in adversarial situations with clients by
eliminating the need to seek indemnification. The Company continues to study the
possibility of becoming self-insured in the future for selected risks and
believes that significant additional opportunities to self-insure may arise.



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Payroll and Payroll Tax Administration. The Company provides its clients with
comprehensive payroll and payroll tax administration which, except for the
obligation to pay, substantially eliminates client responsibility for payroll
and payroll taxes beyond verification of payroll information. Subject to the
client's obligation to pay, the Company as the co-employer, assumes liability
and responsibility for the payroll and payroll taxes of worksite employees and
for the obligations of clients to make federal and state unemployment and
workers' compensation filings, FICA deposits, child support levies and
garnishments, and new hire reports. The Company receives all payroll
information, calculates, processes and records all such information, and either
issues payroll checks or directly deposits the net pay of worksite employees
into their bank accounts. All payroll checks are delivered either to the on-site
supervisor of the worksite or directly to the worksite employees. As part of its
strategic plan of expanding information technology, the Company is in the
process of developing client-based software interfaces to make it possible for
clients to enter and submit payroll information via computer modems.

Placement Services. As a part of the overall employment relationship, the
Company assists its clients in their efforts to hire new employees. As a result
of the Company's advertising volume and contracts with newspapers and other
media, it is able to place such advertisements at significantly lower prices
than are available to its clients. In addition, in some cases, the Company does
not have to place such advertisements because it already has multiple qualified
candidates in a job bank or pool of candidates. The Company interviews, screens
and pre-qualifies candidates based on criteria established in a job description
prepared by it with the client's assistance and performs background checks. In
addition, depending on the needs of the client, the Company may test worksite
employees for skills, health, and drug-use in accordance with state and federal
laws. Following the selection of a candidate, the Company completes all hiring
paperwork and, if the employee is eligible, enrolls the employee in benefit
programs. The Company believes that this unique approach in providing such
services gives it a significant advantage over competitors. These services also
enable it to reduce administrative expenses and employee turnover and to avoid
hiring unqualified or problem employees.

CLIENTS

All clients enter into a client services agreement. The Company's client
services agreement generally is for one year and provides for an on-going
relationship, subject to termination by the Company or the client upon 30 days
written notice.

The client services agreement establishes a comprehensive service fee, which is
subject to periodic adjustments to account for changes in the composition of the
client's workforce and statutory changes that affect costs. The client services
agreement also establishes the division of responsibilities between the Company
and the client. Pursuant to the client services agreement, the Company is
responsible for all personnel administration and is liable for certain
employment-related government regulation. In addition, subject to the obligation
of the client to pay the Company, the Company assumes responsibility for payment
of salaries and wages of worksite employees and responsibility for providing
employee benefits to such persons. The client retains the employees' services
and remains liable for compliance with certain governmental regulations, which
requires control of the worksite, daily supervisory responsibility, or is
otherwise beyond the Company's ability to assume. A third group of
responsibilities and liabilities are shared by the Company and the client where
such joint responsibility is appropriate. The specific division of applicable
responsibilities under the client services agreement is as follows:

TEAM MUCHO

         -        Payroll administration and related tax reporting and
                  remittance (state and federal withholding, FICA, FUTA, state
                  unemployment);

         -        state unemployment compliance, management and reporting;

         -        workers' compensation compliance, procurement, management and
                  reporting;

         -        compliance with COBRA, IRCA, HIPAA and ERISA (for plans
                  sponsored by us), as well as monitoring changes in other
                  governmental regulations governing the employer/employee
                  relationship and updating the client when necessary;

         -        promulgation of policies and procedures for compliance with
                  all federal, state and local employment laws; and

         -        employee benefits administration.



                                       7
<PAGE>



CLIENT

         -        Payment and related tax reporting and remittance of
                  non-qualified deferred compensation and equity-based
                  compensation;

         -        assignment to, and ownership of, all intellectual property
                  rights;

         -        compliance with Section 414(o) of the Internal Revenue Code
                  regarding benefit discrimination;

         -        compliance with OSHA regulations, EPA regulations and state
                  and local equivalents and compliance with government
                  contracting provisions;

         -        compliance with NLRA, including all organizing efforts and
                  expenses related to a collective bargaining agreement and
                  related benefits;

         -        professional licensing requirements and fidelity bonding;

         -        implementation of policies and practices relating to the
                  employee/employer relationship and compliance with all
                  federal, state and local employment laws; and

         -        products produced and/or services provided.

JOINT

         -        Employer's professional liability insurance.

Because the Company is a co-employer, it is possible that it could incur
liability for violations of such laws even if it is not responsible for the
conduct giving rise to such liability. The client services agreement addresses
this issue by providing that the client will indemnify the Company for liability
incurred to the extent the liability is attributable to conduct by the client.
Notwithstanding this contractual right to indemnification, it is possible that
the Company could be unable to collect on a claim for indemnification and may
therefore be ultimately responsible for satisfying the liability in question.
The Company maintains certain general insurance coverages (including coverages
for its clients) to manage its exposure for these types of claims, and, as a
result, settlement costs with respect to this exposure have historically been
insignificant to its operating results.

Clients are generally required to remit their comprehensive service fees no
later than one day prior to the applicable payroll date by wire transfer or
automated clearinghouse transaction. The Company retains the ability to
terminate the client services agreement as well as the continued employment of
the employees upon non-payment by a client. This right, the periodic nature of
payroll and the overall quality of the client base has resulted in an excellent
overall collection history.

At December 29, 2001, the Company served approximately 1,600 clients and
approximately 13,000 worksite employees resulting in an average of eight
worksite employees per client. No single client accounted for more than 1.5% of
revenues for the twelve months ended December 29, 2001. As a result of
acquisitions in 1997 and 1998, the Company's clientele is geographically
diverse. In 1996, approximately 94% of the client base was located in Ohio. At
December 29, 2001, less than 30% of the worksite employees were located in Ohio.
The client base is broadly distributed throughout a wide variety of industries,
but is heavily weighted towards professional, service, light manufacturing and
non-profit businesses. Exposure to higher workers' compensation claims
businesses such as construction, transportation and commercial is less than 5%
of the Company's total business.

In general, the Company has benefited from a high level of client retention,
resulting in a significant recurring revenue stream. The attrition that has been
experienced has typically been caused by a variety of factors, including:

         -        sale or acquisition of the client;

         -        termination resulting from the client's inability to make
                  timely payments;

         -        client business failure or downsizing; and



                                       8
<PAGE>



         -        client non-renewal due to price or service dissatisfaction.

The Company believes that the risk of a client terminating its relationship with
the Company decreases substantially after the client has been associated with it
for over one year because of the client's increased appreciation of its
value-added services and because of the difficulties associated with a client
reassuming the burdens of being the sole employer. The Company believes that
only a small percentage of nonrenewing clients withdraw due to dissatisfaction
with services or to retain the services of a competitor. The Company did,
however, experience higher than normal attrition during calendar 2001 due to a
change in medical insurance premiums by a supplier and due to the general
downturn in the economy.

SALES AND MARKETING

The Company markets its services through a direct sales force. Each of its sales
personnel enters into an employment agreement which establishes a
performance-based compensation program, which currently includes a base amount,
sales commissions and a bonus for each new worksite employee enlisted. These
employment agreements contain certain non-competition and non-solicitation
provisions that prohibit the sales personnel from competing against the Company.
The productivity of the Company's sales personnel is attributed in part to their
experience in fields related to one or more of the Company's core services. The
background of the Company's sales personnel includes experience in industries
such as information services, health insurance, business consulting and
commercial sales. Sales materials emphasize a broad range of high-quality
services and the resulting benefits to clients and worksite employees.

The Company sales and marketing strategy is to achieve higher penetration in
certain existing markets by hiring additional sales personnel and increasing
sales productivity. Currently, sales leads are generated from the two primary
sources of referrals and direct sales efforts. These leads result in initial
presentations to prospective clients. Sales personnel gather information about
the prospective client and its employees, including job classification, workers'
compensation and health insurance claims history, salary and the desired level
of employee benefits. The Company performs a risk management analysis of each
prospective client which involves a review of such factors as the client's
credit history, financial strength, and workers' compensation, and health
insurance and unemployment claims history. Following a review of these factors,
a client proposal is prepared for acceptable clients. Stringent underwriting
procedures greatly reduce controllable costs and liability exposure, and are, in
part, responsible for the Company's high rate of client retention and control of
direct costs.

INFORMATION TECHNOLOGY

The Company's primary information-processing center is located at its corporate
headquarters. Other offices are connected to its centralized system through
network dial-up services. Industry-standard software is used to process payroll
and other commercially available software manages standard business functions
such as accounting and finance. The Company maintains a back-up payroll
processing facility in San Diego, and maintains a back-up of TEAM Direct(TM) PEO
operating system. The Company also maintains a contract with a mobile recovery
service as part of a disaster recovery plan for its corporate headquarters.

Since October 1995, the Company has been developing and continues to develop its
proprietary integrated information system based on client-server technology
using an Oracle(TM) relational database. The system, called TEAM Direct(TM),
will allow clients to enter and submit payroll data via modem and over the
Internet. The system also is used to store and retrieve information regarding
all aspects of the Company's business, including human resource administration,
regulatory compliance management, employee benefits administration, risk
management services, payroll and payroll tax administration, and placement
services. As of December 29, 2001, all Company locations were utilizing TEAM
Direct(TM). The Company believes that this system will be capable of being
upgraded and expanded to meet its needs for the foreseeable future.

CORPORATE EMPLOYEES

As of December 29, 2001, the Company had 209 corporate employees located at its
headquarters in Worthington, Ohio and at its offices around the country.




                                       9
<PAGE>



PEO RESPONSIBILITIES

Federal, State and Local Employment Taxes. The Company assumes the
administrative responsibility for the payment of federal, state and local
employment taxes with respect to wages and salaries paid to its employees,
including worksite employees. There are essentially three types of federal,
state and local employment tax obligations:

         -        income tax withholding requirements;

         -        social security obligations under FICA; and

         -        unemployment obligations under FUTA and SUTA.

Under these Internal Revenue Code sections, the employer has the obligation to
withhold and remit the employer portion and, where applicable, the employee
portion of these taxes.

Employee Benefit Plans. The Company offers various employee benefit plans to
worksite employees, including 401(k) plans, cafeteria plans, group health plans,
a group life insurance plan, a group disability insurance plan and an employee
assistance plan. Generally, employee benefit plans are subject to provisions of
both the Internal Revenue Code and ERISA. In order to qualify for favorable tax
treatment under the Internal Revenue Code, the plans must be established and
maintained by an employer for the exclusive benefit of its employees. Most of
these benefit plans are also offered to the Company's corporate employees.

Representatives of the IRS have publicly stated that a Market Segment Study
Group established by the IRS is examining whether PEOs are the employers of
worksite employees under Internal Revenue Code provisions applicable to employee
benefit plans and consequently able to offer to worksite employees benefit plans
that qualify for favorable tax treatment and whether client company owners are
employees of PEOs under Internal Revenue Code provisions applicable to employee
benefit plans. The Company has limited knowledge of the nature, scope and status
of the Market Segment Study, and the IRS has not publicly released any
information regarding the study to date. In addition, the Company's 401(k) plan
was audited for the year ended December 31, 1992, and, as a part of that audit,
the IRS regional office has asked the IRS national office to issue a Technical
Advice Memorandum regarding whether or not the Company is the employer for
benefit plan purposes. The Company has stated its position in a filing with the
IRS that it is the employer for benefit plan purposes. The Company is unable to
predict the timing or nature of the findings of the Market Segment Study Group,
the timing or conclusions of the Technical Advice Memorandum, or the ultimate
outcome of such conclusions or findings. If the IRS study were to conclude that
a PEO is not an employer of its worksite employees for plan purposes, then
worksite employees could not continue to make contributions to the Company's
401(k) plan or cafeteria plan. If such conclusion were applied retroactively,
then employees' vested account balances could become taxable immediately. The
Company would lose its tax deduction for deposits to the plan trust which would
become a taxable trust, and penalties could be assessed. In such a scenario, the
Company would face the risk of client dissatisfaction as well as potential
litigation. A retroactive application by the IRS of an adverse conclusion could
have a material adverse effect on the Company's financial position and results
of operations. While the Company believes that a retroactive disqualification is
unlikely, there can be no assurance as to the ultimate resolution of these
issues.

The Staffing Firm Workers Benefits Act of 1997 (H.R. 1891) proposed legislation
that would have clarified who is the employer for benefit plan purposes, thus
eliminating much of the current confusion and uncertainty surrounding these
issues. H.R. 1891 did not become legislation in 2000. The bill will be
reintroduced in 2002 with additional support and sponsorship. It is uncertain at
this time whether this legislation will become law, and, if it does, what
changes, if any, may be required of the Company's existing benefit plans in
order to comply with its provisions.

In addition to the employer/employee relationship issues described above,
pension and profit-sharing plans, including the Company's 401(k) plan, must
satisfy certain other requirements under the Internal Revenue Code. These other
requirements are generally designed to prevent discrimination in favor of highly
compensated employees to the detriment of non-highly compensated employees with
respect to both the availability of, and the benefits, rights and features
offered in, qualified employee benefit plans. The Company applies the
nondiscrimination requirements of the Internal Revenue Code to ensure that its
401(k) plan is in compliance with the requirements of the Internal Revenue Code.

Workers' Compensation. Workers' compensation is a state mandated, comprehensive
insurance program that requires employers to fund medical expenses, lost wages
and other costs resulting from work-related injuries, illnesses and deaths. In
exchange for providing workers' compensation coverage for employees, employers
are not subject to litigation by employees for benefits in



                                       10
<PAGE>



excess of those provided by the relevant state statute. In most states, the
extensive benefits coverage (for both medical cost and lost wages) is provided
through the purchase of commercial insurance from private insurance companies,
participation in state-run insurance funds or employer self-insurance. Workers'
compensation benefits and arrangements vary on a state-by-state basis and are
often highly complex. These laws establish the rights of workers to receive
benefits and to appeal benefit denials.

As a creation of state law, workers' compensation is subject to change by the
state legislature in each state and is influenced by the political processes in
each state. Some states, such as Ohio, have mandated that employers receive
coverage only from state operated funds. Although Ohio maintains such a "state
fund," it does allow employers of a sufficient size and with sufficient ties to
the state to self-insure for workers' compensation purposes. The Company has
maintained a self-insured workers' compensation program for its Ohio employees
since July 1999 and has a high retention workers' compensation policy covering
most of its non-Ohio employees. The Company records workers' compensation
expense based on the estimated total cost of each claim, plus an estimate for
incurred but not reported (IBNR) claims. Under the Ohio Self-Insurance Program,
the Company is self-funded up to $250,000 per occurrence and purchases private
insurance for individual claims in excess of that amount. Although workers'
compensation in Ohio is mandatory and generally shields employers from common
law civil suits, the Ohio Supreme Court has created an exception for so-called
"intentional torts." However, the Company's client services agreement language
provides some protection in this area. Effective January 1, 2002, the Company
purchased excess loss coverage for individual claims that exceed $500,000
through The Hartford Insurance Company.

Under its insured program for non-Ohio employees, the Company has a per claim
retention limit of $250,000 per occurrence and maintains an aggregate maximum
claims limit. For the insurance program covering the period July 1, 1999 through
September 30, 2000, the aggregate cap was $4,672,000 and for the period covering
October 1, 2000 through December 31, 2001, the aggregate cap was $4,950,000.

Other Employer Related Requirements. As an employer, the Company is subject to a
wide variety of federal and state laws and regulations governing
employer-employee relationships, including the Immigration Reform and Control
Act, the Americans with Disabilities Act of 1990, the Family Medical Leave Act,
the Occupational Safety and Health Act, wage and hour regulations, and
comprehensive state and federal civil rights laws and regulations, including
those prohibiting discrimination and sexual harassment. The definition of
employer may be broadly interpreted under these laws.

Responsibility for complying with various state and federal laws and regulations
is allocated by agreement between the Company and its clients, or, in some
cases, is the joint responsibility of both. Because the Company acts as a
co-employer of worksite employees for many purposes, it is possible that it
could incur liability for violations of laws even though it is not contractually
or otherwise responsible for the conduct giving rise to such liability. The
standard client agreement generally provides that the client will indemnify the
Company for liability incurred both as a result of an act of negligence of a
worksite employee under the direction and control of the client and to the
extent the liability is attributable to the client's failure to comply with any
law or regulation for which it has specified contractual responsibility.
However, there can be no assurance that the Company will be able to enforce such
indemnification, and may therefore be ultimately responsible for satisfying the
liability in question.

ITEM 2.  PROPERTIES.

The Company leases office facilities in Ohio, Michigan, Nevada, Georgia,
California, Idaho, Utah, Montana, Oregon, Tennessee, and Mississippi. Its
corporate headquarters is located in a suburb of Columbus, Ohio in a leased
building that houses its executive offices and operations for central Ohio
worksite employees. Other offices are used to service local PEO operations and
are also leased. The Company believes that its current facilities are adequate
for its current needs and that additional suitable space will be available as
required.

ITEM 3.  LEGAL PROCEEDINGS.

The Company is not involved in any material pending legal proceedings, other
than ordinary routine litigation incidental to its business. The Company does
not believe that any such pending legal proceedings, individually or in the
aggregate, will have a material adverse effect on its financial results.



                                       11
<PAGE>



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

None.































































                                       12
<PAGE>


                                     PART II

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

The Company's common stock was quoted on the Nasdaq National Market under the
symbol "TMAM" from the commencement of its initial public offering on December
10, 1996 until October 1, 1999, when the Company's common stock began trading on
the Nasdaq SmallCap Market. Following the merger with Mucho.com, Inc. on
December 28, 2000, the Company's trading symbol was changed to "TMOS." The
following table sets forth, for the periods indicated, the high and low sales
prices for the Company's common stock, as reported on the Nasdaq SmallCap
Market.

<TABLE>
<CAPTION>

CALENDAR PERIOD                                                                             COMPANY COMMON STOCK
---------------                                                                             --------------------
                                                                                            HIGH              LOW
                                                                                            ----              ---

<S>                                                                                     <C>               <C>
Fiscal 2000:
    First Quarter..............................................................      $       7.13      $        5.63
    Second Quarter.............................................................      $       6.66      $        3.13
    Third Quarter..............................................................      $       6.00      $        4.06
    Fourth Quarter.............................................................      $       5.38      $        3.00

Fiscal 2001:
    First Quarter..............................................................      $       5.03      $        3.00
    Second Quarter.............................................................      $       3.54      $        2.75
    Third Quarter..............................................................      $       3.30      $        2.60
    Fourth Quarter.............................................................      $       4.00      $        2.70

Fiscal 2002:
    First Quarter (through March 22, 2002).....................................      $       3.98      $        3.00

</TABLE>

As of March 22, 2002, the number of record holders of the Company's common stock
was 260. The closing sales price of the common stock on March 22, 2002, was
$3.25.

The Company has not paid any cash dividends to holders of its common stock and
does not anticipate paying any cash dividends in the foreseeable future, but
intends instead to retain any future earnings for reinvestment in its business.
The payment of any future dividends would be contingent upon approval of the
Company's Class A preferred shareholders and its lenders.

In March 2001, the Company received a $1 million investment from Professional
Staff Management, Inc. As additional consideration for the purchase of the Class
A preferred stock, the Company issued Professional Staff Management, Inc. a
warrant to purchase an additional 148,148 shares.

In connection with the purchase of substantially all of the assets of
Professional Statement Management, Inc., the Company issued 74,074 common
shares.

ITEM 6.  SELECTED FINANCIAL DATA.

SUMMARY OF TEAM MUCHO, INC. SELECTED FINANCIAL DATA

The following table presents summary selected financial data of Team Mucho, Inc.
as of and for the period from July 8, 1999 to December 31, 1999, and as of and
for the years ended December 29, 2001 and December 31, 2000. This financial data
should be read in conjunction with TEAM Mucho, Inc.'s historical financial
statements and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained elsewhere in this Annual Report on Form 10-K/A.

The reported results for 1999 and 2000 are those of Mucho.com, Inc. No PEO
results are provided for either fiscal years 1999 and 2000.



                                       13
<PAGE>



                     (000'S OMITTED, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>

                                                                                                            PERIOD FROM
                                                                     YEAR ENDED         YEAR ENDED         INCEPTION TO
                                                                     DECEMBER 29,      DECEMBER 31,        DECEMBER 31,
                                                                        2001               2000                1999
                                                                        ----               ----                ----
                                                                   (unaudited)         (unaudited)

<S>                                                                    <C>                <C>                   <C>
Statement of Operations Data:
Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 451,062         $      51         $    --
                                                                      ---------         ---------         ---------

Direct Costs:
   Salaries and wages. . . . . . . . . . . . . . . . . . . . . . . . .  375,744              --                --
   Payroll taxes, workers' compensation and other direct costs. . . .    55,449              --                --
                                                                      ---------         ---------         ---------
      Total direct costs. . . . . . . . . . . . . . . . . . . . . . .   431,193              --                --
                                                                      ---------         ---------         ---------
Gross Profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . .    19,869                51              --
                                                                      ---------         ---------         ---------
Expenses:
   Administrative salaries. . . . . . . . . . . . . . . . . . . . . .    10,743             5,651               883
   Other selling, general and administrative expenses. . . . . . . . .    7,588             2,468               271
   Depreciation and amortization. . . . . . . . . . . . . . . . . . .     2,808               262                20
   Restructuring charges. . . . . . . . . . . . . . . . . . . . . . .     1,834               654              --
                                                                      ---------         ---------         ---------
      Total operating expenses. . . . . . . . . . . . . . . . . . . .    22,973             9,035             1,174
                                                                      ---------         ---------         ---------
      Loss from operations. . . . . . . . . . . . . . . . . . . . . .    (3,104)           (8,984)           (1,174)
                                                                      ---------         ---------         ---------
   Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . .   (1,051)             (512)              (80)
                                                                      ---------         ---------         ---------
   Income tax expense. . . . . . . . . . . . . . . . . . . . . . . . .      (35)             --                --
                                                                      ---------         ---------         ---------
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    (4,190)           (9,496)           (1,254)
Deemed dividend (1). . . . . . . . . . . . . . . . . . . . . . . . . .     --              (1,047)             --
Preferred stock dividends. . . . . . . . . . . . . . . . . . . . . . .   (1,100)             --                --
                                                                      ---------         ---------         ---------
Net loss attributable to common shareholders (1). . . . . . . . . . . $  (5,290)        $ (10,543)        $  (1,254)
                                                                      =========         =========         =========
Net loss per common share
   Basic and diluted (1). . . . . . . . . . . . . . . . . . . . . . . $   (0.72)        $   (3.74)        $   (0.66)

Balance Sheet Data:
Working capital deficit. . . . . . . . . . . . . . . . . . . . . . . .$  (8,222)        $  (4,803)        $    (957)
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $  58,844         $  56,960         $     292
Long-term obligations. . . . . . . . . . . . . . . . . . . . . . . . .$  13,044         $   3,665         $      62
Total shareholders' equity (deficit) (1). . . . . . . . . . . . . . . $  12,064         $  17,021         $    (803)

</TABLE>

(1)      As described in Note 3 to the Company's Consolidated Financial
         Statements, the Company's Statements of Operations and of Cash Flows
         for the year ended December 31, 2000 and its Balance Sheets and
         Statements of Changes in Shareholders' Equity at December 29, 2001
         and December 31, 2000 have been restated.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

OVERVIEW

The Company has operated as a Professional Employer Organization ("PEO")
actively since 1986 as TEAM America. The Company participated in a reverse
merger with Mucho.com (Lafayette, CA) on December 28, 2000, which operated as an
Online Business Center ("OBC") since July 1999.

PEO revenue is recognized as service is rendered. The PEO revenue consists of
charges by the Company for the wages and employer payroll taxes of the worksite
employees, the administrative service fee, workers' compensation charges, and
the health and retirement benefits provided to the worksite employees. These
charges are invoiced to the client at the time of each periodic payroll. The
Company negotiates the pricing for its various services on a client-by-client
basis based on factors such as market conditions, client needs and services
requested, the client's workers' compensation experience, credit exposure and
the required resources to service the account, among other factors. Because the
pricing is negotiated separately with each client and varies according to
circumstances, the Company's revenue, and therefore its gross margin, will
fluctuate based on



                                       14
<PAGE>



the Company's client mix. Direct costs of services are reflected in the
Company's Statement of Operations as "direct costs" and are reflective of the
type of revenue being generated. Direct costs of revenue include wages paid to
worksite employees, employment related taxes, costs of health and welfare
benefit plans and workers' compensation insurance costs. The Company maintains
two workers' compensation programs. One covers the Ohio worksite employees
co-employed by the Company through a self-insured program and the other covers
the Company's worksite employees co-employed by TEAM America located outside the
state of Ohio or all-other-states (AOS). The Company does not provide workers'
compensation to non-employees of the Company. The AOS workers' compensation
program insurance provider is The Hartford Insurance Company (Hartford) which
provides coverage for substantially all of the Company's worksite and corporate
employees outside the state of Ohio.

The Company's insurance policy dictates that if losses and fixed costs under the
policy are less than the amounts the Company paid, the insurer will refund the
difference to the Company. The amount of claims incurred in any policy year may
vary, and in a year with significantly fewer claims than estimated, the amount
of repayment from this account may be significant. The Company records in direct
costs a monthly charge based upon its estimate of the year's ultimate fully
developed losses plus the fixed costs charged by the insurance carrier to
support the program. This estimate is established each quarter based in part
upon information provided by the Company's insurers, internal analysis and its
insurance broker. The Company's internal analysis includes a quarterly review of
open claims and review of historical claims and losses related to the workers'
compensation programs. While management uses available information, including
nationwide loss ratios, to estimate ultimate losses, future adjustments may be
necessary based on actual losses. Since the recorded ultimate expense is based
upon a ten-year projection of actual claims paid and the timing of these
payments, as well as the interest earned on the Company's prepayments, the
Company relies on actuarial tables to estimate its ultimate expense.

As of December 29, 2001, the adequacy of the workers' compensation reserves were
determined, in management's opinion, to be reasonable. However, since these
reserves are for losses that have not been sufficiently developed due to the
relatively young age of these claims, and such variables as timing of payments
and investment returns thereon are uncertain or unknown, actual results may vary
from current estimates. The Company will continue to monitor the development of
these reserves, the actual payments made against the claims incurred, the timing
of these payments, the interest accumulated in the Company's prepayments and
adjust the reserves as deemed appropriate.

The Company's clients are billed at fixed rates which are determined when the
contract is negotiated with the client. The fixed rates include charges for
workers' compensation which are based upon the Company's assessment of the costs
of providing workers' compensation to the client. If the Company's costs for
workers' compensation are greater than the costs which are included in the
client's contractual rate, the Company may be unable to recover these excess
charges from the clients. The Company reserves the right in its contracts to
increase the workers' compensation charges on a prospective basis only.

Effective March 13, 2001, the Company acquired Professional Staff Management,
Inc. (PSMI), a PEO based in Salt Lake City with offices in San Diego, Columbus,
Cincinnati, and Las Vegas. Under the terms of the purchase agreement, the
Company acquired substantially all of the assets for $4,250,000 in cash,
$1,000,000 of seller financing supported by a letter of credit to be drawn no
later than July 2002, $1,000,000 in TEAM Mucho Series A Preferred Stock and
$241,000 in TEAM Mucho common stock. The transaction was valued at approximately
$6,491,000. The Company also incurred $84,000 of certain legal, accounting and
investment banking expenses, resulting in a total purchase price of $6,575,000.
The acquisition has been accounted for under the purchase method and the results
of operations of the acquired company have been included in the statements of
operations since the date of the acquisition. The purchase price has been
allocated based on the estimated fair value at the date of the acquisition.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's discussion and analysis of its financial condition and results of
operations are based upon its consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires the
Company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. On an on-going basis, the Company evaluates its
estimates, including those related to customer bad debts, workers' compensation
reserves, income taxes, and contingencies and litigation. The Company bases its
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from



                                       15
<PAGE>



other sources. Actual results may differ from these estimates. The Company
believes the following critical accounting policies reflect the more significant
judgments and estimates used in the preparation of its consolidated financial
statements:

REVENUE RECOGNITION. The Company bills its clients on each payroll date for (i)
the actual gross salaries and wages, related employment taxes and employee
benefits of the Company's worksite employees, (ii) actual advertising costs
associated with recruitment, (iii) workers' compensation and unemployment
service fees and (iv) an administrative fee. The Company's administrative fee is
computed based upon either a fixed fee per worksite employee or an established
percentage of gross salaries and wages (subject to a guaranteed minimum fee per
worksite employee), negotiated at the time the client service agreement is
executed. The Company's administrative fee varies by client based primarily upon
the nature and size of the client's business and the Company's assessment of the
costs and risks associated with the employment of the client's worksite
employees. Accordingly, the Company's administrative fee income will fluctuate
based on the number and gross salaries and wages of worksite employees, and the
mix of client fee income will fluctuate based on the mix of total client fee
arrangements and terms. Although most contracts are for one year and renew
automatically, the Company and its clients generally have the abilities to
terminate the relationship with 30 days' notice.

The Company bills its clients for workers' compensation and unemployment costs
at rates which vary by client based upon the client's claims and rate history.
The amount billed is intended (i) to cover payments made by the Company for
insurance premiums and unemployment, (ii) to cover the Company's costs of
contesting workers' compensation and unemployment claims, and other related
administrative costs and (iii) to compensate the Company for providing such
services. The Company has an incentive to minimize its workers' compensation and
unemployment costs because the Company bears the risk that its actual costs will
exceed those billed to its clients, and conversely, the Company profits in the
event that it effectively manages such costs. The Company believes that this
risk is mitigated by the fact that its standard client agreement provides that
the Company, at its discretion, may adjust the amount billed to the client to
reflect changes in the Company's direct costs, including without limitation,
statutory increases in employment taxes and insurance. Any such adjustment which
relates to changes in direct costs is effective as of the date of the changes,
and all changes require thirty days' prior notice.

WORKERS' COMPENSATION. The Company has maintained a self-insured workers'
compensation program for its Ohio employees since July 1999 and has a high
retention workers' compensation policy covering most of its non-Ohio employees.
The Company records workers' compensation expense based on the estimated
ultimate total cost of each claim, plus an estimate for incurred but not
reported (IBNR) claims. Under the Ohio Self-Insurance Program, the Company is
self-funded up to $250,000 per occurrence and purchases private insurance for
individual claims in excess of that amount. Effective January 1, 2002, the
Company purchased excess loss coverage for individual claims that exceed
$500,000 through The Hartford Insurance Company.

Under its insured program for non-Ohio employees, the Company has a per claim
retention limit of $250,000 per occurrence and maintains an aggregate maximum
claims limit. For the insurance program covering the period July 1, 1999 through
September 30, 2000, the aggregate cap was $4,672,000 and for the period covering
October 1, 2000 through December 31, 2001, the aggregate cap was $4,950,000.

In addition to providing the claims expense under the plan, as described above,
the Company is required to "pre-fund" a portion of the estimated claims under
the non-Ohio program. The amounts "pre-funded" are used by the insurance carrier
to pay claims. The amount "pre-funded" is measured at various periods in the
insurance contract to determine, based upon paid and incurred claims history,
whether the Company is due a refund or owes additional funding.

FISCAL YEAR 2001 AS COMPARED TO FISCAL YEAR 2000

The Company's revenue has changed substantially from the 2000 and 1999 fiscal
years. The Company's reported results were those of the Mucho.com Internet
operations based in Lafayette, California. Accordingly, no meaningful comparison
can be made on the Company's overall results for fiscal 2001 to 2000.

The Company's revenues for the fiscal year ended December 2001 were $451,062,000
of which $78,000 was related to the Mucho.com Internet operations. This compares
to Mucho.com's reported revenue for fiscal year 2000 of $51,000, which
represents an increase of 52.9%. The Mucho.com Internet operations were closed
in Lafayette, California by December 29, 2001. Direct expenses for fiscal 2001
of $431,193,000 were in line with revenue growth. As a percentage of revenue,
direct



                                       16
<PAGE>



expenses for the fiscal year 2001 was 95.6%.

Gross profits were $19,869,000 for fiscal year 2001. Gross profits, as a
percentage of revenue, were 4.40% for the fiscal year 2001. Workers'
compensation profit increased over last year. Additional expenses were incurred
as a result of the events surrounding the September 11th tragedy. These
expenses, totaling $149,000, were primarily due to additional charges associated
with the delivery of payroll by ground and other available means due to the
problems associated with air freight around the country.

Selling, general and administrative expenses ("SG&A") for fiscal 2001 amounted
to $7,588,000, or 1.7% of revenue. The Company incurred expenditures to open a
new Dallas office ($250,000), the PSMI integration costs ($683,000), the closure
of certain offices (Boise, Memphis, Orlando, and Orem, UT [$150,000]), and
additional IT consulting and programming capacity to expand the Company's
processing capabilities as it continues to integrate new books of business and
open new offices during the 2002 fiscal year. Difficulties associated with
previous accounting software platforms along with the implementation challenges
associated with the Company's new platform caused the Company to file its third
quarter 10-Q late and to incur some additional expenses. This resulted in
additional expenses of approximately $300,000. The Company is currently
finalizing the implementation of the new accounting platform to help prevent
this from occurring in the future.

Depreciation and amortization was $2,808,000 in fiscal 2001 primarily due to
amortization of goodwill from the acquisitions of TEAM America in December 2000
and PSMI in March 2001, offset by a reduction in depreciation expense from
assets that were fully depreciated in fiscal 2001.

In conjunction with the integration of the TEAM America acquisition, the Company
incurred $1,834,000 of restructuring charges. The charges related primarily to
exit costs associated with the on-line business center, including the relocation
of certain key executives, employee severance and the write-down of impaired
assets. Total restructuring costs were 0.4% of revenues.

Interest expense in fiscal 2001 was $863,000 as the Company's indebtedness
reached $9,049,000. Including letters of credit with regards to the Company's
workers' compensation programs in Ohio and with the Hartford Insurance Company,
the Company's total indebtedness was approximately $11,000,000.

Income tax expense for fiscal 2001 was $35,000. The Company has substantial net
operating losses carried forward from Mucho.com which, while limited in the
amount that can be used in one individual year by Internal Revenue Code
provisions, will permit the Company to reduce its tax expense in the future
based upon the Company generating operating income.

Net loss for fiscal 2001 was $4,190,000. The Company's 2001 fiscal year was
characterized by a downturn in the economic climate, the tragic events of
September 11th and the aftermath of a hardening insurance market. These market
dynamics provided management with challenges as it undertook plans to transition
the TEAM America book of business to a lower risk profile. The Company's
workers' compensation manual rate dropped from $3.20 to $2.84 per $100 of
payroll year over year. This reduction, as well as the introduction of a new
pricing structure, allowed the Company to increase its gross margin from $1,186
to $1,514 per worksite employee, representing an increase of approximately 25%.
Historically, the number of worksite employees are positively correlated to
changes in the employment rate. This suggests that as the percentage of the
country or region's available workforce becomes employed increases then the
Company's number of worksite employees will increase as well. This important
factor will be a good indicator of the change in the Company's revenue and
worksite employee count in the future.

FISCAL YEAR 2000 AS COMPARED TO FISCAL YEAR 1999

In 2000 and 1999, the Company operated strictly as Mucho.com, Inc., an on-line
business center.

The Company's revenues for the fiscal year ended December 31, 2000 were $51,000
as compared to fiscal year 1999 of $0.

Operating expenses for fiscal 2000 were $9,035,000 as compared to $1,174,000 for
fiscal year 1999, which represents an increase of $7,861,000 or 669.59%. Total
salaries were $5,651,000 in 2000 compared to $883,000 in 1999. This increase was
primarily due to a full year's operation in 2000 and increased number of
employees.

Selling, general and administrative expenses ("SG&A") for fiscal 2000 increased
$2,197,000, or 810.70%. This increase is attributed to a full year of Mucho.com
operations and significant investments in growing its on-line business center.



                                       17
<PAGE>



Depreciation and amortization increased $242,000, or 121.0%, in fiscal 2000
primarily due to the company's expansion and development of the on-line business
center.

Interest expense in fiscal 2000 increased $432,000, or 540%, from $80,000 in
fiscal 1999 to $512,000 in fiscal 2000. This increase was due to an increase in
debt financing associated with the Company's expansion activities in fiscal 1999
and 2000.

Net loss for fiscal 2000 was $9,496,000 versus $1,254,000 in fiscal 1999.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities in fiscal 2001 was $664,000. Net cash
provided by operating activities primarily relates to net loss of $4,190,000,
depreciation and amortization of $2,808,000 and an increase in accounts payable,
accrued expenses and other current liabilities of $933,000, decrease in accounts
receivable of $518,000 and decrease in prepaid expenses and other current assets
of $806,000.

The increase in accounts payable, accrued expenses and other current liabilities
relates to the growth in business in 2001, while the decrease in accounts
receivable is due to increased focus on working capital management. The Company
also utilized approximately $3,218,000 in cash for liabilities assumed by the
combined TEAM Mucho from the previous TEAM America PEO operations as a result of
final purchase accounting. The net cash used in financing activities was
$4,454,000 million during fiscal 2001. At December 29, 2001, the Company had
cash and cash equivalents of $1,447,000 and net accounts receivable of
$1,036,000.

The Company was authorized to repurchase up to $200,000 of the outstanding
shares of the Company's common stock, subject to the Company's terms with its
lenders and the Series A Preferred Stock Purchase Agreement. As of December 29,
2001, the Company repurchased approximately 9,200 shares at an average cost of
$3.10.

Management of the Company believes that its existing cash and cash flow from
operations, incremental cash flow from announced acquisitions and potential
borrowing capacity will be sufficient to support cash needs for the next twelve
months. Future acquisitions will be funded through a combination of the
Company's existing credit facility and seller financing.

INFLATION

Inflation and changing prices have not had a material effect on the Company's
net revenues and results of operations in the last three fiscal years, as the
Company has been able to modify its prices and cost structure to respond to
inflation and changing prices.

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

During June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations (SFAS No. 141) and
No. 142 Goodwill and Other Intangible Assets (SFAS No. 142). SFAS No. 141
changes the accounting for business combinations, requiring that all business
combinations be accounted for using the purchase method and that intangible
assets be recognized as assets apart from goodwill if they arise from
contractual or other legal rights, or if they are separable or capable of being
separated from the acquired entity and sold, transferred, licensed, rented or
exchanged. SFAS No. 141 is effective for all business combinations initiated
after June 30, 2001. SFAS No. 142 specifies the financial accounting and
reporting for acquired goodwill and other intangible assets. Goodwill and
intangible assets that have indefinite useful lives will not be amortized but
rather will be tested at least annually for impairment. SFAS No. 142 is
effective for fiscal years beginning after December 15, 2001. The Company
adopted SFAS No. 142 as of December 30, 2001.

SFAS No. 142 requires that the useful lives of intangible assets acquired on or
before June 30, 2001 be reassessed and the remaining amortization periods
adjusted accordingly. Previously recognized intangible assets deemed to have
indefinite livesshall be tested for impairment. The Company has not fully
assessed the potential impact of the adoption of SFAS No. 142, but believes that
goodwill and the trade name recognized prior to July 1, 2001 will no longer be
amortized upon adoption of SFAS No. 142.



                                       18
<PAGE>


In June 2001, the Financial Accounting Standards Board issued SFAS No. 143,
Accounting for Asset Retirement Obligations. SFAS No. 143 addresses financial
accounting and reporting for obligations associated with the retirement of
intangible long-lived assets and the associated asset retirement costs and is
effective for the fiscal years beginning after June 15, 2002. Management does
not expect the impact of SFAS No. 143 to be material to the Company's
consolidated financial statements.

In August 2001, the FASB issued SFAS No. 144, Accounting for Impairment or
Disposal of Long-Lived Assets. SFAS No. 144 amends SFAS No. 121, Accounting for
the impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,
and establishes a single accounting model for the impairment or disposal of
long-lived assets. SFAS No. 144 is effective for fiscal years beginning after
December 15, 2001. Management does not expect the impact of SFAS No. 144 to be
material to the Company's consolidated financial statements.

RISK FACTORS

IF GOVERNMENT REGULATIONS REGARDING PEOS ARE IMPLEMENTED, OR IF CURRENT
REGULATIONS ARE CHANGED, THE COMPANY'S BUSINESS COULD BE HARMED.

Many of the laws related to the employment relationship were enacted prior to
the development of professional employer organizations and other staffing
businesses and many of these laws do not specifically address the obligations
and responsibilities of non-traditional employers. The Company's operations are
affected by numerous federal, state and local laws and regulations relating to
labor, tax, insurance and employment matters. By entering into an employment
relationship with employees who work at client locations, the Company assumes
some obligations and responsibilities of an employer under these laws.
Uncertainties arising under the Internal Revenue Code of 1986, include, but are
not limited to, the qualified tax status and favorable tax status of certain
benefit plans provided by the Company and other alternative employers. The
unfavorable resolution of these unsettled issues could have a material adverse
effect on the Company's results of operations and financial condition.

While many states do not explicitly regulate PEOs, approximately 21 of the
states, but not Ohio, have enacted laws that have licensing or registration
requirements for PEOs, and several additional states, including Ohio, are
considering such laws. Such laws vary from state to state but generally provide
for the monitoring of the fiscal responsibility of PEOs and specify the employer
responsibilities assumed by PEOs. There can be no assurance that the Company
will be able to comply with any such regulations which may be imposed upon it in
the future, and the Company's inability to comply with any such regulations
could have a material adverse effect on its results of operations and financial
condition.

In addition, there can be no assurance that existing laws and regulations which
are not currently applicable to the Company will not be interpreted more broadly
in the future to apply to its existing activities or that new laws and
regulations will not be enacted with respect to its activities. Either of these
changes could have a material adverse effect on the Company's business,
financial condition, results of operations and liquidity.

IF THE IRS DETERMINES THAT THE COMPANY IS NOT AN "EMPLOYER," ITS 401(K) PLAN
COULD BE REVOKED AND ITS CAFETERIA PLAN MAY LOSE FAVORABLE TAX TREATMENT.

If the IRS concludes that PEOs are not "employers" of certain worksite employees
for purposes of the Internal Revenue Code, then the tax qualified status of the
Company's 401(k) plan could be revoked and its cafeteria plan may lose its
favorable tax status. The loss of qualified status for the 401(k) plan and the
cafeteria plan could increase the Company's administrative expenses, increase
client dissatisfaction and adversely affect its ability to attract and retain
clients and worksite employees, and, thereby, materially adversely affect the
Company's financial condition and results of operations. The Company is unable
to predict the impact that the foregoing could have on its administrative
expenses, and whether its resulting liability exposure, if any, will relate to
past or future operations. Accordingly, the Company is unable to make a
meaningful estimate of the amount, if any, of such liability exposure.

THE COMPANY INTENDS TO GROW ITS EXISTING BUSINESS, AND, IF IT IS UNABLE TO
MANAGE THIS GROWTH, THE COMPANY'S BUSINESS AND RESULTS OF OPERATIONS COULD BE
HARMED.

The Company intends to continue its internal growth and to pursue an acquisition
strategy. Such growth may place a significant strain on the Company's
management, financial, operating and technical resources. Growth through
acquisition involves



                                       19
<PAGE>



substantial risks, including the risk of improper valuation of the acquired
business and the risks inherent in integrating businesses with the Company's
operations. There can be no assurance that suitable acquisition candidates will
be available, that the Company will be able to acquire or profitably manage such
additional companies, or that future acquisitions will produce returns that
justify the investment. In addition, the Company may compete for acquisition and
expansion opportunities with companies that have significantly greater
resources. There can be no assurance that management skills and systems
currently in place will be adequate to implement a strategy of growth through
acquisitions and through increased market penetration. The Company's failure to
manage growth effectively, or to implement its strategy, could have a material
adverse effect on its results of operations and financial condition.

THE COMPANY BEARS THE RISK OF NONPAYMENT FROM ITS CLIENTS.

To the extent that any client experiences financial difficulty, or is otherwise
unable to meet its obligations as they become due, the Company's financial
condition and results of operations could be adversely affected. Although the
Company historically has not incurred significant bad debt expense, in each
payroll period, the Company has a nominal number of clients who fail to make
timely payment prior to delivery of the payroll.

IF THE COMPANY'S WORKERS' COMPENSATION AND UNEMPLOYMENT COSTS RISE, ITS RESULTS
OF OPERATIONS AND BUSINESS MAY SUFFER.

The Company's workers' compensation and unemployment costs could increase as a
result of many factors, including increases in the rates charged by the
applicable states and private insurance companies and changes in the applicable
laws and regulations. Although the Company believes that historically it
profited from such services, its results of operations and financial condition
could be materially adversely affected in the event that the Company's actual
workers' compensation and unemployment costs exceed those billed to its clients.
Although, the Company has the right to pass onto its clients rate increases for
those costs, it may be unable to do so to the full extent of the increases, or
client terminations may occur if such increases are made.

THE COMPANY'S CLIENT AGREEMENTS ARE SHORT TERM IN NATURE, AND, IF A SIGNIFICANT
NUMBER OF CLIENTS DO NOT RENEW THEIR CONTRACTS, ITS BUSINESS MAY SUFFER.

The Company's standard client agreement provides for successive one-year terms,
subject to termination by the Company or by the client at any time upon 30 days'
prior written notice. A significant number of terminations by clients could have
a material adverse effect on the Company's financial condition, results of
operations and liquidity.

THE COMPANY MAY BE LIABLE FOR ACTIONS OF WORKSITE EMPLOYEES OR CLIENTS, AND ITS
INSURANCE POLICIES MAY NOT BE SUFFICIENT TO COVER THESE LIABILITIES.

The Company's client agreement establishes a contractual division of
responsibilities between the Company and each client for various human resource
matters, including compliance with and liability under various governmental laws
and regulations. However, the Company may be subject to liability for violations
of these or other laws despite these contractual provisions, even if the Company
does not participate in such violations. Although such client agreements
generally provide that the client indemnify the Company for any liability
attributable to the client's failure to comply with its contractual obligations
and to the requirements imposed by law, the Company may not be able to collect
on such a contractual indemnification claim, and thus may be responsible for
satisfying these liabilities. In addition, worksite employees may be deemed to
be the Company's agents, subjecting the Company to liability for the actions of
the worksite employees.

As an employer, the Company, from time to time, may be subject in the ordinary
course of business to a wide variety of employment-related claims such as claims
for injuries, wrongful death, harassment, discrimination, wage and hours
violations and other matters. Although the Company carries $2 million of general
liability insurance, with a $25,000 deductible and with a $10 million commercial
umbrella policy, and carries employment practices liability insurance in the
amount of $10 million, with a $50,000 deductible, there can be no assurance that
any of the insurance carried by the Company or its providers will be sufficient
to cover any judgments, settlements or costs relating to any present or future
claims, suits or complaints. There also can be no assurance that sufficient
insurance will be available to the Company's providers or to the Company in the
future and, if available, on satisfactory terms. If the insurance carried by the
Company or its providers is not sufficient to cover any judgments, settlements
or costs relating to any present or future claims, suits or complaints, then the
Company's business and financial condition could be materially adversely
affected.




                                       20
<PAGE>



COMPETITIVE PRESSURES THE COMPANY FACES MAY HAVE A MATERIAL ADVERSE EFFECT.

The PEO industry is highly fragmented. Many of the PEOs have limited operations
and fewer than 1,000 worksite employees, but there are several industry
participants that are comparable in size to the Company. The Company also
encounters competition from fee for service companies such as payroll processing
firms, insurance companies and human resource consultants. In addition, several
of the Company's PEO competitors have recently been acquired by large business
services companies, such as Automatic Data Processing, Inc. Such companies have
substantially greater resources and provide a broader range of services than the
Company. Accordingly, the PEO divisions of such companies may be able to provide
more services at more competitive prices than may be offered by the Company.
Moreover, the Company expects that as the PEO industry grows and its regulatory
framework becomes better established, well-organized competition with greater
resources than the Company may enter the PEO market, possibly including large
fee for service companies currently providing a more limited range of services.

THE COMPANY'S PRINCIPAL SHAREHOLDERS, OFFICERS AND DIRECTORS OWN A CONTROLLING
INTEREST IN ITS VOTING STOCK.

The Company's officers, directors and shareholders with greater than 5%
holdings, in the aggregate, beneficially own approximately 4,807,000 shares, or
59.6% of its outstanding common stock as of March 22, 2002. The holders of the
preferred shares have the right to acquire beneficial ownership of an additional
1,792,593 shares through the exercise of stock warrants. The holders of the
preferred shares also have the right to convert their preferred shares to an
additional 1,792,593 shares of common stock. As a result, these shareholders,
acting together, may have the ability to determine the outcome of substantially
all matters submitted to the Company's shareholders for approval, including:

         -        election of the board of directors;

         -        removal of any of the directors;

         -        amendment of the articles of incorporation or code of
                  regulations; and

         -        adoption of measures that could delay or prevent a change in
                  control or impede a merger, takeover or other business
                  combination involving us.

These shareholders will have substantial influence over the Company's management
and affairs. Accordingly, this concentration of ownership may have the effect of
impeding a merger, consolidation, takeover or other business consolidation
involving the Company, or discouraging a potential acquirer from making a tender
offer for the Company's shares which would prevent shareholders from realizing
the benefits of the transaction, such as a purchase price premium or significant
increase in stock price.

The Company has designated 125,000 of the Class A Voting Preferred Shares,
without par value, as the "Series 2000 9.75% Cumulative Convertible Redeemable
Class A Preferred Shares" (the "Series A Shares"). These shares were initially
issued with a mandatory redemption feature. Effective January 1, 2001, the
preferred shareholders and the Company agreed to eliminate the mandatory
redemption feature. In connection with the elimination of the mandatory
redemption feature, the preferred stock purchase agreement was amended such that
the Company is committed to complete a secondary offering of common stock, in
which the preferred shareholders may participate, prior to June 28, 2004. In the
event that the Company fails to complete the secondary offering, the Company
will be in default of its obligations to the preferred shareholders and the
preferred shareholders will be entitled to liquidated damages.

The Company has entered into a Put Option Agreement with the preferred
shareholders. Under the terms of this agreement, the preferred shareholders may,
under certain conditions, have the right to put these shares back to the
Company.

If the Company fails to complete the secondary offering of common stock or if
the conditions are met that would allow the preferred shareholders to put their
shares to the Company, such events could have a material adverse affect on the
financial condition of the Company.

Other significant terms of the Series A Shares include the following:



                                       21
<PAGE>



         -        Annual cumulative dividends in an amount equal to 9.75%,
                  payable quarterly in cash, beginning January 1, 2003, and
                  payable in-kind prior to that date.

         -        In the event of liquidation or winding up of the Company, a
                  liquidation preference over the common stock.

         -        The right to convert, in whole or in part, at any time, into
                  the number of shares of common stock of the Company (1,792,593
                  at December 29, 2001) determined by dividing the aggregate
                  liquidation amount (as defined in the Preferred Stock
                  Agreement, but $12,100,000 as of December 29, 2001) by the
                  conversion price (as defined in the Preferred Stock Agreement,
                  but $6.75 as of December 29, 2001).

         -        The right to designate two members of the Board of Directors
                  of the Company.

ANTI-TAKEOVER PROVISIONS IN THE COMPANY'S ARTICLES OF INCORPORATION AND CODE OF
REGULATIONS MAKE A CHANGE IN CONTROL MORE DIFFICULT.

The provisions of the Company's articles of incorporation and code of
regulations and of the Ohio Revised Code, together or separately, could
discourage potential acquisition proposals, delay or prevent a change in control
and limit the price that certain investors might be willing to pay in the future
for the Company's common stock. Among other things, these provisions:

         -        require certain supermajority votes;

         -        establish certain advance notice procedures for nomination of
                  candidates for election as directors and for shareholders
                  proposals to be considered at shareholders' meetings; and

         -        divide the board of directors into two classes of directors
                  serving staggered two-year terms.

Pursuant to the Company's articles of incorporation, the board of directors has
authority to issue up to 5,000,000 preferred shares without further shareholder
approval. Such preferred shares could have dividend, liquidation, conversion,
voting and other rights and privileges that are superior or senior to the
Company's common stock. Issuance of preferred shares could result in the
dilution of the voting power of the Company's common stock, adversely affecting
holders of common stock in the event of the Company's liquidation or delay, and
defer or prevent a change in control. In certain circumstances, such issuance
could have the effect of decreasing the market price of the Company's common
stock.

In addition, the Ohio Revised Code contains provisions that require shareholder
approval of any proposed "control share acquisition" of any Ohio corporation at
any of three ownership thresholds: 20%, 33 1/3% and 50%. The Ohio Revised Code
also contains provisions that restrict certain business combinations and other
transactions between an Ohio corporation and interested shareholders.

THE COMPANY'S QUARTERLY OPERATING RESULTS FLUCTUATE AND MAY NOT ACCURATELY
PREDICT FUTURE PERFORMANCE.

The Company's quarterly results of operations have varied significantly and
probably will continue to do so in the future as a result of a variety of
factors, many of which are outside the Company's control. These factors include:

         -        changes in pricing policies or those of competitors;

         -        timing and number of new client agreements and existing client
                  terminations;

         -        seasonal patterns in revenue and expenses; and

         -        other changes in levels of operating expenses, personnel and
                  general economic conditions.

As a result, management believes that period-to-period comparisons of its
operating results are not necessarily meaningful, and should not be relied on as
an indication of future performance. In addition, operating results in a future
quarter or quarters may fall below expectations of securities analysts or
investors and, as a result, the price of the Company's common stock may
fluctuate.



                                       22
<PAGE>



ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         Not Applicable.

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





























































                                       23
<PAGE>





                        TEAM MUCHO, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                  AS OF DECEMBER 29, 2001 AND DECEMBER 31, 2000
                    (000'S OMITTED, EXCEPT FOR SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                                  2001            2000
                                                                                                  ----            ----
                                                                                                (as restated - see Note 3)
                                                                                                --------------------------
<S>                                                                                           <C>             <C>
ASSETS  CURRENT ASSETS:
   Cash....................................................................................   $     1,447     $   10,925
   Receivables:
      Trade, net of allowance for doubtful accounts of $392 in 2001 and $200 in 2000.......         1,036          1,978
      Unbilled revenues....................................................................         9,893          8,792
      Other receivables....................................................................         1,404          1,461
   Prepaid expenses........................................................................         1,883          1,534
   Deferred income tax.....................................................................         1,497            420
                                                                                              -----------     ----------
        Total current assets...............................................................        17,160         25,110
                                                                                              -----------     ----------

PROPERTY AND EQUIPMENT, NET................................................................         2,580          1,581
                                                                                              -----------     ----------

OTHER ASSETS:
   Goodwill, net...........................................................................        35,238         26,732
   Cash surrender value of life insurance policies.........................................           521            587
   Deferred income tax asset...............................................................           784            249
   Other...................................................................................         2,561          2,701
                                                                                              -----------     ----------
        Total other assets.................................................................        39,104         30,269
                                                                                              -----------     ----------
        Total assets.......................................................................   $    58,844     $   56,960
                                                                                              ===========     ==========

</TABLE>

(Continued on next page)



                                       24
<PAGE>



                        TEAM MUCHO, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)
                  AS OF DECEMBER 29, 2001 AND DECEMBER 31, 2000
                    (000'S OMITTED, EXCEPT FOR SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                                  2001          2000
                                                                                                  ----          ----
                                                                                               (as restated - see Note 3)
                                                                                               --------------------------
<S>                                                                                           <C>             <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Trade accounts payable..................................................................   $     2,325     $    1,954
   Capital leases, current portion.........................................................           296            103
   Bank debt, current portion..............................................................         1,250              -
   Stock repurchase obligation.............................................................             -         11,622
   Accrued compensation....................................................................        10,338          8,367
   Accrued payroll taxes and insurance.....................................................         6,475          3,967
   Accrued workers' compensation liability.................................................         1,750          1,832
   Other accrued expenses..................................................................         2,948          2,068
                                                                                              -----------     ----------
        Total current liabilities..........................................................        25,382         29,913

LONG-TERM LIABILITIES:
   Bank debt, less current portion.........................................................         7,799              -
   Capital lease obligations, less current portion.........................................           547            127
   Accrued workers' compensation liability.................................................         2,879          2,602
   Client deposits and other liabilities...................................................         1,298            349
   Deferred compensation...................................................................           521            587
                                                                                              -----------     ----------
        Total liabilities..................................................................        38,426         33,578
                                                                                              -----------     ----------

CONVERTIBLE PREFERRED STOCK, face amount of $11 million and
   $10 million, respectively...............................................................         8,354          6,361
                                                                                              -----------     ----------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
   Common stock, no par value:
      45,000,000 shares authorized; 10,788,743 and 9,603,558 issued
      at December 29, 2001 and December 31, 2000, respectively.............................        43,947         43,593
   Deferred compensation...................................................................           (20)           (28)
   Accumulated deficit.....................................................................       (17,087)       (11,797)
                                                                                              ------------    ----------
                                                                                                   26,840         31,768
   Less -Treasury stock, 2,739,782 and 2,722,366 common shares, at cost,...................
      at December 29, 2001 and December 31, 2000, respectively.............................       (14,776)       (14,747)
                                                                                              ------------    -----------
        Total shareholders' equity.........................................................        12,064         17,021
                                                                                              -----------     ----------
        Total liabilities and shareholders' equity.........................................   $    58,844     $   56,960
                                                                                              ===========     ==========

</TABLE>


   The accompanying notes to consolidated financial statements are an integral
                   part of these consolidated balance sheets.



                                       25
<PAGE>



                        TEAM MUCHO, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
         FOR THE YEARS ENDED DECEMBER 29, 2001 AND DECEMBER 31, 2000 AND
        FOR THE PERIOD FROM INCEPTION (JULY 8, 1999) TO DECEMBER 31, 1999
                    (000'S OMITTED EXCEPT FOR SHARE AMOUNTS)
     (UNAUDITED FOR THE YEARS ENDED DECEMBER 29, 2001 AND DECEMBER 31, 2000)

<TABLE>
<CAPTION>

                                                                                                                     PERIOD FROM
                                                                                       YEAR ENDED      YEAR ENDED   INCEPTION TO
                                                                                       DECEMBER 29,    DECEMBER 31, DECEMBER 31,
                                                                                          2001            2000           1999
                                                                                          ----            ----           ----
                                                                                                       (as restated
                                                                                                       - see Note 3)

<S>                                                                                   <C>              <C>              <C>

                  REVENUES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $   451,062      $        51      $      --
                                                                                      -----------      -----------      -----------

                  DIRECT COSTS:
                     Salaries and wages. . . . . . . . . . . . . . . . . . . . . .        375,744             --               --
                     Payroll.taxes, workers' compensation and other direct costs. .        55,449             --               --
                                                                                      -----------      -----------      -----------
                        Total direct costs. . . . . . . . . . . . . . . . . . . . .       431,193             --               --
                                                                                      -----------      -----------      -----------
                  GROSS PROFIT. . . . . . . . . . . . . . . . . . . . . . . . . . .        19,869               51             --
                                                                                      -----------      -----------      -----------

                  OPERATING EXPENSES:
                     Administrative salaries. . . . . . . . . . . . . . . . . . . .        10,743            5,651              883
                     Other.selling, general and administrative expenses. . . . . . .        7,588            2,468              271
                     Depreciation and amortization. . . . . . . . . . . . . . . . .         2,808              262               20
                     Restructuring charges. . . . . . . . . . . . . . . . . . . . .         1,834              654             --
                                                                                      -----------      -----------      -----------
                        Total operating expenses. . . . . . . . . . . . . . . . . .        22,973            9,035            1,174
                                                                                      -----------      -----------      -----------
                  OPERATING LOSS. . . . . . . . . . . . . . . . . . . . . . . . . .        (3,104)          (8,984)          (1,174)

                     Interest expense, net. . . . . . . . . . . . . . . . . . . . .          (863)            (512)             (80)
                     Fair value loss of derivative instruments. . . . . . . . . . .          (188)            --               --
                                                                                      -----------      -----------      -----------
                  LOSS BEFORE INCOME TAXES. . . . . . . . . . . . . . . . . . . . .        (4,155)          (9,496)          (1,254)

                     Income tax expense. . . . . . . . . . . . . . . . . . . . . . .          (35)            --               --
                                                                                      -----------      -----------      -----------
                  NET LOSS... . . . . . . . . . . . . . . . . . . . . . . . . . . .        (4,190)          (9,496)          (1,254)

                  Deemed dividend. . . . . . . . . . . . . . . . . . . . . . . . . .         --             (1,047)            --
                  Preferred stock dividends. . . . . . . . . . . . . . . . . . . . .       (1,100)            --               --
                                                                                      -----------      -----------      -----------
                  NET LOSS ATTRIBUTABLE TO COMMON
                     SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . .  $    (5,290)     $   (10,543)     $    (1,254)
                                                                                      ===========      ===========      ===========

                  NET LOSS PER SHARE:
                     Basic  . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $     (0.72)     $     (3.74)     $     (0.66)
                     Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $     (0.72)     $     (3.74)     $     (0.66)

                  WEIGHTED AVERAGE SHARES OUTSTANDING:
                     Basic    . . . . . . . . . . . . . . . . . . . . . . . . . . .     7,342,508        2,816,501        1,903,095
                     Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7,342,508        2,816,501        1,903,095

</TABLE>


                The accompanying notes to consolidated financial
       statements are an integral part of these consolidated statements.




                                       26
<PAGE>



                        TEAM MUCHO, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
         FOR THE YEARS ENDED DECEMBER 29, 2001 AND DECEMBER 31, 2000 AND
        FOR THE PERIOD FROM INCEPTION (JULY 8, 1999) TO DECEMBER 31, 1999
                    (000'S OMITTED, EXCEPT FOR SHARE AMOUNTS)
                           (AS RESTATED - SEE NOTE 3)
     (UNAUDITED FOR THE YEARS ENDED DECEMBER 29, 2001 AND DECEMBER 31, 2000)

<TABLE>
<CAPTION>

                                           COMMON STOCK ISSUED
                                           -------------------        DEFERRED     TREASURY     ACCUMULATED    SHAREHOLDERS'
                                         NUMBER           STOCK     COMPENSATION     STOCK       DEFICIT          EQUITY
                                         ------           -----     ------------     -----       -------          ------
<S>                                        <C>          <C>          <C>          <C>          <C>             <C>
Balance, July 8, 1999 (inception)

   Issuance of common stock...........     1,976,393    $    390     $       -    $        -   $         -     $       390
   Issuance of warrants...............             -          61             -             -             -              61
   Net loss for the period............             -           -             -             -        (1,254)         (1,254)
                                          ----------    --------     ---------    ----------    -----------    ------------
Balance, December 31, 1999............     1,976,393         451             -             -        (1,254)           (803)

   Issuance of common stock...........     1,086,597       5,553             -             -             -           5,553
   Issuance of common stock
      for services....................       606,219       1,212             -             -             -           1,212
   Conversion of debt to equity.......       349,500       1,077             -             -             -           1,077
   Issuance of warrants...............             -         127             -             -             -             127
   Grant of qualified and non-
      Qualified options...............             -         710           (28)            -             -             682
   Acquisition of TEAM America
      Corporation.....................     4,984,849      30,352             -       (14,747)            -          15,605
   Issuance of common stock and
      warrants related to preferred
      stock offering..................       600,000       3,064             -             -             -           3,064
   Discount on preferred stock
      attributable to beneficial
      conversion feature..............             -       1,047             -             -        (1,047)              -
Net loss..............................             -           -             -             -        (9,496)         (9,496)
                                          ----------    --------     ---------    ----------    -----------    ------------
Balance, December 31, 2000............     9,603,558      43,593           (28)      (14,747)      (11,797)         17,021

   Issuance of common stock
      in connection with the
      acquisition of assets...........        74,074         241             -             -             -             241
   Release of contingent common
      shares, treated as stock
      dividend........................     1,111,111           -             -             -             -               -
   Issuance of common stock warrants..             -         113             -             -             -             113
   Amortization of deferred
      compensation....................             -           -             8             -             -               8
   Acquisition of treasury stock......             -           -                         (29)            -             (29)
   Convertible preferred stock
      dividend........................             -           -             -             -        (1,100)         (1,100)
   Net loss...........................             -           -             -             -        (4,190)         (4,190)
                                          ----------    --------     ---------    ----------    -----------     -----------
Balance, December 29, 2001............    10,788,743    $ 43,947     $     (20)   $  (14,776)   $  (17,087)     $   12,064
                                          ==========    ========     =========    ==========    ===========     ===========

</TABLE>


                The accompanying notes to consolidated financial
       statements are an integral part of these consolidated statements.



                                       27
<PAGE>




                        TEAM MUCHO, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
         FOR THE YEARS ENDED DECEMBER 29, 2001 AND DECEMBER 31, 2000 AND
        FOR THE PERIOD FROM INCEPTION (JULY 8, 1999) TO DECEMBER 31, 1999
                                 (000'S OMITTED)
     (UNAUDITED FOR THE YEARS ENDED DECEMBER 29, 2001 AND DECEMBER 31, 2000)

<TABLE>
<CAPTION>

                                                                                                         PERIOD FROM
                                                                     YEAR ENDED         YEAR ENDED      INCEPTION TO
                                                                     DECEMBER 29,      DECEMBER 31,     DECEMBER 31,
                                                                        2001               2000             1999
                                                                        ----               ----             ----
                                                                                 (as restated - See Note 3)
<S>                                                                   <C>             <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ......................................................       $ (4,190)       $ (9,496)         $ (1,254)
Adjustments to reconcile net loss to net cash provided by
   (used in) operating activities:
Depreciation and amortization .................................          2,808             262                20
Write-down of property and equipment related to restructuring .            261             477                --
Bad debt expense ..............................................            368              --                --
Compensation expense on grant of stock options and other
   non cash compensation ......................................              8             682                --
Loss on derivative ............................................            188              --                --
Changes in assets and liabilities, excluding the impact of
   acquisitions:
      Accounts receivable .....................................           (518)             (1)               --
      Prepaid expenses and other assets .......................            806             (93)               (2)
      Accounts payable ........................................            371           1,523               338
      Accrued liabilities .....................................            562             596               154
                                                                      --------        --------          --------
Net cash provided by (used in) operating activities ...........            664          (6,050)             (744)
                                                                      --------        --------          --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment ............................         (1,438)           (766)             (125)
Acquisitions, net of cash acquired ............................         (4,250)          2,364                --
                                                                      --------        --------          --------
Net cash (used in) provided by investing activities ...........         (5,688)          1,598              (125)
                                                                      --------        --------          --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank debt .......................................          8,250              --                --
Payments on bank debt .........................................           (201)             --                --
Stock repurchase ..............................................        (11,622)             --                --
Purchase of treasury stock ....................................            (29)             --                --
Proceeds from issuance of common stock ........................             38           5,553               390
Proceeds from issuance of common stock and preferred stock
   and detachable warrants ....................................             --           9,425                --
Proceeds from loans payable to related party ..................             --             955               561
Payment of loans payable to related party .....................             --            (561)               --
Payment of financing costs ....................................           (755)             --                --
Payment on capital lease obligations ..........................           (135)            (69)               (8)
                                                                      --------        --------          --------
Net cash (used in) provided by financing activities ...........         (4,454)         15,303               943
                                                                      --------        --------          --------

Net (decrease) increase in cash ...............................         (9,478)         10,851                74
CASH, beginning of period .....................................         10,925              74                --
                                                                      --------        --------          --------
CASH, end of period ...........................................       $  1,447        $ 10,925          $     74
                                                                      ========        ========          ========

</TABLE>

(Continued on next page)



                                       28
<PAGE>



                        TEAM MUCHO, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
         FOR THE YEARS ENDED DECEMBER 29, 2001 AND DECEMBER 31, 2000 AND
        FOR THE PERIOD FROM INCEPTION (JULY 8, 1999) TO DECEMBER 31, 1999
                                 (000'S OMITTED)
     (UNAUDITED FOR THE YEARS ENDED DECEMBER 29, 2001 AND DECEMBER 31, 2000)


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

<TABLE>
<CAPTION>

                                                                             2001               2000            1999
                                                                             ----               ----            ----

<S>                                                                      <C>               <C>               <C>
Interest paid.........................................................   $          777    $           54    $          -
                                                                         ==============    ==============    ============

Income taxes paid.....................................................   $          194    $            -    $          -
                                                                         ==============    ==============    ============

</TABLE>

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES

The Company acquired certain assets of PSMI on March 13, 2001. Included in the
purchase price was $1,000,000 of seller financing. See Note 4 for further
discussion.

During 2001, the Company declared $1,100,000 of dividends in-kind to holders of
convertible preferred stock.

In 2000, in connection with the issuance of common stock and preferred stock
with detachable warrants, the Company recorded a deemed dividend to preferred
shareholders of $1,047,000.

During 2000, the Company acquired TEAM America Corporation in a transaction
accounted for as a reverse acquisition. As a result of this transaction, the
Company acquired the outstanding common stock of TEAM America Corporation for
$15,605,000. See Note 4 for additional information.

During 2001, 2000 and 1999, the Company acquired $748,000, $207,000 and
$102,000, respectively, of property and equipment under capital leases.

During 2000 and 1999, the Company satisfied accrued interest through the
issuance of warrants valued at $249,000 and $61,000, respectively.

During 2000, the Company satisfied accounts payable for services performed
through the issuance of common stock valued at $1,212,000.

In December 2000, in conjunction with the acquisition of TEAM America
Corporation, $955,000 of debt was converted to equity.



                The accompanying notes to consolidated financial
       statements are an integral part of these consolidated statements.



                                       29
<PAGE>




(1)      NATURE AND SCOPE OF BUSINESS

TEAM Mucho, Inc. (the "Company"), an Ohio corporation, is a Business Process
Outsourcing ("BPO") Company specializing in human resources. TEAM Mucho is a
leading provider of Professional Employment Organization ("PEO") services in
Ohio, Utah, Nevada, Oregon, Idaho, Tennessee, Mississippi and California. TEAM
Mucho's Single-Point-Of-Contact Human Resource Solution(TM) includes payroll,
benefits administration, on-site and online employee and employer
communications and self-service, employment practices and human resources risk
management, workforce compliance administration and severance management.

The Company was formed by the December 28, 2000 merger of TEAM America
Corporation and Mucho.com, Inc. in a transaction accounted for under the
purchase method of accounting as a reverse acquisition. Mucho.com, Inc. was
treated as the acquiring company for accounting purposes because its
shareholders controlled more than 50% of the post transaction combined company.
The historical earnings per share and share amounts of the Company have been
retroactively restated for all periods presented in these consolidated financial
statements to give effect to the conversion ratio utilized in the merger with
TEAM America Corporation. As a result, all share amounts and earnings per share
are presented in TEAM America Corporation equivalent shares.

In its financial statements for the period ended December 31, 1999, the Company
was considered a development stage company. Effective with the acquisition of
TEAM America Corporation, the Company was no longer considered a development
stage company for financial reporting purposes.

(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Company's financial statements are prepared on the accrual basis of
accounting in accordance with generally accepted accounting principles.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include TEAM Mucho, Inc. and its
wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.

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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

REVENUE RECOGNITION

The Company bills its clients on each payroll date for (i) the actual gross
salaries and wages, related employment taxes and employee benefits of the
Company's worksite employees, (ii) actual advertising costs associated with
recruitment, (iii) workers' compensation and unemployment service fees and (iv)
an administrative fee. The Company's administrative fee is computed based upon
either a fixed fee per worksite employee or an established percentage of gross
salaries and wages (subject to a guaranteed minimum fee per worksite employee),
negotiated at the time the client service agreement is executed. The Company's
administrative fee varies by client based primarily upon the nature and size of
the client's business and the Company's assessment of the costs and risks
associated with the employment of the client's worksite employees. Accordingly,
the Company's administrative fee income will fluctuate based on the number and
gross salaries and wages of worksite employees, and the mix of client fee income
will fluctuate based on the mix of total client fee arrangements and terms.
Although most contracts are for one year and renew automatically, the Company
and its clients generally have the ability to terminate the relationship with 30
days' notice.

The Company bills its clients for workers' compensation and unemployment costs
at rates which vary by client based upon the client's claims and rate history.
The amount billed is intended (i) to cover payments made by the Company for
insurance



                                       30
<PAGE>



premiums and unemployment taxes, (ii) to cover the Company's cost of contesting
workers' compensation and unemployment claims, and other related administrative
costs and (iii) to compensate the Company for providing such services. The
Company has an incentive to minimize its workers' compensation and unemployment
costs because the Company bears the risk that its actual costs will exceed those
billed to its clients, and conversely, the Company profits in the event that it
effectively manages such costs. The Company believes that this risk is mitigated
by the fact that its standard client agreement provides that the Company, at its
discretion, may adjust the amount billed to the client to reflect changes in the
Company's direct costs, including without limitation, statutory increases in
employment taxes and insurance. Any such adjustment which relates to changes in
direct costs is effective as of the date of the changes, and all changes require
thirty days' prior notice.

Consistent with PEO industry practice, the Company recognizes all amounts billed
to its clients as revenue because the Company is at risk for the payment of its
direct costs, whether or not the Company's clients pay the Company on a timely
basis. The Company also recognizes as revenue and as unbilled receivables, on an
accrual basis, any such amounts which relate to services performed by worksite
employees which have not yet been billed to the client as of the end of the
accounting period. Unbilled receivables at December 29, 2001 and December 31,
2000 are net of prepayments received prior to year-end of $1,490,000 and $0,
respectively.

Because the acquisition of TEAM America Corporation occurred on December 28,
2000, the Company recognized no revenue or expenses related to the PEO business
segment prior to 2001. Unbilled revenues on the balance sheet at December 31,
2000 represent amounts generated by TEAM America Corporation prior to the
acquisition and billed to clients after the acquisition.

SEGMENT INFORMATION

During 2000 and 1999, the Company operated entirely in the online business
segment. As a result, the consolidated statements of operations are composed
entirely of the results of this business segment. With the acquisition of TEAM
America Corporation, the Company entered the PEO business segment. During 2001,
the Company wound down and merged the operations of its online business into the
operations of its PEO business. Accordingly, the Company operates in a single
segment providing PEO services to small and mid-sized businesses.

CONCENTRATIONS OF CREDIT RISK

Financial instruments, which potentially subject the Company to a concentration
of credit risk, consist principally of accounts receivable. The Company provides
its services to its clients based upon an evaluation of each client's financial
condition. Exposure to losses on receivables is primarily dependent on each
client's financial condition. The Company mitigates such exposure by requiring
customers to participate in a bonding program or through deposits,
letters-of-credit or personal guarantees from certain of its clients. Exposure
to credit losses is monitored by the Company, and allowances for anticipated
losses are established when necessary.

PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost and is depreciated over the estimated
useful lives of the related assets primarily using the straight-line method.
Additions and betterments for property and equipment over certain minimum dollar
amounts are capitalized. Repair and maintenance costs are expensed as incurred.
The estimated useful lives of property and equipment for purposes of computing
depreciation are as follows:

    Computer hardware and software..............................      3-5 years
    Software development costs..................................        3 years
    Furniture, fixtures and equipment...........................      5-7 years

Property and equipment and related accumulated depreciation as of December 29,
2001 and December 31, 2000 are as follows (000's omitted):



                                       31
<PAGE>


<TABLE>
<CAPTION>

                                                                                              2001             2000
                                                                                              ----             ----

<S>                                                                                    <C>               <C>
         Computer hardware and software...........................................     $        2,918    $       1,559
         Furniture, fixtures and equipment........................................                509              184
         Leasehold improvements...................................................                127              117
                                                                                       --------------    -------------
                                                                                                3,554            1,860
         Less:  accumulated depreciation and amortization.........................               (974)            (279)
                                                                                       ---------------   --------------

                                                                                       $        2,580    $       1,581
                                                                                       ==============    =============

</TABLE>

Leasehold improvements and capital leases are depreciated or amortized over the
shorter of the lease term or their estimated useful lives.

Software development costs relate primarily to the Company's internet-based
enhancements to its proprietary software, TEAM Direct, and are accounted for in
accordance with Statement of Position ("SOP") 98-1, Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use. During 2001, the
Company capitalized $869,000 related to these enhancements. In the fourth
quarter 2001, the Company decided to exit the online business center and in
doing so evaluated the future use of certain assets and determined that certain
items would not be integrated with TEAM Direct. Accordingly, $231,000 of
previously capitalized costs was written-off as a restructuring charge.

GOODWILL

Goodwill is the excess of the purchase price paid for businesses acquired,
including liabilities assumed, over the estimated fair market value of the
assets acquired. Goodwill is amortized over 20 years. During 2001, the Company
recognized $1,783,000 in amortization expense. As the goodwill on the
consolidated balance sheet at December 31, 2000 is related entirely to the
acquisition of TEAM America Corporation on December 28, 2000, no amortization
expense or accumulated amortization was recognized prior to 2001.

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141")
and Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142"). SFAS 141 requires all business combinations to
be accounted for using the purchase method of accounting and that certain
intangible assets acquired in a business combination shall be recognized as
assets apart from goodwill. SFAS 141 is effective for all business combinations
initiated after June 30, 2001. SFAS 142 requires goodwill to be tested for
impairment under certain circumstances, and written down when impaired, rather
than being amortized as previous standards required. Furthermore, SFAS 142
requires purchased intangible assets other than goodwill to be amortized over
their useful lives unless these lives are determined to be indefinite.

SFAS 142 is effective for fiscal years beginning after December 15, 2001. The
Company plans to adopt this statement effective December 30, 2001. Testing
regarding impairment of goodwill will be completed during the second quarter of
fiscal 2002. The Company is evaluating what, if any, additional impact this
statement may have on its results of operations and financial position.

Had the Company adopted this statement as of the beginning of 2001, $1,783,000
of amortization expense would not have been recognized and net loss would have
decreased by $1,783,000 and loss per share attributable to common shareholders
would have decreased by $0.24.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of current assets and liabilities, bank debt and capital
lease obligations approximate their fair value because of the immediate or
short-term maturity of these financial instruments. There is no quoted market
price for the Company's preferred stock, however, based on the December 29, 2001
trading price of the Company's common stock, on an if converted basis, the
preferred stock would have had a value of approximately $6,400,000.



                                       32
<PAGE>



INCOME TAXES

Income taxes are accounted for using the asset and liability approach for
financial reporting. The Company recognizes deferred tax liabilities and assets
for the expected future tax consequences of temporary differences between the
financial statement carrying amount and the tax bases of assets and liabilities.

Valuation allowances are established when necessary to reduce deferred tax
assets to the amounts expected to be realized.

STOCK-BASED COMPENSATION AND AWARDS

The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation ("SFAS 123") for all
stock-based compensation to employees and directors. Under the provisions of
this standard, employee and director stock-based compensation expense is
measured using either the intrinsic-value method as prescribed by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25"), or the fair value method described in SFAS 123. Companies choosing
the intrinsic-value method are required to disclose the pro forma impact of the
fair value method on net income.

The Company has elected to account for stock-based compensation and awards under
the provisions of APB 25. Under APB 25, compensation cost for stock options is
measured as the excess, if any, of the fair value of the underlying common stock
on the date of grant over the exercise price of the option. The Company is
required to implement the provisions of SFAS 123 for stock-based awards to those
other than employees and directors. Stock-based compensation and award expense
for all equity instruments is recognized based on the related vesting periods.

ADVERTISING

The Company expenses advertising costs as incurred. Advertising expense for the
years ended December 29, 2001 and December 31, 2000 and for the period ended
December 31, 1999 was approximately $88,000, $32,000 and $4,000, respectively.

EARNINGS PER SHARE

For the periods ended December 29, 2001, December 31, 2000 and 1999, 1,796,000,
1,818,000 and 881,000 options, and 1,705,000, 1,501,000 and 65,000 warrants,
with a weighted average price of $4.37, $5.99 and $4.39 for the options, and
$6.75, $6.75 and $0.91 for the warrants, respectively, are excluded from the
calculation of diluted earnings per share because their effect is anti-dilutive.
Additionally, preferred stock convertible into approximately 1,481,000 shares of
common stock was excluded from the calculation of diluted earnings per share
because its effect is anti-dilutive. As a result, no reconciliation between
weighted average shares used for the calculation of basic earnings per share and
weighted average shares used for the calculation of diluted earnings per share
is necessary.

FISCAL YEAR

During 2001, the Company changed its year-end from a calendar year to a fiscal
year ending on the Saturday closest to December 31. As prior periods reflect
only the results of Mucho.com, Inc., this change did not have a material effect
on the comparability of results.

RECLASSIFICATIONS

Certain reclassifications have been made to the 2000 consolidated financial
statements to conform with the 2001 financial statement presentation.

NEW ACCOUNTING STANDARDS

In October 2001, the FASB issued Statement of Financial Accounting Standard No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS
144"). SFAS 144 establishes a single accounting model, based on the framework
established in Statement of Financial Accounting Standard No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of" ("SFAS 121"), for long-lived assets to be disposed of by sale, and resolves
significant



                                       33
<PAGE>



implementation issues related to SFAS 121. The Company is currently assessing
the impact of SFAS 144 on its operating results and financial condition. The
Company is required to adopt SFAS 144 during the first quarter of fiscal 2002.

(3)      RESTATEMENT

In accordance with EITF Nos. 98-5 "Accounting For Convertible Securities with
Beneficial Conversion Features or Contingently Adjustable Conversion Ratios" and
00-27 "Application of EITF Issue 98-5, Accounting For Convertible Securities
with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios
to Convertible Instruments" and related standards, when a company issues
convertible preferred stock with a beneficial conversion feature ("BCF"), the
value of the beneficial conversion feature must be accounted for as a deemed
dividend. The beneficial conversion feature is computed as the intrinsic value
of the spread between the quoted market price of the common stock and the
implicit conversion price of the preferred stock.

As described in Note 6, in connection with the reverse acquisition of Team
America Corporation by Mucho.com on December 28, 2000, the Company issued
100,000 Series A Preferred Shares with detachable warrants to purchase 1,481,481
common shares and 600,000 common shares for total net proceeds of $9,425,000.
The proceeds of this issuance were originally assigned to the common shares
based upon the quoted market price on the date of the transaction, the warrants
based upon their estimated fair value and the residual amount, net of expenses
to the preferred stock. At the time of issuance, the Company concluded that
there was no beneficial conversion feature associated with the preferred stock
and accordingly no deemed dividend was recorded. This was based on the belief by
management, that the quoted market price of the common shares was artificially
inflated due to a concurrent tender offer at $6.75 per share.

Recently, the Company has become aware that the United States Securities and
Exchange Commission ("SEC") has insisted that the quoted market price be used in
determining the value of a beneficial conversion feature. As a result, the
Company has reassessed its conclusion regarding the treatment of this
transaction in 2000 and is restating its 2000 and 2001 financial statements to
reflect the required changes. During the process of recalculating the fair value
of the issued securities, the Company noted an error in its original calculation
of the fair value of the associated warrants and is correcting the allocation of
the net proceeds based upon the restated relative fair values of the securities
issued. As a result of the corrections, the allocation of the net proceeds based
upon the restated relative fair values, and the calculation of the beneficial
conversion feature, the Company has determined that a deemed dividend of
$1,047,000 should have been recorded in the period ended December 31, 2000. As a
result of recording the beneficial conversion feature the following table
summarizes the restatement of the Company's Statement of Operations for the year
ended December 31, 2000 (000's omitted, except per share amounts):

    Net loss, as originally reported ........................     $ (9,496)
    Deemed dividend .........................................       (1,047)

    Net loss attributable to common shareholders, as restated     $(10,543)

    Net loss per share, as originally reported ..............     $  (3.37)
    Net loss attributable to common shareholders, as restated        (3.74)

In addition to the change in loss attributable to common shareholder, the
reallocation of the net proceeds resulted in as reclassification of amounts from
Common Stock to Preferred Stock. These changes are summarized in the following
table (000's omitted):

<TABLE>
<CAPTION>

                                                                     AS ORIGINALLY
   ALLOCATION OF NET PROCEEDS .....................................     REPORTED   AS RESTATED
                                                                        --------   -----------
<S>                                                                    <C>          <C>
   Preferred stock, face amount $10 million .......................     $3,625       $6,361
   Common stock ...................................................      3,000        2,175
   Warrants .......................................................      2,800
                                                                        ------       ------
                                                                                        889
        Total .....................................................     $9,425       $9,425
                                                                        ======       ======

</TABLE>

As a result of the reallocation of net proceeds and the recording of a deemed
dividend the Company has restated its December 29, 2001 and December 31, 2000
balance sheets as follows (000's omitted):




                                       34
<PAGE>



<TABLE>
<CAPTION>

                                                                             AS ORIGINALLY
                                                                                REPORTED          AS RESTATED
                                                                             --------------       -----------
<S>                                                                           <C>                  <C>
     DECEMBER 29, 2001 BALANCE SHEET IMPACT:
      Preferred Stock ........................................................   $  5,618           $  8,354

      Common Stock ...........................................................     45,636             43,947
      Deferred Compensation ..................................................        (20)               (20)
      Accumulated Deficit ....................................................    (16,040)           (17,087)
                                                                                 --------           ---------
                                                                                   29,576             26,840
      Less: Treasury Stock ...................................................    (14,776)           (14,776)
                                                                                 --------           ---------
      Total Shareholders' Equity .............................................   $ 14,800           $ 12,064
                                                                                 =========          ========

     DECEMBER 31, 2000 BALANCE SHEET IMPACT:
      Preferred Stock ........................................................   $  3,625           $  6,361

      Common Stock ...........................................................   $ 45,282           $ 43,593
      Deferred Compensation ..................................................        (28)               (28)
      Accumulated Deficit ....................................................    (10,750)           (11,797)
                                                                                 --------           ---------
                                                                                   34,504             31,768
      Less: Treasury Stock ...................................................    (14,747)           (14,747)
                                                                                 --------           ---------
      Total Shareholders' Equity .............................................   $ 19,757           $ 17,021
                                                                                 ========           ========

</TABLE>

No changes were required to the Statement of Operations for the year ended
December 29, 2001.

(4)      ACQUISITIONS

On March 13, 2001, the Company acquired certain assets and assumed certain
liabilities of Professional Staff Management, Inc. (PSMI). The acquisition was
accounted for using the purchase method of accounting.

Total cash and stock consideration for this acquisition was (000's omitted,
except for share amounts):

   Cash........................................................  $     4,250
   Seller financing............................................        1,000
   Common shares of TEAM Mucho, Inc. (74,074 shares)...........          241
   Convertible preferred stock (10,000 shares).................          925
   Warrants....................................................           75
   Direct expenses of the acquisition..........................           84
                                                                 -----------
                                                                 $     6,575
                                                                 ===========

The purchase price including liabilities assumed was allocated to the assets
acquired based on their relative fair market values with the excess allocated to
goodwill. Goodwill of $6,664,000 was recorded related to this transaction and
was being amortized over 20 years.

On December 28, 2000, the Company completed the acquisition of TEAM America
Corporation, a professional employer organization. The acquisition was accounted
for under the purchase method of accounting as a reverse acquisition, whereby
the legal target (Mucho.com, Inc.), was treated as the acquiring company for
accounting purposes because its shareholders controlled more than 50% of the
post transaction combined company. The historical earnings per share and share
amounts of the Company have been retroactively restated for all periods
presented in these consolidated financial statements to give effect to the
conversion ratio utilized in the merger with TEAM America Corporation. As a
result, all share amounts and earnings per share are presented in TEAM America
Corporation equivalent shares.

No results of operations of TEAM America Corporation are included in the 2000
statement of operations as the acquisition of TEAM America Corporation occurred
on December 28, 2000.

Total consideration paid for this acquisition was (000's omitted, except for
share amounts):




                                       35
<PAGE>



<TABLE>
<CAPTION>

                                                                                             NUMBER OF
                                                                                             SHARES OR
                                                                                              OPTIONS           VALUE
<S>                                                                                            <C>          <C>

   TEAM America Corporation common stock owned by Mucho.com, Inc.  control group
      prior to date of acquisition at historical cost of $6.34 per share...............         1,296,044    $       8,221
   Other TEAM America Corporation common stock outstanding at fair market value of
      $5 per share.....................................................................         1,341,439            6,707
   TEAM America stock options acquired at fair market value............................           850,637              677
   Direct expenses related to acquisition..............................................                 -            1,664
                                                                                           --------------    -------------
   Total purchase price................................................................         3,488,120    $      17,269
                                                                                           ==============    =============

</TABLE>

The purchase price was allocated to the assets acquired based on the preliminary
evaluation of relative fair market values with the excess allocated to goodwill.
Original goodwill of $26,732,000 was recorded as a result of the initial
purchase price allocation and was amortized using the straight-line method over
20 years. During 2001, final purchase accounting was completed requiring
additional goodwill of $3,625,000 to be recorded. At December 31, 2000,
1,111,111 shares of TEAM Mucho, Inc. common stock were contingently issuable
related to this acquisition and were not included in total shares outstanding.
Upon action of the Company's Board of Directors, these shares were released from
escrow to the Mucho.com, Inc. shareholders on July 27, 2001. Because this
transaction was accounted for as a reverse acquisition, these shares were
accounted for as a stock dividend.

Concurrent with the acquisition of TEAM America Corporation by the Company, TEAM
America Corporation made a tender offer to its shareholders to purchase up to
50% of the outstanding TEAM America Corporation common shares at $6.75 per
share. A total of approximately 1,722,000 shares were tendered for a total cost
of approximately $11,622,000. This liability was shown on the December 31, 2000
consolidated balance sheet as "stock repurchase obligation" in current
liabilities. In January 2001 this obligation was settled. Tendered shares, plus
shares held in treasury stock by TEAM America Corporation prior to the
acquisition, are reflected as treasury stock on the post acquisition
consolidated balance sheets.

The following table presents unaudited condensed pro forma operating results as
if TEAM America Corporation and PSMI had been acquired as of January 1, 2000.
These results are not necessarily an indication of operating results that would
have occurred had the Company actually operated the business during the periods
indicated (000's omitted except for share amounts):


                                                      2001             2000
                                                      ----             ----
                                                   (UNAUDITED)      (UNAUDITED)
   Revenue ....................................     $ 477,791      $ 561,193
   Net loss ...................................        (4,145)        (7,459)
   Net loss attributable to common shareholders        (5,265)        (9,579)
   Loss per share
   Basic ......................................     $   (0.72)     $   (1.59)
   Diluted ....................................     $   (0.72)     $   (1.59)

The pro forma net loss attributable to common shareholders includes preferred
dividends of approximately $1,120,000 in 2001 and approximately $1,073,000 in
2000.

(5)      WORKERS' COMPENSATION

The Company has maintained a self-insured workers' compensation program for its
Ohio employees since July 1999 and has a high retention workers' compensation
policy covering most of its non-Ohio employees. The Company records workers'
compensation expense based on the estimated total cost of each claim, plus an
estimate for incurred but not reported (IBNR) claims. Under the Ohio
Self-Insurance Program, the Company is self-funded up to $250,000 per occurrence
and purchases private insurance for individual claims in excess of that amount.

Under its insured program for non-Ohio employees, the Company has a per claim
retention limit of $250,000 per occurrence and maintains an aggregate maximum
claims limit. For the insurance program covering the period July 1, 1999 through
September



                                       36
<PAGE>



30, 2000, the aggregate cap was $4,672,000 and for the period covering October
1, 2000 through December 31, 2001, the aggregate cap was $4,950,000.

In addition to providing the claims expense under the plan, as described above,
the Company is required to "pre-fund" a portion of the estimated claims under
the non-Ohio program. The amounts "pre-funded" are used by the insurance carrier
to pay claims. The amount "pre-funded" is measured at various periods in the
insurance contract to determine, based upon paid and incurred claims history,
whether the Company is due a refund or owes additional funding. As of December
29, 2001 and December 31, 2000, the Company has recorded in its consolidated
balance sheets the following related to workers compensation insurance (000's
omitted):

<TABLE>
<CAPTION>

                                                                                              2001             2000
                                                                                              ----             ----

<S>                                                                                    <C>               <C>
         Ohio workers' compensation reserves, net of claims paid..................     $          469    $         212
         Non-Ohio workers' compensation reserves, net of claims paid..............              3,850            3,421
                                                                                       --------------    -------------
                                                                                                4,319            3,633
         Less:  long-term portion.................................................             (2,879)          (2,422)
                                                                                       ---------------   --------------
         Workers' compensation reserves, current..................................     $        1,440            1,211
                                                                                       ==============    =============

         Total amount pre-funded..................................................     $        2,798    $       3,606
                                                                                       ==============    =============

         Receivable from insurance carrier........................................     $          628    $           0
                                                                                       ==============    =============

</TABLE>

In connection with these workers' compensation programs, the Company is required
to post certain collateral with the insurance carrier. As of December 29, 2001,
certain of these requirements were fulfilled by letters of credit drawn under
the Company's existing credit facility. Letters of credit in the amount of
$1,100,000 and $750,000 were available to be drawn as collateral for the
non-Ohio July 1, 1999 through September 30, 2000 programs and the Ohio program,
respectively.

(6)      SHAREHOLDERS' EQUITY

The Company is authorized to issue 50,000,000 shares, consisting of 45,000,000
common shares, without par value, 2,500,000 Class A Voting Preferred Shares, and
2,500,000 Class B Nonvoting Preferred Shares. The Board of Directors is
authorized to fix the terms of the Class A and Class B Preferred Stock prior to
the issuance of each such series.

As part of its master lease agreement with a lessor of its capital equipment,
the Company issued warrants to purchase up to approximately 7,000 shares of
common stock for $7.09 per share, which was the market value of the stock when
the agreement was executed. The warrants will be issued quarterly in arrears
based on the dollar amount of equipment leased to the Company. At December 31,
2000, warrants to purchase 2,853 shares had been earned and issued. The warrants
were exercisable for one year from the date of issuance. No warrants were earned
or issued in the year ended December 29, 2001.

The Company has designated 125,000 of the Class A Voting Preferred Shares,
without par value, as the "Series 2000 9.75% Cumulative Convertible Redeemable
Class A Preferred Shares" (the "Series A Shares"). These shares were initially
issued with a mandatory redemption feature. Effective January 1, 2001, the
preferred shareholders and the Company agreed to eliminate the mandatory
redemption feature. In connection with the elimination of the mandatory
redemption feature, the preferred stock purchase agreement was amended such that
the Company is committed to complete a secondary offering of common stock, in
which the preferred shareholders may participate, prior to June 28, 2004. In the
event that the Company fails to complete the secondary offering, the Company
will be in default of its obligations to the preferred shareholders and the
preferred shareholders will be entitled to liquidated damages.

The Company has entered into a Put Option Agreement with the preferred
shareholders. Under the terms of this agreement, the preferred shareholders may,
under certain conditions, have the right to put these shares back to the
Company.

Other significant terms of the Series A Shares include the following:

         -        Annual cumulative dividends in an amount equal to 9.75%,
                  payable quarterly in cash, beginning January 1, 2003, and
                  payable in-kind prior to that date.




                                       37
<PAGE>



         -        In the event of liquidation or winding up of the Company, a
                  liquidation preference over the common stock.

         -        The right to convert, in whole or in part, at any time, into
                  the number of shares of common stock of the Company (1,792,593
                  at December 29, 2001) determined by dividing the aggregate
                  liquidation amount (as defined in the Preferred Stock
                  Agreement, but $12,100,000 as of December 29, 2001) by the
                  conversion price (as defined in the Preferred Stock Agreement,
                  but $6.75 as of December 29, 2001).

         -        The right to designate two members of the Board of Directors
                  of the Company.

On December 28, 2000, in connection with the acquisition of TEAM America
Corporation (see note 3), the Company issued 100,000 Series A Preferred Shares,
warrants to purchase 1,481,481 shares of common stock of the Company at $6.75
per share, which expire December 28, 2010 and 600,000 shares of common stock for
total net proceeds of $9,425,000. The proceeds of this issuance were partially
used to fund the stock repurchase obligation. The net proceeds were allocated to
the preferred stock, common stock and warrants, based on their relative fair
values as follows (000's omitted):

    Preferred Stock with face amount of $10 million.............     $   6,361
    Warrants....................................................           889
    Common Stock................................................         2,175
                                                                     ---------
       Total....................................................     $   9,425
                                                                     =========

In March 2001, the Company issued an additional 10,000 Series A Shares and
warrants to purchase 148,148 shares of common stock of the Company at $6.75 per
share, which expire December 28, 2010, for $1,000,000 in connection with the
acquisition of the assets of PSMI. The proceeds were allocated $75,000 to
warrants and $925,000 to preferred stock, based on their relative fair values.

At December 29, 2001, the Company had accrued preferred stock dividends payable
in-kind equivalent to $1,100,000. Also during 2001, the Company incurred $32,000
of costs to amend the terms of the preferred stock agreement.

In the year ended December 31, 2000, the Company recorded a deemed dividend to
preferred shareholders of $1,047,000.

Concurrent with the acquisition of TEAM America Corporation by the Company, TEAM
America Corporation made a tender offer to purchase up to 50% of the outstanding
TEAM America Corporation common shares at $6.75 per share. A total of
approximately 1,722,000 shares were tendered for a total cost of approximately
$11,622,000, which is classified in the December 31, 2000 balance sheet as
"Stock repurchase obligation" in current liabilities. This obligation was
settled in January 2001. These shares are reflected as treasury stock in the
Company's balance sheet at December 29, 2001.

(7)      COMMITMENTS

The Company leases office facilities, automobiles and certain office equipment
under long-term agreements expiring through 2007, which are accounted for as
operating leases. The future minimum lease payments as of December 29, 2001 are
as follows (000's omitted):

     2002........................................................$       833
     2003........................................................        443
     2004........................................................        383
     2005........................................................        136
     2006 and thereafter.........................................        111
                                                                 -----------
                                                                 $     1,906
                                                                 ===========

Rent expense under all operating leases was $1,141,000, $139,000 and $16,000 for
the years ended December 29, 2001 and December 31, 2000 and for the period ended
December 31, 1999, respectively.

The Company leases certain equipment under capital leases. The cost of assets
under capital leases was $1,065,000, and $317,000 at December 29, 2001 and
December 31, 2000, respectively. Accumulated depreciation on these assets was
$229,000 and $76,000 at December 29, 2001 and December 31, 2000, respectively.



                                       38
<PAGE>


Future minimum commitments under capital leases as of December 29, 2001 are as
follows (000's omitted):

    2002.........................................................    $      377
    2003.........................................................           291
    2004.........................................................           227
    2005.........................................................            82
    2006 and thereafter..........................................            30
                                                                      ---------

    Total minimum lease payments.................................         1,007
    Less: amount representing interest...........................          (164)
                                                                      ---------
                                                                            843
    Less: current portion........................................          (296)
                                                                     ----------
                                                                     $      547
                                                                     ==========

(8)      DEFERRED COMPENSATION

The Company has certain rights and responsibilities under various deferred
compensation agreements with certain Company and client employees. The
liabilities under these agreements are being accrued over the participants'
remaining periods of employment so that, on the payout date, the then-present
value of the payments will have been accrued. These liabilities will be funded
by the cash surrender value of life insurance policies, wherein the Company is
the beneficiary. The cash surrender value of such policies dictates the amount
of the deferred compensation benefits due, as defined by the respective
agreements. The total face value of related life insurance policies was
approximately $9,872,000 and $13,000,000 at December 29, 2001 and December 31,
2000, respectively.

(9)      CREDIT FACILITY AND DEBT OBLIGATIONS

Term debt at December 29, 2001 consists of the following (000's omitted):

<TABLE>
<CAPTION>

                                                                                                2001
                                                                                                ----

<S>                                                                                           <C>
   Borrowings under the Credit Agreement (due through 2006)............................     $    7,967
   Seller financing....................................................................            800
   Amounts due finance company, unsecured, interest rate 6.2 %, due through 2002.......            282
                                                                                            ----------
                                                                                                 9,049
   Less:  current portion..............................................................         (1,250)
                                                                                            -----------
   Non-current portion.................................................................     $    7,799
                                                                                            ==========

</TABLE>

Concurrent with the acquisition of TEAM America Corporation, the Company entered
into a credit agreement (the "Credit Agreement") which provides up to
$18,000,000 as a senior revolving credit facility. The Credit Agreement provided
for an initial advance of $4,000,000 which was made to the Company on January 3,
2001. The Credit Agreement also provides for acquisition loans up to an
aggregate of $14,000,000 and for the issuance of letters of credit of up to
$2,000,000. The total credit under the facility including aggregate borrowings
and letters of credit cannot exceed $18,000,000.

In March 2001, the Company made a $4,250,000 draw against the acquisition loan
in connection with the PSMI acquisition. As part of the PSMI acquisition, seller
financing was supported with a $1,000,000 letter of credit that expires July 13,
2002.

Interest due under the Credit Agreement is payable monthly in arrears at prime
plus 1% or at LIBOR plus 3.50%, as specified by the Company at the date of the
advance, for both the initial advance and acquisitions loans. The initial
advance of $4,000,000 is payable in 42 equal monthly installments of principal
and interest, beginning in February 2003. The $4,250,000 draw on March 13, 2001
is payable in 63 equal monthly installments of principal and interest beginning
June 2001.

Further, any additional acquisition loans are payable in equal monthly
installments of principal and interest, beginning the month after an acquisition
loan is received, through July 2006 (the maturity date of the Credit Agreement).
The acquisition loan commitments shall terminate, to the extent not borrowed, in
January 2003. The Credit Agreement is collateralized by substantially all of the
assets of the Company and includes certain quarterly financial and non-financial
covenants and a





                                       39
<PAGE>



subjective acceleration material adverse change clause. The financial covenants
include, among others, a minimum current ratio, interest coverage ratio, fixed
charge coverage ratio, maximum annual lease obligations, minimum earnings before
interest, taxes, depreciation and amortization, maximum operating losses,
consolidated senior debt leverage ratio, and parent senior debt leverage ratio.
The Company entered into a Second Amendment to the Credit Agreement, effective
as of December 29, 2001. Based upon the Second Amendment, the Company was in
compliance as of December 29, 2001 with these covenants.

Term debt repayments as of December 29, 2001 are due as follows (000's omitted):

<TABLE>
<CAPTION>

                                                                                         AMOUNT
                                                                                         ------

<S>                                                                             <C>
   2002.....................................................................    $         1,250
   2003.....................................................................              2,161
   2004.....................................................................              2,161
   2005.....................................................................              2,161
   2006.....................................................................              1,275
   Thereafter...............................................................                 41
                                                                                 --------------
                                                                                $         9,049
                                                                                 ==============

</TABLE>

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS No. 133"), "Accounting for
Derivative Instruments and Hedging Activities," which establishes accounting and
reporting standards for derivative instruments and hedging activities. SFAS No.
133, as amended, requires that the Company recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value.

In July 2001, the Company entered into an interest rate swap. The following is a
summary of the fair value gain/(loss) of the Company's swap, based upon the
estimated amount that the Company would receive (or pay) to terminate the
contracts as of December 29, 2001. The fair values are based on quoted market
prices for the same or similar instruments. The Company has not met all the
conditions to make the interest rate swap an effective hedge for accounting
purposes. Accordingly, the change in the fair value of the swap is recorded in
the consolidated statement of operations.

<TABLE>
<CAPTION>

                                                               NOTIONAL        FAIR VALUE
                                                                AMOUNT         GAIN/(LOSS)
                                                                ------         -----------

<S>                                                      <C>               <C>
  Interest rate swaps............................        $    6,330,000    $    (188,000)

</TABLE>

In August 2000, the Company issued a convertible note for $955,000 which bore
interest at the rate of 9% per annum with all principal and interest due on the
earlier of December 31, 2000 or the closing of the acquisition of TEAM America
Corporation. Prior to December 31, 2000, the holder of the note converted the
note and all accrued but unpaid interest into 349,500 shares of common stock of
the Company.

The holder of the convertible note was also issued a warrant to purchase up to
13,401 shares of common stock at $7.09 per share, which was the then estimated
fair market value of the stock. The warrant was exercisable for one year from
the date of issuance. The fair value of the warrant was estimated to be $100,000
at the date of grant. The warrant was exchanged for stock in 2000.
The Company incurred debt issuance costs of approximately $723,000 related to
the Credit Agreement, which are being amortized over the term of the Credit
Agreement.

(10)     EMPLOYEE BENEFIT PROGRAMS

The following plans were assumed as part of the acquisition of TEAM America:

CAFETERIA PLANS

The Company sponsors Section 125 cafeteria plans that include a fully insured
health, dental, vision and prescription card program. The plans are offered to
full-time employees. Entrance to the plan is the first day of the month
following thirty days of service.



                                       40
<PAGE>



401(k) RETIREMENT PLANS

The Company sponsors 401(k) retirement plans that cover all corporate full-time
employees. Entrance to the plan is the first day of the month following ninety
days of service. During the year ended December 29, 2001, the Company provided
matching contributions under its 401(k) plan at a rate of 25% of the employees'
contribution, up to a maximum of 6%. Total contributions to this plan were
$32,000 in the year ended December 29, 2001.

OTHER PROGRAMS

Other available employee benefit programs include health, life, accidental death
and dismemberment insurance, disability insurance, and medical and dependent
care reimbursement programs. Benefits under such programs are funded by the
Company's employees and clients.

(11)     STOCK OPTION PLANS

The Company established the 2000 Stock Plan in January 2000 and assumed the TEAM
America Corporation Incentive Stock Plan upon acquisition of TEAM America
Corporation. The TEAM America Corporation Stock Plan was established on December
10, 1996. These plans are collectively referred to as "the Plans." The Plans
provide for the granting, at the discretion of the Board of Directors of: (a)
options that are intended to qualify as incentive stock options, within the
meaning of Section 422 of the Internal Revenue Code of 1986 (the "Code"), as
amended, to employees, officers and directors and (b) options not intended to so
qualify to employees, officers, consultants and directors.

Options granted to employees and officers generally vest 20% per year over five
years; options granted to directors fully vest after one year. Options generally
have a ten-year exercise period and are issued with an exercise price equal to
the fair market value of Company common stock on the date of grant.

The Company has granted non-qualified options in connection with acquisitions
and employment agreements with key executives of the acquired businesses and to
officers and key employees of the Company. During 2000, non-qualified options
were granted to employees under the Plans to purchase shares at $0.47, which was
below the fair market value at the date of grant. In connection with these
grants, compensation expense of $8,000 and $7,000 has been recorded for fiscal
2001 and 2000, respectively, and $20,000 remains at December 29, 2001 to be
amortized over the remaining vesting period. Also during 2000, non-qualified
options were granted to an officer of the Company to purchase up to 600,000
shares at $3.875, which was below the fair market value at the date of grant.
The options vested upon grant. The $675,000 difference between the grant price
and the fair market value was recorded as compensation expense.

A summary of changes in the stock options plans for the two years ended December
29, 2001 and December 31, 2000 is as follows:

<TABLE>
<CAPTION>

                                                                  NUMBER OF OPTIONS              WEIGHTED-AVERAGE PRICE
                                                                  -----------------              ----------------------
                                                                2001             2000             2001            2000
                                                                ----             ----             ----            ----
<S>                                                           <C>                            <C>              <C>

   Options outstanding, beginning of year...............      1,818,368                -     $        5.99    $        -
   Options granted......................................        400,000          880,674              4.18    $     4.33
   Options assumed in acquisition.......................              -        1,057,112                 -    $     7.31
   Options exercised....................................           (727)               -              0.47    $        -
   Options cancelled/surrendered........................       (421,552)        (119,418)             7.04    $     8.17
                                                            ------------    -------------    -------------    ----------
   Options outstanding, end of year.....................      1,796,089        1,818,368     $        4.37    $     5.99
                                                            ===========     =============    =============    ==========

   Options exercisable, end of year.....................      1,224,870        1,389,095     $        7.04    $     5.23
                                                            ===========     =============    =============    ==========

   Shares available for future grant, end of year.......        586,770          386,161
                                                            ===========     =============

   Shares reserved for issuance under stock option plans      1,811,640        1,775,256
                                                            ===========     =============

   Weighted average fair value of options granted
      during the year...................................                                     $        1.80    $     1.47
                                                                                             =============    ==========

</TABLE>


                                       41
<PAGE>



The following table summarizes information concerning outstanding and
exercisable options as of December 29, 2001:

<TABLE>
<CAPTION>

                                                                                                     EXERCISABLE AT
                                                                          EXPIRATION DATES            DECEMBER 29,
         EXERCISE PRICE RANGE                   NUMBER OF SHARES                RANGE                     2001
         --------------------                   ----------------                -----                     ----
<S>                                                     <C>                     <C>                        <C>

         $9.35 to $10.50                                64,857            05/05 to 10/08                     46,197
         $6.75 to $8.50                                266,807            09/07 to 10/11                    213,022
         $3.03 to $5.38                              1,298,000            05/09 to 12/11                    842,900
         $3.00 and less                                166,425            02/05 to 03/11                    122,751
                                                 -------------                                          -----------
                                                     1,796,089                                            1,224,870
                                                 =============                                          ===========

</TABLE>

At December 29, 2001, the weighted average remaining contractual life of all
options outstanding under the Plans was approximately 7.42 years.

The Company has elected to follow Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees (ABP 25) and related interpretations in
accounting for its stock-based compensation arrangements because, as discussed
below, the alternative fair value accounting provided for under SFAS No. 123,
Accounting for Stock-Based Compensation, requires use of option valuation models
in valuing employee stock options. Under APB 25, no compensation expense has
been recognized because the exercise price of the Company's employee stock
options has equaled the market price of the underlying stock on the date of
grant.

Pro forma information regarding net income and earnings per share is required by
SFAS No. 123, which also requires that the information be determined as if the
Company had accounted for its employee stock options under the fair value method
prescribed by SFAS No. 123. The fair value for these options was estimated at
the date of grant using a Black-Scholes option pricing model with the following
assumptions:

<TABLE>
<CAPTION>

                                                                           2001             2000
                                                                           ----             ----

<S>                                                                          <C>             <C>
         Risk-free interest rate.....................................        4.0%            4.8%
         Expected dividend yield.....................................        0.0%            0.0%
         Expected volatility.........................................       31.0%           23.0%
         Weighted average expected life (in years)...................         10              10

</TABLE>

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information, as if the Company had accounted for its employee stock
options granted under the fair value method prescribed by SFAS No. 123, follows:

<TABLE>
<CAPTION>

                                                                                          2001             2000
                                                                                          ----             ----

<S>                                                        <C>                      <C>                <C>
    Pro forma net loss attributable to common shareholders (000's omitted)...       $   (5,369)        $  (12,030)
    Pro forma net loss per share attributable to common shareholders.........       $    (0.73)        $    (4.27)

</TABLE>

(12)     RELATED PARTY TRANSACTIONS

The Company has clients which are owned by officers of the Company or members of
the Board of Directors. The Company also has paid professional fees, office rent
and other services to entities owned or controlled by officers or members of the
Board of Directors.

During the fiscal year 2001, the Company contracted with firms, whose principals
were members of the Board of Directors, for legal services and for tax
preparation and advice. The costs incurred for these services during fiscal 2001
were $386,000. The Company had accounts payable of $77,000 and $33,000 to
related parties at December 29, 2001 and December 31, 2000, respectively.

Officers of the Company are trustees of the Company's 401(k) plans.



                                       42
<PAGE>



In 1999, a shareholder made a loan of $500,000 to the Company, which accrued
interest at 9% per annum. In relation to the loan, the Company issued a warrant
to the shareholder to acquire up to 50,000 shares of the Company's stock at no
cost. Interest expense of $61,000 was recorded for the period ended December 31,
1999 in connection with the warrant. In March 2000, the Company paid $277,000 of
cash to the shareholder, issued approximately 116,000 shares of its common stock
valued at approximately $3.80 per share in exchange for the note and the
warrant, and recorded interest expense of $127,000.

In 1999, a shareholder made a demand loan to the Company. In March 2000, as
additional consideration for the loan, the Company issued two warrants to
acquire up to 16,000 shares of common stock at a price of $3.80 per share, which
were exercisable within a ten-year period. In July 2000, the Company issued at
no cost 2,400 shares of its common stock valued at approximately $7.10 per share
in exchange for one warrant to purchase 4,000 shares. In December 2000, the
Company issued at no cost 7,300 shares of its common stock valued at
approximately $7.10 per share in exchange for the other warrant for the
remaining 12,000 shares. For the year-ended December 31, 2000, the Company had
recorded interest expense of $34,500 for the conversion of these two warrants.

During the year ended December 31, 2000, the Company recorded interest expense
of $56,687 to provide for the cost of the conversion of the warrant for 4,000
shares and the eventual conversion of the warrant for the remaining 12,000
shares of common stock.

Certain officers and members of the Board of Directors of the Company are
shareholders or principals of firms from which the Company contracted for legal
services, and of TEAM America Corporation which provided the co-employment of
essentially all the staff of the Company during both 2000 and 1999. During the
year ended December 31, 2000 and the period from inception, July 8, 1999,
through December 31, 1999, the Company incurred charges for legal services of
$46,000 and $137,000, respectively and staff leasing of $3,785,000 and $539,000,
respectively to such related firms.

At December 31, 2000, the Company had an account receivable of $117,000 from a
partnership, which is partially owned by an officer of the Company. During 2001,
the partnership filed bankruptcy and accordingly this receivable was written off
as uncollectible.

(13)     INCOME TAXES

Deferred income tax assets and liabilities represent amounts taxable or
deductible in the future. These taxable or deductible amounts are based on
enacted tax laws and rates applicable to the periods in which the differences
are expected to affect taxable income. Income tax expense is the tax payable or
refundable amount for the period plus or minus the change during the period in
deferred tax assets and liabilities. No federal provision for income taxes for
fiscal 2001, 2000 and 1999 has been provided due to operating losses in all
three periods. The provision recorded in 2001 represents state income taxes.
Deferred tax assets and liabilities are as follows (000's omitted):

<TABLE>
<CAPTION>

                                                                                               2001            2000
                                                                                               ----            ----
<S>                                                                                       <C>              <C>

         Deferred income tax assets (liabilities):
            Deferred compensation.......................................................  $          -     $        239
            Depreciation and amortization...............................................           549               77
            Workers' compensation.......................................................         1,152                -
            Other.......................................................................            28              289
            Net operating loss carryforward.............................................         3,962            3,273
                                                                                          ------------     ------------
              Total long-term deferred tax asset, net...................................         5,691            3,878
              Valuation allowance.......................................................        (4,907)          (3,629)
                                                                                          ------------     ------------
         Total long-term deferred tax assets............................................  $        784     $        249
                                                                                          ============     ============

         Workers compensation...........................................................  $        576              140
         Allowance for doubtful accounts................................................           157               80
         Severance......................................................................           306                -
         Other accrued liabilities......................................................           646              624
                                                                                          ------------     ------------
            Total short-term deferred tax assets........................................         1,685              844
            Valuation allowance.........................................................          (188)            (424)
                                                                                          ------------     ------------
         Total short-term deferred tax assets, net......................................  $      1,497     $        420
                                                                                          ============     ============

</TABLE>



                                       43
<PAGE>



The Company has considered the realizability of its deferred tax assets and
liabilities and has recorded valuation allowances, as appropriate, to reduce its
deferred tax assets to an amount which, in the opinion of management, is more
likely than not to be realized. At December 29, 2001, the Company has net
operating loss carryforwards available for federal tax purposes of approximately
$12,000,000, which begin to expire in 2019. The use of these net operating loss
carryforwards is limited on an annual basis, according to Internal Revenue Code
guidelines.

The following table reconciles the federal tax provision:

<TABLE>
<CAPTION>

                                                                             2001               2000            1999
                                                                             ----               ----            ----

<S>                                                                      <C>               <C>               <C>
         Tax benefit - federal........................................   $       (1,413)   $      (3,229)    $       (426)
         State tax benefit, net of federal benefit....................             (197)            (570)             (75)
         Permanent differences, net...................................              603               171             176
         Valuation allowance..........................................            1,042            3,628              425
                                                                         --------------    --------------    ------------
              Tax provision...........................................   $           35    $            -    $          -
                                                                         ==============    ==============    ============

</TABLE>

(14)     RESTRUCTURING CHARGES

During the last quarter of 2000, the Company began to restructure in
contemplation of its acquisition of TEAM America Corporation. The primary
purpose of this restructuring was to position the Company to focus on the
opportunities to be derived from integrating the Company's internet technology
with TEAM America Corporation's PEO business and the opportunities for
cross-promotion between TEAM America Corporation's client and worksite employee
base and the Company's online business center. As a result of this shift,
certain assets utilized in the online business segment were determined to be
impaired. Additionally, certain exit costs were accrued related to leased office
space no longer being utilized, employee severance, and costs to break
contractual agreements with vendors.

During the year ended December 29, 2001, the Company incurred additional
restructuring costs, in conjunction with the TEAM America Corporation
acquisition, primarily related to relocation of certain key executives in
connection with exiting its headquarters in California, employee severance, the
write-down of impaired assets and other asset write-offs. These relocations were
made in order to allow the Company to focus on its PEO business and to exit its
online business center business. All such costs were expensed when incurred.

A summary of expenses included in the restructuring costs line item of the
consolidated statement of operations are as follows (000's omitted):

<TABLE>
<CAPTION>

                                                                                               2001            2000
                                                                                               ----            ----

<S>                                                                                       <C>              <C>
         Relocation costs...............................................................  $        533     $          -
         Employee severance.............................................................           973               49
         Write-down of impaired assets                                                             261              477
         Cost to exit contractual agreements............................................             -              100
         Other..........................................................................            67               28
                                                                                          ------------     ------------
                                                                                          $      1,834     $        654
                                                                                          ============     ============

</TABLE>

(15)     CONTINGENCIES

The Internal Revenue Service ("IRS") has been conducting a Market Segment Study
since 1994, focusing on selected PEOs (not including the Company), in order to
examine the relationships among PEOs, worksite employees and owners of client
companies. The Company has limited knowledge of the nature, scope and status of
the Market Segment Study because it is not a part thereof and the IRS has not
publicly released any information regarding the study to date. In addition, TEAM
America's 401(k) retirement plan (the "Plan") was audited for the year ended
December 31, 1992, and, as part of that audit the IRS regional office has asked
the IRS national office to issue a Technical Advice Memorandum ("TAM") regarding
whether or not the Company is the employer for benefit plan purposes. The
Company has stated its position in a filing with the IRS that it is the employer
for benefit plan purposes.




                                       44
<PAGE>



If the IRS concludes the PEOs are not "employers" of certain worksite employees
for purposes of the Code as a result of either the Market Segment Study or the
TAM, then the tax qualified status of the Plan could be revoked and its
cafeteria plan may lose its favorable tax status. The loss of qualified status
for the Plan and the cafeteria plan could increase the Company's administrative
expenses, and thereby, materially adversely affect the Company's financial
condition and result of operations.

The Company is unable to predict the timing or nature of the findings of the
Market Segment Study, the timing or conclusions of the TAM, and the ultimate
outcome of such conclusions or findings. The Company is also unable to predict
the impact, if any, that the foregoing could have on the Company's
administrative expenses, and the Company's resulting exposure.

The Company has ongoing litigation matters pertaining to worksite employees and
other legal matters which have arisen in the ordinary course of business. The
Company provides reserves for estimated future costs to defend the Company
and/or the estimated amount to be paid if the award or payment is probable and
estimable. Management believes these claims will not have a material adverse
effect on the results of operations or financial condition of the Company.

(16)     QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>

                                                               MARCH 31         JUNE 30     SEPTEMBER 29      DECEMBER 29
                                                               --------         -------     ------------      -----------
<S>                                                         <C>             <C>             <C>              <C>

YEAR ENDED DECEMBER 29, 2001:
Revenues................................................    $   101,795     $    123,130    $   114,343      $   111,794
Gross profit............................................    $     4,029     $      5,261    $     5,511      $     5,068
Operating income (loss).................................    $       (98)    $         68    $      (235)     $    (2,839)
Net (loss) attributable to common shareholders..........    $      (508)    $       (478)   $    (1,011)     $    (3,293)
Basic net (loss) per share attributable to common
   shareholders.........................................    $     (0.07)    $      (0.07)   $     (0.14)     $     (0.41)
Diluted net (loss) per share attributable to common
   shareholders.........................................    $     (0.07)    $      (0.07)   $     (0.14)     $     (0.41)
</TABLE>

<TABLE>
<CAPTION>

                                                                MARCH 31        JUNE 30      SEPTEMBER 30     DECEMBER 31
                                                                --------        -------      ------------     -----------

<S>                                                         <C>             <C>             <C>               <C>
YEAR ENDED DECEMBER 31, 2000:
Revenues................................................    $         -     $          -    $        41       $       10
Gross profit............................................    $         -     $          -    $        41       $       10
Operating (loss)........................................    $    (2,135)    $     (2,456)   $    (1,761)      $   (2,632)
Net (loss) attributable to common shareholders..........    $    (2,276)    $     (2,510)   $    (1,818)      $   (3,939)
Diluted net (loss) per share attributable to common
   shareholders.........................................    $     (0.89)    $      (0.86)   $     (0.64)      $    (1.54)
Basic net (loss) per share attributable to common
   shareholders.........................................    $     (0.89)    $      (0.86)   $     (0.64)      $    (1.54)

</TABLE>

<TABLE>
<CAPTION>

                                                                                             SEPTEMBER 30     DECEMBER 31
                                                                                             ------------     -----------
<S>                                                                                         <C>               <C>

PERIOD ENDED DECEMBER 31, 1999:
Revenues................................................                                    $         -       $        -
Gross profit............................................                                    $         -       $        -
Operating (loss)........................................                                    $      (140)      $   (1,034)
Net (loss)..............................................                                    $      (140)      $   (1,034)
Diluted net (loss) per share............................                                    $     (0.06)      $    (0.59)
Basic net (loss) per share..............................                                    $     (0.06)      $    (0.59)

</TABLE>

(17)     SUBSEQUENT EVENTS

On March 1, 2002, the Company acquired certain assets and assumed certain
liabilities from Strategic Staff Management, Inc. (SSMI) in Omaha, Nebraska. The
purchase price of $472,000, included cash of $300,000 and deposits from certain
SSMI customers of $172,000.




                                       45
<PAGE>



On February 15, 2002, the Company entered into a letter of intent to acquire
certain assets from Inovis Corporation. A maximum down payment of $200,000 will
be paid in cash at closing. In addition to the down payment, the Company will
pay additional amounts based upon the operating performance relative to the
customers acquired over a defined period of time. The Company closed this
transaction on May 1, 2002.

On March 14, 2002, the Company entered into a letter of intent to acquire
certain assets from Group 4, Inc. A maximum down payment of $120,000 will be
paid in cash at closing. In addition to the down payment, the Company will pay
additional amounts based upon the operating performance of the customers
acquired over a defined period of time. The Company anticipates that this
transaction will close in the third quarter of 2002.

The cash consideration for SSMI was funded under the Company's existing line of
credit. The Company plans that the cash consideration for Inovis and Group 4,
Inc. will also be funded under its existing line of credit.

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

        None.

















































                                       46
<PAGE>



                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information required by this item is incorporated by reference to the
information set forth under the captions Proposal Number 1: Election of
Directors - Nominees - Class II Directors (For Terms Expiring at the 2002 Annual
Meeting), - Directors Remaining in Office, and - Section 16(a) Beneficial
Ownership Reporting Compliance in the Company's definitive Proxy Statement
filed with the Securities and Exchange Commission pursuant to Regulation 14A
on April 30, 2002 (the TEAM Mucho Proxy Statement).

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated by reference to the
information set forth under the captions Proposal Number 1: Election of
Directors - Director Compensation and --Executive Compensation in the TEAM Mucho
Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is incorporated by reference to the
information set forth under the caption Security Ownership of Certain Beneficial
Owners and Management in the TEAM Mucho Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this item is incorporated by reference to the
information set forth under the caption Proposal Number 1: Election of Directors
- Certain Relationships and Related Transactions in the TEAM Mucho Proxy
Statement.











































                                       47
<PAGE>



TEAM MUCHO, INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
AS OF DECEMBER 29, 2001


<TABLE>
<CAPTION>

                                                     BEGINNING                                              ENDING
                                                      BALANCE         ADDITIONS      DEDUCTIONS             BALANCE
                                                      -------         ---------      ----------             -------
<S>                                                 <C>            <C>               <C>                  <C>
December 29, 2001
  Allowance for doubtful accounts
    Accounts receivable - trade.................    $  200,000     $     368,000     $   (176,000)        $   392,000

Restructuring reserve
  Other accrued expenses........................       654,000         1,834,000       (1,465,000)          1,023,000

</TABLE>

VALUATION AND QUALIFYING ACCOUNTS
AS OF DECEMBER 31, 2000

<TABLE>
<CAPTION>


                                                     BEGINNING                      OTHER                        ENDING
                                                      BALANCE       ADDITIONS     ADDITIONS     DEDUCTIONS       BALANCE
                                                      -------       ---------     ---------     ----------       -------

<S>                                                 <C>           <C>           <C>              <C>           <C>
December 31, 2000
  Allowance for doubtful accounts...............
   Accounts receivable-trade....................    $        -    $        -    $    200,000(1)  $        -    $   200,000

Restructuring reserve
   Other accrued expenses.......................             -       654,000              -               -        654,000

</TABLE>


1        Other additions represent allowance for doubtful accounts originating
         from the acquisition of TEAM America.

















































                                       48
<PAGE>



                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)      The following financial statements are included in this Annual Report
         on Form 10-K/A:

         (1)     The following financial statements of the Company are included
                 in Item 8 of this report:

                 Consolidated Balance Sheets (unaudited) as of December 29, 2001
                 and December 31, 2000

                 Consolidated Statements of Operations (unaudited) for the years
                 ended December 29, 2001 and December 31, 2000 and for the
                 Period from Inception (July 8, 1999) to December 31, 1999.

                 Consolidated Statements of Shareholders' Equity (unaudited) for
                 the years ended December 29, 2001 and December 31, 2000 and for
                 the Period from Inception (July 8, 1999) to December 31, 1999.

                 Consolidated Statements of Cash Flows (unaudited) for the years
                 ended December 29, 2001 and December 31, 2000 and for the
                 Period from Inception (July 8, 1999) to December 31, 1999.

                 Notes to Consolidated Financial Statements (unaudited) December
                 29, 2001 and December 31, 2000

         (2)     The following financial statement schedules for the Company
                 are filed as part of this report:

                 Schedule II - Valuation and Qualifying Accounts

                 All other schedules are omitted because the required
                 information is either presented in the financial statements or
                 notes thereto, or is not applicable, required or material.

         (3)     Exhibits:

<TABLE>
<CAPTION>

EXHIBIT NO.                                        DESCRIPTION
-----------                                        -----------

<S>               <C>
2.1               Agreement and Plan of Merger, dated as of June 16, 2000, among the Company, TEAM Merger Corporation and
                  Mucho.com, Inc. (Attached as Appendix A to the Registration Statement on Form S-4, Reg. No. 333-43630,
                  filed with the Securities and Exchange Commission on November 27, 2000 and incorporated herein by
                  reference.)

3.1               Third Amended and Restated Articles of Incorporation of the Company (Attached as Appendix B to the
                  Definitive Proxy Statement for the Meeting of Shareholders held on September 20, 2001, filed with the
                  Securities and Exchange Commission on August 21, 2001, and incorporated herein by reference.)

3.2               Second Amended and Restated Code of Regulations of the Company (Attached as Appendix E to the Registration
                  Statement on Form S-4, Reg. No. 333-43630, filed with the Securities and Exchange Commission on November
                  27, 2000, and incorporated herein by reference.)

*10.1             Company's 1996 Incentive Stock Plan (Attached as Exhibit 10.1 to the Registration Statement on Form S-1, as
                  amended, Reg. No. 333-13913, and incorporated herein by reference.)

</TABLE>

                                            49
<PAGE>

<TABLE>
<CAPTION>



EXHIBIT NO.                                        DESCRIPTION
-----------                                        -----------

<S>                                                              <C>
10.2              Lease for Cascade Corporate Center dated June 22, 1990 between EastGroup Properties and the Company, as
                  amended (Attached as Exhibit 10.4 to the Registration Statement on Form S-1, as amended, Reg. No.
                  333-13913, and incorporated herein by reference)

10.3              Securities Purchase Agreement, dated as of December 28, 2000, by and among TEAM Mucho, Inc., Stonehenge
                  Opportunity Fund, LLC and Provident Financial Group, Inc. (Attached as Exhibit 10.5 to the Annual Report on
                  Form 10-K/A, File No. 0-21533, filed with the SEC on April 2, 2001, and incorporated herein by reference)

10.4              Credit Agreement, dated as of December 28, 2000, by and among TEAM Mucho, Inc. and Mucho.com, Inc. and The
                  Provident Bank (attached as Exhibit 10.6 to the Annual Report on Form 10-K/A, File No. 0-21533, filed with
                  the SEC on April 2, 2001, and incorporated herein by reference)

10.5              Registration Rights Agreement, dated as of December 28, 2000, by and among TEAM Mucho, Inc., Stonehenge
                  Opportunity Fund, LLC and The Provident Bank (Attached as Exhibit 10.7 to the Annual Report on Form 10-K/A,
                  File No. 0-21533, filed with the SEC on April 2, 2001, and incorporated herein by reference)

*10.6             Company's 2000 Stock Option Plan(1)

*10.7             Executive employment agreement dated December 28, 2000 between the Company and Jose C. Blanco(1)

*10.8             Executive employment agreement dated December 28, 2000 between the Company and Jay R. Strauss(1)

*10.9             Executive Employment Agreement dated February 19, 2001 between the Company and Jay Whitehead(1)

*10.10            Agreement dated December 28, 2001 between the Company and Kevin T. Costello(1)

21.1              Subsidiaries of the Registrant(1)

24.1              Power of Attorney(1)

99.1              Letter from TEAM Mucho, Inc. to the SEC, dated March 28, 2002, regarding Auditors Report of Arthur
                  Andersen, LLP(1)

99.2              CEO Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002

99.3              CFO Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002


(1)      Attached to the Annual Report on Form 10-K, File No. 0-21533, filed with the SEC on March 29, 2002, and
         incorporated herein by reference.

* Management contract or compensation plan or arrangement.

(b)      Reports on Form 8-K

         We filed the following Current Reports on Form 8-K since September 30,
2001:

         (i)      Current Report on Form 8-K, dated March 7, 2002, filed with
                  the Securities and Exchange Commission on March 8, 2002

         (ii)     Current Report on Form 8-K, dated January 17, 2002, filed with
                  the Securities and Exchange Commission on January 29, 2002

         (iii)    Current Report on Form 8-K, dated November 21, 2001, filed
                  with the Securities and Exchange Commission on November 21,
                  2001


</TABLE>


                                       50
<PAGE>


         (iv)     Current Report on Form 8-K, dated November 19, 2001, filed
                  with the Securities and Exchange Commission on November 19,
                  2001

         (v)      Current Report on Form 8-K, dated October 26, 2001, filed with
                  the Securities and Exchange Commission on October 30, 2001


(c)      Exhibits

         The exhibits to this report follow the Signature Page
(d)      Financial Statement Schedules

         The financial statement schedule and the independent auditors' report
         thereon are included in Item 8 to this Annual Report on Form 10-K/A.































































                                       51
<PAGE>



                                   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.

                                    Team America, Inc.

Date: August 13, 2002           By: /s/ S. Cash Nickerson
                                    -------------------------------------------
                                    S. Cash Nickerson, Chairman, President and
                                    Chief Executive Officer

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

<TABLE>
<CAPTION>

SIGNATURE                                   TITLE                                                           DATE
---------                                   -----                                                           ----

<S>                                                  <C>                                                <C>
/s/ S. CASH NICKERSON                       Chairman and Chief Executive Officer                     August 13, 2002
---------------------------------------
S. Cash Nickerson                           (Principal Executive Officer)

/s/ JOSE  C. BLANCO*                        Chief Financial Officer, Treasurer                       August 13, 2002
---------------------------------------
Jose  C. Blanco                             and Director (Principal Financial
                                            Officer)

/s/ JAY R. STRAUSS                          Chief Legal Officer and Director                         August 13, 2002
---------------------------------------
Jay R. Strauss

/s/ ANDREW H. JOHNSON*                      Chief Accounting Officer                                 August 13, 2002
---------------------------------------
Andrew H. Johnson                           (Principal Accounting Officer)

/s/ CRYSTAL FAULKNER*                       Director                                                 August 13, 2002
---------------------------------------
Crystal Faulkner

/s/ DANIEL J. JESSEE*                       Director                                                 August 13, 2002
---------------------------------------
Daniel J. Jessee

/s/ WILLIAM W. JOHNSTON*                    Director                                                 August 13, 2002
---------------------------------------
William W. Johnston

/s/ ROBERT G. McCREARY III*                 Director                                                 August 13, 2002
---------------------------------------
Robert G. McCreary III

/s/ JOSEPH MANCUSO*                         Director                                                 August 13, 2002
---------------------------------------
Joseph Mancuso

/s/ JAMES D. ROBBINS*                       Director                                                 August 13, 2002
---------------------------------------
James D. Robbins

/s/ THEODORE R. TETZLAFF                    Director                                                 August 13, 2002
---------------------------------------
Theodore R. Tetzlaff

/s/ MICHAEL H. THOMAS*                      Director                                                 August 13, 2002
---------------------------------------
Michael H. Thomas

*By: /s/ S. CASH NICKERSON
     ----------------------------------
S. Cash Nickerson, attorney-in-fact
for each of the persons indicated

</TABLE>




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