AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 25, 1998

REGISTRATION NO. 333-53745

------------------------

AMENDMENT NO. 1

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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CORPORATE STAFFING RESOURCES, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 7363 56-2017705
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)

ONE MICHIANA SQUARE
100 EAST WAYNE STREET
SOUTH BEND, IN 46601
(219) 233-8209
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

THOMAS E. MURPHY

CHIEF FINANCIAL OFFICER

ONE MICHIANA SQUARE
100 EAST WAYNE STREET
SOUTH BEND, IN 46601
(219) 233-8209
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

------------------------

Copies of all communications,
including all communications sent to the agent for service, should be sent to:

CHRISTOPHER D. LUEKING, ESQUIRE LELAND E. HUTCHINSON, ESQUIRE
LATHAM & WATKINS WINSTON & STRAWN
SEARS TOWER, SUITE 5800 35 WEST WACKER DRIVE
CHICAGO, IL 60606 CHICAGO, IL 60601
(312) 876-7700 (312) 558-5600

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
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2

For an index of the Exhibits filed as part of this Registration Statement,
see page II-2 hereof.

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.

SUBJECT TO COMPLETION, DATED SEPTEMBER 24, 1998

5,500,000 SHARES

CORPORATE STAFFING RESOURCES, INC.
[LOGO]

COMMON STOCK

Of the 5,500,000 shares of Common Stock offered hereby, 4,750,000 shares
are being sold by Corporate Staffing Resources, Inc. (the "Company") and 750,000
shares are being sold by certain stockholders of the Company ("the Selling
Stockholders"). See "Principal and Selling Stockholders." The Company will not
receive any of the proceeds from the sale of shares by the Selling Stockholders.

Prior to this offering (the "Offering"), there has been no public market
for the Common Stock of the Company. It is currently estimated that the initial
public offering price will be between $ and $ per share. See
"Underwriting" for a discussion of the factors considered in determining the
initial public offering price. The Company has applied for quotation of the
Common Stock on the Nasdaq National Market under the symbol "CSRI," subject to
official notice of issuance.

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF MATERIAL RISKS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OF COMMON
STOCK OFFERED HEREBY.

------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Proceeds to
Price to Underwriting Proceeds to Selling
Public Discount (1) Company (2) Stockholders
- ------------------------------------------------------------------------------------------------------------------

Per Share......................... $ $ $ $
Total (3)......................... $ $ $ $
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------

(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.

(2) Before deducting expenses payable by the Company estimated at $ .

(3) The Company and certain of the Selling Stockholders have granted the
Underwriters a 30-day option to purchase up to an additional 825,000 shares
of Common Stock at the Price to the Public less the Underwriting Discount
solely to cover over-allotments, if any. If the Underwriters exercise this
option in full, the Price to the Public will total $ , the
Underwriting Discount will total $ , the Proceeds to Company will
total $ and Proceeds to Selling Stockholders will total
$ . See "Principal and Selling Stockholders" and "Underwriting."

------------------------
The shares of Common Stock are offered by the Underwriters named herein
subject to receipt and acceptance by them and their right to reject any order in
whole or in part. It is expected that delivery of the certificates representing
the shares will be made against payment therefor at the office of NationsBanc
Montgomery Securities LLC on or about , 1998.
------------------------

NATIONSBANC MONTGOMERY SECURITIES LLC

BT ALEX. BROWN

THE ROBINSON-HUMPHREY COMPANY

, 1998
4

CORPORATE STAFFING RESOURCES, INC.

[TO BE INSERTED: MAP OF THE UNITED STATES SHOWING LOCATIONS
OF COMMERCIAL STAFFING AND PROFESSIONAL SERVICES BRANCHES]

THE BEST RESOURCE FOR YOUR STAFFING NEEDS.

The Company intends to furnish its stockholders with annual reports containing
financial statements audited by independent certified public accountants and
with quarterly reports containing unaudited summary financial information for
the first three quarters of each fiscal year.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, INCLUDING
STABILIZING BIDS, SYNDICATE COVERING TRANSACTIONS AND THE IMPOSITION OF PENALTY
BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
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5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the pro forma and
historical financial statements and the related notes thereto appearing
elsewhere in this Prospectus. Prospective investors should carefully consider
the matters set forth under "Risk Factors" herein. Corporate Staffing Resources,
Inc. was previously named The Mega Force Staffing Companies, Inc. In March 1997,
the Company acquired The Hamilton-Ryker Company, LLC ("Hamilton-Ryker"), and in
December 1997, it acquired CSR, Inc. ("CSR, Inc.") and adopted its current name.
During 1998, Corporate Staffing Resources, Inc. has acquired six additional
staffing service companies. All references herein to the "Company" refer to
Corporate Staffing Resources, Inc. and, where appropriate, its subsidiaries and
their respective operations. Industry information used in this Prospectus was
obtained from industry publications that the Company believes to be reliable,
but such information has not been independently verified. Unless indicated
otherwise, all information contained in this Prospectus assumes that the
Underwriters' over-allotment option will not be exercised.

THE COMPANY

Corporate Staffing Resources, Inc. is a leading provider of diversified
staffing, professional and consulting services to businesses, professional and
service organizations, educational institutions and governmental agencies. The
Company offers these services through over 130 branches located in 16 states,
including 91 branches added by the Company since March 1997 through the
acquisition of eight additional staffing and professional service companies. The
Company believes that a combination of internal growth and selective
acquisitions will allow it to capitalize most effectively on opportunities in
the large and rapidly growing staffing services industry. For the year ended
December 31, 1997 and the six months ended June 30, 1998, the Company's pro
forma revenues and operating income were $235.8 million and $131.9 million, and
$11.4 million and $6.1 million, respectively.

The Company primarily provides two types of staffing services: (i)
commercial staffing services ("Commercial Staffing"), including
vendor-on-premises ("VOP"), clerical, administrative and light industrial
staffing services; and (ii) professional staffing services ("Professional
Services"), including a comprehensive range of information technology ("IT"),
accounting and finance staffing, placement and outplacement services. The
Company's Commercial Staffing branches primarily serve small to mid-size cities,
while its Professional Services branches primarily serve major metropolitan and
national markets. For the year ended December 31, 1997 and for the six months
ended June 30, 1998, Commercial Staffing generated approximately 78.6% and 77.5%
of the Company's pro forma revenues and 68.5% and 67.3% of the Company's pro
forma gross profits, respectively. For the year ended December 31, 1997 and for
the six months ended June 30, 1998, Professional Services generated
approximately 21.4% and 22.5% of the Company's pro forma revenues and 31.5% and
32.7% of the Company's pro forma gross profits, respectively.

The Company has developed operating and growth strategies designed to
emphasize high margin Professional Services while maintaining strong operating
and financial controls. The key elements of the Company's operating strategy
are: (i) maintain an entrepreneurial environment; (ii) continue disciplined
financial management; (iii) integrate acquired companies quickly; (iv) maintain
or establish leadership in existing geographic markets; and (v) deliver high
value-added quality service. The key elements of the Company's growth strategy
include:

Increase Focus on Professional Services. The Company's strategy is to
increase the percentage of total revenues and gross profits contributed by
Professional Services by expanding its service offerings in the fields of IT
staffing and consulting and accounting and finance staffing. The Company also
intends to grow its pool of skilled professionals, hire additional sales
consultants, target mid-size and large companies, leverage client relationships,
open additional Professional Services branches and increase the pace of
acquisitions of Professional Services companies in larger metropolitan markets.
The Company believes that providing Professional Services to its clients offers
attractive opportunities for growth in sales and profits.

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6

Focus on Commercial Staffing in Small to Mid-Size Cities. The Company
provides Commercial Staffing primarily in small to mid-size cities with
populations ranging from 10,000 to 250,000 and seeks to be the leading provider
of Commercial Staffing in the markets in which it operates. The Company believes
that it can achieve attractive margins in these markets and that in many cases
it has a competitive marketing advantage over national providers because it has
developed a strong local presence and has tailored its operations to meet the
needs of local customers. Each of the Company's Commercial Staffing branches
operates under established local brand names. The Company intends to continue
building on the strong reputations of these local brand names in their markets
while leveraging the sophisticated support services and low cost structures of a
national provider.

Increase Vendor-On-Premises Relationships. As of June 30, 1998, the Company
had 22 VOP partnering relationships. Under these programs, the Company assumes
administrative responsibility for coordinating some or all Commercial Staffing
at a client's location or organization, including skills testing and training.
The VOP relationships provide clients with dedicated on-site account management
which can more effectively meet the client's changing staffing needs with high
quality, timely and consistent service. The Company has expanded geographically
by establishing new VOP sites to service existing clients and intends to
establish additional sites for both existing and new clients as opportunities
arise in the future.

Expand through Acquisitions. The Company intends to acquire and integrate
independent Professional Service and Commercial Staffing companies with strong
management, profitable operating results and recognized local and regional
presences. Since March 1997, the Company has acquired eight companies with an
aggregate of 91 branches and 1997 revenues of $170.2 million. Primarily, the
Company intends to pursue strategic acquisitions in Professional Services that
offer complementary services and expand the percentage of revenues generated by
Professional Services and tuck-in acquisitions in Commercial Staffing that
increase its penetration of existing markets. The Company has established a team
of corporate officers responsible for identifying prospective acquisitions,
performing due diligence and negotiating acquisition contracts.

The Company is a Delaware corporation which was organized on March 4, 1997.
The Company's executive offices are located at One Michiana Square, 100 East
Wayne Street, Suite 100, South Bend, IN 46601, and its telephone number is (219)
233-8209.

STAFFING SERVICES INDUSTRY OVERVIEW

The staffing services industry has grown rapidly in recent years as
companies have utilized supplemental employees to control personnel costs and to
meet specialized or fluctuating personnel needs. According to Staffing Industry
Report, a widely available industry newsletter, the U.S. market for temporary
staffing services is estimated to have grown at a compound annual rate of
approximately 17.4% from approximately $29.3 billion in 1992 to approximately
$76.8 billion in 1998. Furthermore, according to Staffing Industry Report,
revenues from information technology and technical staffing are estimated to
have grown at a compound annual rate of 24.0% from approximately $5.1 billion in
1992 to approximately $18.5 billion in 1998. The Company believes the staffing
services industry is highly fragmented with over 6,000 staffing companies and
2,500 professional/IT companies. Although the industry is experiencing
increasing consolidation, in part because of client demand for comprehensive
supplemental staffing solutions, the Company believes that there are numerous
attractive acquisition targets.

4
7

THE OFFERING

Common Stock offered by the Company.................. 4,750,000 shares
Common Stock offered by the Selling Stockholders..... 750,000 shares
Common Stock to be Outstanding after the Offering
(1)................................................ 14,428,114 shares
Use of proceeds by the Company....................... To repay certain indebtedness. See "Use of
Proceeds."
Proposed Nasdaq National Market symbol............... CSRI

- ---------------

(1) Excludes approximately 1,500,000 shares of Common Stock reserved for
issuance under the Company's Option Plan (as defined herein) (of which: (i)
95,000 shares of Common Stock are issuable upon exercise of outstanding
options at a weighted average exercise price of $8.00 per share; and (ii)
500,000 shares of Common Stock will be issuable at the initial public
offering price upon exercise of options to be granted concurrently with the
consummation of this Offering). See "Management," "Capitalization" and
"Principal and Selling Stockholders."

5
8

SUMMARY FINANCIAL DATA (1)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

PRO FORMA (3)
SIX MONTHS ----------------------------------
YEAR ENDED ENDED YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
---------------------------- ------------------ ------------ -------------------
1995 1996 1997 1997 1998 1997 1997 1998
------- ------- -------- ------- -------- ------------ -------- --------

STATEMENT OF INCOME DATA: (2)
Revenues................................. $67,350 $65,549 $114,564 $43,643 $117,055 $235,828 $107,324 $131,946
Cost of services......................... 57,173 54,724 93,557 35,798 93,227 183,039 83,297 102,470
------- ------- -------- ------- -------- -------- -------- --------
Gross profit............................. 10,177 10,825 21,007 7,845 23,828 52,789 24,027 29,476
Selling, general and administrative
expenses............................... 8,081 8,652 13,861 5,644 18,483 37,961 17,516 21,856
Depreciation and amortization............ 295 284 836 239 1,129 3,055 1,406 1,549
Other operating expenses................. 1,574 842 1,158 232 -- 409 81 --
------- ------- -------- ------- -------- -------- -------- --------
Operating income......................... 227 1,047 5,152 1,730 4,216 11,364 5,024 6,071
Interest expense......................... 275 266 1,570 518 1,780 2,201 786 1,093
Other income expense..................... (10) (115) (124) (21) (137) (205) (170) --
------- ------- -------- ------- -------- -------- -------- --------
Income (loss) before income taxes and
extraordinary item..................... (38) 896 3,706 1,233 2,573 9,368 4,408 4,978
Provisions for income taxes.............. -- -- 1,904 805 1,158 4,296 2,038 2,240
------- ------- -------- ------- -------- -------- -------- --------
Income (loss) before extraordinary
item................................... (38) 896 1,802 428 1,415 $ 5,072 $ 2,370 $ 2,738
======== ======== ========
Extraordinary item, net of tax benefit
(5).................................... -- -- 1,672 -- --
------- ------- -------- ------- --------
Net income (loss)........................ $ (38) $ 896 $ 130 $ 428 $ 1,415
======= ======= ======== ======= ========
Basic earnings per common share:
Income before extraordinary item....... $ .36 $ .10 $ .15 $ .35 $ .16 $ .19
======== ======== ========
Extraordinary item, net of tax
benefit.............................. (.33) -- --
-------- ------- --------
Net income........................... $ .03 $ .10 $ .15
======== ======= ========
Average shares outstanding............... 5,061 4,385 9,678 14,428 14,428 14,428
Diluted earnings per common share:
Income before extraordinary item....... $ .32 $ .09 $ .15 $ .35 $ .16 $ .19
======== ======== ========
Extraordinary item, net of tax
benefit.............................. (.30) -- --
-------- ------- --------
Net income........................... $ .02 $ .09 $ .15
======== ======= ========
Average shares outstanding............... 5,580 4,946 9,692 14,428 14,428 14,442

JUNE 30, 1998
-------------------------
ACTUAL PRO FORMA (4)
-------- -------------

BALANCE SHEET DATA:
Working capital............................................. $ 14,718 $ 15,373
Total assets................................................ 103,128 111,887
Total debt.................................................. 60,174 24,821
Shareholders' equity........................................ 29,861 73,036

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(1) The Company was organized in March 1997. Therefore, the Statement of Income
Data represents the operations of the Company's predecessors, Mega Force
Staffing Services, Inc. for the period ended March 12, 1997 and The Mega
Force Group for the years ended December 31, 1995 and 1996.

(2) The Company's Completed Acquisitions (as hereinafter defined) have been
accounted for as purchases, and therefore, the operations of the acquired
companies are included in the Statement of Income Data from the respective
dates of acquisition. See the Financial Statements of Corporate Staffing
Resources, Inc. included herein.

(3) Pro forma information gives effect to the Completed Acquisitions, the
discontinuation of the Company's Professional Employer Organization, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Recent Developments," and the consummation of the Offering
described herein. The pro forma adjustments for the Completed Acquisitions
include: (i) an adjustment to compensation expense equal to the difference
between actual compensation paid to certain officers of the Company and the
acquired companies and compensation expense agreed to in connection with the
recent amendment and restatement of certain management employment contracts;
(ii) an adjustment to income tax expense based upon a consolidated effective
tax rate of 45%, which reflects the impact of nondeductible goodwill
amortization; (iii) an adjustment to amortization expense relating to
intangible assets recorded in conjunction with the Completed Acquisitions;
and (iv) an adjustment to interest expense to reflect incremental borrowings
under the Company's borrowing facility necessary to finance the Completed
Acquisitions. Pro forma adjustments for the Offering include: (i) a
reduction of interest expense resulting from repayment of borrowings under
the credit agreement and repayment of notes payable to shareholders; (ii)
the elimination of certain management and consulting fees pursuant to
certain agreements which will be terminated upon the consummation of the
Offering and (iii) the increase in the average shares outstanding to reflect
the issuance of shares in the Offering. The pro forma results of operations
are not necessarily indicative of the results that would have occurred had
these transactions been completed as of such date or the results that may be
attained in the future.

(4) Gives effect to 4,750,000 shares issued by the Company in the Offering and
the application of the estimated net proceeds therefrom.

(5) Represents non-recurring expenses incurred by the Company in connection with
the refinancing of its credit facility in December 1997.

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RISK FACTORS

Prospective purchasers of the Common Stock should carefully consider the
risk factors set forth below, as well as the other information contained in this
Prospectus.

LIMITED COMBINED OPERATING HISTORY; INTEGRATION OF OPERATIONS

The Company acquired Hamilton-Ryker in March 1997, CSR, Inc. in December
1997 and the other acquired companies in transactions that occurred from January
1998 to July 1998. The members of the Company's senior management have worked
together and managed these entities as a combined business for only a short
time. There can be no assurance that management will be able to oversee the
Company and effectively implement the Company's operating or growth strategies
or effectively manage the combined operations. The Company's historical
financial results cover periods when the Company was not under common control or
management and, therefore, may not be indicative of the Company's future
financial or operating results. In addition, integration of the acquired
companies requires resources, management time, training and the implementation
of consistent management practices. If the Company is not able successfully to
complete the integration of Hamilton-Ryker, CSR, Inc. and the other acquired
companies, such failure could have a material adverse effect on the Company's
business, operating results and financial condition. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

RISKS RELATED TO GROWTH STRATEGY

The Company has experienced significant growth, primarily through
acquisitions, internal growth and opening new branches. There can be no
assurance that the Company will be able to expand its market presence in its
current locations or successfully enter new markets through acquisitions or the
opening of new branches. The Company's ability to continue its growth and
profitability will depend on a number of factors, including the availability of
capital to fund acquisitions, existing and emerging competition, the ability to
maintain sufficient profit margins despite pricing pressures and the strength of
demand for temporary employees, consultants and professionals in the Company's
markets. The Company must also manage costs in a changing regulatory
environment, adapt its infrastructure and systems to accommodate growth and
recruit and train additional qualified personnel. There can be no assurance that
the Company's systems, procedures and controls will be adequate to support its
operation as the Company expands.

RISKS ASSOCIATED WITH ACQUISITIONS

The Company intends to increase its revenues in part through the
acquisition of additional providers of Professional Services and Commercial
Staffing. There can be no assurance that the Company will be able to
successfully identify suitable acquisition candidates (particularly
professional/information technology ("IT") candidates), complete acquisitions at
an acceptable price or integrate acquired businesses into its operations. Even
if suitable acquisition candidates are identified, the Company may not be able
to compete successfully with other companies in its industry that have adopted a
strategy of growth through acquisition. Acquisitions also involve certain risks,
including risks associated with the availability of acquisition financing,
unanticipated problems, liabilities and contingencies, diversion of management
attention, unanticipated costs associated with effecting or attempting to effect
acquisitions and possible adverse effects on earnings resulting from increased
goodwill amortization, increased interest costs, the issuance of additional
securities and difficulties related to the integration of the acquired business.
Once integrated, acquired companies may not achieve acceptable levels of revenue
or profitability or otherwise perform as expected. The Company is unable to
predict whether or when any prospective acquisition candidate will become
available or the likelihood that any acquisition will be completed. The Company
intends to finance future acquisitions by using cash and Common Stock for all or
a portion of the consideration to be paid. In the event that the Common Stock
does not maintain a sufficient market value, or potential acquisition candidates
are unwilling to accept Common Stock as part of the consideration for their
businesses, the Company may be required to utilize its cash resources, if
available, in order to pursue additional acquisitions. Although the Company
currently maintains a $75 million credit facility, if the Company does not have
sufficient cash resources to pursue acquisitions, its growth could be limited
unless it is able to obtain additional capital through debt or equity financing.
See "Management's

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Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Business -- Growth
Strategy."

RISKS ASSOCIATED WITH OPENING NEW BRANCHES

The Company intends to grow by opening new branches and, in certain
circumstances, by expanding into new geographic areas. The Company anticipates
that new branches initially may produce significant operating losses and will
place demands on the Company's management and operational, administrative and
financial resources. In addition, the Company's future performance and
profitability will depend, in part, on its ability successfully to attract and
retain qualified personnel to manage the growth and operations of the new
branches. There can be no assurance that the Company's new branches will be
profitable. The opening of additional branches, individually or in the
aggregate, may have a material adverse effect on the Company's business,
operating results and financial condition. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
"Business -- Growth Strategy."

DEPENDENCE ON AVAILABILITY OF QUALIFIED TEMPORARY PERSONNEL

The Company depends on its ability to attract, train and retain personnel,
including technical and professional personnel, who possess the skills and
experience necessary to meet the staffing requirements of the Company's clients.
Competition for individuals with proven skills in certain areas, particularly in
IT, is intense. The Company places employees in several industries in which
unemployment is relatively low, thereby increasing competition for employees
qualified for such placements. The Company must continually evaluate, train and
upgrade its supply of available personnel to satisfy clients' needs. There can
be no assurance that qualified personnel will continue to be available to the
Company in sufficient numbers and on terms of employment acceptable to the
Company. In addition, the Company's clients and other employers frequently hire
the Company's temporary staff for permanent positions, thereby increasing the
need to recruit and train qualified temporary personnel. The inability to
attract and retain qualified personnel could have a material adverse effect on
the Company's business, operating results and financial condition. See
"Business -- Human Resources -- Employees."

FLUCTUATIONS IN OPERATING RESULTS

The Company's quarterly operating results have fluctuated in the past and
will fluctuate in the future based on many factors. These factors include, among
others, changes in the regulatory environment, gain or loss of a key client,
failure to adequately integrate acquired companies, fluctuations in the general
economy, increased competition, the opening of new branches, changes in
operating expenses, expenses related to acquisitions and the potential adverse
effect of acquisitions. It is possible that in the future, the Company's
operating results may be below the expectations of public market analysts and
investors. In such an event, the price of the Common Stock could be materially
adversely affected.

SEASONALITY

The Company's quarterly operating results are affected by the seasonality
of its clients' businesses. Demand for services in Commercial Staffing has
historically been lower from the year-end holidays through February of the
following year, and has shown gradual improvement over the remainder of the
year. Although less pronounced than in Commercial Staffing, the demand for
Professional Services is typically lower during the first quarter.

RELIANCE ON KEY PERSONNEL

The Company is highly dependent on its current management, including its
Chief Executive Officer. The Company believes that its success will depend to a
significant extent upon the efforts and abilities of the key executives of the
Company. Furthermore, the Company will likely be dependent on the senior
management of companies that may be acquired in the future. If any of these
individuals does not continue in his/her position

8
11

with the Company, or if the Company is unable to attract and retain other
skilled managers, the Company's business, operating results and financial
condition could be materially adversely affected. See "Management."

COMPETITION

The staffing industry is intensely competitive and fragmented and has
limited barriers to entry. The Company competes for employees and clients in
national, regional and local markets with full-service and specialized temporary
staffing services businesses. A significant number of the Company's competitors
have greater marketing, financial and other resources and more established
operations than the Company. Price competition in the staffing industry is
intense, particularly for the provision of commercial personnel, and pricing
pressures from competitors and clients are increasing. Many of the Company's
clients have relationships with more than one staffing service company. However,
in recent years, an increasing number of companies have consolidated their
staffing services purchases and entered into exclusive contracts with a single
temporary staffing company or a small number of temporary staffing companies. If
current or potential clients enter into exclusive contracts with competitors of
the Company, it will be difficult or impossible for the Company to obtain
business from such clients. The Company expects that the level of competition
will remain high in the future, which could limit the Company's ability to
maintain or increase its market share or maintain or increase gross margins,
either of which could have a material adverse effect on the Company's business,
operating results and financial condition. See "Business -- Staffing Services
Industry Overview" and "-- Competition."

EFFECT OF FLUCTUATIONS IN THE GENERAL ECONOMY

Demand for the Company's staffing services is significantly affected by the
general level of economic activity and unemployment in the regions in which the
Company operates and in the United States as a whole. When economic activity
increases, temporary employees are often added before full-time employees are
hired. However, as economic activity slows, many companies reduce their
utilization of temporary employees prior to undertaking layoffs of full-time
employees. In addition, the Company may experience more competitive pricing
pressures during periods of economic downturn. Therefore, any regional or
national economic downturn could have a material adverse effect on the Company's
business, operating results and financial condition. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

DEPENDENCE ON KEY CLIENTS

Substantially all of the Company's contracts to perform services may be
canceled or modified by the Company's clients at will without penalty. The
Company's largest client accounted for approximately 2.9% and 9.5% of the
Company's pro forma revenues for the year ended December 31, 1997 and the six
months ended June 30, 1998, respectively. For the year ended December 31, 1997
and the six months ended June 30, 1998, the Company's five largest clients
accounted for approximately 9.6% and 16.6% of the Company's pro forma revenues,
respectively. In May 1998, the Company was informed by its largest client during
the six months ended June 30, 1998 that it intends to reduce substantially its
use of temporary staffing. The additional loss of, or a material reduction in
revenues from, one or more large clients could have a material adverse effect on
the Company's business, operating results and financial condition.

RELIANCE ON INFORMATION SYSTEMS

The Company's business depends upon its ability to store, retrieve, process
and manage significant databases, and periodically to expand and upgrade its
information processing capabilities. The Company's computer equipment and
software systems are maintained at two locations and are backed-up on a daily
basis. Interruption or loss of the Company's information processing capabilities
through loss of stored data, breakdown or malfunction of computer equipment and
software systems, telecommunications failure, conversion difficulties, or damage
to the Company's headquarters and systems caused by fire, hurricane, lightning,
electrical power outage, or other disruption could have a material adverse
effect on the Company's business, operating results and financial condition.

9
12

YEAR 2000 ISSUES; POTENTIAL IMPACT ON CUSTOMERS

Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As a result, in less than two years, computer systems and
software used by many companies may need to be upgraded to comply with such
"Year 2000" requirements. The Company has completed an assessment of its
computer software and systems with respect to Year 2000 compliance and is in the
process of implementing necessary modifications and systems upgrades. There can
be no assurances that these modifications and upgrades will be successful or
that Year 2000 compliance problems will not have a material adverse effect on
the Company's business, operating results and financial condition. In addition,
in the course of its business the Company performs consulting on Year 2000
problems for certain of its clients. In the event such clients experience Year
2000 compliance difficulties, the Company could become involved in professional
liability litigation. Moreover, Year 2000 issues could significantly disrupt the
business and purchasing patterns of clients and potential clients and reduce
their need for the Company's services, which could have a material adverse
effect on the Company's business, operating results and financial condition.

SYSTEMS INTEGRATION

The Company currently utilizes several different front and back office
management information systems at its subsidiaries. Although management believes
the Company's systems are adequate and can be readily expanded without
significant additional capital expenditures, there can be no assurances that the
systems of the Company's subsidiaries can be integrated successfully or in a
timely manner, or that delays or problems in systems integration will not have a
material adverse effect on the Company's business, operating results and
financial condition.

INFORMATION TECHNOLOGY TRENDS

Growth in the use of flexible staffing in the IT area in recent years has
been driven largely by rapid technological advances. As the sophistication and
complexity of business information systems increase, and as the recent corporate
trend toward downsizing continues, businesses are increasingly turning to
specialized, outside technical personnel to support their IT operations. The
Company's success in the IT area depends in large part on its ability to keep
pace with existing technology, predict new technological advancements and
recruit and train qualified employees in response to these trends and in
accordance with clients' needs. See "Business -- Services -- Professional
Services."

RISK OF GOVERNMENT REGULATION AND LEGISLATIVE PROPOSALS

The Company's costs could increase if there are any material changes in
applicable governmental regulations. Recent federal and state legislative
proposals have included provisions extending health insurance benefits to
employees not presently receiving such benefits. Due to the wide variety of
national and state proposals currently under consideration, the impact of such
proposals cannot be predicted. There can be no assurance that the Company will
be able to increase the fees charged to its clients in a timely manner and
sufficient amount to cover increased costs related to any new benefits that may
be extended to temporary employees. It is not possible to predict whether other
legislation or regulations affecting the Company's operations will be proposed
or enacted at the federal or state level. Such legislation, if enacted, could
have a material adverse effect on the Company's business, operating results and
financial condition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business -- Regulation."

POTENTIAL LIABILITY; LEGAL PROCEEDINGS

Providers of staffing services place employees in the workplaces of other
businesses. An inherent risk of such activity includes possible claims of
professional malpractice, errors and omissions, misuse of client proprietary or
other confidential information, misappropriation of funds, discrimination and
harassment, employment of illegal aliens, theft of client property, other
criminal activity or torts and other claims. In addition, a small number of
customers of the Company have required the Company to enter into indemnity

10
13

agreements. Any substantial claim against the Company or an employee of the
Company may result in negative publicity, injunctive relief or the payment by
the Company of monetary damages or fines, or may have other material adverse
effects upon the Company. Moreover, the Company could be held responsible for
the actions at a workplace of persons not under the direct control of the
Company. To reduce its exposure, the Company maintains insurance covering
general liability, workers' compensation claims, errors and omissions and
employee theft, but there can be no assurance that such insurance coverage will
continue to be available at a reasonable cost for amounts adequate to cover any
such liability. In the ordinary course of its business, the Company is
periodically threatened with or named as a defendant in various lawsuits,
including discrimination, harassment and other similar claims, which could have
a material adverse effect on the Company's business, operating results and
financial condition.

UNEMPLOYMENT INSURANCE AND WORKERS' COMPENSATION COSTS

The Company is required to pay unemployment insurance premiums and workers'
compensation for its employees. The cost of unemployment insurance premiums may
increase as a result of, among other things, increased levels of unemployment,
the lengthening of periods for which unemployment benefits are available,
changes in the Company's experience rating or changes in applicable laws.
Although management believes its existing workers' compensation coverage amounts
are adequate, there can be no assurance that the Company's actual workers'
compensation claims will be within the coverage amounts. The Company may incur
costs related to worker's compensation claims at a higher rate than expected due
to such causes as greater than anticipated losses from known claims or an
increase in the number and severity of new claims. In addition, the Company's
workers' compensation insurance premiums may be subject to retroactive increases
based upon audits of the Company's employee classification practices and other
data provided to the insurance carrier. The Company has retained the services of
an independent third-party administrator and an independent actuary to assist
the Company in establishing appropriate reserves for the uninsured portion of
workers compensation claims. Although management believes its recorded reserve
is adequate, there can be no assurance that the Company's actual future workers'
compensation obligations will not exceed the amount of its workers' compensation
reserve. See "Business -- Human Resources -- Risk Management and Workers'
Compensation Program."

INTANGIBLE ASSETS

As of June 30, 1998, the Company had intangible assets of $68.3 million,
net of accumulated amortization, arising principally from the Company's
acquisition of Hamilton-Ryker, CSR, Inc. and five other smaller companies. Such
intangible assets comprised approximately 66.3% of total assets and 228.8% of
total shareholders' equity as of June 30, 1998 (67.7% of total assets and 103.6%
of total shareholders' equity on a pro forma basis, giving effect to the
acquisition of Programming Management and Systems, Inc. completed after June 30,
1998, related borrowings under the Company's Credit Agreement (as defined
herein) and application of the proceeds of this Offering). Such intangible
assets may increase if additional acquisitions are completed and will increase
upon payment of contingent earnout amounts with respect to completed
acquisitions. These intangible assets result in significant recurring
amortization expense. In addition, any impairment of such assets, with resultant
write-offs, could have a material adverse effect on the Company's business,
operating results and financial condition.

CONTROL BY EXISTING MANAGEMENT AND STOCKHOLDERS

After completion of the Offering, the Company's executive officers,
directors and current stockholders will beneficially own approximately 61.9% of
the outstanding shares of Common Stock. These persons acting together would
likely be able to elect a sufficient number of directors to control the Board of
Directors of the Company and to approve or disapprove any matter submitted to a
vote of stockholders. See "Principal and Selling Stockholders."

11
14

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have 14,428,114 shares of
Common Stock outstanding. Of these shares, all of the shares sold in the
Offering will be freely transferable without restriction or limitation under the
Securities Act of 1933, as amended (the "Securities Act"), except any shares
purchased by "affiliates" of the Company, as such term is defined in Rule 144
under the Securities Act. The remaining 8,928,114 shares constitute "restricted
securities" within the meaning of Rule 144 and the resale of such shares is
restricted for one year from the date they were acquired. The holders of such
shares have certain rights to have shares registered in the future under the
Securities Act pursuant to the terms of agreements between such holders and the
Company. The Company and its executive officers, directors and principal
shareholders have agreed not to offer or to sell any shares of Common Stock for
a period of 180 days following the date of this Prospectus without the prior
written consent of NationsBanc Montgomery Securities LLC, except that the
Company may issue shares of Common Stock in connection with acquisitions and
pursuant to the exercise of stock options described in this Prospectus. On the
date of this Prospectus, the Company had outstanding options to purchase 95,000
shares of Common Stock granted pursuant to the Stock Option Plan. Concurrently
with the completion of this Offering, the Company intends to grant options to
employees to acquire 500,000 shares of Common Stock. The Company intends to
register all of the 1,500,000 shares of Common Stock reserved for issuance
pursuant to the Company's Stock Option Plan under the Securities Act for public
resale. Sales of substantial amounts of shares of Common Stock in the public
market after this Offering or the perception that such sales could occur may
adversely affect the market price of the Common Stock. See "Shares Eligible for
Future Sale."

NO PRIOR TRADING MARKET FOR COMMON STOCK; VOLATILITY OF STOCK PRICE

Prior to this Offering, there has been no public market for the Common
Stock. There can be no assurance that an active trading market will develop or
be sustained after this Offering or that the market price of the Common Stock
will not fall below the offering price. The initial public offering price was
determined through negotiations among the Company, the Selling Stockholders and
representatives of the Underwriters based on several factors and may not be
indicative of the market price of the Common Stock after this Offering. From
time to time, there may be significant volatility in the market price for the
Common Stock. Quarterly operating results of the Company or of other temporary
staffing and service companies, extreme price and volume fluctuations in the
stock market, changes in general conditions in the economy, analyst's earnings
estimates, the financial markets or the staffing industry, natural disasters or
other developments could cause the market price of the Common Stock to fluctuate
substantially. See "Risk Factors -- Fluctuations in Operating Results;
Fluctuations in Quarterly Results and Seasonality" "-- Effects of Fluctuations
in the General Economy" and "Dividend Policy."

ANTI-TAKEOVER EFFECTS OF CERTIFICATE OF INCORPORATION, BYLAWS, DELAWARE LAW

Upon completion of this Offering, the Company's Amended and Restated
Certificate of Incorporation (the "Certificate") and Bylaws will, and Delaware
law does, contain provisions that could have the effect of delaying, deferring
or preventing an unsolicited change in control of the Company, which may
adversely affect the market price of the Common Stock or the ability of
shareholders to participate in a transaction in which they might otherwise
receive a premium for their shares over the then-current market price. Such
provisions also may have the effect of preventing changes in the management of
the Company. These provisions will provide that all stockholder action must be
taken at an annual or special meeting of the stockholders, that only the Board
of Directors may call special meetings of the stockholders and that the Board of
Directors be divided into three classes to serve for staggered three-year terms.
In addition, the Certificate will authorize the Board of Directors to issue
preferred stock in one or more series ("Preferred Stock") without shareholder
approval and on such terms as the Board of Directors may determine. Although no
shares of Preferred Stock will be outstanding upon the closing of this Offering
and the Company has no present plans to issue any shares of Preferred Stock, the
rights of the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of holders of any Preferred Stock that may be issued in
the future. In addition, the Company is subject to the anti-takeover provisions
of Section 203 of the Delaware General Corporation Law,

12
15

which could have the effect of delaying or preventing a change of control of the
Company. See "Description of Capital Stock -- Preferred Stock,"
"-- Anti-Takeover Provisions of Charter and Bylaws," and "-- Statutory Business
Combinations Provision."

SUBSTANTIAL DILUTION

Purchasers of Common Stock in this Offering will experience immediate and
substantial dilution in net tangible book value of $10.18 per share of Common
Stock and present stockholders will experience an increase in net tangible book
value of $4.55 per share of Common Stock. To the extent that currently
outstanding options to purchase Common Stock are exercised, there will be
further dilution. See "Dilution."

NO DIVIDENDS

The Company does not intend to pay any dividends on its Common Stock in the
foreseeable future and is prohibited from doing so under the terms of its Credit
Agreement. See "Dividend Policy."

13
16

THE COMPANY

The Company was organized on March 4, 1997 under the name "Mega Force
Staffing Companies, Inc." and is the successor to Mega Force Staffing Services,
Inc. and The Mega Force Group, a group of operating companies that provided
clerical and light industrial staffing services in the southeastern United
States beginning in 1983. In March 1997, the Company acquired Hamilton-Ryker, a
southeastern based clerical and light industrial staffing company with 27
branches in four states. In December 1997, the Company acquired CSR, Inc., a
midwest-based clerical, light industrial and IT staffing company with 49
branches in ten states, subsequent to which the Company changed its name to
Corporate Staffing Resources, Inc. Since acquiring CSR, Inc., the Company has
acquired six businesses, NPS of Atlanta, Inc., Intranational Computer
Consultants Inc., CMS Management Services Company, Monday Temporary Services,
Inc., Networld Solutions, Inc., and Programming Management & Systems, Inc.
(together with Hamilton-Ryker and CSR, Inc., the "Completed Acquisitions").

The table below sets forth certain information with respect to the
Completed Acquisitions.

1997 PURCHASE
DATE REVENUES PRICE BRANCHES YEAR SERVICES
COMPANY ACQUIRED (IN MILLIONS) (IN MILLIONS) ACQUIRED HEADQUARTERS FOUNDED PROVIDED
- --------------------------- --------- ------------- ------------- -------- ---------------- ------- -------------

The Hamilton-Ryker Company,
LLC(1)................... Mar. 1997 $ 43.7 $10.9 27 Martin, TN 1971 Clerical/Light
Industrial
CSR(2)(3).................. Dec. 1997 71.3 22.1 49 South Bend, IN 1987 Clerical/Light
Industrial/IT
NPS of Atlanta,
Inc.(4)(5)............... Feb. 1998 11.1 6.1 5 Atlanta, GA 1991 Clerical
Intranational Computer
Consultants, Inc.(6) .... Mar. 1998 14.5 5.9 3 Petaluma, CA 1996 IT
CMS Management Services
Company(7)............... May 1998 13.9 15.5 3 South Bend, IN 1986 Accounting/IT
Monday Temporary Services,
Inc.(8) ................. May 1998 6.2 3.8 1 Kalamazoo, MI 1985 Clerical/Light
Industrial
Networld Solutions,
Inc.(9).................. June 1998 .9 2.2 1 San Diego, CA 1997 IT
Programming Management &
Systems, Inc.(10)........ July 1998 8.6 7.8 2 St. Louis, MO 1984 IT
------ ----- --
$170.2 $74.3 91
====== ===== ==

- ---------------

(1) Purchase price consisted of $3.5 million in cash, $1.0 million in notes
payable to sellers and Common Stock valued at $6.4 million.

(2) Purchase price consisted of Common Stock valued at $22.1 million.

(3) The CSR revenues represent $66.0 million of revenues of CSR, Inc. and its
predecessor from January 1 to December 3, 1997 and $5.3 million of revenues
of CSR, Inc.'s successor from December 4 to December 31, 1997.

(4) Revenues are for the twelve months ended October 31, 1997.

(5) Purchase price consisted of $6.1 million in cash. The purchase agreement
provides for additional consideration of up to $2.3 million if the acquired
company meets certain financial targets.

(6) Purchase price consisted of $5.9 million in cash. The purchase agreement
provides for additional consideration of up to $6.0 million if the acquired
company meets certain financial targets.

(7) Purchase price consisted of $10.5 million in cash and $5.0 million in
subordinated notes. The purchase agreement provides for additional
consideration of up to $4.5 million if the acquired company meets certain
financial targets.

(8) Purchase price consisted of $3.8 million in cash.

(9) Purchase price consisted of $2.2 million in cash. The purchase agreement
provides for additional consideration of a multiple of adjusted EBIT of the
acquired company in excess of targeted EBIT for the years ending December
31, 1998, 1999 and 2000.

(10) Purchase price consisted of $7.8 million in cash. The purchase agreement
provides for additional consideration of a multiple of adjusted EBIT of the
acquired company in excess of targeted EBIT for the years ending May 31,
1999 and 2000.

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17

USE OF PROCEEDS

The net proceeds to the Company from the sale of shares of Common Stock
offered hereby are estimated to be approximately $43.2 million ($48.5 if the
Underwriters' over-allotment option is exercised in full), assuming an initial
offering price of $10.00 per share and after deducting estimated discounts and
estimated expenses payable by the Company.

The Company intends to use the net proceeds of the Offering (i) to repay
$40.8 million of outstanding indebtedness under its Credit Agreement (as defined
herein) and (ii) to repay certain notes payable to shareholders of $2.4 million.

At September 15, 1998, the Company had $63.1 million of borrowings
outstanding under the Credit Agreement. The Credit Agreement currently bears
interest at a base rate or London Interbank Offered Rate ("LIBOR") plus an
applicable margin and is scheduled to mature on December 3, 2001. At September
15, 1998, the weighted average interest rate for outstanding borrowings under
the Credit Agreement was 8.5% and the interest rate for the notes payable to
shareholders was 8.0%. Borrowings under the Credit Agreement have been used to
finance acquisitions and for general corporate purposes. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Certain Relationships and
Related Transactions."

The Company will not receive any proceeds from the sale of shares of Common
Stock by the Selling Stockholders.

DIVIDEND POLICY

The Company does not anticipate paying any dividends on Common Stock in the
foreseeable future. In addition, the Credit Agreement prohibits the payment of
dividends.

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18

CAPITALIZATION

The following table sets forth: (i) the actual capitalization of the
Company at June 30, 1998; (ii) the pro forma capitalization of the Company at
June 30, 1998, giving effect to the acquisitions completed by the Company after
that date and the sale of the 4,750,000 shares of Common Stock offered by the
Company hereby (at an assumed public offering price of $10.00 per share), after
deduction of the estimated underwriting discounts and commissions and offering
expenses and the application of the net proceeds therefrom as described in "Use
of Proceeds." The information in the table below is qualified in its entirety
by, and should be read in conjunction with, the Consolidated Financial
Statements of the Company and notes thereto included elsewhere in this
Prospectus.

AS OF JUNE 30, 1998
(IN THOUSANDS)
-------------------
ACTUAL PRO FORMA
------- ---------

Current portion of long-term debt........................... $ 2,150 2,000
======= =======
Long-term debt, excluding current portion:
Bank indebtedness(1)...................................... $52,750 19,821
Subordinated promissory notes............................. 5,274 3,000
------- -------
Total long-term debt.............................. 58,024 22,821
------- -------
Shareholders' equity:
Common stock, $.01 par value, 50,000,000 shares authorized
upon consummation of the Offering: 9,678,114 shares
issued and outstanding, actual and 14,428,114 shares
issued and outstanding, pro forma(2)................... 97 145
Additional paid-in capital................................ 29,309 72,436
Retained earnings......................................... 455 455
------- -------
Shareholders' equity.............................. 29,861 73,036
------- -------
Total capitalization........................................ $87,885 95,857
======= =======

- ---------------

(1) Actual long-term bank indebtedness does not include borrowings of
approximately $10.3 million incurred after June 30, 1998.

(2) Excludes approximately 1,500,000 shares of Common Stock reserved for
issuance under the Company's Option Plan (as defined herein) (of which: (i)
95,000 shares of Common Stock are issuable upon exercise of outstanding
options at a weighted average exercise price of $8.00 per share; and (ii)
500,000 shares of Common Stock will be issuable at the initial public
offering price upon exercise of options to be granted concurrently with the
consummation of this Offering). See "Management" and "Principal and Selling
Stockholders."

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19

DILUTION

The pro forma net tangible book deficiency, prior to offering adjustments,
of the Company at June 30, 1998 was approximately $45.8 million, or $4.73 per
share of Common Stock. Pro forma net tangible book deficiency per share prior to
Offering adjustments, represents the Company's pro forma total tangible assets
less its pro forma total liabilities prior to Offering adjustments, divided by
9,678,114 shares of Common Stock outstanding as of June 30, 1998. After giving
effect to the sale of the 4,750,000 shares of Common Stock offered by the
Company (after deducting the underwriting discount and estimated Offering
expenses) and the use of the net proceeds therefrom as described under "Use of
Proceeds," the pro forma net tangible book deficiency of the Company at June 30,
1998 would have been approximately $2.7 million, or $.18 per share. This
represents an immediate increase in such pro forma net tangible book value of
$4.55 per share to existing shareholders at June 30, 1998 and an immediate net
tangible book value dilution of $10.18 per share to investors purchasing shares
in the Offering. The following table illustrates pro forma dilution on a per
share basis to new investors:

Assumed initial public offering price....................... $ 10.00
Pro forma net tangible book deficiency per share as of
June 30, 1998, prior to Offering adjustments........... $ (4.73)
Increase in pro forma net tangible book value per share
attributable to the Offering........................... 4.55
--------
Pro forma net tangible book deficiency per share after the
Offering............................................... (.18)
---------
Dilution per share to new investors....................... $ 10.18
=========

The following table summarizes, as of the date of this Prospectus, the
difference between existing stockholders and new investors with respect to the
number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price paid per share, assuming an initial
public offering price of $10.00 per share but before deducting the underwriting
discount and estimated Offering expenses:

SHARES PURCHASED TOTAL CONSIDERATION(1) AVERAGE
-------------------- ----------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ------------ -------- ---------

Existing stockholders.......... 9,678,114 67.1% $29,861,000 38.6% $ 3.09
New investors.................. 4,750,000 32.9% 47,500,000 61.4% 10.00
---------- ----- ----------- -----
Total.......................... 14,428,114 100.0% $77,361,000 100.0%
========== ===== =========== =====

- ---------------

(1) Total consideration paid by existing stockholders represents the Company's
pro forma combined shareholders' equity at June 30, 1998, before giving
effect to offering adjustments.

The foregoing tables assume no exercise of outstanding options. As of the date
of this Prospectus, there are 95,000 shares of Common Stock issuable upon the
exercise of stock options at a weighted average exercise price of $8.00 per
share. An additional 500,000 shares of Common Stock will be issuable at the
initial public offering price upon the exercise of options to be granted
concurrently with the consummation of this Offering. See "Management."

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SELECTED FINANCIAL DATA

The financial data set forth below as of and for the year ended December
31, 1997 were derived from audited financial statements of the Company. The
financial data as of and for the years ended December 31, 1995 and 1996 were
derived from the audited financial statements of The Mega Force Group, the
Company's predecessor. The financial data for the years ended December 31, 1993
and 1994 and as of and for the six months ended June 30, 1997 and 1998 were
derived from the unaudited financial statements of The Mega Force Group and the
Company, respectively, which include all adjustments (consisting only of normal
recurring adjustments) that, in the opinion of management, are necessary to
present fairly the information set forth therein.

The pro forma financial data as of and for the six months ended June 30,
1997 and 1998 and the year ended December 31, 1997, were derived from the pro
forma combined financial statements of the Company appearing elsewhere in this
Prospectus. Such pro forma combined financial statements give effect to the
Completed Acquisitions, the Offering and the application of the proceeds
therefrom, as if each of these events had occurred on the first day of the
relevant period. The pro forma financial information of the Company does not
purport to represent what the Company's results of operations or financial
position actually would have been had the Completed Acquisitions occurred on the
dates specified, nor is it a projection of the Company's results of operations
or financial position for any future period or date. The data presented below
should be read in conjunction with the Management's Discussion and Analysis of
Financial Condition and Results of Operations, the financial statements and pro
forma combined financial statements and the notes thereto included elsewhere
herein.

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21

SELECTED FINANCIAL DATA (1)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

PRO FORMA (3)
------------
YEAR ENDED SIX MONTHS YEAR ENDED
DECEMBER 31, ENDED JUNE 30, DECEMBER 31,
------------------------------------------------ ------------------ ------------
1993 1994 1995 1996 1997 1997 1998 1997
------- ------- ------- ------- -------- ------- -------- ------------

STATEMENT OF INCOME DATA: (2)
Revenues:........................... $49,705 $59,408 $67,350 $65,549 $114,564 $43,643 $117,055 $235,828
Cost of services.................... 42,882 51,515 57,173 54,724 93,557 35,798 93,227 183,039
------- ------- ------- ------- -------- ------- -------- --------
Gross profit........................ 6,823 7,893 10,177 10,825 21,007 7,845 23,828 52,789
Selling, general and administrative
expenses........................... 4,382 6,718 8,081 8,652 13,861 5,644 18,483 37,961
Depreciation and amortization....... 214 283 295 284 836 239 1,129 3,055
Other operating expenses............ -- -- 1,574 842 1,158 232 -- 409
------- ------- ------- ------- -------- ------- -------- --------
Operating income.................... 2,227 892 227 1,047 5,152 1,730 4,216 11,364
Interest expense.................... 67 158 275 266 1,570 518 1,780 2,201
Other (income) expense.............. 45 2 (10) (115) (124) (21) (137) (205)
------- ------- ------- ------- -------- ------- -------- --------
Income (loss) before taxes and
extraordinary item................. 2,115 732 (38) 896 3,706 1,233 2,573 9,368
Provisions for income taxes......... 57 69 -- -- 1,904 805 1,158 4,296
------- ------- ------- ------- -------- ------- -------- --------
Income (loss) before extraordinary
item............................... 2,058 663 (38) 896 1,802 428 1,415 $ 5,072
========
Extraordinary item, net of tax
benefit (5)........................ -- -- -- -- 1,672 -- --
------- ------- ------- ------- -------- ------- --------

Net income (loss)................... $ 2,058 $ 663 $ (38) $ 896 $ 130 $ 428 $ 1,415
======= ======= ======= ======= ======== ======= ========
Basic earnings per common share:
Income before extraordinary item... $ .36 $ .10 $ .15 $ .35
========
Extraordinary item, net of tax
benefit.......................... (.33) -- --
-------- ------- --------
Net income....................... $ .03 $ .10 $ .15
======== ======= ========
Average shares outstanding.......... 5,061 4,385 9,678 14,428
Diluted earnings per common share:
Income before extraordinary item... $ .32 $ .09 $ .15 $ .35
========
Extraordinary item, net of tax
benefit.......................... (.30) -- --
-------- ------- --------

Net income....................... $ .02 $ .09 $ .15
======== ======= ========
Average shares outstanding.......... 5,580 4,946 9,692 14,428

PRO FORMA (3)
-------------------
SIX MONTHS
ENDED JUNE 30,
-------------------
1997 1998
-------- --------

STATEMENT OF INCOME DATA: (2)
Revenues:........................... $107,324 $131,946
Cost of services.................... 83,297 102,470
-------- --------
Gross profit........................ 24,027 29,476
Selling, general and administrative
expenses........................... 17,516 21,856
Depreciation and amortization....... 1,406 1,549
Other operating expenses............ 81 --
-------- --------
Operating income.................... 5,024 6,071
Interest expense.................... 786 1,093
Other (income) expense.............. (170) --
-------- --------
Income (loss) before taxes and
extraordinary item................. 4,408 4,978
Provisions for income taxes......... 2,038 2,240
-------- --------
Income (loss) before extraordinary
item............................... 2,370 2,738
Extraordinary item, net of tax
benefit (5)........................ -- --
-------- --------
Net income (loss)................... $ 2,370 $ 2,738
======== ========
Basic earnings per common share:
Income before extraordinary item... $ .16 $ .19
======== ========
Extraordinary item, net of tax
benefit..........................
Net income.......................
Average shares outstanding.......... 14,428 14,428
Diluted earnings per common share:
Income before extraordinary item... $ .16 $ .19
======== ========
Extraordinary item, net of tax
benefit..........................
Net income.......................
Average shares outstanding.......... 14,428 14,442

JUNE 30, 1998
-------------------------------
ACTUAL PRO FORMA (4)
-------- -------------------

BALANCE SHEET DATA:
Working capital........................................... $ 14,718 $ 15,373
Total assets.............................................. 103,128 111,887
Total debt................................................ 60,174 24,821
Shareholders' equity...................................... 29,861 73,036

- ---------------

(1) The Company was organized in March 1997. Therefore, the Statement of Income
Data represents the operations of the Company's predecessors, Mega Force
Staffing Services, Inc. for the period ending March 12, 1997 and the Mega
Force Group for the years ended December 31, 1993, 1994, 1995 and 1996.

(4) Gives effect to 4,750,000 shares issued by the Company in the Offering and
the application of the estimated net proceeds therefrom.

(5) Represents non-recurring expenses incurred by the Company in connection with
the refinancing of its credit facility in December 1997.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements which involve
risks and uncertainties. Actual events and results may differ materially from
those anticipated in these forward-looking statements as a result of various
factors, including the matters set forth under the caption "Risk Factors" and
elsewhere in this Prospectus.

OVERVIEW

The Company primarily provides two types of staffing services: (i)
Commercial Staffing, including vendor-on-premises, clerical, administrative and
light industrial staffing services; and (ii) Professional Services, including a
comprehensive range of IT, accounting and finance staffing, placement and
outplacement services. The Company's Commercial Staffing branches primarily
serve small to mid-size cities, while its Professional Services branches serve
primarily major metropolitan and national markets.

The Company has grown significantly in the past 18 months through its
Completed Acquisitions, including the acquisition of CSR, Inc. on December 3,
1997. The businesses owned by CSR, Inc. (the "CSR businesses") were founded by
William W. Wilkinson with his son, William J. Wilkinson, in 1986 to provide
clerical and light industrial staffing services. The revenues of the CSR
businesses grew at a compound annual growth rate of over 29.6% during the two
year and eleven month period ended December 3, 1997, and the gross profits of
the CSR businesses grew at a compound annual growth rate of over 31.9% during
the same period. During this period, the CSR businesses' growth was attributable
to increased billable hours, higher hourly rates, the opening of new branches
and a shift in its business mix toward Professional Services. The disciplined
budgeting process and management practices implemented at the CSR businesses
serve as the management model for all branches of the Company.

The Company recognizes revenues based on hours worked by assigned
personnel. Generally, the Company bills its clients a prenegotiated fixed rate
per hour worked by its temporary employees. Temporary personnel placed by the
Company are generally Company employees; accordingly, the Company is responsible
for workers' compensation, unemployment compensation insurance, Medicare and
Social Security taxes and general payroll expenses. These expenses are included
within cost of services. Because the Company pays its temporary employees only
for the hours they actually work, wages for the Company's temporary personnel
are a variable cost that increases or decreases in proportion to revenues. Some
of the temporary employees placed by the Company may decide to accept an offer
of permanent employment from the client and thereby "convert" the temporary
position to a permanent position, and in this case, a fee is generally paid to
the Company. Such fees are included in revenues herein. Selling, general and
administrative expenses include payroll for management and administrative
employees, office occupancy costs, sales and marketing expenses and other
general and administrative costs.

The Completed Acquisitions have been accounted for under the purchase
method of accounting, with the results of operations of businesses acquired
being included in the Company's results of operations beginning on the date of
acquisition. As of September 15, 1998, the Company had recorded approximately
$75.7 million as goodwill, representing the excess of the fair value of the
consideration paid over the fair value of the assets acquired. GAAP requires
that goodwill be amortized over the period that the related assets provide
ongoing benefits to the Company. The Company has concluded that anticipated
future cash flows associated with

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intangible assets recognized in the Completed Acquisitions will continue
indefinitely, and therefore, has adopted a 40 year period for the amortization
of goodwill. The pro forma effect of this amortization expense on operating
income is approximately $1.9 million annually. Approximately 27.3% of the
goodwill is deductible for federal income tax purposes over 15 years. Any
impairment of goodwill, with resultant write-offs, could have a material adverse
effect on the Company's operating results and financial condition.

The Company incurred a non-recurring extraordinary item, net of taxes, of
$1.7 million in the year ended December 31, 1997. This item represents a charge
resulting from the early extinguishment of debt by the Company in December 1997.
See Notes to Corporate Staffing Resources, Inc. Financial Statements.

RECENT DEVELOPMENTS

In May 1998, the Company was informed by a client at which it had
established a VOP relationship in the fourth quarter of 1997 that the client
intends to reduce substantially its use of temporary staffing at certain
manufacturing facilities, resulting in a reduction in the amount of revenues
that the Company anticipates generating from this client in the future. The
client accounted for $12.6 million of revenues for the six months ended June 30,
1998.

In June 1998, the Company discontinued its Professional Employer
Organization (the "PEO Business"), which had revenues of $3.1 million and
operating income of $100,000 in the six months ended June 30, 1998.

HISTORICAL AND PRO FORMA OPERATING DATA

The historical operating data of the Company for the year ended December
31, 1997 and six months ended June 30, 1997 and June 30, 1998 includes the
results of operations of the Completed Acquisitions in the Company's results of
operations beginning on the date each acquisition was completed. The historical
operating data of the Company as of and for the periods ended December 31, 1995
and 1996 represents the results of operations of the Company's predecessor, The
Mega Force Group, and the Company's historical operating data for the year ended
December 31, 1997 includes the operating data of Mega Force Staffing Services,
Inc. from January 1 through March 12, 1997.

Pro forma information gives effect to the Completed Acquisitions, the
discontinuation of the PEO Business and the Consummation of the Offering
described herein. The pro forma adjustments for the Completed Acquisitions
include: (i) the Completed Acquisitions as if they were consummated as of the
beginning of each of those periods; (ii) an adjustment to compensation expense
for the difference between actual compensation paid to certain officers of the
Company and the acquired companies and compensation expense agreed to in
connection with the recent amendment and restatement of certain management
employment contracts; (iii) an adjustment to income tax expense based upon a
consolidated effective tax rate of 45%, which reflects the impact of
nondeductible goodwill amortization; (iv) an adjustment to amortization expense
relating to intangible assets recorded in conjunction with the Completed
Acquisitions; and (v) an adjustment to interest expense to reflect incremental
borrowings under the Company's borrowing facility necessary to finance the
Completed Acquisitions. Pro forma adjustments for the Offering include: (i) a
reduction of interest expense resulting from repayment of borrowings under the
credit agreement and repayment of notes payable to shareholders; and (ii) the
elimination of certain management and consulting fees pursuant to certain
agreements which will be terminated upon consummation of the Offering. The pro
forma results of operations are not necessarily indicative of the results that
would have occurred had these transactions been completed as of such date or the
results that may be attained in the future.

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RESULTS OF OPERATIONS

The following table sets forth certain historical and pro forma operating
data as a percentage of revenues for the indicated periods:

PRO FORMA
------------------------------
SIX MONTHS SIX MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 31, JUNE 30, YEAR ENDED JUNE 30,
----------------------- -------------- DECEMBER 31, --------------
1995 1996 1997 1997 1998 1997 1997 1998
----- ----- ----- ----- ----- ------------ ----- -----

Revenues.................................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of services.......................... 84.9 83.5 81.7 82.0 79.6 77.6 77.6 77.7
----- ----- ----- ----- ----- ----- ----- -----
Gross profit.............................. 15.1 16.5 18.3 18.0 20.4 22.4 22.4 22.3
----- ----- ----- ----- ----- ----- ----- -----
Selling, general and administrative
expenses................................ 12.0 13.2 12.1 12.9 15.8 16.1 16.3 16.5
Depreciation and amortization............. 0.4 0.4 0.7 0.6 1.0 1.3 1.3 1.2
Other operating expenses.................. 2.4 1.3 1.0 0.5 -- .2 .1 --
----- ----- ----- ----- ----- ----- ----- -----
Operating income.......................... 0.3% 1.6% 4.5% 4.0% 3.6% 4.8% 4.7% 4.6%
===== ===== ===== ===== ===== ===== ===== =====

PRO FORMA SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30,
1997

Revenues. Revenues increased 22.9% to $131.9 million for the six months
ended June 30, 1998 from $107.3 million for the six months ended June 30, 1997.
The increase was due to an increase in billable hours of approximately 21.3% and
an increase in the average rate per hour of approximately 1.3%. The increase in
revenues was a result of a 22.1% increase in revenues from Commercial Staffing
to $102.2 million for the six months ended June 30, 1998 from $83.7 million for
the six months ended June 30, 1997, and a 25.9% increase in revenues from
Professional Services to $29.7 million for the six months ended June 30, 1998
from $23.6 million for the six months ended June 30, 1997. Commercial Staffing
revenues increased primarily as a result of the establishment of a new VOP
relationship, which provided $12.6 million of revenues for the six months ended
June 30, 1998. In May 1998, the Company was informed by this client that it
intends to reduce substantially its use of temporary staffing. See "-- Recent
Developments." Commercial Staffing revenues also increased as a result of
increased billings to existing clients, the addition of new clients and the
opening of 16 new branches. Professional Services revenues increased primarily
as a result of increased billings to existing clients, the addition of new
clients, increased billing rates, and the opening of 9 new branches.

Gross Profit. Gross profit increased 22.7% to $29.5 million for the six
months ended June 30, 1998 from $24.0 million for the six months ended June 30,
1997. Gross profit as a percentage of revenues remained relatively constant at
22.3% for the six months ended June 30, 1998 compared to 22.4% for the six
months ended June 30, 1997.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 24.8% to $21.9 million for the six months
ended June 30, 1998 from $17.5 million for the six months ended June 30, 1997.
This increase was primarily due to salaries and related benefits arising from
the hiring of additional management personnel necessary to identify, complete
and integrate acquisitions. Selling, general and administrative expenses as a
percentage of revenues remained relatively constant at 16.5% for the six months
ended June 30, 1998 compared to 16.3% for the six months ended June 30, 1997.

Depreciation and Amortization. Depreciation and amortization expenses
increased 10.2% to $1.5 million for the six months ended June 30, 1998 from $1.4
million for the six months ended June 30, 1997. Depreciation and amortization
expenses as a percentage of revenues decreased to 1.2% for the six months ended
June 30, 1998 from 1.3% for the six months ended June 30, 1997.

Other Operating Expenses. During the six months ended June 30, 1997, the
Company incurred other operating expenses of $81,000, related primarily to legal
and accounting fees incurred by one of the acquired companies in a failed
acquisition transaction.

Operating Income. As a result of the foregoing, operating income increased
20.8% to $6.1 million for the six months ended June 30, 1998 from $5.0 million
for the six months ended June 30, 1997, and operating

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25

income as a percentage of revenues remained relatively constant at 4.6% for the
six months ended June 30, 1998 and 4.7% for the six months ended June 30, 1997.

SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997

Revenues. Revenues increased 168.2% to $117.1 million for the six months
ended June 30, 1998 from $43.6 million for the six months ended June 30, 1997.
The increase was due to an increase in billable hours of approximately 133.8%
and an increase in the average rate per hour of approximately 14.7%. Revenues
increased primarily due to the inclusion of the full six months results of
operations of CSR, Inc. and Hamilton-Ryker and partial period results for other
acquired companies for the six months ended June 30, 1998 and the establishment
of a new VOP relationship, which provided $12.6 million of revenues for the six
months ended June 30, 1998. In May 1998, the Company was informed by this client
that it intends to reduce substantially its use of temporary staffing. See
"-- Recent Developments."

Gross Profit. Gross profit increased 203.7% to $23.8 million for the six
months ended June 30, 1998 from $7.8 million for the six months ended June 30,
1997. Gross profit as a percentage of revenues increased to 20.4% for the six
months ended June 30, 1998 from 18.0% for the six months ended June 30, 1997.
This increase resulted from the inclusion of the full six months of operations
of CSR, Inc. and Hamilton-Ryker and partial period results for other acquired
companies. CSR, Inc., Hamilton-Ryker and the other acquired companies had higher
gross margins due to the higher proportion of Professional Services in their
revenue mixes.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 227.5% to $18.5 million for the six months
ended June 30, 1998 from $5.6 million for the six months ended June 30, 1997.
Selling, general and administrative expenses as a percentage of revenues
increased to 15.8% for the six months ended June 30, 1998 from 12.9% for the six
months ended June 30, 1997. This increase was primarily due to salaries and
related benefits arising from hiring several management personnel to identify,
complete and integrate acquisitions.

Depreciation and Amortization. Depreciation and amortization expenses
increased 372.4% to $1.1 million for the six months ended June 30, 1998 from
$239,000 for the six months ended June 30, 1997. Depreciation and amortization
expenses as a percentage of revenues increased to 1.0% for the six months ended
June 30, 1998 from 0.6% for the six months ended June 30, 1997. The increase was
due to a full six months of amortization of goodwill in 1998 in connection with
the acquisitions of Hamilton-Ryker and CSR, Inc.

Other Operating Expenses. During the six months ended June 30, 1997, the
Company incurred other operating expenses of $232,000 related to amounts paid to
a former member of management.

Operating Income. As a result of the foregoing, operating income increased
143.7% to $4.2 million for the six months ended June 30, 1998 from $1.7 million
for the six months ended June 30, 1997, and operating income as a percentage of
revenues decreased to 3.6% for the six months ended June 30, 1998 from 4.0% for
the six months ended June 30, 1997.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

Revenues. Revenues increased 74.8% to $114.6 million for the year ended
December 31, 1997 from $65.5 million for the year ended December 31, 1996. The
increase was due to an increase in billable hours of approximately 52.9% and an
increase in the average rate per hour of approximately 14.3%. These increases
were primarily due to the acquisition of Hamilton-Ryker, which had revenues of
$36.0 million from the date of its acquisition on March 12, 1997 to year end,
and the acquisition of CSR, Inc., which had revenues of $5.3 million from the
date of its acquisition on December 3, 1997 to year end, both at higher average
rates per hour than the Company. A significant portion of this increase was also
due to the establishment of a new VOP relationship, which provided $5.2 million
of revenues for the year ended December 31, 1997. This client has indicated to
the Company that it intends to reduce substantially its use of temporary
staffing. See "-- Recent

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26

Developments." During both 1997 and 1996, the Company's revenues were generated
primarily by Commercial Staffing, as the Company did not provide Professional
Services prior to the acquisition of CSR, Inc.

Gross Profit. Gross profit increased 94.0% to $21.0 million for the year
ended December 31, 1997 from $10.8 million for the year ended December 31, 1996.
Gross profit as a percentage of revenues increased to 18.3% for the year ended
December 31, 1997 from 16.5% for the year ended December 31, 1996. This increase
was due to lower costs associated with workers' compensation claims and the
acquisition of Hamilton-Ryker and CSR, Inc., which had higher gross margins than
the Company.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 60.2% to $13.9 million for the year ended
December 31, 1997 from $8.7 million for the year ended December 31, 1996.
Selling, general and administrative expenses as a percentage of revenues
decreased to 12.1% for the year ended December 31, 1997 from 13.2% for the year
ended December 31, 1996. This decrease resulted from greater operating
efficiencies and economies of scale gained from a larger revenue base.

Depreciation and Amortization. Depreciation and amortization expenses
increased 194.4% to $836,000 for the year ended December 31, 1997 from $284,000
for the year ended December 31, 1996. Depreciation and amortization expenses as
a percentage of revenues increased to 0.7% for the year ended December 31, 1997
from 0.4% for the year ended December 31, 1996. The increase was due to the
amortization of goodwill in connection with the acquisitions of Hamilton-Ryker
and CSR, Inc. in 1997.

Other Operating Expenses. Other operating expenses increased 37.5% to $1.2
million for the year ended December 31, 1997 from $842,000 for the year ended
December 31, 1996. Other operating expenses as a percentage of revenues
decreased to 1.0% for the year ended December 31, 1997 from 1.3% for the year
ended December 31, 1996. During the year ended December 31, 1997, other
operating expenses consisted primarily of severance fees paid to two former
executive employees of the Company and amounts paid to a third former executive
employee, and in the year ended December 31, 1996 consisted of amounts paid to a
former executive employee.

Operating Income. As a result of the foregoing, operating income increased
392.1% to $5.2 million for the year ended December 31, 1997 from $1.0 million
for the year ended December 31, 1996, and operating income as a percentage of
revenues increased to 4.5% for the year ended December 31, 1997 from 1.6% for
the year ended December 31, 1996.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

Revenues. Revenues decreased 2.7% to $65.5 million for the year ended
December 31, 1996 from $67.4 million for the year ended December 31, 1995. The
decrease in revenues was the result of a decrease of approximately 7.8% in
billable hours offset by an increase in the average billing rate per hour of
approximately 5.6%. The decrease in revenues was a result of the closing of a
client's operating facility in December 1995, at which the Company had a VOP
site that generated $3.8 million of revenues in 1995, and the non-renewal of a
second VOP relationship by the same client in April 1995, which generated $4.6
million of revenues in 1995. These decreases were partially offset by an
increase in revenues of $6.6 million as a result of increased billings to
existing clients and the addition of new clients.

Gross Profit. Gross profit increased 6.4% to $10.8 million for the year
ended December 31, 1996 from $10.2 million for the year ended December 31, 1995.
Gross profit as a percentage of revenues increased to 16.5% for the year ended
December 31, 1996 from 15.1% for the year ended December 31, 1995. The increase
in gross profit as a percentage of revenues was due to replacing the lost VOP
revenues with higher margin revenues.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 7.1% to $8.7 million for the year ended
December 31, 1996 from $8.1 million for the year ended December 31, 1995.
Selling, general and administrative expenses as a percentage of revenues
increased to 13.2% for the year ended December 31, 1996 from 12.0% for the year
ended December 31, 1995. This increase resulted from constant fixed costs
distributed over a smaller revenue base.

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27

Depreciation and Amortization. Depreciation and amortization expenses
decreased 3.7% to $284,000 for the year ended December 31, 1996 from $295,000
for the year ended December 31, 1995. Depreciation and amortization expenses as
a percentage of revenues remained constant at 0.4% for the year ended December
31, 1996 and the year ended December 31, 1995.

Other Operating Expenses. Other operating expenses decreased 46.5% to
$842,000 for the year ended December 31, 1996 from $1.6 million for the year
ended December 31, 1995. Other operating expenses as a percentage of revenues
decreased to 1.3% for the year ended December 31, 1996 from 2.4% for the year
ended December 31, 1995. Other operating expenses consisted of amounts paid to a
former executive in both periods.

Operating Income. As a result of the foregoing, operating income increased
361.2% to $1.0 million for the year ended December 31, 1996 from $227,000 for
the year ended December 31, 1995, and operating income as a percentage of
revenues increased to 1.6% for the year ended December 31, 1996 from 0.4% for
the year ended December 31, 1995.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $746,000 and $529,000 in the
years ended December 31, 1995 and 1996 and $715,000 and $2.2 million for the six
months ended June 30, 1997 and 1998, respectively. During the year ended
December 31, 1997, operations used $1.4 million in cash. The increase in cash
provided by operating activities for the six months ended June 30, 1998 as
compared to the six months ended June 30, 1997 was due to an increase in net
income, an increase in accrued payroll and related taxes resulting from the
timing of temporary staff payroll and increases in other accrued expenses offset
by increases in accounts receivable. The decrease in net cash provided by
operating activities in 1997 as compared to 1996 was primarily due to (i) an
increase in accounts receivable as a result of growth experienced by the Company
during 1997; (ii) an increase in income taxes receivable due to timing of income
tax payments made during the year; and (iii) amounts contributed to the worker's
compensation insurance loss fund in excess of amounts accrued. The slight
decrease in net cash provided by operating activities in 1996 as compared to
1995 was primarily due to a decrease in accrued payroll and related taxes due to
the timing of such payments and amounts contributed to the workers' compensation
insurance loss fund in excess of amounts accrued.

Net cash used in investing activities was $411,000, $138,000 and $4.1
million in the years ended December 31, 1995, 1996, 1997 and $3.7 million and
$29.7 million first six months of 1997 and 1998, respectively. Cash used in
investing activities for the periods presented was attributable to the
acquisitions and capital expenditures. During March 1997, the Company acquired
Hamilton-Ryker which, net of cash received, resulted in a use of cash of
approximately $3.0 million during the six months ended June 30, 1997 and the
year ended December 31, 1997. During the six months ended June 30, 1998, the
Company completed the acquisitions of five staffing companies, resulting in a
use of cash of approximately $28.5 million.

Net cash provided by financing activities was $2.9 million and $25.6 for
the six month periods ended June 30, 1997 and 1998 respectively, and was
primarily attributable to borrowings for the acquisitions referred to above. Net
cash used in financing activities was $529,000 and $250,000 during the years
ended December 31, 1995 and 1996, respectively. Financing activities provided
$7.2 million for the year ended December 31, 1997. Financing activities during
the years ended December 31, 1995 and 1996 consisted primarily of borrowings and
payments on the Company's line of credit, borrowings and payments on shareholder
notes payable and shareholder distributions. During the year ended December 31,
1997 the Company paid the outstanding borrowings on its line of credit in full
with proceeds from the revolving credit agreement. Payments and borrowings on
the revolving credit agreement were made throughout the year based upon the
Company's cash needs.

The Company extends credit to its customers on an unsecured basis on terms
which vary by subsidiary and by customer. Payment is generally due within 10-30
days after invoice. The Company performs ongoing credit evaluations of its
customers' financial condition. Amounts charged to expense for uncollectible
accounts were $195,000, $110,000 and $180,000 during the years ended December
31, 1995, 1996 and 1997, respectively. Average days sales outstanding have
historically ranged from 30 to 40 days.

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The Company anticipates that it will require significant amounts of cash to
finance acquisitions after the Offering. The Company expects to fulfill these
requirements for cash primarily through bank borrowings, cash from operations,
and from the sale of debt or equity securities of the Company. The Company has
entered into a credit agreement (the "Credit Agreement") with ING (U.S.) Capital
Corporation, Creditanstalt Corporate Finance, Inc. and Societe Generale (the
"Lenders") to provide a $75 million revolving credit facility, $63.1 million of
which was outstanding at September 15, 1998. The Company expects that,
immediately upon completion of the Offering and repayment of a portion of
currently outstanding amounts with the proceeds of the Offering, $52.7 million
will be available under the facility. Loans under the Credit Agreement bear
interest at rates based, at the Company's option, on either LIBOR or a base rate
plus, in each case, an applicable margin. The applicable margin is contingent
upon the ratio of the Company's senior funded debt to its EBITDA and will vary
from 2.50% to 3.25% per annum in the case of LIBOR loans and .50% to 1.25% per
annum in the case of base rate loans. In addition, the Company is required to
pay to the Lenders a monthly fee of .50% per annum with respect to the unused
portion of the credit facility. The Credit Agreement also permits up to $10
million of the amount available for borrowings to be used for the issuance of
letters of credit. A per annum fee based on the applicable margin for LIBOR
loans is payable with respect to the face amount of letters of credit
outstanding during the applicable month. See Note 6 of Notes to Financial
Statements of Corporate Staffing Resources, Inc.

Borrowings under the Credit Agreement are secured by substantially all of
the assets of the Company and its subsidiaries, by a pledge of the stock of the
subsidiaries and by drop-down notes made by each subsidiary in favor of the
Company and pledged by the Company to the Lenders. In addition, subsidiaries of
the Company have guaranteed the Company's obligations under the Credit
Agreement. The Credit Agreement contains covenants requiring the maintenance of
certain financial ratios and specified net worth and limiting the incurrence of
additional indebtedness, the sale of substantial assets, consolidations or
mergers by the Company and the payment of dividends. The Credit Agreement will
terminate, and all borrowings will be required to be repaid on December 3, 2001.

The Company believes that its cash flows together with available borrowings
under the Credit Agreement will be sufficient for its capital expenditure
requirements, including capital expenditures expected to be incurred to acquire
and implement a system designed to standardize financial reporting and
accounting controls.

The net proceeds from the Offering, after deducting underwriting discounts
and offering expenses, are expected to total approximately $43.2 million. The
Company intends to use the net proceeds of this Offering as follows: (i)
approximately $40.8 million to repay the outstanding indebtedness under the
Credit Facility and (ii) approximately $2.4 million to repay certain notes
payable to shareholders.

The Company believes that the proceeds of this Offering, funds currently
available on hand, funds to be provided by operations and funds available under
the Credit Agreement will be sufficient to meet the Company's anticipated needs
for working capital until the end of 1998. The Company's estimate of the time
that the proceeds of this Offering, funds currently on hand, funds provided by
operations and funds available under the Credit Facility will be sufficient to
meet the Company's working capital needs is a forward-looking statement that is
subject to risks and uncertainties. Actual results and working capital needs
could differ materially from those estimated due to a number of factors,
including the use of such proceeds to fund acquisitions. In addition,
acquisitions may require additional debt and equity financing.

SEASONALITY

The Company's quarterly operating results are affected primarily by the
number of billing days in the quarter and the seasonality of its customers'
businesses. Demand for services in Commercial Staffing has historically been
lower during the year-end holidays through February of the following year,
showing gradual improvement over the remainder of the year. Although less
pronounced than in Commercial Staffing, the demand for Professional Services is
typically lower during the first quarter until customers' operating budgets are
finalized. The Company believes that the effects of seasonality will be less
severe in the future as revenues contributed by Professional Services continue
to increase as a percentage of the Company's consolidated revenues.

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RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income," and SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information." SFAS No. 130 establishes standards for the reporting and
disclosure of comprehensive income and its components in a full set of general
purpose financial statements. SFAS No. 131 changes the manner in which public
companies report segment information in annual reports and requires companies to
report selected segment information in interim financial reports. The Company
will be required to report financial and descriptive information about the
Company's operating segments. Both these statements are effective for fiscal
years beginning after December 15, 1997, with reclassification of the financial
statements for earlier periods required for comparative purposes. The Company
plans to adopt these statements, for its year ending December 31, 1998. SFAS No.
130 is not expected to have a significant impact on the Company's historical
financial statements, as comprehensive income will equal reported net income.
The Company is evaluating the impact of SFAS No. 131.

YEAR 2000 COMPLIANCE

The Company has completed an assessment of its computer software and
systems with respect to Year 2000 compliance and is in the process of
implementing necessary software modifications and system upgrades. The Company
believes that any costs that may be incurred to modify existing software or
upgrade systems will not be material.

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BUSINESS

GENERAL

The Company primarily provides two types of staffing services: (i)
Commercial Staffing, including VOP, clerical, administrative and light
industrial staffing services; and (ii) Professional Services, including a
comprehensive range of IT, accounting and finance staffing, placement and
outplacement services. The Company's Commercial Staffing branches serve
primarily small to mid-size cities, while its Professional Services branches
serve primarily major metropolitan and national markets. For the year ended
December 31, 1997 and for the six months ended June 30, 1998, Commercial
Staffing generated approximately 78.6% and 77.5% of the Company's pro forma
revenues and 68.5% and 67.3% of the Company's pro forma gross profits,
respectively. For the year ended December 31, 1997 and for the six months ended
June 30, 1998, Professional Services generated approximately 21.4% and 22.5% of
the Company's pro forma revenues and 31.5% and 32.7% of the Company's pro forma
gross profits, respectively.

STAFFING SERVICES INDUSTRY OVERVIEW

The staffing services industry has grown rapidly in recent years as
companies have utilized supplemental employees to control personnel costs and to
meet specialized or fluctuating personnel needs. According to Staffing Industry
Report, the U.S. market for temporary staffing services is estimated to have
grown at a compound annual rate of approximately 17.4% from approximately $29.3
billion in 1992 to approximately $76.8 billion in 1998. Within the U.S. staffing
services industry, the market for office support grew at a compound annual rate
of approximately 12.4% from approximately $8.5 billion in 1992 to approximately
$17.1 billion in 1998, and the market for industrial staffing services grew at a
compound annual rate of approximately 16.0% from approximately $6.0 billion in
1992 to approximately $14.6 billion in 1998. Furthermore, according to Staffing
Industry Report, revenues from information technology and technical staffing are
estimated to have grown at a compound annual rate of 24.0% from approximately
$5.1 billion in 1992 to approximately $18.5 billion in 1998. The Company
believes the staffing industry is highly fragmented with over 6,000 staffing
companies and 2,500 professional/IT companies. Although the industry is
experiencing increasing consolidation, in part because of client demand for
comprehensive supplemental staffing solutions, the Company believes that there
are numerous attractive acquisition targets.

GROWTH STRATEGY

The Company has implemented a strategy intended to continue its growth in
existing and new markets, the key elements of which are to: (i) increase the
Company's focus on Professional Services; (ii) cross-sell service offerings in
existing markets and expand into new markets; (iii) focus on commercial staffing
in small to mid-size cities; (iv) increase vendor-on-premises relationships; and
(v) expand through acquisitions.

Increase Focus on Professional Services. The Company's strategy is to
increase the percentage of total revenues and gross profits contributed by
Professional Services by expanding its service offerings in the fields of IT
staffing and consulting and accounting and finance staffing. The Company also
intends to grow its pool of skilled professionals, hire additional sales
consultants, target mid-size and large companies, and leverage client
relationships. The Company believes that providing Professional Services to its
clients offers attractive opportunities for growth in sales and profits.
Professional Services, primarily IT services, comprised 22.5% of

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the Company's pro forma revenues and generated 32.7% of the Company's pro forma
gross profit in the six months ended June 30, 1998. The Company currently
employs 53 recruiters and 51 sales consultants in Professional Services, a 79.3%
increase over the previous year. Based on client demand for Professional
Services on a national basis, the Company intends to open additional
Professional Services branches and to increase the pace of acquisitions of
Professional Services companies in larger metropolitan markets.

Cross-Sell Service Offerings in Existing Markets and Expand Into New
Markets. The Company continually identifies additional growth opportunities with
existing and new clients as a result of the breadth of the Company's service
offerings. The Company currently offers a complete range of IT, accounting and
clerical staffing services in only a small number of its markets. As a result,
the Company believes substantial opportunities exist to cross-sell service
offerings, especially Professional Services, within these markets. In addition,
the Company continually evaluates potential expansion of existing services into
new geographic areas. To facilitate the offering of new services in existing and
new markets, the Company plans to transfer or recruit experienced personnel for
positions in new locations as such locations are opened. The Company also seeks
to leverage its relationships with existing clients to facilitate entry into new
markets.

Focus on Commercial Staffing in Small to Mid-Size Cities. The Company
provides Commercial Staffing primarily in small to mid-size cities with
populations ranging from 10,000 to 250,000 and seeks to be the leading provider
of Commercial Staffing in the markets in which it operates. The Company believes
that its existing and potential clients in these markets select service
providers largely based on local brand awareness, specialized expertise and
quality of service. Each of the Company's Commercial Staffing branches operates
under established local brand names. The Company intends to continue building on
the strong reputations of these local brand names in their markets while
leveraging the sophisticated support services and low cost structures of a
national provider. The Company believes that it can achieve attractive margins
in these markets and that in many cases it has a competitive marketing advantage
over national providers because it has developed a strong local presence and has
tailored its operations to meet local client needs.

Increase Vendor-On-Premises Relationships. As of June 30, 1998, the Company
had 22 VOP partnering relationships. Under these programs, the Company assumes
administrative responsibility for coordinating some or all Commercial Staffing
at a client's location or organization, including skills testing and training.
The VOP relationships provide clients with dedicated on-site account management
which can more effectively meet the client's changing staffing needs with high
quality, timely and consistent service. While these partnering relationships
tend to have lower gross margins than traditional temporary staffing services,
their higher volumes and relatively long-term relationships result in a more
stable source of revenue. The Company has expanded geographically by
establishing new VOP sites to service existing clients and intends to establish
additional sites for both existing and new clients as opportunities arise in the
future.

Expand through Acquisitions. The Company intends to acquire independent
Professional Service and Commercial Staffing companies with strong management,
profitable operating results and recognized local and regional presences. Since
March 1997, the Company has acquired eight companies with an aggregate of 91
branches and 1997 revenues of $170.2 million. Primarily, the Company intends to
pursue strategic acquisitions in Professional Services that offer complementary
services and expand the percentage of revenues generated by Professional
Services and tuck-in acquisitions in Commercial Staffing that increase its
penetration of existing markets. The Company has established a team of corporate
officers responsible for identifying prospective acquisitions, performing due
diligence and negotiating acquisition contracts. The Company typically retains
management of acquired companies and offers management of acquired companies
contingent compensation based on improvement in financial performance of the
acquired operating company. The Company intends to include Common Stock as part
of the consideration in future acquisitions in order to incentivize management
of acquired companies and align their interests with those of the Company.

OPERATING STRATEGY

The key elements of the Company's operating strategy include: (i) maintain
an entrepreneurial environment; (ii) continue disciplined financial management;
(iii) integrate acquired companies quickly;

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(iv) maintain or establish leadership in existing geographic markets; and (v)
deliver high value-added quality service.

Maintain an Entrepreneurial Environment. The Company's management structure
promotes an entrepreneurial environment that rewards performance at all levels
of the Company. The Company has decentralized decisions regarding staff
selection, pricing, business mix and advertising, resulting in significant local
autonomy at the branch level. This permits each branch to be extremely flexible
and responsive to the specific needs of its clients. The Company has an
incentive compensation system for its managers which it believes: (i) allows the
Company to capitalize on its managers' knowledge of local business conditions
and markets; (ii) encourages local branch managers to develop long-term
relationships with key decision makers at both existing and potential clients;
and (iii) makes the Company more attractive to potential employees and
acquisition candidates.

Continue Disciplined Financial Management. The Company's corporate
management has developed certain financial, risk management and administrative
control procedures which are applied to each branch and at newly acquired
companies. These control procedures include the preparation of annual business
plans and budgets and the submission of detailed monthly financial reports. This
information is reviewed by the Company's executive officers together with branch
managers at the end of each fiscal quarter. In addition, the Company produces
weekly financial performance reports with respect to each of its branches that
are supplied to branch managers as well as operating company management. This
information allows management proactively to manage the Company down to the
branch level and continuously to seek new opportunities to improve operations.
The Company performs periodic operational audits of each of the Company's
branches in order to effectively manage and control worker's compensation costs.
The Company believes its system of disciplined financial management is readily
adaptable and scalable as the Company continues to grow.

Integrate Acquired Companies Quickly. As soon as practicable after an
acquisition is completed, management begins integrating newly acquired
companies. The Company implements a formal process of budgeting and quarterly
performance reviews at all newly acquired companies. Acquired companies are
brought under the Company's uniform risk management program, and key personnel
of acquired companies often become a part of management of the Company.
Marketing, sales, field operations and personnel programs of the acquired
companies are reviewed and, where appropriate, conformed to the Company's
practices.

Maintain or Establish Leadership in Existing Geographic Markets. The
Company believes that there are substantial growth opportunities within its
existing geographic markets. On a pro forma basis, the Company has opened 30
branches (including VOPs) since January 1, 1996, and the Company anticipates
opening additional new branches in its existing geographic markets. A new branch
typically takes up to six months to reach operating profitability and the
Company believes that new branches typically achieve a relatively well-
developed client base within two years after opening. The Company believes that
as its relatively new branches mature through sustained sales and marketing
efforts, the Company generally should realize increased revenues and
profitability from such branches. To further penetrate existing geographic
markets, the Company spins-off new branches from existing branches, which
provides the Company greater coverage in these geographic markets at marginal
cost. These branch clusters provide economies of scale by leveraging common
costs such as recruiting, advertising and management over a larger revenue base
as well as providing better service to clients and opportunities to temporary
employees in these markets.

Deliver High Value-Added Quality Service. The Company emphasizes
recruiting, training and retaining experienced sales consultants and providing
highly qualified temporary employees. The Company trains its sales consultants
to operate as partners with their clients in evaluating and meeting the client's
staffing requirements. The Company seeks to enhance client relationships and to
provide highly qualified temporary employees by generating referrals from
existing temporary employees, utilizing in-depth interviews conducted by Company
personnel experienced in the temporary employees' field, performing skill
evaluations, contacting clients within hours of the beginning of a project to
receive a preliminary determination of satisfaction and obtaining client
satisfaction reports upon the completion of projects. The Company seeks to
understand and proactively assess clients' needs, to respond promptly to
clients' requests and to continually monitor job

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performance and client satisfaction. The Company believes that its commitment to
providing quality service has enabled it to establish and maintain long-term
relationships with clients. To assure its branch managers are equally committed
to providing quality service, the Company reviews and evaluates them based,
among other factors, on client retention.

SERVICES

The Company provides Commercial Staffing and Professional Services.
Commercial Staffing generated approximately $185.4 million, or 78.6%, of 1997
pro forma revenues, and $36.2 million, or 68.5%, of 1997 pro forma gross profit.
Professional Services generated approximately $50.4 million, or 21.4%, of pro
forma revenues in the year ended December 31, 1997, and $16.6 million, or 31.5%,
of pro forma gross profits in the year ended December 31, 1997. The Company
expects the proportion of revenues and gross profits generated by Professional
Services relative to Commercial Staffing to increase in the future.

Commercial Staffing. The Company offers Commercial Staffing, ranging from
workforce management to clerical, administrative and light industrial staffing,
through 106 branches located primarily in the Midwest and the Southeast in small
to mid-size cities with populations from 10,000 to 250,000. The Company's
Commercial Staffing business consists of providing a wide variety of clerical,
administrative, assembly and light industrial skills. In addition to providing
personnel to perform general office tasks such as reception, copying and filing,
the Company provides high-end niche clerical personnel who are proficient in
word processing, graphics, spreadsheets or database management. In the light
industrial area, the Company primarily provides skilled and semi-skilled
personnel to perform tasks such as precision assembly, packaging, shipping and
receiving, warehousing and equipment operation.

Within Commercial Staffing, the Company offers Vendor-on-Premises services,
whereby a client delegates management of its staffing needs to the Company,
allowing the client to focus on its core business activities. The Company has 22
VOP partnering relationships. VOP has evolved to include managing a client's
entire staffing needs in some cases. Revenues from VOP clients have grown to
21.4% of Commercial Staffing pro forma revenue for fiscal 1997. In connection
with its VOP services, the Company intends to expand into new geographic areas
in order to serve both existing and new clients. The Company believes that
clients are generally reluctant to terminate VOP arrangements once in place,
having become dependent on the Company's knowledge and management systems.

Professional Services. The Company offers an expanding array of
Professional Services, including IT, accounting and finance staffing, placement
and outplacement services, through 26 branches located primarily in major
metropolitan markets. In the IT area, the Company provides a broad spectrum of
staff augmentation services, ranging from hardware systems support, desktop
management and PC support, help desk support, and data center operations to
software development and customization, programming and network configuration.
The Company's IT services generally provide large numbers of personnel for
shorter assignments. The Company also provides accounting and finance personnel
at all levels, including bookkeepers, degreed accountants, certified public
accountants, auditors and controllers.

The Company's strategy is to increase the percentage of total revenues and
gross profits contributed by Professional Services by expanding its service
offerings in the fields of IT staffing and consulting and accounting and finance
staffing. The Company also intends to grow its pool of skilled professionals,
hire additional sales consultants, target mid-size and large companies, leverage
whenever possible on existing client relationships, open additional Professional
Services branches and increase the pace of acquisitions of Professional Services
companies in major metropolitan markets. The Company believes that providing
Professional Services to its clients offers the attractive opportunities for
growth in sales and profits.

CLIENT RELATIONSHIPS

The Company has a broad client base. The Company's largest client accounted
for approximately 2.9% of the Company's 1997 pro forma revenues and 9.5% of pro
forma revenues for the six months ended June 30, 1998. This client has informed
the Company that it intends to reduce substantially its use of temporary
staffing. The Company's five largest clients together accounted for 9.6% of the
Company's 1997 pro forma

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revenues and 16.6 % of pro forma revenues for the six months ended June 30,
1998. In Commercial Staffing, the Company offers services to a broad range of
clients, from small businesses to Fortune 500 corporations. In Professional
Services, the Company typically targets Fortune 1000 corporations with
sophisticated MIS needs.

HUMAN RESOURCES

Employees. As of June 30, 1998, the Company had approximately 689 full-time
employees. On a pro forma basis, the Company employed over 12,000 temporary
employees in a typical week in 1997. The Company typically does not enter into
employment agreements with its full-time or temporary employees and does not
have an exclusive relationship with its temporary employees. None of the
Company's employees, including its temporary employees, is represented by a
collective bargaining agreement. The Company believes its employee relations to
be strong. Hourly wages for the Company's temporary employees are determined
according to market conditions. The Company pays mandated costs of employment,
including the employer's share of social security taxes, federal and state
unemployment taxes, unemployment compensation insurance, general payroll
expenses and workers' compensation insurance. The Company offers access to
various insurance programs and other benefits, such as vacations, holidays and
401(k) programs to qualified temporary employees and professionals.

Recruiting. The Company believes that successful recruiting is critical to
the growth of its business. One of the Company's most successful recruiting
tools is referrals by its temporary employees. The Company finds that referrals
from existing employees provide a large number of high quality new temporary
employees. In Commercial Staffing, the Company employs full-time regional
recruiters who visit schools, clubs and professional associations and present
career development programs at job fairs and to various organizations. In
addition, the Company advertises in major newspapers, on radio, in the Yellow
Pages and through other print media. In Professional Services, the Company
employs 53 full-time recruiters and compensates its temporary employees for the
recruitment and retention of qualified professionals. In addition, the Company
seeks to offer its employees interesting and challenging assignments which
enhance their professional skills and career development. The Company also
obtains many IT applicants through its world wide web sites. The Company is in
the process of expanding its primary web site to allow for the listing of
certain jobs and processing applications on-line.

Assessment, Training and Quality Control. The Company uses a comprehensive
system to assess, select and train its temporary employees in order to assure
the quality of its services. Applicants are given a range of tests, applicable
to the position(s) they seek. Clerical and office-support applicants receive
comprehensive tests in computer skills, word processing, typing, data entry,
accounting and other business applications. These tests cover the latest
software and evaluate each individual's skills and experience. Computerized
tutorials are generally available for temporary employees who seek to upgrade
their typing, data entry, office automation or word processing skills. The
Company completes reference checks for its Professional Services employees and
carefully monitors client satisfaction with the performance of temporary
professionals.

Risk Management and Workers' Compensation Program. The Company believes
that higher operating margins can be achieved through careful risk management
and monitoring of workers' compensation claims and unemployment compensation
claims. The Company's risk management team therefore takes a proactive approach
to safety, risk control, and cost containment. The team works diligently to
train the Company's field staff to better screen and test candidates for
employment and to orient the Company's temporary employees to a more
safety-conscious environment. The field staff performs periodic safety
inspections of new and existing clients in order to evaluate their safety
environments. The field staff has the authority to decline service if a work
environment is perceived to be unsafe or potentially hazardous. The Company's
policies prohibit staffing of high-risk activities such as working on
unprotected elevated platforms, handling of hazardous materials, or construction
activities. The Company's goal is to work alongside the client to achieve a safe
work environment through effective training and commitment to safety. In
particular, the Company's risk management team analyzes all claims in order to
produce the most effective cost containment methods. The integrity of the
program is monitored through an internal audit process that reports directly to
executive management. An independent actuary provides advice on overall workers'
compensation costs and periodically performs an actuarial valuation regarding
the adequacy of the Company's reserve for workers' compensation claims. The

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Company implements its risk management program at newly acquired companies from
the date of acquisition of such companies. The Company maintains workers'
compensation insurance for claims in excess of a retention level of $250,000 per
occurrence. Premium costs historically have trended downward due to the
Company's successful management of workers' compensation claims.

OPERATIONS

Sales and Marketing. The Company's services are marketed through its
network of over 130 branches whose managers and placement coordinators make
regular personal sales visits to clients and prospective clients. The Company
emphasizes long-term personal relationships with clients which are developed
through regular assessment of client requirements and constant monitoring of
temporary staff performance. New clients are obtained through sales calls,
consultation meetings with target companies, client referrals, telemarketing and
advertising in a variety of local and regional media, including radio, Yellow
Pages, newspapers, magazines and trade publications and through the Company's
world wide web sites. In addition, the Company sponsors job fairs and other
community events and the Company's officers and senior management participate in
national and regional trade associations, local chambers of commerce and other
civic associations. The Company coordinates the sales, marketing and recruiting
functions to identify prospective opportunities to deliver high value-added
quality services.

The Company believes that both its clients and its temporary employee
candidates select service providers principally on the basis of local brand
awareness, specialized expertise and quality of service. The Company provides
Commercial Staffing under several established local brand names, most of which
have been continuously in use for more than 10 years. The Company is considering
establishing distinct national brands in its Professional Services operations
that target specific staffing disciplines in order to provide clients and
candidates with an easily identifiable source of specific staffing expertise.

Branch Offices. The Company offers its services through over 130 branch
offices and 24 VOP sites in four regions: the Midwest (Indiana, Michigan,
Missouri, and Ohio), the Southeast (Georgia, Maryland, New Jersey, North
Carolina, South Carolina, and Virginia), the South (Kentucky, Louisiana,
Mississippi, Tennessee, Texas) and the West (California). Set forth below are
the Company's branches and VOP sites by region and the pro forma revenues for
each region for the six months ended June 30, 1998 and the year ended December
31, 1997.

NUMBER OF BRANCHES PRO FORMA
AND VOP SITES PRO FORMA REVENUES FOR THE
------------------------ REVENUES FOR THE SIX MONTHS
DECEMBER 31, JUNE 30, YEAR ENDED ENDED
REGION 1997 1998 DECEMBER 31, 1997 JUNE 30, 1998
- ------ ------------ -------- ----------------- ----------------
(IN THOUSANDS)

Midwest.................................... 51 61 $ 92,995 $ 50,735
Southeast.................................. 48 53 81,418 43,312
South...................................... 31 35 45,471 27,597
West....................................... 7 7 15,944 10,302
--- --- -------- --------
Total:.............................. 137 156 $235,828 $131,946
=== === ======== ========

The Company's Commercial Staffing branches are primarily located in small
to mid-size cities with populations of 10,000 to 250,000, and the Company's
Professional Services branches are primarily located in major urban markets.
Branch managers operate their branches with a combination of a significant
degree of autonomy and specific areas of accountability to the Company and are
eligible for compensation based on operating performance in excess of budgeted
amounts at their branches. The compensation system is designed to motivate the
managers and staff to maximize the growth and profitability of their branches
while securing long-term client relationships. Branch managers report directly
to area managers, regional vice presidents or division presidents, all of whom
receive bonuses based upon the profitability of their regions or operating
divisions against budgeted performance targets. Operating within the guidelines
set by the Company, the

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36

branch managers are responsible for pursuing new business opportunities and
focusing on sales and marketing, account development and retention and employee
recruitment, development and retention.

Management Information Systems. The Company licenses front office software
for Commercial Staffing from several providers. Many of the Company's IT
services branches use software which permits access to a shared database of
resumes and job orders at the branch level, allowing the branch office to fill
client orders, communicate with clients regarding invoices and perform candidate
screening for the most suitable job opportunity. The Company's systems allow the
remote printing of paychecks at many of its branches. The Company reviews its
systems periodically and upgrades and implements new systems based on a
cost-benefit analysis. Certain of the Company's subsidiaries operate on
free-standing systems. Although the Company believes that its systems can be
readily expanded to meet increased demands without significant additional
expenditures, there can be no assurances that the systems of the Company's
subsidiaries can be integrated successfully or in a timely manner. See "Risk
Factors -- Systems Integration."

COMPETITION

The staffing industry is intensely competitive and fragmented and has
limited barriers to entry. The Company competes for employees and clients in
national, regional and local markets with full-service and specialized temporary
staffing service businesses. A significant number of the Company's competitors
have greater marketing, financial and other resources and more established
operations than the Company. Price competition in the staffing industry is
intense, particularly for the provision of commercial personnel, and pricing
pressures from competitors and customers are increasing. Many of the Company's
clients have relationships with more than one staffing service company. However,
in recent years, an increasing number of companies have consolidated their
staffing services purchases and entered into exclusive contracts with a single
temporary staffing company or small number of temporary staffing companies. If
current or potential clients enter into exclusive contracts with competitors of
the Company, it will be difficult or impossible for the Company to obtain
business from such clients. The Company expects that the level of competition
will remain high in the future, which could limit the Company's ability to
maintain or increase its market share or maintain or increase gross margins,
either of which could have a material adverse effect on the Company's business,
operating results and financial condition. In addition, the Company competes for
acquisition candidates with other staffing services companies, and there can be
no assurance that the Company will be able to successfully identify suitable
acquisition candidates or complete acquisitions. See "Risk Factors
- -- Competition" and "Risks Associated with Acquisitions."

FACILITIES

The Company's corporate headquarters are currently located at One Michiana
Square, 100 East Wayne Street, Suite 100, South Bend, IN 46601. The Company has
entered into a lease to rent new corporate headquarters space commencing in
December 1998. The Company believes that the newly leased space will be adequate
for its needs.

The Company leases space for all of its branches and does not own any real
property. The Company believes that its facilities are adequate for its needs
and does not anticipate inordinate difficulty in replacing such facilities or
opening additional facilities, if needed. A number of the Company's branch
offices are leased from related parties. The Company believes that the lease
terms are at least as favorable as could be obtained from any unrelated third
party. See "Certain Relationships and Related Transactions."

REGULATION

Generally, the Company's operations are not subject to state or local
licensing requirements or other regulations specifically governing the provision
of commercial and professional staffing services. There can be no assurance,
however, that states in which the Company operates or may in the future operate
will not adopt such licensing or other regulations affecting the Company.

The laws of various states require the Company to maintain workers'
compensation and unemployment insurance coverage for its temporary employees.
The Company maintains state mandated workers' compensa-

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tion and unemployment insurance coverage. The extent and type of health
insurance benefits that employers are required to provide employees have been
the subject of intense scrutiny and debate in recent years at both the national
and state levels. Proposals have been made to mandate that employers provide
health insurance benefits to staffing employees. In addition, some states could
impose sales taxes, or raise sales tax rates, on staffing services. Further
increases in such premiums or rates, or the introduction of new regulatory
provisions, could substantially raise the costs associated with hiring and
employing staffing employees. See "Risk Factors -- Unemployment Insurance and
Workers' Compensation Costs" and "-- Risk of Government Regulation and
Legislative Proposals."

INTELLECTUAL PROPERTY

The Company maintains a number of trademarks, tradenames, service marks and
other intangible rights. The Company believes that it has all rights to
trademarks and trade names necessary for the conduct of its business and is not
currently aware of any infringing uses or other conditions that would materially
and adversely affect its use of proprietary rights.

LEGAL PROCEEDINGS

In the ordinary course of its business, the Company is periodically
threatened with or named as a defendant in various lawsuits, including
discrimination, harassment and other similar claims. The Company maintains
insurance in such amounts and with such coverage and deductibles as management
believes are reasonable. The Company is not a party to any material legal
proceedings.

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MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND OTHER SIGNIFICANT EMPLOYEES

The following table sets forth information regarding the executive officers
and directors of the Company:

NAME AGE POSITION
- ---- --- --------

William W. Wilkinson (1)(6)............ 65 Chairman of the Board and Chief
Executive Officer
Jerry F. Stone (1)(2).................. 47 President of Mega Force Staffing
Services, Inc. and Director
T. Wayne McCreight (1)(4).............. 52 President of The Hamilton-Ryker
Company, Inc. and Director
William J. Wilkinson (1)(4)............ 36 President of Corporate Staffing
Resources of Indiana, Inc. and Director
Thomas E. Murphy....................... 36 Executive Vice President and Chief
Financial Officer
D. Crawford Gallimore (1)(2)........... 49 Chief Administrative Officer and
Director
John Geer (1)(2)....................... 52 Director
Robert W. MacDonald (1)(5)............. 51 Director
Conor T. Mullett (1)(5)................ 31 Director
David Pairitz (3)(4)................... 62 Director
Richard H. Rosenthal (3)(6)............ 65 Director
Theodore F. Savastano (3)(5)........... 61 Director
John P. Shoemaker (1)(2)............... 33 Director
H. Ronald Stone (1)(6)................. 51 Director

- ---------------

(1) Pursuant to an agreement among the Company, IPP 97 Private Equity, LLC (an
affiliate of William E. Simon & Sons, LLC ("Simon")), Mellon Ventures, L.P.
("Mellon") and the other stockholders of the Company dated December 3, 1997
(the "Stockholders Agreement"), Simon designated Mr. MacDonald and Mr.
Mullett as Directors, Mellon Designated Mr. Geer and Mr. Shoemaker as
Directors, the Mega Force Stockholders (as defined in the Stockholders
Agreement) designated Mr. H. Ronald Stone, Mr. Jerry F. Stone, Mr. Gallimore
and Mr. McCreight as Directors, Mr. William W. Wilkinson designated himself
and Mr. William J. Wilkinson designated himself. See "Certain Relationships
and Related Transactions -- Stockholders Agreement."

(2) Mr. Jerry F. Stone, Mr. Gallimore, Mr. Geer and Mr. Shoemaker have informed
the Company that they intend to resign as Directors effective upon
consummation of the Offering.

(3) Has been elected as a Director effective as of the consummation of the
Offering.

(4) Will serve in the class of directors whose terms expire at the Annual
Meeting of Stockholders in 1999.

(5) Will serve in the class of directors whose terms expire at the Annual
Meeting of Stockholders in 2000.

(6) Will serve in the class of directors whose terms expire at the Annual
Meeting of Stockholders in 2001.

Following the consummation of this Offering, pursuant to the Company's
Charter and Bylaws, the Board of Directors will be classified into three
classes. Upon expiration of the initial term of each class of directors,
directors comprising such class will be elected to a three-year term at the next
succeeding annual meeting of stockholders. Each director shall hold office until
his successor is duly elected and qualified, or until his death, resignation or
removal.

EXECUTIVE OFFICERS AND DIRECTORS

William W. Wilkinson. Mr. Wilkinson has served as Chief Executive Officer
of the Company since December 1997. In 1987, Mr. Wilkinson co-founded Corporate
Staffing Resources, Inc., an Indiana corporation ("CSR-Ind.") which was
subsequently acquired by CSR, Inc. Mr. Wilkinson served as the Chief Executive
Officer of CSR, Inc. until it was acquired by the Company. Previously Mr.
Wilkinson spent 28 years

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39

with Central Soya Company, Inc., an international agribusiness and food
processing company. Mr. Wilkinson's last position with Central Soya was
Executive Vice President and President of the Agra Business Group. Mr. Wilkinson
has a B.S.B.A. from the University of Chattanooga. Mr. Wilkinson is the father
of William J. Wilkinson.

Jerry F. Stone. Mr. Stone currently serves as a Director and as the
President of the Company's subsidiary, Mega Force Staffing Services, Inc. Mr.
Stone joined the Company's predecessor, The Mega Force Group, in 1990 and became
its President in 1994. Prior to joining The Mega Force Group, Mr. Stone managed
an extensive farming operation for 17 years. Mr. Stone has a B.A. in Business
from Methodist College in Fayetteville, North Carolina. Mr. Stone is the brother
of H. Ronald Stone. Mr. Stone has informed the Company that he intends to resign
as Director effective upon consummation of the Offering.

T. Wayne McCreight. Mr. McCreight serves as a Director of the Company and
the President of the Company's subsidiary, The Hamilton-Ryker Company, Inc. He
founded and served as Chief Executive Officer of Hamilton-Ryker and its
predecessors until its acquisition by the Company in March 1997. Mr. McCreight
has a B.S. from the University of Tennessee at Martin.

William J. Wilkinson. Mr. Wilkinson has served as a Director of the Company
and the President of the Company's subsidiary, Corporate Staffing Resources of
Indiana, Inc., since December 1997. In 1987, Mr. Wilkinson co-founded CSR-Ind.
and served as its President and Chief Operating Officer from January 1992 until
it was acquired by CSR, Inc. Mr. Wilkinson served in the same position at CSR,
Inc. until it was acquired by the Company. Mr. Wilkinson has a B.S.B.A. from
Indiana University. Mr. Wilkinson is the son of William W. Wilkinson.

Thomas E. Murphy. Mr. Murphy has served as Executive Vice President and
Chief Financial Officer since December 1997. Until joining the Company, Mr.
Murphy was a partner in the Elkhart, Indiana office of Crowe, Chizek and
Company, LLP, the independent auditor of CSR, Inc. and subsidiaries. Previously,
Mr. Murphy served as a Senior Manager at Ernst & Young, LLP, Chicago, Illinois.
Mr. Murphy is a certified public accountant and has a B.B.A. in accounting from
the University of Notre Dame.

D. Crawford Gallimore. Mr. Gallimore has served as a Director and as the
Chief Administrative Officer of the Company since December 1997. Mr. Gallimore
previously served as Treasurer/Chief Financial Officer for Hamilton-Ryker and
its predecessors until its acquisition by the Company. Mr. Gallimore has a
B.B.A. from the University of Tennessee at Martin. Mr. Gallimore has informed
the Company that he intends to resign as Director effective upon consummation of
the Offering.

John Geer. Mr. Geer has served as a Director of the Company since February
1998. He is a Managing Director of Mellon Ventures, Inc., having joined Mellon
in February 1998. Previously, Mr. Geer was Senior Vice President at Security
Pacific Capital Corp., a bank-owned venture capital firm. Mr. Geer also served
as Portfolio Manager of Bank America Capital's equity portfolio, managing
investments which included leveraged buyouts, leveraged recapitalizations, and
start-up and early stage venture capital financings. Mr. Geer has served on more
than twenty boards of directors of emerging growth, middle market companies. Mr.
Geer has a B.A. from Union College and a J.D., cum laude, from the Boston
University School of Law. Mr. Geer has informed the Company that he intends to
resign as Director effective upon the consummation of the Offering.

Robert W. MacDonald. Mr. MacDonald has served as a Director of the Company
since December 1997. Mr. MacDonald is a Managing Director of William E. Simon &
Sons and is President of the firm's Private Equity Group based in Los Angeles.
Mr. MacDonald joined William E. Simon & Sons in 1992. He currently serves on the
boards of directors of People's Bank of California and several private
companies. Mr. MacDonald has a B.A. in finance from Fairfield University.

Conor T. Mullett. Mr. Mullett has served as a Director of the Company since
December 1997. He is a Senior Vice President of William E. Simon & Sons, Private
Equity Group, having joined the firm in 1994. Mr. Mullett serves on the boards
of directors of several portfolio companies, including GeoLogistics Corporation
and several private companies. Mr. Mullett has his B.A. in economics from the
College of William & Mary and an M.B.A. from the Columbia Business School.

David A. Pairitz. Mr. Pairitz will become a Director of the Company,
effective upon consummation of the Offering. Mr. Pairitz is a partner in the
Elkhart, Indiana office of Crowe, Chizek and Company, LLP, the

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independent auditor of CSR, Inc. and subsidiaries. Mr. Pairitz has a B.S. in
accounting from the University of Notre Dame.

Richard A. Rosenthal. Mr. Rosenthal will become a Director of the Company,
effective upon consummation of the Offering. Mr. Rosenthal served as Director of
Athletics at the University of Notre Dame from 1987 to 1995 and as Chief
Executive Officer of St. Joseph Bank from 1962 to 1987. Mr. Rosenthal serves on
the Board of Directors of LaCrosse Footwear, Inc., Athey Products Corporation
and several other privately held companies. Mr. Rosenthal has a B.S. from
University of Notre Dame and is a graduate of the School of Banking of the
University of Wisconsin.

Theodore F. Savastano. Mr. Savastano will become a Director of the Company,
effective upon consummation of the Offering. Mr. Savastano is the founder of,
and has served since 1994 as Chairman of the Board of Directors of, Waterlink,
Inc., a publicly-traded water and wastewater treatment, manufacturing and
service company. From 1988 to 1994, Mr. Savastano served as Chief Financial
Officer of Summit Environmental Group, Inc., a consulting engineering company.
Mr. Savastano has a B.S. from Syracuse University.

John P. Shoemaker. Mr. Shoemaker has served as a Director of the Company
since December 1997. He is a Managing Director of Mellon Ventures, Inc., having
joined the firm in November, 1996. Previously, Mr. Shoemaker was Vice President
of Corporate Development for RAF Industries, Inc., a Philadelphia based private
investment company, and an associate in the business and finance group of the
law firm of Reed Smith Shaw & McClay. Mr. Shoemaker has a B.A. from the
University of Pennsylvania and a J.D. from Boston College Law School. Mr.
Shoemaker has informed the Company that he intends to resign as Director
effective upon consummation of the Offering.

H. Ronald Stone. Mr. Stone has served as a director of the Company since
its founding in March 1997. Mr. Stone founded the Company and its predecessors,
Mega Force Staffing Services, Inc. and The Mega Force Group. He served as chief
executive officer of the Company's predecessors and the Company from 1982 until
the 1997 merger of the Company with CSR, Inc. Mr. Stone attended Chowan and
Guilford Colleges. Mr. Stone is the brother of Jerry F. Stone.

OTHER KEY EMPLOYEES

Jacqueline M. Camacho Barton. Ms. Barton serves as Senior Vice President of
the Company, having joined CSR-Ind. in 1990. Ms. Barton is responsible for the
implementation and management of the Company's IT services. Ms. Barton attended
Napa College and University of California with an emphasis in Business Science.

Kurt Krauthamer. Mr. Krauthamer founded and served as Chief Executive
Officer of Intranational Computer Consultants, Inc. ("ICC") in 1986. Prior to
his service with ICC, Mr. Krauthamer served as an information technology
consultant. Mr. Krauthamer has a B.A. from Sonoma State University and an M.B.A.
from San Francisco State University.

Joseph A. Noto. Mr. Noto, CPA, is President of CMS Management Services
Company and has served in such capacity since 1992. Mr. Noto has a B.S.B.A. from
Geneva College.

William G. Stotzer. Mr. Stotzer has served as Vice President of Corporate
Development at the Company since January 1998. Mr. Stotzer is responsible for
mergers and acquisitions, and long-range strategic planning. Before joining the
Company, Mr. Stotzer was Vice President of Business Development at Holy Cross
Health System, South Bend, Indiana. Previously, he was also a Senior Manager
with Arthur Anderson, LLP, Chicago, Illinois. Mr. Stotzer is a certified public
accountant and has a B.B.A. in accounting from the University of Notre Dame.

DIRECTOR COMPENSATION

Prior to the consummation of this Offering, directors of the Company did
not receive compensation for their services as directors or for attending board
meetings but were reimbursed for reasonable expenses

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incurred in attending directors' meetings. Upon completion of the Offering,
non-employee directors of the Company will receive options to purchase 10,000
shares of Common Stock at the initial public offering price. In addition, each
non-employee director will receive $2,500 for each meeting of the Board attended
and $500 for each meeting of a Board committee attended. Each director also will
be reimbursed for travel expenses incurred for each non-telephonic meeting of
the Board or any committee thereof attended.

BOARD COMMITTEES

The Board of Directors has established a Compensation Committee and plans
to establish an Audit Committee upon consummation of the Offering in order to
assist the Board in the discharge of its duties. The Compensation Committee's
principal function is to establish the compensation for the executive officers
of the Company and to establish and administer the Company's compensation
programs. Mr. Mullet, Mr. Shoemaker and Mr. H. Ronald Stone currently serve on
the Compensation Committee. Mr. Stone served as the Company's Chief Executive
Officer until December 3, 1997. Upon consummation of the Offering, Mr. Mullett,
Mr. Rosenthal, Mr. Savastano and Mr. H. Ronald Stone will serve as members of
the Compensation Committee. The Audit Committee's principal functions include
making recommendations to the Board regarding the annual selection of
independent public accountants, reviewing the proposed scope of each annual
audit and reviewing the recommendations of the independent public accountants as
a result of their audits of the Company's financial statements. Upon
consummation of the Offering, Mr. Pairitz, Mr. Rosenthal, Mr. Savastano and Mr.
MacDonald will serve as members of the Audit Committee. The Board of Directors
may from time to time establish other committees to facilitate the management of
the Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

None of the directors serving on the Compensation Committee is an employee
of the Company, and neither the Chief Executive Officer nor any other executive
officer will serve on the Compensation Committee. No director or executive
officer of the Company is a director or executive officer of any other
corporation that has a director or executive officer who is also a director of
the Company.

EXECUTIVE COMPENSATION

Summary Compensation. The following table sets forth information with
respect to the annual and long-term compensation earned in 1997 by the principal
executive officers of the Company.

LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL NUMBER OF ALL OTHER
COMPENSATION SHARES COMPENSATION
---------------- UNDERLYING ------------
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS ($)
- --------------------------- -------- ----- ------------ ------------

William W. Wilkinson
Chairman of the Board and Chief Executive
Officer (1).................................... $ 17,308 -- -- --
H. Ronald Stone
Former Chief Executive Officer (2)............. 348,118 -- -- --
Jerry F. Stone
President, Mega Force Staffing Companies, Inc.
(3)............................................ 249,460 -- -- --
T. Wayne McCreight
President, The Hamilton-Ryker Company, Inc.
(4)............................................ 121,154 -- -- --
William J. Wilkinson
President, Corporate Staffing Resources of
Indiana, Inc. (1).............................. 17,308 -- -- --

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Thomas E. Murphy
Executive Vice President and Chief Financial
Officer (1).................................... 14,423 -- -- --
D. Crawford Gallimore
Chief Administrative Officer (4)............... 121,154 -- -- --

- ---------------
(1) Represents salary from December 3, 1997 to December 31, 1997, subsequent to
the acquisition of CSR, Inc. by the Company. The annual base salary of
William W. Wilkinson is $200,000 and that of William J. Wilkinson and Thomas
E. Murphy is $150,000.

(2) Represents salary during H. Ronald Stone's service as Chief Executive
Officer of the Company and its predecessors from January 1, 1997 to December
2, 1997. The Company has entered into a Consulting Services Agreement with
H. Ronald Stone pursuant to which the Company will pay Mr. Stone fees of
$200,000 in calendar 1998. See "Certain Relationships and Related
Transactions."

(3) Jerry F. Stone has entered into an employment agreement with the Company
setting his base salary at $150,000.

(4) Represents salary from March 12, 1997 to December 31, 1997, subsequent to
the acquisition of Hamilton-Ryker by the Company. The annual base salary of
T. Wayne McCreight and D. Crawford Gallimore is $150,000.

Option Grants. The Company granted an option to purchase 30,000 shares of
common stock to Mr. Murphy at a price of $8.00 per share on January 29, 1998.
The Company has not granted options to any other officers or directors.

EMPLOYMENT AGREEMENTS WITH SENIOR MANAGEMENT

William W. Wilkinson, Jerry F. Stone, T. Wayne McCreight, William J.
Wilkinson, Thomas E. Murphy, D. Crawford Gallimore. The Company has entered into
employment agreements (the "Senior Executive Agreements") with Messrs. William
W. Wilkinson (Chief Executive Officer), Stone (President of Mega Force Staffing
Services, Inc.), McCreight (President of The Hamilton-Ryker Company, Inc.),
William J. Wilkinson (President of Corporate Staffing Resources of Indiana,
Inc.), Murphy (Chief Financial Officer) and Gallimore (Chief Administrative
Officer), (each, individually a "Senior Executive," and collectively, the
"Senior Executives"), that are based on the same form of agreement and that
contain substantially similar terms. The Senior Executive Agreement of Mr.
Murphy expires on December 31, 2000, and each of the other Senior Executive
Agreements expires on December 31, 2002, unless earlier terminated in accordance
with the provisions set forth therein. The respective Senior Executive
Agreements provide that: (i) William W. Wilkinson shall receive an annual base
salary of $200,000 and each other Senior Executive shall receive an annual base
salary of $150,000; and (ii) each Senior Executive Officer shall participate in
the Company's Incentive Compensation Plan for Senior Officers, pursuant to which
such Senior Executive is eligible to receive a performance-based annual
incentive bonus in an amount ranging from 0% to 100% of his base salary.

The Company's Incentive Compensation Plan for Senior Officers provides (i)
that 50% of the incentive compensation of Mr. Stone, Mr. McCreight and William
J. Wilkinson is based on the financial performance of the subsidiary (Mega Force
Staffing Services, Inc., The Hamilton-Ryker Company, Inc. and Corporate Staffing
Resources of Indiana, Inc., respectively) measured against the budget for such
performance, 25% on the Company's financial performance measured against the
budget, and 25% on achievement of individual objectives established by Mr.
Stone, Mr. McCreight and William J. Wilkinson respectively, together with the
CEO of the Company and (ii) that 60% of William W. Wilkinson's, Mr. Murphy's and
Mr. Gallimore's incentive compensation is based on the Company's financial
performance measured against the budget for

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such performance, and 40% is based on achievement of individual objectives
established by the CEO of the Company or by the Board.

Each of the Senior Executive Agreements provides that the amount of the
respective Senior Executive's base salary may be increased during his period of
employment with the Company at the sole discretion of the Board. In addition,
each of the Senior Executive Agreements provides for certain specified benefits,
for reimbursement of reasonable and necessary business expenses and for use of a
company car for business purposes.

The Company may terminate any Senior Executive's employment at any time for
cause (as described in the Senior Executive Agreements), upon death of the
Senior Executive, or if such Senior Executive becomes disabled for 120 days or
more, with no further compensation due. The Senior Executive Agreements further
provide that if the Company terminates the employment of the respective Senior
Executive for reason other than cause, death or disability, the Company shall:
(i) continue to pay the Senior Executive's base salary and continue to provide
him with health benefits for two years after such termination; and (ii) pay the
Senior Executive any portion of his incentive compensation earned through the
date of such termination. The Senior Executive Agreements also provide that each
respective Senior Executive may resign his position and terminate his employment
by giving the Company a 30 day notice of resignation with no further
compensation due after the date of termination.

Each of the Senior Executive Agreements contains certain non-compete and
confidentiality provisions that extend for a period of two years after the
respective Senior Executive's termination of employment with the Company or its
affiliates, which period is automatically extended for another two years if the
confidentiality clause or the non-compete clause is violated by the Senior
Executive.

EMPLOYEE BENEFIT PLANS

Non-Qualified Option Plan. Effective January 29, 1998 the Company adopted
the Corporate Staffing Resources, Inc. Non-Qualified Stock Option Plan (the
"Option Plan") for key employees of the Company and its subsidiaries or its
parent ("Key Employees"). The Option Plan is intended to advance the best
interests of the Company by allowing the Key Employees to acquire an ownership
interest in the Company, thereby motivating Key Employees to contribute to the
success of the Company and to remain in the employ of the Company and its
subsidiaries through grants (the "Grants") of non-qualified stock options (the
"Options") to purchase shares of the Company's Common Stock.

Under the Option Plan, not more than 1,500,000 shares of Common Stock are
authorized for issuance upon exercise of the Options (subject to adjustment in
the event of certain changes in the capitalization of the Company). The Options
are not "incentive stock options" within the meaning of Section 422 of the Code.
As of January 29, 1998, Options to purchase 95,000 shares of Common Stock were
outstanding under the Option Plan and concurrent with the consummation of the
Offering, options for an additional 500,000 shares will be granted.

The Board administers the Option Plan upon consultation with the Chairman
and CEO of the Company. Subject to the terms of the Option Plan, the Board will
have the authority to determine which employees are Key Employees, to select the
Key Employees, if any, to whom Grants are to be made, to determine the number of
shares to be subject thereto and the terms and conditions thereof, and to make
all other determinations and to take all other actions necessary or advisable
for the administration of the Option Plan. The Board is also authorized to
adopt, amend and rescind rules relating to the administration of the Option Plan
and to delegate its duty thereunder to a committee or other persons as the Board
deems appropriate.

The terms and conditions of each Option granted under the Option Plan will
be set forth in a separate agreement between the Company and the option holder
("Option Agreement"), consistent with the terms of the Option Plan. The Board,
in its sole discretion, shall determine the per share exercise price of shares
of Common Stock subject to an Option, and each Option shall become exercisable
at such times and in such installments as the Board shall provide in each Option
Agreement. No Option may be exercised after the expiration of ten years from the
date such Option was granted.

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44

In the event of a merger or consolidation of the Company with or into
another corporation, the acquisition by another corporation of all or
substantially all of the Company's assets or 80% or more of the Company's then
outstanding voting stock, the liquidation or dissolution of the Company, or
certain initial public offerings of the Company's Common Stock, the Board, at
its sole discretion, may determine that any Option shall be exercisable as to
all shares covered thereby. The Board does not currently intend to accelerate
the exercise of any Options in connection with the Offering.

Under current federal income tax laws, in general, recipients of the Grants
are taxable under Section 83 of the Code upon their receipt of Common Stock or
cash with respect to such Grants and, subject to Section 162(m) of the Code, the
Company will be entitled to an income tax deduction with respect to the amounts
taxable to such recipients.

401(k) Savings Plans. As a result of its recent acquisitions, the Company
currently maintains several 401(k) Profit Sharing Plans, defined contribution
pension plans with a cash or deferred arrangement as described in section 401(k)
of the Code (each, a "401(k) Plan"). The 401(k) Plans are intended to qualify
under section 401(a) of the Code, so that contributions, and income earned
thereon, are not taxable to employees until withdrawn. In general, regular
full-time Company employees over the age of 18 are eligible to participate under
one of the 401(k) Plans, depending on the operating subsidiary at which the
employee is employed. The 401(k) Plans provides that each participant may make
elective pre-tax salary deferrals up to 15% of his or her annual compensation,
subject to statutory limits. The Trustees of the 401(k) Plans invest each
employee's account at the direction of the employee, who may choose among
several investment alternatives, which do not include shares of the Company's
Common Stock. The Company is currently in the process of consolidating its
401(k) plans.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

STOCKHOLDERS AGREEMENT

The Company, IPP 97 Private Equity, LLC (an affiliate of Simon), Mellon and
the other stockholders of the Company are parties to a Stockholders Agreement.
Pursuant to the Stockholders Agreement, Simon designated Mr. MacDonald and Mr.
Mullett as Directors, Mellon designated Mr. Geer and Mr. Shoemaker as Directors,
the Mega Force Stockholders designated Mr. H. Ronald Stone, Mr. Jerry F. Stone,
Mr. Gallimore and Mr. McCreight as Directors, and Mr. William W. Wilkinson
designated himself and Mr. William J. Wilkinson designated himself as Directors.
Mr. Jerry F. Stone, Mr. Gallimore, Mr. Geer and Mr. MacDonald have informed the
Company that they intend to resign as Directors effective upon consummation of
the Offering. Pursuant to the Stockholders Agreement, Mr. Pairitz, Mr. Rosenthal
and Mr. Savastano will become Directors upon consummation of the Offering. The
Stockholders Agreement terminates upon the consummation of the Offering.

REGISTRATION RIGHTS AGREEMENT

For a description of the Registration Rights Agreement among the Company,
Simon, Mellon, H. Ronald Stone and certain other stockholders of the Company,
see "Shares Eligible for Future Sale."

TRANSACTIONS WITH PRINCIPAL STOCKHOLDERS PRIOR TO THE FORMATION OF THE COMPANY

H. Ronald Stone ("Ronald Stone") and Jerry F. Stone ("Jerry Stone") are
Directors of the Company, and each owns in excess of 5% of the Company's
outstanding Common Stock. During 1996, Mega Force Staffing Services, Inc.
("MFSS") made cash distributions of $3,860,000 and $772,000 to Ronald Stone and
Jerry Stone, respectively. Of these amounts, $1,256,000 and $251,000,
respectively, were reinvested as additional paid in capital. In addition, Ronald
Stone and Jerry Stone loaned MFSS $1,667,000 and $333,000, respectively, which
was reflected as notes payable to shareholders. These notes were repaid in full
in 1997.

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THE HAMILTON-RYKER COMPANY, LLC TRANSACTIONS

D. Crawford Gallimore ("Gallimore") is the Chief Administrative Officer of
the Company, a director of the Company and the holder, directly or indirectly,
of in excess of 5% of the Company's outstanding Common Stock. T. Wayne McCreight
is the President of The Hamilton-Ryker Company, Inc., a director of the Company
and the holder, directly or indirectly, of in excess of 5% of the Company's
outstanding Common Stock. In connection with the formation of The Hamilton-Ryker
Company, LLC ("HRC-LLC"), on January 1, 1996, the equity of Hamryk Services,
Inc., a predecessor company, was recapitalized into $1,373,169 notes (the
"HRC-LLC Notes") payable to each of McCreight and Gallimore. During 1997,
$811,252 was repaid on each of McCreight's and Gallimore's notes.

In 1997, a note payable of $450,000 by HRC-LLC to a third party was assumed
equally by McCreight and Gallimore. A total of $150,000 of such note was repaid
to McCreight and Gallimore during 1997, and the balance is recorded as notes
payable to shareholders on the books of the Company, bearing interest at a rate
of 8%. In addition, in 1997, McCreight and Gallimore each received a cash
distribution of $625,000 from HRC-LLC.

THE ACQUISITION OF THE HAMILTON-RYKER COMPANY, LLC BY THE COMPANY

On March 12, 1997, MFSS and HRC-LLC effected a business combination. In
order to effect the combination, the Company was formed as a holding company;
HRC-LLC was merged into the Company; the HRC-LLC business was contributed by the
Company to The Hamilton-Ryker Company, Inc., a newly formed North Carolina
Corporation ("HRC-Inc."), as a capital contribution; and Jerry Stone and Ronald
Stone contributed the capital stock of MFSS to the Company as a capital
contribution. The business combination resulted in HRC-Inc. and MFSS becoming
wholly-owned subsidiaries of the Company. In the transaction, McCreight and
Gallimore received cash of $3,502,000, notes payable for $1,000,000 (the "MFSS
Notes"), 398,376 shares of common stock (currently represented by 796,752 shares
of common stock, following a subsequent 2 for 1 stock split) and 398,374 shares
of non-voting common stock (currently represented by 318,221 shares of common
stock following the December 3, 1997 transaction with CSR, Inc. and a subsequent
2 for 1 stock split), representing approximately 20% of the common equity of the
Company, and Ronald Stone and Jerry Stone received 1,414,232 shares of the
Company's common stock (currently represented by 2,828,464 shares of common
stock following a subsequent 2 for 1 stock split) and 1,414,230 shares of
non-voting common stock (currently represented by 1,129,689 shares of common
stock following the December 3, 1997 transaction with CSR, Inc. and a subsequent
2 for 1 stock split), representing approximately 69% of the common equity of the
Company as of the date of the merger. Ronald Stone and Jerry Stone also received
springing warrants to purchase 99,594 shares of Common Stock at $.01 per share,
exercisable in the event that amounts outstanding under the Company's loan
agreement were paid in full and amounts thereunder had not exceeded $20 million.

The MFSS Notes in the amount of $500,000 to each of Gallimore and
McCreight, are unsecured, and the principal amounts bear interest at a rate of
8% based on a 360-day year and the actual number of days the principal is
outstanding during each interest period. Upon consummation of the Offering, the
MFSS Notes will be accelerated and paid in full.

In connection with the transaction, MFSS also issued notes in the amount of
$561,916 to each of Gallimore and McCreight. The notes, which are due April 12,
2002, are amendments and replacements of the HRC-LLC Notes. The notes are
unsecured, and the principal amounts bear interest at a rate of 8% based on a
360-day year and the actual number of days the principal is outstanding during
each interest period. Upon consummation of the Offering, these notes will be
accelerated and paid in full.

THE CSR, INC. TRANSACTIONS

William W. Wilkinson is the Company's Chairman of the Board and Chief
Executive Officer. William J. Wilkinson is a Director of the Company and
President of the Company's subsidiary, CSR, Inc. On May 14, 1997, CSR, Inc., and
its wholly-owned subsidiary, CSR Acquisition Corp., an Indiana corporation
("CSRA"), acquired all of the issued and outstanding stock of Corporate Staffing
Resources, Inc., an Indiana

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corporation ("CSR-Ind"). As part of the acquisition, William W. Wilkinson and
William J. Wilkinson, contributed all of the membership interests of Corporate
Staffing Resources, LLC, an Indiana limited liability company ("CSR-LLC"), owned
by them and shares of capital stock of CSR-Ind with a combined aggregate value
of $2,200,000 to CSR, Inc. in exchange for 22,000 shares of 14% Series A
Cumulative Redeemable Preferred Stock of CSR, Inc. ("CSR, Inc. Preferred Stock")
and 22,000 shares of common stock of CSR, Inc. ("CSR, Inc. Common Stock").
Concurrent with such contribution, William E. Simon & Sons, LLC, through certain
affiliates, contributed $8,320,000 in cash to CSR, Inc. and as a result of such
contribution, received 83,200 shares of CSR, Inc. Preferred Stock and 83,200
shares of CSR, Inc. Common Stock. Each of William W. Wilkinson and William J.
Wilkinson also received $8,808,500 in cash. The acquisition agreement also
provided for a contingent payment of CSR, Inc. equity be paid to the Wilkinsons
if CSR-Ind received certain insurance payments by specified dates (which
obligation was satisfied in December 1997 by a cash payment to the Wilkinsons of
$200,000 and issuance of 1,380 shares of CSR, Inc. Common Stock and 1,380 shares
of CSR, Inc. Preferred Stock). Pursuant to the acquisition, CSR, Inc. also
agreed to award to William W. Wilkinson up to 11,688 shares of restricted CSR,
Inc. Common Stock and to William J. Wilkinson up to 11,687 shares of restricted
CSR, Inc. Common Stock, which restricted CSR, Inc. Common Stock, in each case,
was subject to certain time vesting requirements. Concurrently with the
acquisition, Simon and CSR-LLC entered into an executive management agreement
(the "May Management Agreement") pursuant to which, in consideration of certain
services being provided by Simon thereunder, CSR-LLC would pay Simon an annual
fee (the "Management Fee") equal to $250,000. Immediately after giving effect to
the acquisition of CSR-Ind, CSRA merged with and into CSR-Ind, with CSR-Ind
being the surviving corporation and becoming a wholly-owned subsidiary of CSR,
Inc.

On June 6, 1997, Mellon Ventures, L.P. ("Mellon") acquired 30,000 shares of
CSR, Inc. Preferred Stock and 30,000 shares of CSR, Inc. Common Stock from CSR,
Inc. for an aggregate purchase price of $3,000,000 and Simon acquired 9,075
shares of CSR, Inc. Common Stock for an aggregate purchase price of $9,075.
Concurrent with such purchase, Mellon purchased 26,600 shares of CSR, Inc.
Preferred Stock and 26,600 shares of CSR, Inc. Common Stock from Simon for an
aggregate purchase price of $2,670,476. On June 6, 1997, the May Management
Agreement was amended and restated to provide that an annual Management Fee of
$250,000 be paid to Simon and $125,000 to Mellon.

THE ACQUISITION OF CSR, INC. BY THE COMPANY

Effective December 3, 1997, CSR, Inc., merged with and into the Company
(the "Acquisition"), and the separate existence of CSR, Inc. ceased. In
addition, the name of the Company was changed to Corporate Staffing Resources,
Inc. As part of the Acquisition, (i) each share of the Company's non-voting
common stock issued and outstanding immediately prior to the Acquisition was
converted into 0.3994 fully paid and nonassessable shares of Common Stock; (ii)
each share of CSR, Inc. common stock issued and outstanding immediately prior to
the Acquisition was converted into 5.9871 fully paid and nonassessable shares of
Common Stock; (iii) each share of CSR, Inc. Preferred Stock issued and
outstanding immediately prior to the Acquisition was converted into 7.8975 fully
paid and nonassessable shares of Common Stock; and (iv) the 258,944 warrants
which were, at the time of the Acquisition, each exercisable into one share of
either Common Stock or non-voting common stock, were automatically converted
into 258,944 warrants, each exercisable into .699718858 shares of Common Stock
at an exercise price of $.01 per warrant, and such warrants were exercised
immediately upon the effective date of the Acquisition. No fractional shares of
Common Stock were issued as part of the Acquisition. In lieu thereof, each
shareholder otherwise entitled to fractional shares received cash equal to the
product of the fraction of a share to which the shareholder was otherwise
entitled multiplied by $10. Immediately following the consummation of the
Acquisition, the stockholders of CSR, Inc. prior to the Acquisition including
William W. Wilkinson, William J. Wilkinson, Mellon and Simon, owned, in the
aggregate, 45.72% of the outstanding capital stock of the Company, and the
stockholders of the Company prior to the Acquisition, including McCreight,
Gallimore, Ronald Stone and Jerry Stone, owned in the aggregate, 54.28% of
outstanding capital stock of the Company. All of the Company's non-voting common
stock was cancelled and retired pursuant to the terms of the Acquisition.

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In connection with the Acquisition, the Company purchased 193,132 shares
and 128,756 shares of Common Stock of the Company from Ronald Stone and Jerry
Stone for $1,620,000 and $1,080,000, respectively. These shares were retired by
the Company during 1997. For book purposes, the Company allocated $965,660 and
$643,780, or $5.00 per share, as the purchase price paid to Ronald Stone and
Jerry Stone, respectively, and $654,340 and $436,220 as distributions paid to
Ronald Stone and Jerry Stone, respectively. The Company's other shareholders
approved the transaction.

Also in connection with the Acquisition, Ronald Stone issued a note in the
amount of $402,000 to MFSS, and Jerry Stone issued a note in the amount of
$158,100 to MFSS. The notes are in substitution and replacement of accounts
receivable on the books and records of the Company, which sums were advanced to
Ronald Stone and Jerry Stone in 1996. The notes bears interest at the December
1997 minimum midterm applicable federal rate, as defined in Section 1274(d) of
the Internal Revenue Code, compounded semiannually and are payable semiannually.
The notes are due and payable on December 31, 2000. The Company has the right to
declare the remainder of the indebtedness evidenced by the notes due and payable
upon the effectiveness of the Offering. The Company does not intend to exercise
this option.

In connection with the Acquisition, the Company entered into an Executive
Management Agreement as of December 3, 1997, with Simon and Mellon. This
agreement replaced the May Management Agreement, as amended. Pursuant to the
Executive Management Agreement, Simon and Mellon provide executive management
services, including consultation, advice and direct management assistance with
respect to operations, strategic planning, financing and other aspects of the
business of the Company. In consideration for the services provided, the Company
pays $250,000 per year to Simon and $125,000 per year to Mellon and reimburses
reasonable expenses incurred in the provision of such services. The Executive
Management Agreement will terminate upon consummation of the Offering, provided
that the Company shall pay Simon and Mellon the unpaid portion of the annual
fees payable in 1998.

The Company also entered into a Consulting Services Agreement as of
December 3, 1997 with Ronald Stone. Pursuant to the Consulting Services
Agreement, Stone provides the Company professional advisory and consulting
services by facilitating potential strategic acquisitions, promoting the
Company's business in the southeast portion of the United States, especially in
the Florida market, and serving as a goodwill ambassador for the Company as
reasonably requested by the Company's Board of Directors. In consideration for
the services provided by Stone, the Company has agreed to pay Stone fees of
$200,000 in calendar 1998, provide health insurance to Stone and his dependents
and reimburse Stone for his reasonable expenses. The Consulting Services
Agreement will terminate on the earlier of the consummation of this Offering or
December 31, 2000.

OTHER RELATED PARTY TRANSACTIONS

The Company leases office space for certain of its branches from Stone
Development Corporation, an entity owned by Ronald Stone and Jerry Stone, and
Lumberton Professional Plaza, an entity in which Ronald Stone and Jerry Stone
are shareholders. The leases commenced December 1, 1996 and will terminate on
November 30, 2001. The aggregate annual lease payments are $251,301. The Company
believes that the lease terms are at least as favorable as could be obtained
from an unrelated third party.

The Company also leases office space for certain of its branches from the
HR Company Partnership, a general partnership in which Gallimore and McCreight
are partners. The leases terminate on various dates through May 2003. The
aggregate annual lease payments and associated expenses are approximately
$53,880. The Company believes that the lease terms are at least as favorable as
could be obtained from an unrelated third party.

David A. Pairitz, who will become a Director of the Company effective upon
consummation of the Offering, is a partner in the Elkhart, Indiana office of
Crowe, Chizek and Company, LLP. Crowe, Chizek and Company, LLP served as the
independent auditor of the Company's subsidiary, CSR, Inc. until its acquisition
by the Company on December 3, 1997 and received fees in connection with
providing professional services to CSR, Inc.

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48

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information as of September 15, 1998 with
respect to the beneficial ownership of the Common Stock (including shares
issuable upon the exercise of outstanding options that are exercisable as of
that date or within 60 days thereafter) by: (i) each person who owns
beneficially more than 5% of the Common Stock; (ii) each of the principal
executives and directors of the Company; and (iii) the Company's directors and
executive officers as a group. Unless otherwise indicated, each named person
exercises sole voting and investment power with respect to such shares.

SHARES SHARES SHARES
BENEFICIALLY OWNED SOLD IN BENEFICIALLY OWNED
PRIOR TO OFFERING OFFERING AFTER OFFERING
-------------------- --------- --------------------
NAME OF BENEFICIAL OWNER (1) NUMBER PERCENT NUMBER NUMBER PERCENT
- ---------------------------- --------- ------- --------- --------- -------

H. Ronald Stone (2).................... 2,423,586 25.1%
Jerry F. Stone (3)..................... 1,075,074 11.1
Wayne McCreight (4).................... 557,700 5.8
Crawford Gallimore (5)................. 557,700 5.8
William W. Wilkinson (6)............... 464,570 4.8
William J. Wilkinson................... 464,568 4.8
Thomas E. Murphy....................... 27,540 .3
John Geer (7).......................... 1,571,734 16.2
Robert W. MacDonald (8)(9)............. 1,680,436 17.4
Conor T. Mullett (8)(9)................ 1,680,436 17.4
David A. Pairitz....................... -- --
Richard A. Rosenthal................... -- --
Theodore F. Savastano.................. -- --
John P. Shoemaker (7).................. 1,571,734 16.2
W.E. Simon & Sons, L.L.C. (9).......... 1,680,436 17.4
Mellon Ventures, L.P. ................. 1,571,734 16.2
All directors and executive officers as
a group (11 persons)................. 8,822,908 91.3%

- ---------------

(1) The address of each stockholder listed in the table is c/o Corporate
Staffing Resources, Inc., One Michiana Square, 100 East Wayne Street, Suite
100, South Bend, Indiana 46601.

(2) Includes 2,304,840 shares registered in the name of H. Ronald Stone, 39,582
in the name of the Carmen Nicole Stone Trust, 39,582 in the name of the
Sarah Katherine Stone Trust and 39,582 shares in the name of the Ginger S.
McDonald Trust. H. Ronald Stone serves as a trustee of each of the trusts
and has sole voting and sole dispositive power over these shares.

(3) Includes 995,910 shares registered in the name of Jerry F. Stone, 39,582 in
the name of the Heath Sheperd Stone Trust and 39,852 shares in the name of
the Sarah Ashley Stone Trust. Jerry F. Stone serves as a trustee of each of
the trusts and has sole voting and sole dispositive power over these shares.

(4) The shares attributable to T. Wayne McCreight are held by the T. Wayne
McCreight Family Limited Partnership. T. Wayne McCreight serves as general
partner of the partnership and has sole voting and sole dispositive power
over these shares.

(5) The shares attributable to D. Crawford Gallimore are held by the D. Crawford
Gallimore Family Limited Partnership. D. Crawford Gallimore serves as
general partner of the partnership and has sole voting and sole dispositive
power over these shares.

(6) Includes 100,000 shares held by W.W. Wilkinson Family L.P., of which William
W. Wilkinson is a general partner.

(7) Represents shares over which Mr. Geer and Mr. Shoemaker have voting and
dispositive power in connection with their employment by Mellon Ventures,
L.P. Mr. Geer and Mr. Shoemaker have disclaimed any economic or beneficial
ownership interest in the above shares.

(8) Represents shares over which Mr. MacDonald and Mr. Mullett have voting and
dispositive power in connection with their employment by W.E. Simon & Sons,
L.L.C. Mr. MacDonald and Mr. Mullett have disclaimed any economic interest
or beneficial ownership in the above shares.

(9) Includes 1,571,734 shares registered in the name of Temporary Simon L.L.C.
and 108,702 shares registered in the name of IPP 97 Private Equity.

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49

DESCRIPTION OF CAPITAL STOCK

At the time the Offering is consummated, the Company's Charter will
authorize the Company to issue up to: (i) 50,000,000 shares of Common Stock,
$0.01 par value per share; and (ii) 5,000,000 shares of Preferred Stock, $0.01
par value per share. As of the date of this Prospectus, there were 9,678,114
shares of Common Stock outstanding, held of record by 25 persons. In addition,
on January 29, 1998, the Company granted options to acquire up to an additional
95,000 shares of Common Stock, and concurrent with the consummation of this
offering, options for an additional 500,000 shares will be granted.

COMMON STOCK

Holders of the Common Stock are entitled to one vote per share on all
matters submitted to the stockholders for a vote. There are no cumulative voting
rights in the election of directors. The shares of Common Stock are entitled to
receive such dividends as may be declared and paid by the Board of Directors out
of funds legally available therefor and to share, ratably, in the net assets, if
any, of the Company upon liquidation. The stockholders have no preemptive rights
to purchase any shares of the Company's capital stock. All outstanding shares of
Common Stock are, and the shares of Common Stock offered hereby will be, when
issued and paid for, duly authorized, validly issued, fully paid and
nonassessable.

PREFERRED STOCK

From the time the Offering is consummated, the Board of Directors, without
further action by the holders of the Common Stock, will be authorized to
classify any shares of its authorized but unissued Preferred Stock as preferred
stock in one or more series, from time to time. With respect to each series, the
Board of Directors shall determine the number of shares which shall constitute
such series; the rate of dividend, if any, payable on shares of such series;
whether the shares of such series shall be cumulative, non-cumulative or
partially cumulative as to dividends, and the dates from which any cumulative
dividends are to accumulate; whether the shares of such series may be redeemed,
and, if so, the price or prices at which and the terms and conditions on which
shares of such series may be redeemed; the amount payable upon shares of such
series in the event of the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company; the sinking fund provisions, if any,
for the redemption of shares of such series; the voting rights, if any, of the
shares of such series; the terms and conditions, if any, on which shares of such
series may be converted into shares of capital stock of the Company of any other
class or series; whether the shares of such series are to be preferred over
shares of capital stock of the Company of any other class or series as to
dividends, or upon the voluntary or involuntary dissolution, liquidation, or
winding up of the affairs of the Company, or otherwise; and any other
characteristics, preferences, limitations, rights, privileges, immunities or
terms not inconsistent with the provisions of the Charter.

The availability of preferred stock, while providing desirable flexibility
in connection with possible acquisitions and other corporate purposes, could
have the effect of discouraging takeover proposals, and the issuance of
preferred stock could have the effect of delaying or preventing a change in
control of the Company not approved by the Board of Directors.

ANTI-TAKEOVER PROVISIONS OF CHARTER AND BYLAWS

Upon the consummation of the Offering, the Company's Charter will provide
for a Board of Directors of three classes, with the initial classes having one,
two and three year terms, respectively, and thereafter staggered three year
terms. Under the Bylaws, the number of directors will be fixed at nine. The
Company's Charter will also prohibit actions by the Company's stockholders by
written consent.

Following the consummation of the Offering, the foregoing provisions of the
Charter may be amended or repealed by the stockholders only upon the affirmative
vote of at least 75% of the shares of capital stock entitled to vote thereon,
could have the effect of discouraging takeover proposals and delaying or
preventing a change in control of the Company not approved by the Board of
Directors.

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50

STATUTORY BUSINESS COMBINATIONS PROVISION

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"). Section 203 provides, with certain
exceptions, that a Delaware corporation may not engage in any of a broad range
of business combinations with a person or an affiliate, or associate of such
person, who is an "interested stockholder" for a period of three years from the
date that such person becomes an interested stockholder unless: (i) the
transaction resulting in a person becoming an interested stockholder, or the
business combination, is approved by the Board of Directors of the corporation
before the person becomes an interested stockholder; (ii) the interested
stockholder acquired 85% or more of the outstanding voting stock of the
corporation in the same transaction that makes such person an interested
stockholder (excluding shares owned by persons who are both officers and
directors of the corporation, and shares held by certain employee stock
ownership plans); or (iii) on or after the date the person becomes an interested
stockholder, the business combination is approved at an annual or special
meeting by the corporation's board of directors and by the holders of at least
66 2/3% of the corporation's outstanding voting stock, excluding shares owned by
the interested stockholder. Under Section 203, an "interested stockholder" is
defined as any person who is: (i) the owner of 15% or more of the outstanding
voting stock of the corporation; or (ii) an affiliate or associate of the
corporation and who was the owner of 15% or more of the outstanding voting stock
of the corporation at any time within the three-year period immediately prior to
the date on which it is sought to be determined whether such person is an
interested stockholder.

A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws, through
action of its stockholders, to exempt itself from coverage, provided that such
bylaw or certificate of incorporation amendment shall not become effective until
12 months after the date it is adopted. The Company has not adopted such an
amendment to its Certificate of Incorporation or Bylaws.

LIMITATION ON DIRECTORS' LIABILITIES

Pursuant to the Company's Certificate of Incorporation and under Delaware
law, directors and executive officers of the Company are not liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty,
except liability in connection with a breach of duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, dividend payments or stock repurchases illegal under Delaware
law or any transaction in which a director has derived an improper personal
benefit.

As permitted by Delaware law, the Company will enter into an
indemnification agreement with its directors, pursuant to which the Company will
agree to pay certain expenses, including attorney's fees, judgments, fines and
amounts paid in settlement incurred by such directors in connection with certain
actions, suits or proceedings. These agreements will require directors to repay
the amount of any expenses advanced if it shall be determined that the directors
shall not have been entitled to indemnification. Further, the Company maintains
liability insurance for the benefit of its directors and officers.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is Harris Trust and
Savings Bank, Chicago, Illinois.

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51

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have outstanding
14,428,114 shares of Common Stock. Sales of a substantial number of shares of
Common Stock in the public market following this offering could adversely affect
the market price for the Company's Common Stock. The 5,500,000 shares of Common
Stock sold in this Offering will be freely tradable without restriction or
limitation under the Securities Act, except for shares purchased by "affiliates"
(as defined under the Securities Act), which will be subject to the resale
limitations of Rule 144 promulgated under the Securities Act. All of the
remaining shares of Common Stock outstanding are "restricted securities" as that
term is defined by Rule 144. Of these shares, 5,253,112 will be eligible for
sale in the public market immediately following the date of this Offering
pursuant to Rule 144. In addition, the Company intends, as soon as practicable
after the completion of this Offering, to register approximately 1,500,000
shares of Common Stock reserved for issuance to its employees, directors,
consultants and advisors under the Company's Plan. Options to purchase an
aggregate of 595,000 shares of Common Stock will be outstanding under the Plan
upon the consummation of this Offering.

All directors, executive officers, principal stockholders and certain other
officers of the Company, who hold in the aggregate 8,822,908 shares of Common
Stock (excluding options), have each agreed not to sell or otherwise dispose of
any shares for a period of 180 days after the date of this Prospectus, without
the prior written consent of NationsBanc Montgomery Securities LLC. However,
NationsBanc Montgomery Securities LLC may, in its sole discretion and at any
time without notice, release for public sale all or any portion of these shares
subject to such lock-up agreements.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) is entitled to sell restricted shares if at least
one year has passed since the later of the time such shares were acquired from
the Company or any affiliate of the Company. Rule 144 provides, however, that
within any three-month period such person may only sell up to the greater of:
(i) 1% of the then outstanding shares of Common Stock (approximately 144,281
shares immediately following this offering); or (ii) the average weekly trading
volume in the Common Stock during the four calendar weeks immediately preceding
the date on which notice of the sale is filed with the Commission. Sales under
Rule 144 are also subject to certain manner-of-sale provisions and notice
requirements and to the availability of current public information about the
Company. All shares held by persons who are deemed to be affiliates of the
Company are subject to the volume limitations and other requirements of Rule 144
regardless of how long the shares have been owned or how they were acquired.
Restricted shares held by non-affiliates of the Company for more than two years
may be sold without limitation under Rule 144.

Prior to the offering, there has been no public market for the Common
Stock, and no prediction can be made as to the effect, if any, that future sales
of Common Stock or the availability of shares of Common Stock for future sale
will have on the market price of the Common Stock prevailing from time to time.
Sales of substantial amounts of Common Stock following this offering, or the
perception that such sales could occur, could adversely affect prevailing market
prices of the Common Stock and could impair the Company's ability to raise
capital through an offering of its equity securities.

The Company has entered into a Registration Rights Agreement with the
current holders of the Common Stock. Pursuant to the Registration Rights
Agreement, following this Offering, each of H. Ronald Stone, Mellon Ventures,
L.P. and William E. Simon and Sons L.L.C. has the right to make two demands upon
the Company to file a registration statement under the Securities Act covering
the registration of such holder's shares (a "Demand Registration"). The Company
is not obligated to effect more than three Demand Registrations within any
twelve month period and no holder may make more than one demand during any
twelve month period. In addition, the Company may defer the requested
registration for up to ninety days after the receipt of a demand for
registration. Other current holders of the Common Stock have the right to
participate in Demand Registrations and all holders of the Common Stock have the
right to participate in certain other registrations of the Common Stock by the
Company. The rights to request a Demand Registration shall expire thirty months
following the effectiveness of this Offering. Each current stockholder has
agreed not to sell or otherwise dispose of any shares for a period of 180 days
after the effectiveness of this Offering and for ninety days after any
registration effected subsequent to this Offering. The Registration Rights
Agreement terminates on the tenth anniversary of the closing of this Offering.

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52

UNDERWRITING

The underwriters named below (the "Underwriters"), represented by
NationsBanc Montgomery Securities LLC, BT Alex. Brown Incorporated and The
Robinson-Humphrey Company, LLC (the "Representatives"), have severally agreed,
subject to the terms and conditions in the underwriting agreement (the
"Underwriting Agreement") by and among the Company and the Underwriters, to
purchase from the Company the number of shares of Common Stock indicated below
opposite its name, at the initial public offering price less the underwriting
discount set forth on the cover page of this Prospectus. The Underwriting
Agreement provides that the obligations of the Underwriters are subject to
certain conditions precedent and that the Underwriters are committed to purchase
all of the shares of Common Stock, if they purchase any.

NUMBER OF
SHARES
----------

NationsBanc Montgomery Securities LLC.......................
BT Alex. Brown Incorporated.................................
The Robinson-Humphrey Company, LLC..........................
----------
Total.............................................
==========

The Representatives have advised the Company that the Underwriters propose
initially to offer the Common Stock to the public on the terms set forth on the
cover page of this Prospectus. The Underwriters may allow selected dealers a
concession of not more than $ per share; and the Underwriters may
allow, and such dealers may reallow, a concession of not more than $
per share to certain other dealers. After the initial public offering, the
public offering price and other selling terms may be changed by the
Representatives. The Common Stock is offered subject to receipt and acceptance
by the Underwriters, and to certain other conditions, including the right to
reject orders in whole or in part.

The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a maximum
of additional shares of Common Stock to cover over-allotments, if any,
at the same price per share as the initial shares to be purchased by the
Underwriters. To the extent that the Underwriters exercise such over-allotment
option, the Underwriters will be committed, subject to certain conditions, to
purchase such additional shares in approximately the same proportion as set
forth in the above table. The Underwriters may purchase such shares only to
cover over-allotments made in connection with the Offering.

The Underwriting Agreement provides that the Company, [its subsidiaries and
certain stockholders] will indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act, or will
contribute to payments the Underwriters may be required to make in respect
thereof.

The Company's officers and directors [and substantially all of the
stockholders of the Company prior to the Offering] have agreed that during the
Lock-up Period they will not, without the prior written consent of NationsBanc
Montgomery Securities LLC, directly or indirectly sell, offer, contract or grant
any option to sell, pledge, transfer, establish an open put equivalent position
or otherwise dispose of any shares of Common Stock, options or warrants to
acquire shares of Common Stock or securities exchangeable or exercisable for or
convertible into shares of Common Stock. The Company also has agreed not to
issue, offer, sell, grant options to purchase or otherwise dispose of any of the
Company's equity securities during the Lock-up Period without the prior written
consent of NationsBanc Montgomery Securities LLC, except for securities issued
by the Company in connection with acquisitions and for grants and exercises of
stock options, subject in each case to any remaining portion of the Lock-up
Period applying to shares issued or transferred. In evaluating any request for a
waiver of the Lock-up Period, NationsBanc Montgomery Securities LLC will
consider, in accordance with its customary practice, all relevant facts and
circumstances at the time of the request, including, without limitation, the
recent trading market for the Common Stock, the size of the request, and, with
respect to a request by the Company to issue additional equity securities, the
purpose of such an issuance. See "Shares Eligible for Future Sale."

50
53

In connection with the Offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M under the Securities Exchange Act of 1934 (the
"Exchange Act"), pursuant to which such persons may bid for or purchase Common
Stock for the purpose of stabilizing its market price. The Underwriters also may
create a short position for the account of the Underwriters by selling more
Common Stock in connection with the Offering than they are committed to purchase
from the Company and, in such case, may purchase Common Stock in the open market
following completion of the Offering to cover all or a portion of such short
position. The Underwriters may also cover all or a portion of such short
position, up to shares of Common Stock, by exercising the
Underwriters' over-allotment option referred to above. In addition, NationsBanc
Montgomery Securities LLC, on behalf of the Underwriters, may impose "penalty
bids" under contractual arrangements with the Underwriters whereby it may
reclaim from an Underwriter (or dealer participating in the Offering), for the
account of the other Underwriters, the selling concession with respect to Common
Stock that is distributed in the Offering but subsequently purchased for the
account of the Underwriters in the open market. Any of the transactions
described in this paragraph may result in the maintenance of the price of the
Common Stock at a level above that which might otherwise prevail in the open
market. None of the transactions described in this paragraph is required, and,
if they are undertaken, they may be discontinued at any time.

The Representatives have informed the Company that the Underwriters do not
expect to make sales of Common Stock offered by this Prospectus to accounts over
which they exercise discretionary authority in excess of 5% of the number of
shares of Common Stock offered hereby.

Prior to the Offering, there has been no public trading market for the
Common Stock. Consequently, the initial public offering price of the Common
Stock has been determined by negotiations between the Company and the
Representatives. Among the factors considered in such negotiations were the
results of operations of the Company in recent periods, the prospects for the
Company and the industry in which the Company competes, an assessment of the
Company's management, its financial condition, the prospects for future earnings
of the Company, the present state of the Company's development, the general
condition of the economy and the securities markets at the time of the Offering
and the market prices of and demand for publicly traded common stock of
comparable companies in recent periods.

LEGAL MATTERS

The legality of the issuance of the Common Stock offered hereby and certain
other matters will be passed upon for the Company by Latham & Watkins, Chicago,
Illinois. Certain legal matters will be passed upon for the Underwriters by
Winston & Strawn, Chicago, Illinois.

EXPERTS

The financial statements and schedule of Corporate Staffing Resources, Inc.
at December 31, 1996 and 1997 and for the years ended December 31, 1995, 1996
and 1997 and the financial statements of The Hamilton-Ryker Company, LLC at
December 31, 1995 and 1996 and for the years ended December 31, 1995 and 1996
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports appearing
elsewhere herein, and are included in reliance upon such reports given upon the
authority of said firm as experts in accounting and auditing.

The financial statements of CSR, Inc. and its Subsidiaries and Predecessor
at December 31, 1995, 1996, May 14, 1997 and December 3, 1997 and for the
periods ended December 31, 1995, 1996, May 14, 1997 and December 3, 1997
appearing in this Prospectus and Registration Statement have been audited by
Crowe, Chizek and Company LLP, independent auditors, as set forth in their
reports thereon, appearing elsewhere herein, and are included in reliance upon
such reports given upon the authority of said firm as experts in accounting and
auditing.

51
54

The financial statements of CMS Management Services Company at December 31,
1997 and for the year ended December 31, 1997 appearing in this Prospectus and
Registration Statement have been audited by McGladrey & Pullen, LLP, independent
auditors, as set forth in their report thereon, appearing elsewhere herein, and
are included in reliance upon such report given upon the authority of said firm
as experts in auditing and accounting.

The financial statements of Intranational Computer Consultants, Inc. at
December 31, 1997 and for the year ended December 31, 1997 appearing in this
Prospectus and Registration Statement have been audited by Moss-Adams LLP,
independent auditors, as set forth in their report thereon, appearing elsewhere
herein, and are included in reliance upon such report given upon the authority
of said firm as experts in auditing and accounting.

The financial statements of NPS of Atlanta, Inc. and Affiliate at October
31, 1997 and for the year ended October 31, 1997 appearing in this Prospectus
and Registration Statement have been audited by Brooks, Holmes, Williams & Cook
LLC, independent auditors, as set forth in their report thereon, appearing
elsewhere herein, and are included in reliance upon such report given upon the
authority of said firm as experts in auditing and accounting.

The financial statements of Programming Management & Systems, Inc. at
December 31, 1997 and for the year ended December 31, 1997 appearing in this
Prospectus and the Registration Statement have been audited by Stone Carlie &
Company, L.L.C., independent auditors, as set forth in their report thereon,
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement on Form S-1 under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to the shares of Common
Stock offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement and the exhibits and schedules thereto.
For further information with respect to the Company and the Common Stock offered
hereby, reference is made to the Registration Statement and the exhibits and
schedules filed therewith. Statements contained in this Prospectus as to the
contents of any contract or any other document referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. A copy of the
Registration Statement, and the exhibits and schedules thereto, may be inspected
without charge at the public reference facilities maintained by the Securities
and Exchange Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the Commission located at Seven World
Trade Center, New York, New York 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and copies of all or any part of
the Registration Statement may be obtained from the Commission upon payment of a
prescribed fee. This information is also available from the Commission's
Internet web site at http://www.sec.gov.

As a result of the Offering, the Company will be subject to the information
requirements of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"). So long as the Company is subject to the periodic reporting
requirements of the Exchange Act, it will continue to furnish the reports and
other information required thereby to the Securities and Exchange Commission.
The Company will furnish to its stockholders annual reports containing financial
statements audited by its independent auditors and will make available copies of
quarterly reports for the first three quarters of each fiscal year containing
unaudited financial information.

52
55

INDEX TO THE FINANCIAL STATEMENTS

CORPORATE STAFFING RESOURCES, INC.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
Unaudited Pro Forma Condensed Consolidated Balance Sheet
as of June 30, 1998 Introduction....................... F-4
Unaudited Pro Forma Condensed Consolidated Balance Sheet
as of June 30, 1998.................................... F-5
Notes to Unaudited Pro Forma Condensed Consolidated
Balance Sheet.......................................... F-6
Unaudited Pro Forma Condensed Consolidated Statements of
Income Introduction.................................... F-7
Unaudited Pro Forma Condensed Consolidated Statement of
Income for the six months ended June 30, 1998.......... F-8
Unaudited Pro Forma Condensed Consolidated Statement of
Income for the six months ended June 30, 1997.......... F-9
Unaudited Pro Forma Condensed Consolidated Statement of
Income for the year ended December 31, 1997............ F-10
Notes to Unaudited Pro Forma Consolidated Statements of
Income................................................. F-11

UNAUDITED HISTORICAL FINANCIAL STATEMENTS
Unaudited Condensed Consolidated Balance Sheet as of June
30, 1998............................................... F-15
Unaudited Condensed Consolidated Statements of Income for
the six months ended June 30, 1997 and June 30, 1998... F-16
Unaudited Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 1997 and June 30,
1998................................................... F-17
Notes to Unaudited Condensed Consolidated Financial
Statements............................................. F-18

AUDITED HISTORICAL FINANCIAL STATEMENTS (THE MEGA FORCE
GROUP AS THE PREDECESSOR TO CORPORATE STAFFING RESOURCES,
INC.)
Report of Independent Auditors............................ F-22
Balance Sheets as of December 31, 1996 and 1997........... F-23
Statements of Operations for the years ended December 31,
1995, 1996 and 1997.................................... F-24
Statements of Shareholders' Equity for the years ended
December 31, 1995, 1996 and 1997....................... F-25
Statements of Cash Flows for the years ended December 31,
1995, 1996 and 1997.................................... F-26
Notes to Financial Statements............................. F-27

CSR, INC. AND SUBSIDIARIES AND PREDECESSOR
Report of Independent Auditors............................ F-37
Consolidated Balance Sheets as of December 31, 1996, May
14, 1997 and December 3, 1997.......................... F-38
Consolidated Statements of Income for the periods ended
December 31, 1995, 1996, May 14, 1997 and December 3,
1997................................................... F-39
Consolidated Statements of Shareholders' Equity for the
periods ended December 31, 1995, 1996, May 14, 1997 and
December 3, 1997....................................... F-40
Consolidated Statements of Cash Flows for the periods
ended December 31, 1995, 1996, May 14, 1997 and
December 3, 1997....................................... F-41
Notes to Consolidated Financial Statements................ F-42

THE HAMILTON-RYKER COMPANY, LLC
Report of Independent Auditors............................ F-47
Balance Sheets as of December 31, 1995 and 1996........... F-48
Statements of Income for the years ended December 31, 1995
and 1996............................................... F-49
Statements of Shareholders' Equity/Members' Capital for
the years ended December 31, 1995 and 1996............. F-50
Statements of Cash Flows for the years ended December 31,
1995 and 1996.......................................... F-51
Notes to Financial Statements............................. F-52

F-1
56

CMS MANAGEMENT SERVICES COMPANY
UNAUDITED HISTORICAL FINANCIAL STATEMENTS
Unaudited Condensed Combined Balance Sheet as of March 31,
1998................................................... F-56
Unaudited Condensed Combined Statements of Income for the
three months ended March 31, 1997 and March 31, 1998... F-57
Unaudited Condensed Combined Statements of Cash Flows for
the three months ended March 31, 1997 and March 31,
1998................................................... F-58
Notes to Unaudited Condensed Combined Financial
Statements............................................. F-59

AUDITED FINANCIAL STATEMENTS
Report of Independent Auditors............................ F-60
Combined Balance Sheet as of December 31, 1997............ F-61
Combined Statement of Income for the year ended December
31, 1997............................................... F-62
Combined Statement of Retained Earnings and Members'
Equity for the year ended December 31, 1997............ F-63
Combined Statement of Cash Flows for the year ended
December 31, 1997...................................... F-64
Notes to Financial Statements............................. F-65

INTRANATIONAL COMPUTER CONSULTANTS, INC.
Independent Auditor's Report.............................. F-70
Balance Sheet as of December 31, 1997..................... F-71
Statement of Income and Retained Earnings for the year
ended December 31, 1997................................ F-72
Statement of Cash Flows for the year ended December 31,
1997................................................... F-73
Notes to Financial Statements............................. F-74

NPS OF ATLANTA, INC. AND AFFILIATE
UNAUDITED HISTORICAL FINANCIAL STATEMENTS
Unaudited Condensed Combined Balance Sheet as of January
31, 1998............................................... F-77
Unaudited Condensed Combined Statements of Operations for
the three months ended January 31, 1997 and January 31,
1998................................................... F-78
Unaudited Condensed Combined Statements of Cash Flows for
the three months ended January 31, 1997 and January 31,
1998................................................... F-79
Notes to Unaudited Condensed Combined Financial
Statements............................................. F-80
AUDITED FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants........ F-81
Combined Balance Sheet as of October 31, 1997............. F-82
Combined Statement of Operations for the year ended
October 31, 1997....................................... F-83
Combined Statement of Stockholders' Equity for the year
ended October 31, 1997................................. F-84
Combined Statement of Cash Flows for the year ended
October 31, 1997....................................... F-85
Notes to Combined Financial Statements for the year ended
October 31, 1997....................................... F-86

PROGRAM MANAGEMENT & SYSTEMS, INC.
UNAUDITED HISTORICAL FINANCIAL STATEMENTS
Unaudited Condensed Balance Sheet as of June 30, 1998..... F-91
Unaudited Condensed Statements of Income for the six
months ended June 30, 1997 and June 30, 1998........... F-92
Unaudited Condensed Statements of Cash Flows for the six
months ended June 30, 1997 and June 30, 1998........... F-93
Notes to Unaudited Condensed Financial Statements......... F-94

F-2
57

AUDITED FINANCIAL STATEMENTS
Independent Auditors' Report.............................. F-95
Balance Sheet as of December 31, 1997..................... F-96
Statement of Income for the year ended December 31,
1997................................................... F-97
Statement of Changes in Stockholders' Equity for the year
ended December 31, 1997................................ F-98
Statement of Cash Flows for the year ended December 31,
1997................................................... F-99
Notes to Financial Statements............................. F-100

F-3
58

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

JUNE 30, 1998

The following unaudited pro forma condensed consolidated balance sheet
reflects the acquisition by the Company of Programming Management & Systems,
Inc. ("PMSI") and the consummation of the initial public offering and the
application of the net proceeds as detailed elsewhere in this Prospectus, as if
each had occurred on June 30, 1998. The pro forma information gives effect to
the acquisitions and the pro forma adjustments set forth in the accompanying
notes to pro forma condensed consolidated balance sheet. This pro forma
condensed consolidated balance sheet should be read in conjunction with the pro
forma condensed consolidated statements of income of the Company and the
historical financial statements and notes thereto of the Company, and PMSI
included elsewhere in this Prospectus.

This unaudited pro forma condensed consolidated balance sheet is not
necessarily indicative of what the actual consolidated financial position of the
Company would have been at June 30, 1998, nor does it purport to represent the
future consolidated financial position of the Company.

F-4
59

CORPORATE STAFFING RESOURCES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF JUNE 30, 1998

(IN THOUSANDS)

ASSETS

OFFERING
COMPANY(1) PMSI(2) ADJUSTMENTS SUBTOTAL ADJUSTMENTS(6) PRO FORMA
---------- ------- ----------- -------- -------------- ---------

Current assets:
Cash and cash equivalents.......... $ 19 $ 38 $ -- $ 57 $ -- $ 57
Accounts receivable................ 26,645 1,148 -- 27,793 -- 27,793
Other current assets............... 2,636 83 -- 2,719 -- 2,719
-------- ------ ------ -------- -------- --------
Total current assets....... 29,300 1,269 -- 30,569 -- 30,569
Property and equipment, net........ 3,407 22 -- 3,429 -- 3,429
Goodwill and other intangibles,
net............................. 68,329 -- 7,372(3) 75,701 -- 75,701
Other assets....................... 2,092 96 -- 2,188 -- 2,188
-------- ------ ------ -------- -------- --------
Total assets............... $103,128 $1,387 $7,372 $111,887 $ -- $111,887
======== ====== ====== ======== ======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable................... $ 912 $ 286 $ -- $ 1,198 $ -- $ 1,198
Accrued liabilities................ 4,012 -- 100 4,112 -- 4,112
Accrued payroll and related
taxes........................... 7,508 378 -- 7,886 -- 7,886
Current portion of long-term
debt............................ 2,150 -- -- 2,150 (150) 2,000
-------- ------ ------ -------- -------- --------
Total current
liabilities.............. 14,582 664 100 15,346 (150) 15,196
Long-term debt, less current
portion............................ 55,750 -- 7,822(4) 63,572 (40,751) 22,821
Notes payable to shareholders, less
current portion.................... 2,274 -- -- 2,274 (2,274) --
Other liabilities.................... 661 173 -- 834 -- 834
-------- ------ ------ -------- -------- --------
Total liabilities.......... 73,267 837 7,922 82,026 (43,175) 38,851
Shareholders' equity:
Common stock....................... 97 -- -- 97 48 145
Additional paid-in capital......... 29,309 6 (6)(5) 29,309 43,127 72,436
Retained earnings.................. 455 544 (544)(5) 455 -- 455
-------- ------ ------ -------- -------- --------
Total shareholders'
equity................... 29,861 550 (550) 29,861 43,175 73,036
-------- ------ ------ -------- -------- --------
Total liabilities and
shareholders' equity..... $103,128 $1,387 $7,372 $111,887 $ -- $111,887
======== ====== ====== ======== ======== ========

See accompanying notes.

F-5
60

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

(1) Represents the historical consolidated balance sheet of the Company, as of
June 30, 1998, which reflects the acquisition of The Hamilton-Ryker Company,
LLC; CSR, Inc.; NPS of Atlanta, Inc.; Intranational Computer Consultants,
Inc; CMS Management Services Company; Monday Temporary Services, Inc. and
Networld Solutions, Inc.

(2) Represents the historical combined balance sheet of PMSI as of June 30,
1998.

(3) Represents the adjustments to the historical carrying value of PMSI to
reflect intangibles resulting from its acquisition. The PMSI purchase price
was approximately $7.9 million in cash. Purchase price was allocated as
follows: $550,000 to tangible assets (net of assumed liabilities of
$837,000), $50,000 to non-compete agreements, and $7.3 million to goodwill.
In addition, the Company agreed to pay the sellers additional consideration
contingent upon PMSI achieving certain financial targets during the twelve
month periods ended May 31, 1999 and 2000. The additional consideration,
which is not contractually limited, will be accrued in the period earned and
recorded as goodwill.

(4) Represents additional borrowings to finance the acquisition of PMSI under
the Company's revolving credit agreement. The Company's revolving credit
agreement allows the Company to borrow up to $75.0 million through December
3, 2001. Borrowings under the credit agreement are collateralized by all of
the Company's accounts receivable, equipment and intangibles as well as a
pledge of the stock of the Company's subsidiaries. The agreement provides
for advances under a Base Rate loan or a Eurodollar loan plus an applicable
margin as defined in the loan agreement, depending on the pricing option
selected by the Company.

(5) Represents the elimination of shareholders' equity of PMSI.

(6) Represents the adjustment to reflect the issuance and sale of 4,750,000
shares of common stock by the Company at the public offering price of $10.00
per share, and the application of the estimated net proceeds therefrom as
described under "Use of Proceeds" elsewhere in this Prospectus.

F-6
61

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME

The following unaudited pro forma condensed consolidated statements of
income reflect the acquisitions of The Hamilton-Ryker Company, LLC
("Hamilton-Ryker"); CSR, Inc. ("CSR"); NPS of Atlanta, Inc. ("NPS");
Intranational Computer Consultants, Inc. ("ICC"); CMS Management Services
Company ("CMS"); Monday Temporary Services, Inc. ("Monday"); Networld Solutions,
Inc. ("Networld") and Programming Management & Systems, Inc. ("PMSI")
(collectively, the "Completed Acquisitions") by the Company and the consummation
of the initial public offering and the application of the net proceeds as
detailed elsewhere in this Prospectus as if each had occurred on the first day
of each of the periods shown. Such pro forma information is based upon the
historical results of the Company and the Completed Acquisitions for the six
months ended June 30, 1997 and 1998 and the year ended December 31, 1997, giving
effect to the acquisitions and pro forma adjustments set forth in the
accompanying notes to pro forma condensed consolidated statements of income.
These pro forma condensed consolidated statements of income should be read in
conjunction with the historical financial statements and notes thereto of the
Company and certain of the Completed Acquisitions included elsewhere in this
Prospectus.

These unaudited pro forma condensed consolidated statements of income are
not necessarily indicative of what the actual consolidated results of operations
of the Company would have been assuming the acquisitions had been completed as
set forth above, nor does it purport to represent the consolidated results of
operations of the Company for future periods.

F-7
62

CORPORATE STAFFING RESOURCES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 1998

(IN THOUSANDS EXCEPT PER SHARE DATA)

HISTORICAL
----------------------------------------
COMPLETED SALE OF OFFERING
COMPANY (1) ACQUISITIONS (2) PEO (3) ADJUSTMENTS SUBTOTAL ADJUSTMENTS PRO FORMA
----------- ---------------- ------- ----------- -------- ----------- ---------

Revenues................... $1117,055 $17,984 $(3,093) $ -- $131,946 $ -- $131,946
Cost of services........... 93,227 12,176 (2,933) -- 102,470 -- 102,470
-------- ------- ------- ------- -------- ------- --------
Gross profit............... 23,828 5,808 (160) -- 29,476 -- 29,476
Operating expenses:
Selling, general and
administrative........ 18,483 4,137 (60) (417)(4) 22,143 (287)(8) 21,856
Depreciation and
amortization.......... 1,129 73 -- 347(5) 1,549 -- 1,549
-------- ------- ------- ------- -------- ------- --------
Operating income......... 4,216 1,598 (100) 70 5,784 287 6,071
Other (income) expense:
Interest expense......... 1,780 26 -- 1,116(6) 2,922 (1,829)(9) 1,093
Other income............... (137) -- -- 137 -- -- --
-------- ------- ------- ------- -------- ------- --------
Income before income
taxes.................... 2,573 1,572 (100) (1,183) 2,862 2,116 4,978
Provision for income
taxes.................... 1,158 210 -- (80)(10) 1,288 952(10) 2,240
-------- ------- ------- ------- -------- ------- --------
Net income................. $ 1,415 $ 1,362 $ (100) $(1,103) $ 1,574 $ 1,164 $ 2,738
======== ======= ======= ======= ======== ======= ========
Net income per share:
Basic.................... $ .15 $ .16 $ .19
Diluted.................. $ .15 .16 .19
Weighted average number of
shares of common stock
outstanding:
Basic.................... 9,678 9,678 4,750(11) 14,428
Diluted.................. 9,692 9,692 4,750(11) 14,442

See accompanying notes.

F-8
63

CORPORATE STAFFING RESOURCES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 1997

(IN THOUSANDS EXCEPT PER SHARE DATA)

Revenues................. $43,643 $67,241 $(3,560) $ -- $107,324 $ -- $107,324
Cost of services......... 35,798 50,869 (3,370) -- 83,297 -- 83,297
------- ------- ------- ------- -------- ------- --------
Gross profit............. 7,845 16,372 (190) -- 24,027 -- 24,027
Operating expenses:
Selling, general and
administrative...... 5,644 13,302 (58) (1,372)(4) 17,516 -- 17,516
Depreciation and
amortization........ 239 282 -- 885(5) 1,406 -- 1,406
Other operating
expenses............ 232 81 -- (132)(4) 181 (100)(8) 81
------- ------- ------- ------- -------- ------- --------
Operating income....... 1,730 2,707 (132) 619 4,924 100 5,024
Other (income) expense:
Interest expense....... 518 322 -- 1,775(6) 2,615 (1,829)(9) 786
Other (income)
expense............. (21) (149) -- -- (170) -- (170)
------- ------- ------- ------- -------- ------- --------
Income before income
taxes.................. 1,233 2,534 (132) (1,156) 2,479 1,929 4,408
Provision for income
taxes.................. 805 576 -- (115)(10) 1,266 772(10) 2,038
------- ------- ------- ------- -------- ------- --------
Net income (loss)........ $ 428 $ 1,958 $ (132) $(1,041) $ 1,213 $ 1,157 $ 2,370
======= ======= ======= ======= ======== ======= ========
Net income per share:
Basic.................. $ .10 $ .13 $ .16
Diluted................ .09 .13 .16
Weighted average number
of shares of common
stock outstanding:
Basic.................. 4,385 5,293(7) 9,678 4,750(11) 14,428
Diluted................ 4,946 4,732(7) 9,678 4,750(11) 14,428

See accompanying notes.

F-9
64

CORPORATE STAFFING RESOURCES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS EXCEPT PER SHARE DATA)

HISTORICAL
--------------------------------------
COMPLETED
COMPANY ACQUISITIONS SALE OF OFFERING
(1) (2) PEO (3) ADJUSTMENTS SUBTOTAL ADJUSTMENTS PRO FORMA
---------- --------------- ------- ----------- -------- ----------- ---------

Revenues................... $114,564 $128,802 $(7,538) $ -- $235,828 $ -- $235,828
Cost of services........... 93,557 96,594 (7,112) -- 183,039 -- 183,039
-------- -------- ------- ------- -------- ------- --------
Gross profit............... 21,007 32,208 (426) -- 52,789 -- 52,789
Operating expenses
Selling, general and
administrative........ 13,861 27,681 (127) (3,454)(4) 37,961 -- 37,961
Depreciation and
amortization.......... 836 679 -- 1,540(5) 3,055 -- 3,055
Other operating
expenses.............. 1,158 261 -- (642)(4) 777 (368)(8) 409
-------- -------- ------- ------- -------- ------- --------
Operating income......... 5,152 3,587 (299) 2,556 10,996 368 11,364
Other (income) expense:
Interest expense......... 1,570 860 -- 3,429(6) 5,859 (3,658)(9) 2,201
Other income............. (124) (81) -- -- (205) -- (205)
-------- -------- ------- ------- -------- ------- --------
Income before income taxes
and extraordinary item... 3,706 2,808 (299) (873)(10) 5,342 4,026 9,368
Provision for income
taxes.................... 1,904 673 -- 109 2,686 1,610(10) 4,296
-------- -------- ------- ------- -------- ------- --------
Income before extraordinary
item..................... $ 1,802 $ 2,135 $ (299) $ (982) $ 2,656 $ 2,416 $ 5,072
======== ======== ======= ======= ======== ======= ========
Income before extraordinary
item per share:
Basic.................... $ .36 $ .27 $ .35
Diluted.................. .32 .27 .35
Weighted average number of
shares of common stock
outstanding:
Basic.................... 5,061 4,617(7) 9,678 4,750 14,428
Diluted.................. 5,580 4,098(7) 9,678 4,750 14,428

See accompanying notes.

F-10
65

NOTES TO UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED STATEMENTS OF INCOME

(1) Represents the historical Consolidated Statement of Income of the Company
for the period shown, which includes the operations of the Completed
Acquisitions from their respective dates of acquisition through the end of
each period.

(2) Represents the combined historical results of operations of Hamilton-Ryker,
CSR, NPS, ICC, CMS, Monday and Networld from the first day of each period
through their respective dates of acquisition (or the end of the period if
the acquisition date is subsequent to the end of the period) and PMSI for
the entirety of each period. Amounts for the period ended June 30, 1998
consist entirely of NPS, ICC, CMS, Monday, Networld and PMSI (together, the
"Other Completed Acquisitions"). The following tables present the
historical results of operations of Hamilton-Ryker, CSR, and the Other
Completed Acquisitions for the periods ended June 30, 1997 and December 31,
1997.

HISTORICAL RESULTS OF OPERATIONS OF THE COMPLETED ACQUISITIONS

FOR THE SIX MONTHS ENDED JUNE 30, 1997

(IN THOUSANDS)

PREDECESSOR OTHER
HAMILTON- TO COMPLETED
RYKER CSR, INC. CSR, INC. ACQUISITIONS TOTAL
--------- ----------- --------- ------------ -------

Revenues.............................. $7,700 $23,658 $ 9,166 $26,717 $67,241
Cost of services...................... 6,159 19,003 7,342 18,365 50,869
------ ------- ------- ------- -------
Gross profit.......................... 1,541 4,655 1,824 8,352 16,372
Operating expenses:
Selling, general and
administrative................... 1,152 3,794 1,253 7,103 13,302
Depreciation and amortization....... 60 27 82 113 282
Other operating expenses............ -- 81 -- -- 81
------ ------- ------- ------- -------
Operating income.................... 329 753 489 1,136 2,707
Other income expense:
Interest expense.................... 98 63 104 57 322
Other income expense................ 38 -- (164) (23) (149)
------ ------- ------- ------- -------
Income before income taxes............ 193 690 549 1,102 2,534
Provision for income taxes............ 28 223 201 124 576
------ ------- ------- ------- -------
Net income............................ $ 165 $ 467 $ 348 $ 978 $ 1,958
====== ======= ======= ======= =======

F-11
66

HISTORICAL RESULTS OF OPERATIONS OF THE COMPLETED ACQUISITIONS

FOR THE YEAR ENDED DECEMBER 31, 1997

(IN THOUSANDS)

PREDECESSOR OTHER
HAMILTON- TO COMPLETED
RYKER CSR, INC. CSR, INC. ACQUISITIONS TOTAL
--------- ----------- --------- ------------ -----

Revenues............................. $7,700 $23,658 $42,299 $55,145 $128,802
Cost of services..................... 6,159 19,003 33,504 37,928 96,594
------ ------- ------- ------- --------
Gross profit......................... 1,541 4,655 8,795 17,217 32,208
Operating expenses:
Selling, general and
administrative.................. 1,152 3,901 6,347 16,281 27,681
Depreciation and amortization...... 60 27 321 271 679
Other operating expenses........... -- -- 261 -- 261
------ ------- ------- ------- --------
Operating income................... 329 727 1,866 665 3,587
Other (income) expense:
Interest expense................... 98 63 589 110 860
Other (income) expense............. 38 -- -- (119) (81)
------ ------- ------- ------- --------
Income before income taxes and
extraordinary item................. 193 664 1,277 674 2,808
Provision for income taxes........... 28 223 576 (154) 673
------ ------- ------- ------- --------
Income before extraordinary item..... $ 165 $ 441 $ 701 $ 828 $ 2,135
====== ======= ======= ======= ========

(3) Represents the historical operations of the Professional Employer
Organization ("PEO") discontinued by the Company in June 1998. The PEO
represented a non-strategic line of business in which the Company no longer
competes.

(4) Represents reductions to selling, general and administrative expenses and
other operating expenses for expenses of the Company and the Completed
Acquisitions that would not have been incurred had the acquisitions been
completed at the beginning of the period, primarily compensation paid to
stockholders in excess of compensation that would have been payable under
terms of employment agreements entered into connection with the Completed
Acquisitions and severance of $500,000 paid to an executive terminated in
conjunction with an acquisition.

Aggregate actual compensation paid to these individuals (all of whom had a
significant impact on the operating performance of the Completed
Acquisitions), aggregate compensation to these individuals under their new
employment agreements with the Company and the pro forma adjustments are
set forth below by period. The new employment agreements provide for
compensation per individual ranging from $100,000 to $150,000 and expire at
various dates through December 31, 2000.

NEW
ACTUAL EMPLOYMENT PRO FORMA
COMPENSATION AGREEMENTS ADJUSTMENT
------------ ---------- ----------

June 30, 1998......................................... $ 548 $ 131 $ 417
====== ====== ======
June 30, 1997......................................... $2,118 $ 614 $1,504
====== ====== ======
December 31, 1997..................................... $4,721 $1,125 $3,596
====== ====== ======

(5) Represents an increase to amortization expense resulting from goodwill and
other intangibles recorded as a result of the Completed Acquisitions. The
excess of cost over the fair value of the net assets acquired (goodwill) is
being amortized over 40 years. Non-compete agreements are being amortized
over their contractual terms (typically 5 years). In accordance with
Accounting Principles Board Opinion No. 16, "Business Combinations," the
Company allocated the purchase price of each Completed Acquisition first to
identifiable tangible assets, then to identifiable intangible assets with
the

F-12
67

remainder to goodwill. Fair value of tangible assets acquired approximated the
acquired company's book value in each case. Identified intangible assets
consisted of non-compete agreements and aggregated $635,000. Goodwill recorded
in connection with the Hamilton-Ryker and CSR acquisitions was $11.8
million and $27.2 million, respectively. Goodwill recorded in the remaining
acquisitions aggregated $37.3 million. A calculation of amortization for
each of the periods presented is set forth below:

ANNUAL SEMI ANNUAL
$ AMORTIZATION AMORTIZATION
(000'S) LIFE (000'S) (000'S)
------- -------- ------------ ------------

Goodwill................................. $76,300 40 years $1,908 $ 954
Non-Compete.............................. 635 5 years 127 64
------ ------
$2,035 $1,018
====== ======

AMOUNT INCLUDED
IN HISTORICAL PRO FORMA
AMORTIZATION INCOME STATEMENTS ADJUSTMENT
(000'S) (000'S) (000'S)
------------ ----------------- ----------

June 30, 1998................................ $1,018 $671 $ 347
====== ==== ======
June 30, 1997................................ $1,018 $133 $ 885
====== ==== ======
December 31, 1997............................ $2,035 $495 $1,540
====== ==== ======

The terms of the purchase agreements for certain of the Completed
Acquisitions require the Company to pay additional amounts to the sellers
if the acquired companies meet certain operating results. The earnouts are
payable over 1 to 3 years and certain of them are not contractually limited
as to amount.

(6) Represents additional interest expense to reflect incremental borrowings of
approximately $46.0 million under the Company's borrowing facility
necessary to finance the Completed Acquisitions, less the reduction in
interest expense resulting from repayment of the borrowings of certain of
the acquired companies. Interest expense differs from amounts resulting
from applying an interest rate of 8.5% to incremental borrowings of $46.0
million (the "Computed Amount") due to the Company having recorded interest
expense in its historical financial statements for the portion of the
period related debt was outstanding and as a result of the Company having
retired certain debt of the Completed Acquisitions at the time of closing,
as detailed below.

AMOUNT REDUCTION OF
REFLECTED IN COMPLETED
COMPUTED HISTORICAL ACQUISITIONS PRO FORMA
AMOUNT STATEMENTS INTEREST ADJUSTMENT
(000'S) (000'S) (000'S) (000'S)
-------- ------------ ------------ ----------

June 30, 1998........................... $1,955 $816 $ 23 $1,116
====== ==== ==== ======
June 30, 1997........................... $1,955 $123 $ 57 $1,775
====== ==== ==== ======
December 31, 1997....................... $3,910 $311 $170 $3,429
====== ==== ==== ======

(7) Reflects the issuance of 1,593,500 shares of common stock on March 12, 1997
in connection with the Company's acquisition of Hamilton-Ryker (309,968
weighted from January 1, 1997 through March 12, 1997); the issuance of
4,425,002 shares of common stock on December 3, 1997 in connection with the
Company's acquisition of CSR (4,085,550 weighted from January 1, 1997
through December 3, 1997); the issuance of 561,544 shares of common stock
on December 3, 1997 (518,485 weighted from January 1, 1997 through December
3, 1997) upon the exercise of certain warrants which had been issued in
connection with the Hamilton-Ryker acquisition (these shares were
considered outstanding for the entirety of the year for purposes of diluted
shares outstanding); all offset by the Company's acquisition of 321,888
shares of common stock on December 3, 1997 in connection with the Company's
acquisition of CSR (297,195 weighted from January 1, 1997 through December
3 1997). All shares

F-13
68

were valued at the fair value at the date of the transaction ($4 at March 12,
1997 and $5 on December 3, 1997).

(8) Represents the elimination of certain expenses related to management fees
and consulting fees subject to certain agreements which will be terminated
upon consummation of the Offering. The Company's management believes that
the absence of these management and consulting services would not have
affected the Company's operating performance.

(9) Represents the reduction in interest expense resulting from the Company
repaying a portion of the borrowings outstanding under its credit agreement
with proceeds from the Offering. Adjustment is computed based upon net
proceeds of $43.2 million, and an interest rate of 8.5%, and the
application of $2.4 million thereof to the repayment of certain shareholder
notes bearing interest at 8% and 40.8 million thereof to repayment of
borrowings under the credit agreement bearing interest at an estimated rate
of 8.5%.

(10) Reflects the federal and state income tax effects of the above adjustments,
excluding the portion of the goodwill related to the Completed Acquisitions
which is nondeductible for federal and state tax purposes.

(11) Reflects the issuance of 4,750,000 shares of the Company's common stock at
$10.00 per share in connection with the public offering described in this
Prospectus, less the underwriting discount and estimated Offering expenses.

F-14
69

CORPORATE STAFFING RESOURCES, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

AS OF JUNE 30, 1998

(IN THOUSANDS)

ASSETS

Current assets:
Cash and cash equivalents................................. $ 19
Accounts receivable, less allowance....................... 26,645
Other current assets...................................... 2,636
--------
Total current assets.............................. 29,300
Property and equipment, net................................. 3,407
Goodwill and other intangibles, net......................... 68,329
Other assets................................................ 2,092
--------
Total assets...................................... $103,128
========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 912
Accrued liabilities....................................... 4,012
Accrued payroll and related taxes......................... 7,508
Current portion of long-term debt......................... 2,150
--------
Total current liabilities......................... 14,582
Long-term debt, less current portion........................ 55,750
Notes payable to shareholders, less current portion......... 2,274
Other liabilities........................................... 661
--------
Total liabilities................................. 73,267
Shareholders' equity:
Common stock ($0.01 par value; 15,000,000 shares
authorized; 9,678,114 shares issued and outstanding)... 97
Additional paid-in capital................................ 29,309
Retained earnings......................................... 455
--------
Total shareholders' equity........................ 29,861
--------
Total liabilities and shareholders' equity........ $103,128
========

See accompanying notes.

F-15
70

CORPORATE STAFFING RESOURCES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT PER SHARE DATA)

SIX MONTHS ENDED
JUNE 30,
------------------
1997 1998
------- --------

Revenues.................................................... $43,643 $117,055
Cost of services............................................ 35,798 93,227
------- --------
Gross profit................................................ 7,845 23,828
Operating expenses:
Selling, general and administrative expenses.............. 5,644 18,483
Depreciation and amortization............................. 239 1,129
Other operating expenses.................................. 232 --
------- --------
Operating income............................................ 1,730 4,216
Other (income) expense:
Interest expense.......................................... 518 1,780
Other income.............................................. (21) (137)
------- --------
Income before provision for income taxes.................... 1,233 2,573
Provision for income taxes.................................. 805 1,158
------- --------
Net income.................................................. $ 428 $ 1,415
======= ========
Net income per share:
Basic..................................................... $ .10 $ .15
Diluted................................................... .09 $ .15
Weighted average number of shares of common stock
outstanding:
Basic..................................................... 4,385 9,678
Diluted................................................... 4,946 9,692

See accompanying notes.

F-16
71

CORPORATE STAFFING RESOURCES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

SIX MONTHS ENDED JUNE 30,
-------------------------
1997 1998
--------- ----------

OPERATING ACTIVITIES
Net cash provided by operating activities................. $ 715 $ 2,188
------- --------
INVESTING ACTIVITIES
Acquisitions, net of cash received........................ (3,281) (29,157)
Purchases of property and equipment....................... (397) (782)
Other..................................................... -- 195
------- --------
Net cash used in investing activities..................... (3,678) (29,744)
------- --------
FINANCING ACTIVITIES
Proceeds from borrowings under revolving credit
agreement.............................................. 10,550 35,086
Net change in borrowings under line of credit............. (3,422) --
Repayment of shareholder notes payable.................... (1,976) --
Repayment of revolving credit agreement................... (2,226) (9,507)
------- --------
Net cash provided by financing activities................. 2,926 25,579
------- --------
Net decrease in cash and cash equivalents................. (37) (1,977)
Cash and cash equivalents at beginning of period............ 237 1,996
------- --------
Cash and cash equivalents at end of period.................. $ 200 $ 19
======= ========

See accompanying notes.

F-17
72

CORPORATE STAFFING RESOURCES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements
include the accounts of Corporate Staffing Resources, Inc. and its wholly owned
subsidiaries (individually and collectively referred to as the "Company"). The
unaudited condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
six month period ended June 30, 1998, are not necessarily indicative of the
results that may be expected for the year ending December 31, 1998. These
financial statements should be read in conjunction with the Company's audited
financial statements for the year ended December 31, 1997, included elsewhere in
this Prospectus.

2. ACQUISITIONS

During the six months ended June 30, 1998, the Company, in separate
transactions, acquired two commercial staffing companies (NPS of Atlanta, Inc.
and Monday Temporary Services, Inc. for a combined purchase price of
approximately $9.9 million and three professional services companies
(Intranational Computer Consultants, Inc.; CMS Management Services Company and
Networld Solutions, Inc.) for a combined purchase price of approximately $23.6
($18.6 million cash and $5.0 in subordinated notes). In addition, in connection
with these acquisitions the Company entered into earnout agreements which could
result in additional purchase price upon the achievement of certain operating
results, as defined. The earnouts are payable over 1 to 3 years and are not
contractually limited as to amount. The acquisitions were accounted for using
the purchase method, and the operating results of the companies acquired have
been included in the Company's 1998 consolidated financial statements from the
dates of acquisition. The excess of the combined purchase price over the cost of
acquired net assets ("goodwill") of $30.0 million is being amortized on a
straight-line basis over 40 years.

Subsequent to June 30, 1998, the Company completed the acquisition of an
additional professional services company Programming Management & Systems, Inc.
("PMSI"). The initial aggregate purchase price of the acquisition was
approximately $7.8 million, which could be increased by contingent earnouts
based upon the acquired company achieving certain operating results, as defined.
The earnout, which is payable over 1 to 3 years, is not contractually limited.
The acquisition will be accounted for using the purchase method and the
operating results will be included in the Company's 1998 consolidated financial
statements from the date of acquisition. Goodwill of approximately $7.5 million
will be amortized on a straight-line basis over 40 years.

As more fully disclosed in Note 2 to the Company's audited financial
statements for the year ended December 31, 1997, included elsewhere in this
Prospectus, in March 1997, the Company acquired The Hamilton-Ryker Company, LLC
and in December 1997, the Company acquired CSR, Inc. Certain costs associated
with these acquisitions were paid during the six months ended June 30, 1998.

F-18
73
CORPORATE STAFFING RESOURCES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS -- (CONTINUED)

The following table presents, on an unaudited pro forma basis, a condensed
consolidated balance sheet as of June 30, 1998, giving effect to the acquisition
of PMSI, which occurred subsequent to June 30, 1998, as if it had occurred on
that date. All other acquisitions are reflected in the Company's June 30, 1998
historical unaudited condensed consolidated balance sheet.

JUNE 30, 1998
--------------
(IN THOUSANDS)

Current assets.............................................. $ 30,569
Property and equipment...................................... 3,429
Other assets................................................ 77,889
--------
Total assets...................................... $111,887
========
Current liabilities......................................... $ 15,346
Long-term debt.............................................. 65,846
Other liabilities........................................... 834
Shareholders' equity........................................ 29,861
--------
Total liabilities and shareholders' equity........ $111,887
========

The following unaudited pro forma results for the six months ended June 30,
1997 and 1998 were developed assuming all acquisitions discussed above had been
completed at the beginning of each of the periods described below. For both
periods, the unaudited pro forma results are after giving effect to certain
adjustments, including interest expense, amortization of intangibles, add back
of excess compensation paid to shareholders of certain companies and assuming
all entities had been C Corporations for the entirety of the six month periods.

FOR THE SIX
MONTHS ENDED
-----------------------
JUNE 30, JUNE 30,
1997 1998
---------- ----------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)

Total revenues.............................................. $107,324 $131,946
Net income.................................................. 1,213 1,574
Net income per share (Basic and diluted).................... .13 .16

The unaudited pro forma data shown above is not necessarily indicative of
the consolidated results that would have occurred had the acquisitions taken
place at the beginning of each period shown.

3. INCOME TAXES

The Company was formed on January 1, 1997 as the successor to a group of
ten operating corporations which were controlled and managed by two related
shareholders and which operated under Subchapter S of the Internal Revenue Code.
Upon formation, the Company elected to be taxable as a C Corporation and
accordingly adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes." Upon electing to be
taxable as a C Corporation and adopting SFAS No. 109, the Company established a
net deferred tax liability of $284,000 representing the tax effect of cumulative
temporary differences as of January 1, 1997.

F-19
74
CORPORATE STAFFING RESOURCES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS -- (CONTINUED)

4. STOCK OPTIONS

On January 29, 1998, the Company adopted the Corporate Staffing Resources,
Inc. Non-Qualified Stock Option Plan (the "Option Plan") for key employees of
the Company and its subsidiaries. Under the Option Plan, not more than 1,500,000
shares of common stock are authorized for issuance upon exercise of the options.
Options granted under the Option Plan expire after ten years and the exercise
price and vesting period are set by the Company's Board of Directors at the date
of grant. On January 29, 1998, the Company's Board of Directors granted options
to purchase 95,000 shares at the then estimated fair value of $8.00 per share.
The options become exercisable ratably over a three year period. There were no
exercises or forfeitures during the six months ended June 30, 1998. At June 30,
1998 there were 95,000 options outstanding with a weighted-average remaining
contractual life of 9.58 years of which none were exercisable.

The Company is accounting for the options according to the provisions of
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." The disclosure only provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation" have been adopted and accordingly the appropriate
disclosures will be made in the December 31, 1998 financial statements of the
Company.

Pro forma information regarding net income and earnings per share is
required by SFAS No. 123, and has been determined as if the Company accounted
for its employee stock options under the fair value method of 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 for the six
months ended June 30, 1998: risk-free interest rate of 6%, no expected
dividends, a volatility factor of .5 and a weighted average expected life of the
options of 3 years.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because changes in the subjective input assumptions can materially
affect the fair value estimate, in management's opinion the existing models do
not necessarily provide a reliable single measure of the fair value of its
employee stock options.

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 relating to employee stock options follows:

SIX MONTHS ENDED
JUNE 30, 1998
---------------------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)

Pro forma net income........................................ $1,375
Pro forma earnings per share
Basic..................................................... $ .14
Diluted................................................... .14

5. EARNINGS PER SHARE

The Company computes earnings per share under SFAS No. 128, "Earnings Per
Share" which requires the Company to present basic and diluted earnings per
share.

F-20
75
CORPORATE STAFFING RESOURCES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS -- (CONTINUED)

months ended June 30, 1997, 561,564 shares of common stock issued under warrants
are considered to have been issued on January 1, 1997.

6. PENDING ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," and SFAS No. 131, "Disclosure about Segments
of an Enterprise and Related Information." SFAS No. 131 establishes standards
for the reporting and disclosure of comprehensive income and its components in a
full set of general purpose financial statements. SFAS No. 131 changes the
manner in which public companies report segment information in annual reports
and requires companies to report selected segment information in interim
financial reports. The Company will be required to report financial and
descriptive information about its operating segments. Both these statements are
effective for fiscal years beginning after December 15, 1997, with
reclassification of the financial statements for earlier periods required for
comparative purposes. The Company plans to adopt these statements, to the extent
they are applicable, for its year ending December 31, 1998. SFAS No. 130 is not
expected to have a significant impact on the Company's historical financial
statements, as comprehensive income will equal reported net income
(comprehensive income equaled net income for the quarter ended June 30, 1998).
The Company is evaluating the impact of SFAS No. 131.

F-21
76

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Corporate Staffing Resources, Inc.

We have audited the accompanying consolidated balance sheets of Corporate
Staffing Resources, Inc. (the "Company") as of December 31, 1997 and 1996, and
the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the three years in the period ended December 31, 1997.
Our audits also included the financial statement schedule listed in the index.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Corporate Staffing Resources, Inc. at December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997 in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

ERNST & YOUNG LLP

Raleigh, North Carolina

March 24, 1998, except for Note 6

as to which the date is May 15, 1998 and

Note 14, as to which the date is

July 2, 1998

F-22
77

CORPORATE STAFFING RESOURCES, INC.

BALANCE SHEETS

ASSETS

DECEMBER 31,
--------------------------
1996 1997
----------- -----------

Current assets:
Cash and cash equivalents................................. $ 237,424 $ 1,996,097
Accounts receivable, less allowance of $122,000 and
$220,000............................................... 5,306,808 18,423,644
Income taxes receivable................................... -- 937,182
Prepaid expenses and other................................ 201,364 399,756
Deferred income taxes..................................... -- 1,120,000
----------- -----------
Total current assets.............................. 5,745,596 22,876,679
Insurance loss fund......................................... 860,236 2,112,689
Property and equipment, net................................. 570,044 2,177,790
Notes receivable from shareholders.......................... 422,277 560,100
Goodwill, less accumulated amortization of $70,350 and
$434,128.................................................. 64,129 37,917,827
Other....................................................... 219,891 620,449
----------- -----------
Total assets...................................... $ 7,882,173 $66,265,534
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable.......................................... $ 322,352 $ 783,469
Accrued liabilities....................................... 17,292 725,283
Accrued payroll and related taxes......................... 855,985 4,599,520
Accrued workers' compensation............................. 695,000 2,054,785
Borrowings under line of credit........................... 3,421,741 --
Current portion of long-term debt......................... 48,670 31,362
Current portion of notes payable to shareholders.......... 2,000,000 150,000
----------- -----------
Total current liabilities......................... 7,361,040 8,344,419
Long-term debt, less current portion........................ 77,559 27,036,364
Notes payable to shareholders, less current portion......... -- 2,273,833
Deferred income taxes....................................... -- 166,000
----------- -----------
Total liabilities................................. 7,438,599 37,820,616
Commitments and contingencies (Notes 10 and 13)
Shareholders' equity:
Common stock, $0.01 par value 18,080,000 outstanding in
1996 prior to recapitalization; 15,000,000 shares
authorized; 9,678,114 shares issued and outstanding in
1997................................................... 180,800 96,781
Additional paid-in capital................................ 1,983,414 29,308,911
Accumulated deficit....................................... (1,343,312) (960,774)
----------- -----------
820,902 28,444,918
Less cost of common stock in treasury, 5,100 shares......... (377,328) --
----------- -----------
Total shareholders' equity........................ 443,574 28,444,918
----------- -----------
Total liabilities and shareholders' equity........ $ 7,882,173 $66,265,534
=========== ===========

See accompanying notes.

F-23
78

CORPORATE STAFFING RESOURCES, INC.

STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1996 1997
----------- ----------- ------------

Revenues............................................. $67,349,468 $65,549,163 $114,563,720
Cost of services..................................... 57,172,506 54,724,294 93,556,652
----------- ----------- ------------
Gross profit......................................... 10,176,962 10,824,869 21,007,068
Operating expenses:
Selling, general and administrative expenses....... 8,080,552 8,652,387 13,860,235
Depreciation and amortization...................... 294,943 284,000 835,875
Other operating expenses........................... 1,573,976 841,425 1,158,301
----------- ----------- ------------
Operating income..................................... 227,491 1,047,057 5,152,657
Other (income) expense:
Interest expense................................... 275,664 266,001 1,570,532
Other income....................................... (10,432) (114,941) (123,845)
----------- ----------- ------------
Income (loss) before provision for income taxes and
extraordinary item................................. (37,741) 895,997 3,705,970
Provision for income taxes........................... -- -- 1,904,000
----------- ----------- ------------
Income (loss) before extraordinary item.............. (37,741) 895,997 1,801,970
Extraordinary loss on early extinguishment of debt,
net of related tax benefit of $1,070,000........... -- -- 1,672,184
----------- ----------- ------------
Net income (loss).................................... $ (37,741) $ 895,997 $ 129,786
=========== =========== ============
Basic earnings per common share:
Income before extraordinary item................... $ .36
Extraordinary item................................. (.33)
------------
Net income......................................... $ .03
============
Diluted earnings per common share:
Income before extraordinary item................... $ .32
Extraordinary item................................. (.30)
------------
Net income......................................... $ .02
============
Pro forma income data (unaudited):
Net income (loss) as reported...................... $ (37,741) $ 895,997
Pro forma provision for income taxes............... -- 354,000
----------- -----------
Pro forma net income (loss)........................ $ (37,741) $ 541,997
=========== ===========

See accompanying notes.

F-24
79

CORPORATE STAFFING RESOURCES, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY

RETAINED
COMMON STOCK ADDITIONAL EARNINGS
----------------------- PAID IN (ACCUMULATED TREASURY
SHARES AMOUNT CAPITAL DEFICIT) STOCK TOTAL
----------- --------- ----------- ------------ ----------- -----------

Balance at December 31, 1994... 18,080,000 $ 180,800 $ 476,414 $ 2,631,397 $ (377,328) $ 2,911,283
Net loss for 1995............ -- -- -- (37,741) -- (37,741)
Shareholder distributions.... -- -- -- (200,965) -- (200,965)
----------- --------- ----------- ----------- ----------- -----------
Balance at December 31, 1995... 18,080,000 180,800 476,414 2,392,691 (377,328) 2,672,577
Net income for 1996.......... -- -- -- 895,997 -- 895,997
Contribution of capital...... -- -- 1,507,000 -- -- 1,507,000
Shareholder distributions.... -- -- -- (4,632,000) -- (4,632,000)
----------- --------- ----------- ----------- ----------- -----------
Balance at December 31, 1996... 18,080,000 180,800 1,983,414 (1,343,312) (377,328) 443,574
Recapitalization............. (14,654,964) (146,550) (1,196,762) 1,343,312 -- --
Issuance of 6,018,502 shares
of common stock........... 6,018,502 60,186 28,438,824 -- -- 28,499,010
Issuance of stock warrants... -- -- 2,068,963 -- -- 2,068,963
Exercises of stock
warrants.................. 561,564 5,615 (2,030) -- -- 3,585
Purchase of common stock for
treasury.................. -- -- -- -- (1,609,440) (1,609,440)
Retirement of treasury
stock..................... (326,988) (3,270) (1,983,498) -- 1,986,768 --
Shareholder distributions.... -- -- -- (1,090,560) -- (1,090,560)
Net income for 1997.......... -- -- -- 129,786 -- 129,786
----------- --------- ----------- ----------- ----------- -----------
Balance at December 31, 1997... 9,678,114 $ 96,781 $29,308,911 $ (960,774) $ -- $28,444,918
=========== ========= =========== =========== =========== ===========

See accompanying notes.

F-25
80

CORPORATE STAFFING RESOURCES, INC.

STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
--------------------------------------
1995 1996 1997
--------- ----------- ------------

OPERATING ACTIVITIES
Net income (loss)........................................... $ (37,741) $ 895,997 $ 129,786
Adjustments to reconcile net income (loss) before
extraordinary item to net cash provided by (used in)
operating activities:
Extraordinary loss on extinguishment of debt.............. -- -- 1,672,184
Depreciation.............................................. 221,554 262,895 447,450
Amortization.............................................. 73,389 21,105 388,425
Gain/loss on disposal of assets........................... -- (27,627) 9,950
Deferred taxes............................................ -- -- (778,618)
Changes in operating assets and liabilities:
Accounts receivable.................................... (145,651) (174,333) (1,998,030)
Recoverable income taxes............................... -- -- (937,182)
Prepaid expenses and other............................. 211,796 303,915 500,378
Insurance loss fund.................................... -- (860,236) (1,252,453)
Accounts payable....................................... 67,257 (102,523) (249,469)
Accrued liabilities.................................... 6,260 4,712 (362,882)
Accrued payroll and related taxes...................... 348,869 (489,498) 380,284
Accrued workers' compensation.......................... -- 695,000 676,593
--------- ----------- ------------
Net cash provided by (used in) operating activities......... 745,733 529,407 (1,373,584)
INVESTING ACTIVITIES
Acquisitions, net of cash received.......................... -- -- (2,934,377)
Purchases of property and equipment......................... (411,125) (223,842) (1,182,917)
Proceeds from sale of property and equipment................ -- 85,887 41,221
--------- ----------- ------------
Net cash used in investing activities....................... (411,125) (137,955) (4,076,073)
FINANCING ACTIVITIES
Notes receivables from shareholders......................... -- (422,277) (137,823)
Net borrowings (repayments) on line of credit............... (429,480) 1,554,221 (3,421,741)
Proceeds from revolving credit agreement.................... -- -- 42,586,248
Proceeds from long-term debt................................ 172,387 92,301 75,328
Proceeds of shareholder advances............................ 146,723 1,753,278 --
Repayments of revolving credit agreement.................... -- -- (25,320,592)
Repayment of long-term debt................................. (201,269) (102,772) (100,586)
Repayment of shareholder notes payable...................... (16,588) -- (3,772,504)
Purchase of common stock for treasury....................... -- -- (1,609,440)
Shareholder distributions................................... (200,965) (4,632,000) (1,090,560)
Contributions of capital.................................... -- 1,507,000 --
--------- ----------- ------------
Net cash (used in) provided by financing activities......... (529,192) (250,249) 7,208,330
--------- ----------- ------------
Net (decrease) increase in cash and cash equivalents........ (194,584) 141,203 1,758,673
Cash and cash equivalents at beginning of year.............. 290,805 96,221 237,424
--------- ----------- ------------
Cash and cash equivalents at end of year.................... $ 96,221 $ 237,424 $ 1,996,097
========= =========== ============
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for interest...................... $ 272,200 $ 298,659 $ 1,401,745
========= =========== ============
Cash paid during the year for income taxes.................. $ -- $ -- $ 1,955,362
========= =========== ============

See accompanying notes.

F-26
81

CORPORATE STAFFING RESOURCES, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

1. DESCRIPTION OF BUSINESS AND ORGANIZATION

Corporate Staffing Resources, Inc. (the "Company"), formerly known as Mega
Force Staffing Companies, Inc., operates in one business segment as a provider
of diversified staffing, professional and consulting services to businesses,
professional and services organizations and governmental agencies. The Company
offers these services throughout the United States.

Mega Force Staffing Companies, Inc. was formed on March 4, 1997 as the
holding company for Mega Force Staffing Services, Inc. On December 31, 1996,
Mega Force Staffing Services, Inc. succeeded to the business of The Mega Force
Group, a group of ten operating corporations which were controlled and managed
by two related shareholders. The accompanying financial statements for 1995 and
1996 are not those of a separate legal entity, but represent the combined
operations of the ten operating corporations. Mega Force Staffing Companies,
Inc., Mega Force Staffing Services, Inc. and The Mega Force Group were all owned
by the same two related shareholders.

Mega Force Staffing Companies, Inc. acquired The Hamilton-Ryker Company,
LLC on March 12, 1997 and CSR, Inc. on December 3, 1997, at which time Mega
Force Staffing Companies, Inc. changed its name to Corporate Staffing Resources,
Inc. The acquisition of CSR, Inc. was accounted for as a purchase and
consideration consisted of 4,425,002 shares of common stock valued at
$22,125,000.

2. SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The financial statements include the accounts of the Company and its three
wholly owned subsidiaries. All 1997 significant intercompany accounts and
transactions have been eliminated in consolidation. In addition, all significant
intercompany accounts and transactions have been eliminated in the 1995 and 1996
combined financial statements.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.

Property and Equipment

Property and equipment is stated at cost. Depreciation is computed by the
straight-line method over the estimated useful lives of the assets ranging from
three to seven years.

Property and equipment consists of the following:

DECEMBER 31,
-------------------------
1996 1997
---------- -----------

Office furniture and equipment............................. $1,209,052 $ 3,000,678
Leasehold improvements..................................... 308,593 576,013
---------- -----------
1,517,645 3,576,691
Accumulated depreciation................................... (947,601) (1,398,901)
---------- -----------
$ 570,044 $ 2,177,790
========== ===========

F-27
82
CORPORATE STAFFING RESOURCES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Goodwill

The Company has classified as goodwill the cost in excess of fair value of
the net assets acquired in purchase transactions. Goodwill is being amortized on
a straight-line basis over forty years. Amortization charged to operations
amounted to $73,389, $21,105 and $388,425 in 1995, 1996 and 1997, respectively,
of which $12,331, $21,105 and $304,753 was attributable to goodwill
amortization.

Revenue Recognition

Revenues are recognized as income in the period the related services are
provided.

Income Taxes

During 1995 and 1996, the operating companies of the Mega Force Group were
primarily entities subject to the provisions of Subchapter S of the Internal
Revenue Code and, consequently, were not subject to federal income tax; rather
the shareholders were liable for individual income taxes on their respective
share of taxable income. Accordingly, the statements of income for the years
ended December 31, 1995 and 1996 do not include a provision for federal and
state income taxes. A pro forma provision for federal and state income taxes is
presented as if the Company were taxed as a C corporation for the entirety of
all periods presented.

Effective January 1, 1997, the Company began operating under the provisions
of Subchapter C of the Internal Revenue Code. As such, the Company accounts for
income taxes using the liability method as prescribed by SFAS No. 109,
"Accounting for Income Taxes". The liability method recognizes deferred tax
assets and liabilities based on differences between the financial reporting and
tax bases of assets and liabilities.

Advertising Expense

The cost of advertising is expensed when incurred. The Company incurred
advertising expense of $270,326, $240,810 and $367,782 in 1995, 1996 and 1997,
respectively.

Concentration of Credit Risk

The Company's principal financial instrument subject to potential
concentration of credit risk is accounts receivable which are unsecured. The
Company provides an allowance for doubtful accounts based on management's
evaluation of outstanding accounts receivable.

Fair Value of Financial Instruments

The Company estimates that the fair value of all financial instruments
approximates the carrying amounts. Because of the short-term maturity of cash
and cash equivalents and accounts receivable, their carrying amounts approximate
fair value.

The carrying value of notes payable to shareholders approximates fair value
based upon the Company's current effective borrowing rate.

Use of Estimates

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

F-28
83
CORPORATE STAFFING RESOURCES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Impairment of Long-Lived Assets

The Company regularly evaluates whether events and circumstances have
occurred which may indicate that the carrying amount of intangible or other
long-lived assets warrant revision or may not be recoverable. When factors
indicate that an asset or assets should be evaluated for possible impairment, an
evaluation would be performed pursuant to the provisions of SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of." If an evaluation is required, the estimated future undiscounted
cash flows associated with the asset would be compared to the asset's carrying
amount to determine if a write-down to market value or discounted cash flow
value is required. Management considers the intangible and other long-lived
assets to be fully recoverable as of December 31, 1997.

Cash Flows and Noncash Activities

For purposes of the consolidated statements of cash flow, cash and cash
equivalents include cash, cash investments and any highly liquid investments
purchased with an original maturity of three months or less. The Company's
acquisitions of subsidiaries and associated financing transactions included
certain noncash activities (See Note 3).

Impact of Recently Issued Accounting Pronouncements

In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," and SFAS No. 131, "Disclosure about Segments
of an Enterprise and Related Information." SFAS No. 130 establishes standards
for the reporting and disclosure of comprehensive income and its components in a
full set of general purpose financial statements. SFAS No. 131 changes the
manner in which public companies report segment information in annual reports
and requires companies to report selected segment information in interim
financial reports. The Company will be required to report financial and
descriptive information about its operating segments. Both these statements are
effective for fiscal years beginning after December 15, 1997, with
reclassification of the financial statements for earlier periods required for
comparative purposes. The Company plans to adopt these statements, to the extent
they are applicable, for its year ending December 31, 1998. SFAS No. 130 is not
expected to have a significant impact on the Company's historical financial
statements, as comprehensive income will equal reported net income. The Company
is evaluating the impact of SFAS No. 131.

Stock-Based Compensation

The Company has adopted the disclosure only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," and, accordingly, accounts for its
stock option plan under the provisions of Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees." Through December 31, 1997,
the Company had not granted any stock options.

3. ACQUISITIONS

Business Combinations

On March 12, 1997, the Company acquired all of the membership interests of
The Hamilton-Ryker Company, LLC, a company located in Tennessee which provides
temporary personnel services. Total consideration was approximately $10,876,000,
consisting of: (i) $3,502,000 in cash; (ii) $1,000,000 in certain notes payable
to sellers; and (iii) 1,593,500 shares of common stock of the Company.

On December 3, 1997, the Company acquired the stock of CSR, Inc., a company
located in Indiana which provides temporary personnel services for total
consideration of approximately $22,125,000 consisting of 4,425,002 shares of
common stock.

F-29
84
CORPORATE STAFFING RESOURCES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

All of the above business combinations have been accounted for as purchases
and the results of operations have been included in the accompanying financial
statements since the respective dates of the acquisitions. Costs in excess of
the fair value of the net assets acquired ("goodwill") is being amortized using
the straight-line method over forty years. In accordance with Accounting
Principles Board Opinion No. 16, "Business Combinations," the Company allocated
the purchase price of each Completed Acquisition first to identifiable tangible
assets, then to identifiable intangible assets, with the remainder to goodwill.
Fair value of tangible assets acquired approximated the acquired company's book
value in each case. Identifiable intangible assets were immaterial. Unaudited
pro forma financial information for the years ended December 31, 1996 and 1997
is presented in Note 14.

4. OTHER OPERATING EXPENSES

During the years ended December 31, 1995, 1996 and 1997, the Company
incurred operating expenses aggregating $1,573,976, $841,425 and $1,158,301,
respectively, which primarily consisted of amounts paid to a former executive in
1995 and 1996 and of severance paid to two former executives of the Company and
amounts paid to a third former executive in 1997. These expenses are presented
as other operating expenses in the statements of operations.

5. LINE OF CREDIT

During 1996 the Company maintained a $5,500,000 line of credit with a bank,
bearing interest at the bank's prime rate (8.25% at December 31, 1996) plus
1/2%. Collateral was provided by a security agreement covering all personal
property, including accounts receivable, property and equipment and personal
guarantees of the shareholders. Borrowings under this line of credit were
$3,421,741 at December 31, 1996. Borrowings under this line of credit were
repaid in full on March 12, 1997.

6. LONG-TERM DEBT

Long-term debt consists of the following:

DECEMBER 31,
-----------------------
1996 1997
-------- -----------

Borrowings under revolving credit agreement................. $ -- $26,966,755
Other....................................................... 126,229 100,971
-------- -----------
Total....................................................... 126,229 27,067,726
Less current portion........................................ (48,670) (31,362)
-------- -----------
Long-term portion........................................... $ 77,559 $27,036,364
======== ===========

Aggregate maturities of long-term debt for the years subsequent to December
31, 1997 are as follows:

1998............................................ $ 31,362
1999............................................ 22,586
2000............................................ 16,039
2001............................................ 26,983,125
2002 and thereafter............................. 14,614
-----------
$27,067,726
===========

On March 12, 1997, the Company entered into a revolving credit facility
with a new lender permitting advances of up to $25,000,000. The revolving credit
facility bore interest at prime (8.5% at December 31, 1997) plus 1 1/2% for the
Base Rate Loans, and LIBOR (5.9% at December 31, 1997) plus 3 1/2% for the

F-30
85
CORPORATE STAFFING RESOURCES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Eurodollar loans, and was collateralized by primarily all accounts receivable
and equipment of the Company. In connection with the credit facility, the
Company issued 517,888 warrants to the lender, each exercisable into one share
of the Company's common stock for $0.005 per share. Upon issuance, the Company
recorded the estimated value of this warrant of $2,068,963 as additional paid in
capital and related debt discount. The debt discount was amortized to interest
expense over the life of the loan using the straight-line method. In connection
with the Company's acquisition of CSR, Inc. on December 3, 1997, the warrants
were automatically converted into 517,888 new warrants, each exercisable into
.699718858 shares of the Company's common stock.

On December 3, 1997, the Company entered into a new loan agreement to
refinance the existing agreement. As a result of this early extinguishment, the
Company recorded in the accompanying financial statements, net of related income
tax benefit, an extraordinary loss of $1,672,184 which consists of the
difference between the principal amount and the net carrying amount of the
extinguished debt. The net carrying amount on December 3, 1997 reflected the
unpaid amount of the debt along with the unamortized amount of the related debt
discount and deferred debt issuance costs. All of the warrants issued in
connection with the extinguished debt were exercised by the lender in 1997.

Also in connection with the March 1997 credit facility, the Company issued
a warrant to purchase 198,388 shares of the Company's stock at $0.005 per share.
This warrant was exercisable by the lender in the event the Company's borrowings
under the credit facility exceeded $20,000,000 at any point in time. In the
event the credit facility never reached that level, the warrants became
exercisable by two of the Company's shareholders. As a result of the
extinguishment of the debt discussed above, the warrants became exercisable by
the two stockholders and were exercised on December 3, 1997.

On December 3, 1997, the Company entered into a new revolving credit
agreement with two banks providing loans or letters of credit of up to $50
million through December 3, 2001. Borrowings under the credit agreement are
collateralized by all of the Company's accounts receivable, equipment and
intangibles as well as a pledge of the stock of the Company's subsidiaries. The
agreement provides for advances under a Base Rate loan or a Eurodollar loan plus
an applicable margin as defined in the loan agreement depending on the pricing
option selected by the Company.

On May 14, 1998, the Company entered into an agreement with the banks to
increase availability under the agreement from $50 million to $75 million.

Additionally, a commitment fee of 0.5% per annum is payable on any unused
portion of the credit facility. The revolving credit agreement contains
restrictive covenants relating to leverage ratios, requirements for limitations
on future acquisitions and declaration of dividends.

The Company has entered into a standby letter of credit agreement in the
amount of $1,363,000 relating to workers' compensation self-insurance
requirements.

7. WORKERS' COMPENSATION INSURANCE

Through December 31, 1997, the Company maintained separate workers'
compensation programs for each of its subsidiaries. The Hamilton-Ryker Company,
which was acquired on March 12, 1997, was fully-insured by a commercial
insurance carrier for all workers' compensation claims for the period March 12,
1997, through December 31,1997. CSR, Inc. which was acquired on December 3,
1997, maintained an insurance plan whereby CSR, Inc. retained the first $250,000
of exposure per occurrence with an annual aggregate loss exposure of
approximately $1.6 million.

Mega Force Staffing Services, Inc. (and the Mega Force Group prior to
January 1, 1997) maintained an insurance program whereby they retained the first
$250,000 of exposure per occurrence with an annual aggregate exposure of
approximately $2.3 million. Mega Force Staffing Services, Inc. was required to
make

F-31
86
CORPORATE STAFFING RESOURCES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

periodic deposits to a loss fund (which accrues interest at a rate of 5%) from
which their workers' compensation claims will be paid by a third party
administrator. At December 31, 1996, and 1997, the loss fund had a balance of
$860,236 and $2,112,689, respectively, available to fund future claims, which is
included as a non-current asset under the caption insurance loss fund in the
accompanying balance sheets.

The Company has recorded a reserve for losses and loss adjustment expenses
related to the programs of CSR, Inc. and Mega Force Staffing Services, Inc. of
$695,000 and $2,054,785 at December 31, 1996 and 1997 respectively, which
includes an actuarially determined reserve for incurred but unreported losses.
These estimates are subject to the effects of trends in loss severity and
frequency, and could vary significantly from the amounts reported at December
31, 1996 and 1997. Although considerable variability is inherent in such
estimates, management believes that the workers' compensation insurance reserve
is adequate. However, there can be no assurance that the Company's actual future
obligations will not exceed the amount of the reserve.

8. SHAREHOLDERS' EQUITY

Recapitalization

Prior to 1997, The Mega Force Group consisted of ten operating companies.
On January 1, 1997, Mega Force Staffing Companies, Inc., one of the companies,
exchanged its common stock for all of the outstanding common stock of the other
nine operating companies. Ownership both prior to and after the recapitalization
was retained by the two related shareholders. The historical accounting basis of
the companies was carried forward to Mega Force Staffing Companies, Inc. because
of the continuing ownership.

Earnings per Share

The Company computes earnings per share under SFAS No. 128, "Earnings Per
Share" which requires the Company to present basic and diluted earnings per
share.

Basic earnings per share is computed by dividing net income by the weighted
average number of shares of common stock outstanding during the period. Diluted
earnings per share is computed by dividing net income by the weighted average
number of shares of common stock outstanding plus the dilutive effect of common
stock equivalents. The only common stock equivalents outstanding during the year
ended December 31, 1997 were the warrants discussed in Note 6. For purposes of
diluted earnings per share, the 561,564 shares issued under the warrants are
considered to have been issued on January 1, 1997. The number of shares used in
the computation of basic and diluted earnings per share for the year ended
December 31, 1997 were 5,061,306 and 5,579,791, respectively.

9. 401(K) SAVINGS PLANS

The Company established defined contribution plans under Section 401(k) of
the Internal Revenue Code covering certain employees who meet specified
criteria. The Company matches 50% of employee contributions up to 4% of the
respective employee's annual salary. Employer contributions were $31,600,
$28,125 and $75,561 in 1995, 1996 and 1997, respectively.

F-32
87
CORPORATE STAFFING RESOURCES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

10. LEASES

The Company leases office space under various noncancelable and
month-to-month operating leases with related and unrelated parties. Future
minimum lease payments for noncancelable operating leases with initial terms of
one year or more are as follows at December 31, 1997:

1998............................................. $1,552,948
1999............................................. 955,135
2000............................................. 559,721
2001............................................. 275,177
2002............................................. 35,230
----------
Total future minimum lease payments.............. $3,378,211
==========

Rent expense totaled approximately $642,000, $633,000 and $1,065,000 in
1995, 1996 and 1997, respectively. Of these amounts, approximately $135,000,
$211,000 and $218,000 in 1995, 1996 and 1997, respectively, represented rent
paid to a shareholder.

11. INCOME TAXES

The Company was formed on January 1, 1997 as the successor to a group of
ten operating corporations which were controlled and managed by two related
shareholders and which operated under Subchapter S of the Internal Revenue Code.
Upon formation, the Company elected to be taxed as a C Corporation and
accordingly adopted the provisions of SFAS No. 109, "Accounting for Income
Taxes." Upon electing to be taxed as a C Corporation and adopting SFAS No. 109,
the Company established a net deferred tax liability of $284,000 representing
the tax effect of cumulative temporary differences as of January 1, 1997.

Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities consisted of the following at
December 31, 1997:

Deferred tax liabilities:
Transaction costs and other............................... $ 65,000
Goodwill.................................................. 96,000
Depreciation.............................................. 5,000
----------
Total deferred tax liabilities.............................. $ 166,000
==========
Deferred tax assets:
Allowance for bad debts................................... $ 93,000
Accrued vacation.......................................... 20,000
Other current liabilities................................. 229,000
Accrued workers' compensation............................. 778,000
----------
Total current deferred tax assets........................... $1,120,000
==========

F-33
88
CORPORATE STAFFING RESOURCES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The components of income tax expense are as follows:

Current:
Federal................................................... $ 828,000
State..................................................... 122,000
----------
Total current............................................... 950,000
----------
Deferred:
Federal................................................... 835,000
State..................................................... 119,000
----------
Total deferred.............................................. 954,000
----------
Total income tax expense.................................... $1,904,000
==========

Following is a reconciliation of the 1997 provision for income taxes
computed at the federal statutory rate (34%) to the reported provision for
income taxes:

AMOUNT
-----------

Income taxes on income before extraordinary item at federal
statutory rate............................................ $ 1,260,000
State taxes, net of federal benefit......................... 180,000
Nondeductible goodwill...................................... 170,000
Other, net.................................................. 10,000
Conversion from S Corporation to C Corporation at January 1,
1997...................................................... 284,000
-----------
Provision for income taxes.................................. $ 1,904,000
===========

12. OTHER RELATED PARTY TRANSACTIONS

The Company has notes payable to shareholders of $2,423,833 at December 31,
1997, which bear interest at 8.0%. Of these notes, annual payments of $150,000
are due during 1998 and 1999 with the remainder due April 12, 2002. Notes
payable to shareholders totaling $2,000,000 at December 31, 1996 were repaid in
full during 1997. Interest expense on notes to related parties totaled
approximately $1,400 and $183,000 during 1996 and 1997, respectively.

At December 31, 1996 and 1997, notes receivable from shareholders, which
bear interest at 7.0%, totaled $422,277 and $560,100, respectively, and are due
on December 31, 2002.

On December 3, 1997, the Company purchased 321,888 shares of common stock
from two stockholders for consideration of $1,609,440 in cash. These shares,
along with 5,100 shares of treasury stock existing at December 31 1996, were
retired by the Company during 1997. Also on December 3, 1997 a cash distribution
of $1,090,560 was made to the same two stockholders.

On December 3, 1997, the Company entered into an Executive Management
Agreement with two of its institutional shareholders. Under the agreement, the
Company receives certain managerial assistance and in return agreed to pay the
parties an aggregate of $375,000 per year. During the year ended December 31,
1997, the Company paid these parties $31,550.

During the years ended December 31, 1995, 1996 and 1997, the Company leased
office space from related parties (see Note 10).

During the year ended December 31, 1997, the Company issued warrants to its
lender and to two shareholders (see Note 6).

F-34
89
CORPORATE STAFFING RESOURCES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

13. CONTINGENCIES

The Company is engaged in certain legal and administrative proceedings
incidental to its normal business activities. While it is not possible to
determine the ultimate outcome of those actions at this time, in the opinion of
management and counsel, it is unlikely that the outcome of such litigation and
other proceedings, will have a material adverse effect on the results of the
Company's operations or on its financial position or cash flows.

14. SUBSEQUENT EVENTS

On February 25, 1998, the Company's Board of Directors approved, by written
consent, the increase of authorized shares of common stock to 15,000,000, all of
which was common stock with a par value of $0.01. In addition, by the same
consent, the Board of Directors approved a 2-for-1 stock split of each
outstanding share of common stock.

The authorization of the common stock and the effects of the stock split
have been reflected retroactively in the accompanying consolidated financial
statements as if they had been consummated at the beginning of the earliest
period presented.

The Board of Directors also authorized and the stockholders of the Company
approved and adopted a stock option plan. A total of 1,500,000 shares of common
stock are authorized and reserved for issuance under this plan. Options granted
under the plan may be either in the form of incentive stock options or
nonqualified stock options.

On January 29, 1998, the Company's Board of Directors granted nonqualified
stock options to purchase an aggregate of 95,000 shares of common stock at an
exercise price of $8.00 per share. The options have a term of 10 years and vest
over 3 years.

Subsequent to December 31, 1997, the Company acquired four staffing
companies (NPS of Atlanta, Inc.; Intranational Computer Consultants, Inc.; CMS
Management Services Company and Monday Temporary Services, Inc.) and two
information technology consulting companies (Networld Solutions, Inc. and
Programming Management & Systems, Inc.) for a combined purchase price of
approximately $41.3 million ($36.3 million cash and $5.0 million in subordinated
notes). In addition, in connection with five of these acquisitions, the Company
agreed to pay the sellers additional consideration which could result in
additional purchase price over the next three years based upon the achievement
of certain operating results by the acquired operations, as defined. Some of
these arrangements are not contractually limited as to the amount. The
acquisitions will be accounted for using the purchase method, and the operating
results of the companies acquired will be included in the Company's 1998
consolidated financial statements from the dates of acquisition. The excess of
the combined purchase price over the cost of acquired net assets ("goodwill") of
$36.2 million will be amortized on a straight-line basis over 40 years. The
portion of the consideration contingent upon future performance will be accrued
in the period earned and recorded as goodwill and amortized over the remaining
life of the existing goodwill.

F-35
90
CORPORATE STAFFING RESOURCES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The following unaudited pro forma results for the years ended December 31,
1996 and 1997 were developed assuming all acquisitions discussed above, as well
as those discussed in Note 3, had been completed at the beginning of each of the
periods described below. For both periods, the unaudited pro forma results are
after giving effect to certain adjustments, including interest expense,
amortization of intangibles, add back of excess compensation paid to
shareholders of certain companies and assuming all entities had been C
Corporations for the entirety of the annual periods.

FOR THE YEARS ENDED
DECEMBER 31,
-------------------
1996 1997
-------- --------

Revenues.................................................... $197,711 $243,366
Income before extraordinary item............................ 2,279 2,955
Income before extraordinary item per share -- basic and
diluted................................................... .24 .31
Weighted average shares outstanding......................... 9,678 9,678

The unaudited pro forma data shown above is not necessarily indicative of
the consolidated results that would have occurred had the acquisitions taken
place at the beginning of each period shown.

F-36
91

REPORT OF INDEPENDENT AUDITORS

Board of Directors
CSR, Inc. and Subsidiaries
South Bend, Indiana

We have audited the accompanying consolidated balance sheets of CSR, Inc.
and Subsidiaries as of December 3, 1997 and May 14, 1997 and the related
consolidated statements of income, shareholders' equity and cash flows for the
period from May 15, 1997 through December 3, 1997, and the consolidated balance
sheet of the Predecessor as of December 31, 1996 and the statements of income,
shareholders' equity and cash flows of the Predecessor for the period from
January 1, 1997 through May 14, 1997 and for the years ended December 31, 1996
and 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of CSR, Inc.
and Subsidiaries as of December 3, 1997 and May 14, 1997 and the results of its
operations and its cash flows from May 15, 1997 through December 3, 1997, and
the financial position of the Predecessor as of December 31, 1996 and the
Predecessor's results of operations and cash flows for the period from January
1, 1997 through May 14, 1997 and for the years ended December 31, 1996 and 1995,
in conformity with generally accepted accounting principles.

CROWE, CHIZEK AND COMPANY LLP

Elkhart, Indiana
March 24, 1998

F-37
92

CSR, INC. AND SUBSIDIARIES AND PREDECESSOR

CONSOLIDATED BALANCE SHEETS

ASSETS

PREDECESSOR THE COMPANY
------------ -------------------------
DECEMBER 31, MAY 14, DECEMBER 3,
1996 1997 1997
------------ ----------- -----------

Current assets
Cash................................................ $ 453,622 $ 46,109 $ 98,112
Accounts receivable, less allowance for doubtful
accounts of $20,480 and $40,480 at May 14 and
December 3, 1997................................. 5,359,684 6,464,181 7,246,291
Prepaid workers' compensation....................... 472,203 -- --
Advances to affiliate............................... 84,639 -- --
Deferred income taxes............................... 65,000 143,000 175,382
Other current assets................................ 101,740 262,299 76,495
---------- ----------- -----------
Total current assets........................ 6,536,888 6,915,589 7,596,280
Furniture, fixtures and equipment, net................ 213,745 208,290 255,705
Other assets
Deferred financing fees, net of accumulated
amortization of $52,143 at December 3, 1997...... -- 577,586 525,443
Goodwill, net of accumulated amortization of
$202,189 at December 3, 1997..................... -- 14,765,492 14,730,464
Other assets........................................ 94,571 42,483 42,483
Advances............................................ -- -- 585,578
---------- ----------- -----------
Total assets................................ $6,845,204 $22,509,440 $23,735,953
========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Checks written in excess of bank balance............ $ -- $ 471,453 $ 245,374
Current maturities of long-term debt................ -- 500,000 833,334
Accounts payable.................................... 161,089 104,545 655,422
Accrued compensation and payroll taxes.............. 1,702,553 1,681,993 2,433,347
Accrued workers' compensation....................... 126,369 436,258 610,301
Income taxes payable................................ 354,000 452,768 341,206
Other current liabilities........................... 35,906 51,135 273,759
---------- ----------- -----------
Total current liabilities................... 2,379,917 3,698,152 5,392,743
Long-term debt........................................ 2,178,740 11,561,159 7,345,581
Minority interest..................................... 84 -- --
Commitments and contingencies......................... -- -- --
Shareholders' equity
Common stock........................................ 1,500 1,100 1,831
Preferred stock 14% cumulative, $.01 par value,
1,000,000 shares authorized with 110,000 and
141,380 outstanding (redemption and liquidation
value of $10,890,000 and $13,998,600) at May 14,
1997 and December 3, 1997, respectively.......... -- 1,100 1,414
Additional paid-in capital.......................... 59,620 7,247,929 10,294,359
Retained earnings................................... 2,225,343 -- 700,025
---------- ----------- -----------
Total shareholders' equity.................. 2,286,463 7,250,129 10,997,629
---------- ----------- -----------
Total liabilities and shareholders'
equity.................................... $6,845,204 $22,509,440 $23,735,953
========== =========== ===========

See accompanying notes.

F-38
93

CSR, INC. AND SUBSIDIARIES AND PREDECESSOR

CONSOLIDATED STATEMENTS OF INCOME

PREDECESSOR THE COMPANY
----------------------------------------- -----------
PERIOD FROM PERIOD FROM
YEAR ENDED DECEMBER 31, JANUARY 1, TO MAY 15, TO
------------------------- MAY 14, DECEMBER 3,
1995 1996 1997 1997
----------- ----------- ------------- -----------

Revenues................................. $42,437,683 $53,086,701 $23,658,130 $42,298,604
Direct cost of services................ 34,091,513 42,610,911 19,003,300 33,503,951
----------- ----------- ----------- -----------
Gross profit............................. 8,346,170 10,475,790 4,654,830 8,794,653
Expenses (other income)
Selling, general and administrative
expenses............................ 7,228,229 8,409,328 3,928,067 6,928,849
Interest expense....................... 236,121 227,951 62,946 589,455
Other.................................. (27,619) -- -- --
----------- ----------- ----------- -----------
7,436,731 8,637,279 3,991,013 7,518,304
----------- ----------- ----------- -----------
Income before income taxes............... 909,439 1,838,511 663,817 1,276,349
Provision for income taxes............... 316,860 705,836 222,984 576,324
----------- ----------- ----------- -----------
Net income............................... $ 592,579 $ 1,132,675 $ 440,833 $ 700,025
=========== =========== =========== ===========

See accompanying notes.

F-39
94

CSR, INC. AND SUBSIDIARIES AND PREDECESSOR

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

ADDITIONAL
COMMON PREFERRED PAID-IN RETAINED
STOCK STOCK CAPITAL EARNINGS TOTAL
------ --------- ----------- ---------- -----------

PREDECESSOR
Balance at December 31, 1994........ $1,500 $ -- $ 59,620 $ 742,007 $ 803,127
Net income........................ -- -- -- 592,579 592,579
Distributions ($1,612 per
share)......................... -- -- -- (241,918) (241,918)
------ ------ ----------- ---------- -----------
Balance at December 31, 1995........ 1,500 -- 59,620 1,092,668 1,153,788
Net income........................ -- -- -- 1,132,675 1,132,675
------ ------ ----------- ---------- -----------
Balance at December 31, 1996........ 1,500 -- 59,620 2,225,343 2,286,463
Net income........................ -- -- -- 440,833 440,833
Distributions ($105 per share).... -- -- -- (15,821) (15,821)
Redemption of common stock at
subsidiary level............... -- -- -- (183,152) (183,152)
------ ------ ----------- ---------- -----------
Balance at May 14, 1997............. $1,500 $ -- $ 59,620 $2,467,203 $ 2,528,323
====== ====== =========== ========== ===========
THE COMPANY
Initial capitalization of the
Company........................ $1,100 $1,100 $ 7,247,929 $ -- $ 7,250,129
Issuance of stock.............. 731 314 3,046,430 -- 3,047,475
Net income..................... -- -- -- 700,025 700,025
------ ------ ----------- ---------- -----------
Balance at December 3, 1997......... $1,831 $1,414 $10,294,359 $ 700,025 $10,997,629
====== ====== =========== ========== ===========

See accompanying notes.

F-40
95

CSR, INC. AND SUBSIDIARIES AND PREDECESSOR

CONSOLIDATED STATEMENTS OF CASH FLOWS

PREDECESSOR THE COMPANY
----------------------------------------- ---------------
PERIOD FROM PERIOD FROM
YEAR ENDED DECEMBER 31, JANUARY 1, 1997 MAY 15, 1997 TO
----------------------- TO MAY 14, DECEMBER 3,
1995 1996 1997 1997
--------- ----------- --------------- ---------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income...................................... $ 592,579 $ 1,132,675 $ 440,833 $ 700,025
Adjustments to reconcile net income to net cash
from operating activities
Provision for losses on accounts receivable... 64,374 48,115 52,299 --
Depreciation.................................. 128,279 112,036 27,103 66,579
Amortization.................................. -- -- -- 254,566
Deferred income taxes......................... (37,000) (28,000) -- (32,382)
Loss on sale of fixed assets.................. 3,610 596 -- --
Changes in assets and liabilities
Accounts receivable........................ (501,657) (1,271,842) (1,176,796) (782,110)
Other current assets....................... (164,586) (330,049) 311,644 185,804
Other assets............................... (68,465) 42,544 51,788 --
Accounts payable........................... (9,364) (33,847) (56,544) 550,877
Other current liabilities.................. 158,702 826,531 9,321 1,036,459
--------- ----------- ----------- ------------
Net cash from operating activities.............. 166,472 498,759 (340,352) 1,979,818
CASH FLOWS FROM INVESTING ACTIVITIES
Fees related to acquisition..................... -- -- -- (1,066,331)
Payment for acquisition of predecessor
business -- net of cash acquired.............. -- -- -- (17,570,891)
Capital expenditures............................ (103,378) (30,272) (21,648) (113,994)
Proceeds from repayment of advances
(advances).................................... -- (84,639) 84,639 (585,578)
Proceeds from notes receivable from
shareholder................................... 217,836 81,780 -- --
Other........................................... -- 283 -- (30,343)
--------- ----------- ----------- ------------
Net cash from investing activities.............. 114,458 (32,848) 62,991 (19,367,137)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) on revolving line of
credit agreements............................. (222,277) 408,010 (402,632) (665,577)
Checks written in excess of bank balance........ 222,499 (222,499) 471,453 (226,079)
Payments on notes payable to shareholders....... (88,642) (197,800) -- --
Redemption of common stock at subsidiary
level......................................... -- -- (183,152) --
Distributions paid.............................. (241,918) -- (15,821) --
Borrowings on long-term debt.................... -- -- -- 10,277,756
Debt issuance costs............................. -- -- -- (97,586)
Principal payments on long-term debt............ -- -- -- (3,216,667)
Proceeds from issuance of stock................. -- -- -- 11,367,475
--------- ----------- ----------- ------------
Net cash from financing activities.............. (330,338) (12,289) (130,152) 17,439,322
--------- ----------- ----------- ------------
Net change in cash.............................. (49,408) 453,622 (407,513) 52,003
Cash at beginning of period..................... 49,408 -- 453,622 46,109
--------- ----------- ----------- ------------
Cash at end of period........................... $ -- $ 453,622 $ 46,109 $ 98,112
========= =========== =========== ============

See accompanying notes.

F-41
96

CSR, INC. AND SUBSIDIARIES AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- NATURE OF BUSINESS AND BASIS OF PRESENTATION

The consolidated financial statements include the accounts of CSR, Inc.
(the "Company") and its wholly owned subsidiaries Corporate Staffing Resources,
Inc., Corporate Staffing Resources, LLC and Corporate Staffing Resources, Inc.
of St. Louis. The financial statements of December 31, 1995 and 1996 and the
statements of income and cash flows for the period from January 1, 1997 through
May 14, 1997 represent the results of the predecessor. The balance sheet at May
14, 1997 and the financial statements of December 3, 1997 represent the results
of the successor Company.

The Company is an employee staffing organization with emphasis in skilled
light industrial, clerical and outplacement staffing on a regional basis and
information technology staffing on a national basis.

On May 14, 1997, CSR, Inc., a newly formed corporation, acquired 100% of
the stock of Corporate Staffing Resources, Inc. The former shareholders of
Corporate Staffing Resources, Inc., retained 20% of the common stock of CSR,
Inc. This transaction was accounted for as a purchase. The equity of CSR, Inc.
includes 20% of the carryover basis in net assets of Corporate Staffing
Resources, Inc. Subsequent to the transaction Corporate Staffing Resources, Inc.
changed its name to Corporate Staffing Resources of Indiana, Inc.

The total purchase price amounted to approximately $20,381,000 of which
$17,617,000 was paid in cash to shareholders. The purchase price exceeded the
fair value of the net assets acquired by approximately $14,900,000. The
consolidated balance sheet as of May 14, 1997 presents the financial position of
CSR, Inc. and Subsidiaries immediately subsequent to the purchase.

During 1995, Corporate Staffing Resources of St. Louis, Inc. was
contributed by its shareholders to Corporate Staffing Resources, LLC. Also
during 1995, Corporate Staffing Resources of Sturgis, Inc. and Corporate
Staffing Resources of Tennessee, Inc., formerly affiliated companies, were
merged into the Company. These transactions were accounted for at historical
cost as a pooling of interests and, accordingly, all consolidated financial
statements reflect the transactions as effective as of the beginning of the
year. The distributions for 1995 of $241,918 were all paid by the merged
companies prior to the actual merger date.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Estimates and Assumptions: The financial statements have been prepared in
conformity with generally accepted accounting principles which 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. The accrual for workers' compensation expenditures and the estimate
of amortization on the goodwill require the use of significant estimates. The
Company believes the techniques and assumptions used in establishing these
amounts are appropriate.

Revenue Recognition: Service revenues are recognized as income at the time
staffing services are provided. An allowance for uncollectible accounts is
provided for the amount not probable of collection.

Furniture, Fixtures and Equipment: Furniture, fixtures and office equipment
is recorded at cost. Depreciation is computed using accelerated methods over the
estimated useful lives of the assets.

Intangible Assets: Intangible assets consist of the excess of the purchase
price over the estimated fair value of the net assets (goodwill) acquired from
Corporate Staffing Resources, Inc. and loan issuance costs. The goodwill is
being amortized on a straight-line basis over 40 years. Goodwill is periodically
assessed for impairment based on undiscounted projected cash flows. The loan
issuance costs are being amortized on a straight-line basis over the life of the
related loans.

F-42
97
CSR, INC. AND SUBSIDIARIES AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Workers' Compensation: A liability is recorded for workers' compensation
claims when amounts to be paid can be reasonably estimated.

Income Taxes: Income taxes are provided based on the liability method of
accounting pursuant to ("SFAS") No. 109 which requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of assets
and liabilities.

Deferred income tax assets consist primarily of the tax effects of accrued
expenses.

Advertising Expense: The cost of advertising is expensed when incurred. The
Company incurred advertising expense of $419,524 for the year ended December 31,
1995, $531,327 for the year ended December 31, 1996, $288,498 for the period
ended May 14, 1997 and $540,294 for the period ended December 3, 1997.

Reclassifications: Certain items in the financial statements from prior
years have been reclassified to conform with current presentation.

NOTE 3 -- FURNITURE, FIXTURES AND EQUIPMENT

Furniture, fixtures and equipment consist of the following:

DECEMBER 31, MAY 14, DECEMBER 3,
1996 1997 1997
------------ -------- -----------

Furniture and fixtures............................ $866,485 $164,168 $244,096
Transportation equipment.......................... 1,193 -- --
Leasehold improvements............................ 34,410 44,122 78,188
-------- -------- --------
902,088 208,290 322,284
Accumulated depreciation.......................... 688,343 -- 66,579
-------- -------- --------
$213,745 $208,290 $255,705
======== ======== ========

NOTE 4 -- DEBT

Debt at May 14, 1997 and December 3, 1997 consists of the following:

MAY 14, DECEMBER 3,
1997 1997
----------- -----------

Variable rate (9.75%) revolving credit facility up to the
lesser of $6,000,000 or a percentage of the Company's
accounts receivable, due March 2002....................... $ 1,061,159 $ 395,582
Variable rate (9.75%) note payable due in varying quarterly
installments plus interest through March 2003............. 5,500,000 5,333,333
Variable rate (10.5%) note payable due in quarterly
installments of $25,000 plus interest through March 2003
when the remaining principal balance is due............... 2,500,000 2,450,000
Variable rate (10.5%) note payable, interest only due
through May 2002 followed by varying quarterly
installments plus interest through March 2004. Subsequent
to May 14, 1997 this note was paid in full (Note 8)....... 3,000,000 --
----------- ----------
12,061,159 8,178,915
Less current maturities..................................... 500,000 833,334
----------- ----------
$11,561,159 $7,345,581
=========== ==========

F-43
98
CSR, INC. AND SUBSIDIARIES AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The interest rates for all of the above debt are based on periodic
elections made by the Company and are at a rate related to the prime rate or
LIBOR and are subject to change depending upon the Company's attainment of
certain financial ratios.

All of the above debt is secured by substantially all the assets of the
Company and life insurance policies on certain officers. In conjunction with the
merger (Note 13), another financial institution refinanced all of the Company
debt which is reflected in the above classification of long-term debt.

As of December 3, 1997 the Company had an outstanding letter of credit of
$663,000.

Prior to May 15, 1997, the Company maintained a revolving credit facility
with a bank which enabled it to borrow up to the lesser of $5,000,000 or a
percentage of the Company's accounts receivable. Interest was payable at the
bank's prime rate plus .5% depending upon the Company's attainment of certain
financial ratios. The line was secured by accounts receivable and furniture,
fixtures and equipment and matured May 31, 1998.

Debt is due over the next five years as follows:

DECEMBER 3, 1997
----------------

1998........................................ $ 833,334
1999........................................ 1,150,000
2000........................................ 1,300,000
2001........................................ 1,600,000
2002........................................ 1,900,000

NOTE 5 -- INCOME TAXES

Deferred income taxes in the accompanying balance sheet consist of the
following:

DECEMBER 31, MAY 14, DECEMBER 3,
1996 1997 1997
------------ -------- -----------

Deferred tax assets............................... $65,000 $143,000 $176,382
Deferred tax liabilities.......................... -- -- --

There is no provision for a valuation allowance on the deferred tax assets.

The provision for income taxes consists of the following:

DECEMBER 31, DECEMBER 31, MAY 14, DECEMBER 3,
1995 1996 1997 1997
------------ ------------ -------- -----------

Current income taxes
Federal income tax.................. $293,922 $605,739 $177,084 $496,606
State income tax.................... 59,938 128,097 45,900 112,100
-------- -------- -------- --------
353,860 733,836 222,984 608,706
Deferred income taxes................. (37,000) (28,000) -- (32,382)
-------- -------- -------- --------
$316,860 $705,836 $222,984 $576,324
======== ======== ======== ========

F-44
99
CSR, INC. AND SUBSIDIARIES AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Following is a reconciliation of provision for income taxes computed at the
federal statutory rate (34%) to the reported provision for income taxes:

DECEMBER 31, DECEMBER 31, MAY 14, DECEMBER 3,
1995 1996 1997 1997
------------ ------------ -------- -----------

Income tax at 34% statutory rate...... $309,209 $625,094 $225,698 $433,959
Effect of:
State income taxes, net of federal
tax effect....................... 39,559 84,544 30,294 73,986
Income taxed as S-Corporation....... (22,736) -- -- --
Goodwill amortization............... -- -- -- 68,744
Other............................... (9,172) (3,802) (33,008) (365)
-------- -------- -------- --------
$316,860 $705,836 $222,984 $576,324
======== ======== ======== ========

NOTE 6 -- INCENTIVE STOCK PLAN

During 1997 the Company implemented an incentive stock plan for certain
management employees. Shares of common stock were purchased at $1 per share
which was considered fair market value. The shares are subject to a stock
restriction agreement. As of December 3, 1997 all committed shares were
purchased.

NOTE 7 -- RETIREMENT PLAN

During 1996, the Company implemented a defined contribution plan covering
substantially all of its employees. Eligible employees may contribute a
percentage of their compensation to this plan, and their contributions are
matched by the Company on a discretionary basis. Total costs under this plan was
approximately $17,800 for the year ended December 31, 1996, $12,122 for the
period ended May 14, 1997, and $11,403 for the period ended December 3, 1997.

NOTE 8 -- WARRANTS, PREFERRED AND COMMON STOCK

Pursuant to the acquisition, the Company issued $.01 par common stock
warrants to the debt holder that entitled them to purchase 4,235 shares of
common stock for a nominal amount. Subsequently, in June 1997, a note for
$3,000,000 was paid in full reducing the amount of warrants eligible to 1,810
shares. All warrants had been exercised at December 3, 1997. The value of the
warrants was considered nominal based on the belief of management and
representations by the holders.

In addition, the Company entered into an agreement that entitles a
shareholder to purchase 9,075 shares of common stock for $1 per share. These
shares were purchased during the period ended December 3, 1997.

The preferred stock is redeemable at the Company's option with debt holders
approval at $99 per share. The preferred stock also has a liquidation preference
at $99 per share. As a result of the merger (Note 13) the preferred shareholders
converted all their shares and accumulated dividends of approximately $1,050,000
into common stock.

Common stock consisted of the following:

DECEMBER 31, DECEMBER 31, MAY 14, DECEMBER 3,
1995 1996 1997 1997
------------ ------------ --------- -----------

Shares issued and outstanding........ 150 150 110,000 183,050
Par value............................ None None $ .01 $ .01
Shares authorized.................... 10,000,000 10,000,000 1,000,000 1,000,000

F-45
100
CSR, INC. AND SUBSIDIARIES AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 9 -- LEASE COMMITMENTS

The Company has entered into various lease agreements for the use of its
facilities. The leases expire at various times through fiscal year 2000 with
total monthly payments of approximately $76,000, plus insurance and property
taxes for the facilities. Total lease expense under these agreements for the
periods ended December 31, 1995, December 31, 1996, May 14, 1997 and December 3,
1997 were approximately $428,000, $475,000, $258,000 and $359,000, respectively.

Minimum rental provisions over the terms of the leases are approximately as
follows:

DECEMBER 3, 1997
----------------

1998........................................ $ 666,000
1999........................................ 248,000
2000........................................ 92,000
----------
$1,006,000
==========

NOTE 10 -- CONTINGENCIES

In addition to workers' compensation claims, the Company is a defendant in
certain legal actions or claims arising from normal business activities
primarily related to employment matters. Legal counsel is unable to determine
the likelihood of loss or the amount, if any, to be incurred by the Company in
settlement of these claims. Accordingly, the probability of loss is
undeterminable, and no provision has been recorded. It is reasonably possible
that this estimate may change.

NOTE 11 -- RELATED PARTY TRANSACTIONS

During 1997 the Company entered into an agreement with two of its
shareholders that requires an annual base fee of $250,000 plus expenses in
exchange for consulting services through May 2002. The expense for these
services was $139,454 for the period ended December 3, 1997.

NOTE 12 -- SUPPLEMENTAL CASH FLOW DISCLOSURES

DECEMBER 31, DECEMBER 31, MAY 14, DECEMBER 3,
1995 1996 1997 1997
------------ ------------ -------- -----------

Cash paid during the period for
Interest............................ $236,016 $226,607 $ 78,371 $542,401
Income taxes........................ 347,860 492,836 366,869 726,744

Effective May 14, 1997, the Company issued 4,800 shares of common and
preferred stock in satisfaction of a loan financing fee of $480,000.

Also, as part of the acquisition of May 14, 1997, $1,783,403 of debt was
refinanced.

During 1995, two affiliates were merged into the Company. As a result,
additional paid in capital, net of common stock redeemed, was contributed to the
Company totaling approximately $24,000. Also, a note payable-shareholder of
approximately $26,000 was contributed to the Company as additional paid in
capital.

NOTE 13 -- SUBSEQUENT EVENTS

Effective December 3, 1997 the Company merged with another staffing company
Mega Force Staffing Companies, Inc. (Mega Force). Costs expended by the Company
in connection with the merger that are the responsibility of Mega Force are
recorded as an asset at December 3, 1997, and are to be reimbursed.

F-46
101

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Members
The Hamilton-Ryker Company, LLC

We have audited the accompanying balance sheets of The Hamilton-Ryker
Company, LLC ("the Company") as of December 31, 1995 and 1996, and the related
statements of income and members' capital and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Hamilton-Ryker Company,
LLC at December 31, 1995 and 1996, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.

ERNST & YOUNG LLP

Raleigh, North Carolina
May 8, 1998

F-47
102

THE HAMILTON-RYKER COMPANY, LLC

BALANCE SHEETS

ASSETS

DECEMBER 31,
------------------------
1995 1996
---------- ----------

Current assets:
Cash and cash equivalents................................. $ 842,444 $1,593,307
Accounts receivable, less allowance for doubtful accounts
of $390,000 and $12,598 at December 31, 1995 and
1996................................................... 2,400,253 3,457,781
Deferred tax asset........................................ 150,000 --
Prepaid expenses and other................................ 17,319 73,202
---------- ----------
Total current assets.............................. 3,410,016 5,124,290
Property and equipment, net................................. 215,221 556,385
Intangible assets, net of accumulated amortization of
$5,188.................................................... -- 1,239,957
Receivable from shareholder................................. 217,945 --
Other assets................................................ -- 4,430
---------- ----------
Total assets...................................... $3,843,182 $6,925,062
========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY/MEMBERS' CAPITAL
Current liabilities:
Customer deposits......................................... $ 5,020 $ 182,999
Accrued payroll........................................... 274,146 544,434
Accrued payroll taxes and benefits........................ 266,670 241,364
Income taxes payable...................................... 145,611 --
Borrowings under line of credit........................... -- 850,000
Current maturities of long-term debt...................... -- 150,000
Other current liabilities................................. 253,358 86,153
---------- ----------
Total current liabilities......................... 944,805 2,054,950
Long-term debt, less current maturities..................... -- 3,046,337
Deferred income taxes....................................... 352,000 --

Shareholders' equity/members' capital
Common stock........................................... 2,000 --
Retained earnings/members' capital.......................... 2,544,377 1,823,775
---------- ----------
Total liabilities and shareholders'
equity/members' capital......................... $3,843,182 $6,925,062
========== ==========

See accompanying notes.

F-48
103

THE HAMILTON-RYKER COMPANY, LLC

STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31,
--------------------------
1995 1996
----------- -----------

Revenues.................................................... $30,328,764 $32,187,952
Cost of services.......................................... 25,529,508 26,507,177
----------- -----------
Gross profit................................................ 4,799,256 5,680,775
Other (income) expense:
Selling, general and administrative expenses.............. 4,189,927 3,960,202
Depreciation and amortization............................. 56,665 143,095
Interest expense.......................................... 10,565 266,670
Other..................................................... (351,238) (455,900)
----------- -----------
Income before income taxes.................................. 893,337 1,766,708
Income tax expense
Current................................................... 165,000 --
Deferred.................................................. 202,000 --
----------- -----------
367,000 --
----------- -----------
Net income.................................................. $ 526,337 $ 1,766,708
=========== ===========

See accompanying notes.

F-49
104

THE HAMILTON-RYKER COMPANY, LLC

STATEMENTS OF SHAREHOLDERS' EQUITY/MEMBERS' CAPITAL

COMMON RETAINED EARNINGS/
STOCK MEMBERS' CAPITAL TOTAL
------- ------------------ -----------

Balance at December 31, 1994........................ $ 2,000 $ 2,018,040 $ 2,020,040
Net income for 1995............................... -- 526,337 526,337
------- ----------- -----------
Balance at December 31, 1995........................ 2,000 2,544,377 2,546,377
Recapitalization.................................. (2,000) (2,487,310) (2,489,310)
Net income for 1996............................... -- 1,766,708 1,766,708
------- ----------- -----------
Balance at December 31,1996......................... $ -- $ 1,823,775 $ 1,823,775
======= =========== ===========

See accompanying notes.

F-50
105

THE HAMILTON-RYKER COMPANY, LLC

STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
-------------------------
1995 1996
---------- -----------

OPERATING ACTIVITIES
Net income.................................................. $ 526,337 $ 1,766,708
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation and amortization............................. 56,665 143,095
Deferred taxes............................................ 202,000 --
Changes in operating assets and liabilities:
Accounts receivable.................................... (222,293) (1,273,510)
Prepaid expenses and other............................. 36,608 (67,813)
Other assets........................................... -- 2,452
Customer deposits...................................... (270,596) 94,434
Accrued payroll taxes and benefits..................... 429,042 31,997
Other current liabilities.............................. (366,414) 590,294
Income tax payable..................................... 145,611 --
Payable to affiliate................................... (553,118) --
---------- -----------
Net cash provided by (used in) operating activities......... (16,158) 1,287,657
INVESTING ACTIVITIES
Purchase of assets of CM Management, Inc.................... -- (850,000)
Purchases of property and equipment......................... (102,139) (474,794)
Additions to intangible assets.............................. -- (62,000)
---------- -----------
Net cash used in investing activities....................... (102,139) (1,386,794)
FINANCING ACTIVITIES
Increase in borrowings under line of credit................. -- 850,000
Increase in receivable from shareholder..................... (82,505)
---------- -----------
Net cash provided by (used in) financing activities......... (82,505) 850,000
---------- -----------
Net increase (decrease) in cash and cash equivalents........ (200,802) 750,863
Cash and cash equivalents at beginning of year.............. 1,043,246 842,444
---------- -----------
Cash and cash equivalents at end of year.................... $ 842,444 $ 1,593,307
========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest...................... $ 7,712 $ 229,592
========== ===========
Cash paid during the year for income taxes.................. $ 22,800 $ --
========== ===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
In 1996, the Company issued a $450,000 note payable as
partial consideration for the purchase of assets of CM
Management, Inc.

See accompanying notes.

F-51
106

THE HAMILTON-RYKER COMPANY, LLC

NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

Description of Business

The Hamilton-Ryker Company, LLC (the "Company") is a human resource
staffing company. The Company operates primarily in Tennessee, Kentucky,
Mississippi and Missouri serving predominantly the clerical and light industrial
markets. The Company was formed for the purpose of continuing the operations of
Myron Services, Inc., Temp Team, Inc. and Hamryk Services, Inc., all of which
were involved in the staffing services industry. In connection with the
formation of the Company, a portion of the shareholders' equity of the
predecessor companies was recapitalized into a $2,746,337 note payable to the
members. In March 1997, the Company ceased operating as a limited liability
company when the members exchanged 100% of their interests for ownership in Mega
Force Staffing Companies Inc. (Note 7).

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.

Concentration of Credit Risk

The Company's principal financial instrument subject to potential
concentration of credit risk is accounts receivable which are unsecured. The
Company provides an allowance for doubtful accounts equal to estimated losses
expected to be incurred in the collection of accounts receivable.

Property and Equipment

Property and equipment is stated at cost. Depreciation is computed by
accelerated methods over the estimated useful lives of the assets, ranging from
3 to 7 years. Depreciation expense was $56,665 and $137,907 in 1995 and 1996,
respectively.

Advertising Expense

The cost of advertising is expensed when incurred. The Company incurred
advertising expense of $129,309 and $115,355 in 1995 and 1996, respectively.

Intangible Assets

Intangible assets consists primarily of goodwill and capitalized
professional fees related to a business acquisition. Goodwill is amortized on a
straight-line basis over forty years. Amortization expense was $0 and $5,188 in
1995 and 1996, respectively.

Related Party Transactions

The Company routinely transacts business with various individuals that are
members of the Company. In 1995 and 1996, the Company paid $858,000 and
$394,000, respectively, of management fees to a related party.

Receivable from shareholder of $217,945 at December 31, 1995 represents an
unsecured, non-interest bearing obligation and has no fixed repayment schedule.

Income Taxes

During 1995, the Company operated under the provisions of Subchapter C of
the Internal Revenue Code. As such, the Company accounted for income taxes using
the liability method as prescribed by SFAS No. 109

F-52
107
THE HAMILTON-RYKER COMPANY, LLC

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

"Accounting for Income Taxes." The liability method recognizes deferred tax
assets and liabilities based on differences between the financial reporting and
tax bases of assets and liabilities.

Effective January 1, 1997, the Company began operating under the provisions
of Subchapter S of the Internal Revenue Code, and consequently, was not subject
to federal income tax; rather the shareholders were liable for individual income
taxes on their respective share of taxable income.

Use of Estimates

Fair Value of Financial Instruments

The fair value of notes payable is based upon the Company's effective
current borrowing rate for debt with similar terms and remaining maturities.

2. ACQUISITION

On October 30, 1996, the Company acquired the assets of CM Management
Services, a human resource staffing company for $1,300,000. The Company
accounted for the acquisition under the purchase method of accounting and
recorded $1,183,145 of related goodwill. The results of operations for the year
ended December 31, 1996 included the results of operations from the purchased
business from the date of acquisition. The business combination agreement
provides for contingent cash consideration to be paid on an annual basis over
the next three years if certain earnings levels are achieved.

3. LINE-OF-CREDIT

The Company maintains a $1,350,000 line of credit facility with a bank due
on demand or February 1997. The agreement is a closed end credit facility in
which the Company can borrow up to the maximum amount once. The facility bears
interest at the prime rate plus 0.75% (9% at December 31, 1996). The facility is
collateralized by substantially all of the Company's assets and is personally
guaranteed by members of the Company. Borrowings under the facility were
$850,000 at December 31, 1996.

Additionally, the Company maintains a $850,000 line of credit facility with
a bank, due on demand or February 1997. The facility bears interest at the prime
rate plus 0.75% (9% at December 31, 1996). The facility is collateralized by
substantially all of the Company's assets and is personally guaranteed by the
members of the Company. There were no borrowings under the facility at December
31, 1996.

F-53
108
THE HAMILTON-RYKER COMPANY, LLC

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1995 and 1996:

DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------

Note payable to a third party, payable in annual principal
installments of $150,000 through 1999, interest payable
monthly at 8%.......................................... $ -- $ 450,000
Notes payable to related parties, interest payable monthly
at 9%, due December 2001.................................. -- 2,746,337
---- ----------
Total....................................................... -- 3,196,337
Less current portion........................................ -- 150,000
---- ----------
Long-term portion........................................... $ -- $3,046,337
==== ==========

Aggregate maturities of long-term debt for the years subsequent to December
31, 1996 are as follows:

1997............................................. $ 150,000
1998............................................. 150,000
1999............................................. 150,000
2000............................................. --
2001............................................. 2,746,337
----------
$3,196,337
==========

In 1995 and 1996, the Company incurred approximately $0 and $247,000,
respectively, in interest expense due to related parties.

5. LEASES

1997.............................................. $333,313
1998.............................................. 285,127
1999.............................................. 228,680
2000.............................................. 65,867
2001.............................................. 10,695
--------
Total minimum lease payments...................... $923,682
========

Rent expense totaled approximately $139,000 and $187,000 in 1995 and 1996,
respectively. Approximately $34,300 and $31,000 of this amount represents rent
paid to a related party in 1995 and 1996.

6. 401(k) SAVINGS PLAN

The Company maintains a defined contribution plan under Section 401(k) of
the Internal Revenue Code covering certain employees who meet specified
criteria. The Company matches 50% of employee contributions up to 5% of the
respective employee's annual salary. Employer contributions were approximately
$23,000 in 1996.

F-54
109
THE HAMILTON-RYKER COMPANY, LLC

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. INCOME TAXES

Deferred tax assets:
Allowance for bad debts................................... $150,000
--------
Total current deferred tax assets........................... $150,000
========
Deferred tax liabilities:
Employee benefits......................................... $352,000
--------
Total deferred tax liabilities.............................. $352,000
========

A reconciliation of the provision for income tax expense computed by
applying the statutory federal income tax rate to pre-tax earnings at December
31, 1995 is as follows:

Computed federal income tax at statutory rate............... $304,000
State taxes, net of federal benefit......................... 54,000
Non-deductible expenses..................................... 9,000
--------
Income tax expense.......................................... $367,000
========

8. SUBSEQUENT EVENTS

In March 1997, the Company merged with Mega Force Staffing Companies, Inc.,
a human resource staffing company and became a wholly owned subsidiary of Mega
Force Staffing Companies, Inc.

F-55
110

CMS MANAGEMENT SERVICES COMPANY

UNAUDITED CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 1998

ASSETS

Current assets
Cash...................................................... $ 749,650
Accounts receivable....................................... 1,733,001
Prepaid expenses and other................................ 63,526
----------
Total current assets.............................. 2,546,177
Property and equipment, net................................. 327,428
Other assets................................................ 150,256
----------
$3,023,861
==========
LIABILITIES AND OWNERS' EQUITY
Current liabilities
Note payable, bank........................................ $ 350,000
Current maturities of long-term debt...................... 80,740
Accounts payable.......................................... 215,959
Accrued expense........................................... 612,214
Deferred income taxes..................................... 230,000
----------
Total current liabilities......................... 1,488,913
Deferred compensation....................................... 111,085
----------
1,599,998
Owners' equity:
Common stock.............................................. 2,200
Additional paid-in capital................................ 158,674
Retained earnings and members' equity..................... 1,262,989
----------
Total owners' equity.............................. 1,423,863
----------
Total liabilities and owners' equity.............. $3,023,861
==========

See accompanying notes.

F-56
111

CMS MANAGEMENT SERVICES COMPANY

UNAUDITED CONDENSED COMBINED STATEMENTS OF INCOME

THREE MONTHS ENDED
MARCH 31,
-----------------------
1997 1998
---------- ----------

Service revenues............................................ $3,104,720 $4,255,873
Cost of services.......................................... 1,645,705 2,343,069
---------- ----------
Gross profit................................................ 1,459,015 1,912,804
Operating expenses:
Selling, general, and administrative expenses............. 1,214,158 1,402,868
Depreciation.............................................. 34,305 37,416
---------- ----------
Operating income............................................ 210,552 472,520
---------- ----------
Other (income) expense:
Interest expense.......................................... 10,043 18,086
Other, net................................................ (26,452) (4,757)
---------- ----------
(16,409) 13,329
---------- ----------
Income before provision for income taxes.................... 226,961 459,191
Provision for income taxes.................................. -- --
---------- ----------
Net income.................................................. $ 226,961 $ 459,191
========== ==========

See accompanying notes.

F-57
112

CMS MANAGEMENT SERVICES COMPANY

UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED
MARCH 31,
---------------------
1997 1998
--------- ---------

OPERATING ACTIVITIES
Net income.................................................. $ 226,961 $ 459,191
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.............................................. 34,305 37,416
Change in assets and liabilities:
Accounts receivable.................................... 232,161 24,138
Prepaid expenses....................................... 15,648 7,948
Accounts payable....................................... (78,611) 58,599
Accrued expenses....................................... 92,112 166,847
Income taxes payable................................... (17,000) --
--------- ---------
Net cash provided by operating activities................... 505,576 754,139
--------- ---------
INVESTING ACTIVITIES
Capital expenditures........................................ (27,029) (34,579)
(Collections) advances of notes receivable.................. (83,464) 99,011
--------- ---------
Net cash provided by (used in) investing activities......... (110,493) 64,432
--------- ---------
FINANCING ACTIVITIES
Proceeds from borrowings.................................... 200,000 --
Payments on debt and borrowings............................. (30,768) (419,733)
Contribution from stockholders.............................. 91,817 --
Distribution to stockholders................................ (233,353) --
--------- ---------
Net cash provided by (used in) financing activities......... 27,696 (419,733)
--------- ---------
Increase in cash............................................ 422,779 398,838
Cash at beginning of year................................... 104,848 350,812
--------- ---------
Cash at end of year......................................... $ 527,627 $ 749,650
========= =========

See accompanying notes.

F-58
113

CMS MANAGEMENT SERVICES COMPANY

NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
MARCH 31, 1998

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

Nature of Business:

CMS Management Services Company is a name describing a group of separate
entities related through common ownership.

CMS Management Services Company is a regional staffing firm specializing in
financial and information technology, people and projects, and outplacement
services. These services are offered to customers primarily in the Midwestern
United States. Billings are due upon receipt.

The combined financial statements include the accounts of CMS Management
Services Co., TemPro Resources, Inc. CMS/TemPro of Indianapolis, Inc., CMS
Services, Inc. and CMS/TemPro of Nashville, LLC, a limited liability company.
All significant intercompany accounts and transactions have been eliminated in
combination.

Basis of Presentation:

The unaudited condensed combined financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (considering of normal recurring accruals)
considered necessary for a fair presentation have been included. These financial
statements should be read in conjunction with CMS Management Services Company
audited financial statements for the year ended December 31, 1997, included
elsewhere in this Prospectus.

2. SUBSEQUENT EVENT

On May 1,1998, Corporate Staffing Resources, Inc. acquired substantially
all of the assets and liabilities of CMS Management Services Co., TemPro
Resources, Inc., CMS Services, Inc. and CMS/TemPro of Nashville, LLC, and
acquired 100% of the stock of CMS/TemPro of Indianapolis, Inc.

F-59
114

REPORT OF INDEPENDENT AUDITORS

To The Board Of Directors And Members
CMS Management Services Company
South Bend, Indiana

We have audited the accompanying combined balance sheet of CMS Management
Services Company as of December 31, 1997, and the related combined statements of
income, retained earnings and members' equity, and cash flows for the year then
ended. These financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of CMS Management
Services Company as of December 31, 1997, and the results of their operations
and their cash flows for the year then ended, in conformity with generally
accepted accounting principles.

McGLADREY & PULLEN, LLP

South Bend, Indiana
February 20, 1998, except for Note 4, as
to which the date is April 27, 1998 and
Note 10, to which the date is May 1, 1998

F-60
115

CMS MANAGEMENT SERVICES COMPANY

COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1997

ASSETS

Current assets
Cash...................................................... $ 350,812
Accounts receivable....................................... 1,793,178
Notes receivable, stockholder............................. 99,011
Prepaid expenses and other................................ 35,435
----------
Total current assets.............................. 2,278,436
Furniture and equipment, net of accumulated depreciation of
$548,470.................................................. 330,265
Other assets................................................ 150,256
----------
$2,758,957
==========
LIABILITIES AND OWNERS' EQUITY
Current liabilities
Note payable, bank........................................ $ 645,000
Current maturities of long-term debt...................... 188,671
Accounts payable.......................................... 157,360
Accrued expenses.......................................... 445,367
Deferred income taxes..................................... 230,000
----------
Total current liabilities......................... 1,666,398
Long-Term debt, less current maturities..................... 16,802
Deferred compensation....................................... 111,085
----------
Total liabilities................................. 1,794,285
Owners' equity:
Common stock.............................................. 2,200
Additional paid-in capital................................ 158,674
Retained earnings and members' equity..................... 803,798
----------
Total owners' equity.............................. 964,672
----------
Total liabilities and owners' equity.............. $2,758,957
==========

See accompanying notes.

F-61
116

CMS MANAGEMENT SERVICES COMPANY

COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997

Service revenues............................................ $13,884,795
Cost of services.......................................... 7,261,319
-----------
Gross profit................................................ 6,623,476
Operating expenses:
Selling, general, and administrative expenses............. 6,364,440
Depreciation.............................................. 153,682
-----------
Operating income............................................ 105,354
-----------
Other (income) expense:
Interest expense.......................................... 44,114
Other, net................................................ (68,342)
-----------
(24,228)
-----------
Income before provision for income taxes.................... 129,582
Benefit from income taxes................................... 61,000
-----------
Net income.................................................. $ 190,582
===========

See accompanying notes.

F-62
117

CMS MANAGEMENT SERVICES COMPANY

COMBINED STATEMENT OF RETAINED EARNINGS AND MEMBERS' EQUITY
YEAR ENDED DECEMBER 31, 1997

Balance at beginning of year................................ $ 754,752
Members' capital contributions............................ 91,817
Net income................................................ 190,582
Dividends................................................. (233,353)
---------
Balance at end of year...................................... $ 803,798
=========

See accompanying notes.

F-63
118

CMS MANAGEMENT SERVICES COMPANY

COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997

OPERATING ACTIVITIES
Net income.................................................. $ 190,582
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.............................................. 153,682
Loss on sale of property and equipment.................... 13,828
Deferred income taxes..................................... (61,000)
Deferred compensation..................................... 44,800
Change in assets and liabilities:
Accounts receivable.................................... (231,267)
Prepaid expenses....................................... 42,559
Accounts payable....................................... (55,756)
Accrued expenses....................................... 38,499
Income taxes payable................................... (17,000)
---------
Net cash provided by operating activities................... 118,927
---------
INVESTING ACTIVITIES
Capital expenditures........................................ (97,994)
Increase in deposits........................................ (5,000)
Advances of notes receivable................................ (99,011)
Increase in cash value of life insurance.................... (64,701)
---------
Net cash (used in) investing activities..................... (266,706)
---------
FINANCING ACTIVITIES
Issuance of common stock.................................... 1,000
Proceeds from borrowings.................................... 640,000
Payments on debt and borrowings............................. (105,721)
Proceeds from Members' Capital contributions................ 91,817
Dividends................................................... (233,353)
---------
Net cash provided by financing activities................... 393,743
---------
Increase in cash............................................ 245,964
Cash at beginning of year................................... 104,848
---------
Cash at end of year......................................... $ 350,812
=========

See accompanying notes.

F-64
119

CMS MANAGEMENT SERVICES COMPANY

NOTES TO FINANCIAL STATEMENTS

1. NATURE OF BUSINESS, USE OF ESTIMATES, AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business:

CMS Management Services Company is a name describing a group of separate
entities related through common ownership.

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 as of the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Significant Accounting Policies

Principles of Combination

The combined financial statements include the accounts of CMS Management
Services Co., TemPro Resources, Inc., CMS/TemPro of Indianapolis, Inc., CMS
Services, Inc., and CMS/TemPro of Nashville, LLC., a limited liability company.
All significant intercompany accounts and transactions have been eliminated in
combination.

Cash

The Companies have cash on deposit in financial institutions which, at
times, may exceed the limits of insurance coverage provided by the Federal
Deposit Insurance Corporation.

Depreciation

Depreciation of furniture and equipment is computed principally by the
straight-line method over the estimated useful lives of the assets ranging from
3 to 7 years.

Revenue recognition

Revenue is recognized as services are performed.

2. RECEIVABLES

Receivables in the accompanying balance sheet at December 31, 1997 consist
of the following:

Trade............................................ $1,755,301
Employees........................................ 37,877
----------
$1,793,178
==========

F-65
120
CMS MANAGEMENT SERVICES COMPANY

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. OTHER ASSETS

Other assets at December 31, 1997 consist of the following:

Cash value of life insurance...................... $100,095
Deposits.......................................... 9,161
Deferred tax assets............................... 41,000
--------
$150,256
========

4. PLEDGED ASSETS, LINES OF CREDIT, AND LONG-TERM DEBT

The terms of a loan agreement with a bank permit CMS Management Services
Co. and TemPro Resources, Inc. to borrow a maximum of $650,000, of which
$645,000 was outstanding at December 31, 1997. Borrowings under the agreement
are limited to prescribed levels of trade receivables, bear interest at prime
(8.5% at December 31, 1997) plus .75%, are collateralized by substantially all
assets of those Companies, are personally guaranteed by their stockholders, and
are due on demand. This agreement expires in March 1998 (a).

The terms of a loan agreement with a bank permit CMS/TemPro of
Indianapolis, Inc. to borrow a maximum of $500,000, none of which was
outstanding at December 31, 1997. Borrowings under the agreement are limited to
prescribed levels of trade receivables, bear interest at prime (8.5% at December
31, 1997), are collateralized by substantially all assets of that Company, are
personally guaranteed by its stockholders up to certain amounts, and are due on
demand. This agreement expires in April 1998 (a).

Long-term debt as of December 31, 1997 is as follows:

Note payable, bank, due in monthly installments of $7,633
including interest at prime (8.5% at December 31, 1997)
plus 1%, collateralized by substantially all assets of CMS
Management Services Co. and TemPro Resources, Inc.,
personally guaranteed by the stockholders of those
companies, final payment due March 31, 1999(a)............ $101,382
Notes payable, stockholders, subordinated to bank debt, due
in semi-monthly installments of $1,299 including interest
at 7.024% to 7.269%, unsecured, final payments made in
1998...................................................... 104,091
--------
205,473
Less current maturities..................................... 188,671
--------
$ 16,802
========

- ---------------

(a) These agreements contain restrictive covenants that, among other things,
restrict the level of capital expenditures, and require the maintenance of
defined levels of tangible net worth and certain other financial ratios. CMS
Management Services Co. and TemPro Resources, Inc. have obtained a waiver
for the covenants with which they were not in compliance at December 31,
1997.

F-66
121
CMS MANAGEMENT SERVICES COMPANY

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. COMMON STOCK

Common stock at December 31, 1997 consists of the following:

SHARES
ISSUED AND
OUTSTANDING
PAR SHARES ---------------
VALUE AUTHORIZED NUMBER AMOUNT
----- ---------- ------ ------

CMS Management Services Co........................ None 1,200 1,200 $ 100
TemPro Resources, Inc............................. None 1,200 1,200 100
CMS/TemPro of Indianapolis, Inc................... None 1,000 66 1,000
CMS Services, Inc................................. None 1,000 100 1,000
------
$2,200
======

6. EMPLOYEE BENEFIT PLANS

Profit Sharing Plans

The Companies maintain a contributory profit-sharing plan with 401(k)
provisions for the benefit of all eligible fulltime employees. The Companies
match 25% of the first 6% of employee contributions. Contributions were
approximately $44,000 for the year ended December 31, 1997.

Deferred Compensation Obligations

Effective January 1, 1994, the Companies entered into deferred compensation
agreements with certain key employees which provide benefits payable over a
ten-year period commencing at retirement as defined in the agreement. Under
certain circumstances, including death, total disability or a change in
ownership control of the Companies, the payment of the benefit would be
accelerated. The accumulated benefit of the agreements as of December 31, 1997
was $176,000, of which $21,000 was vested. The net present value of the
accumulated benefit as of December 31, 1997 was not material to the combined
financial statements and no liability has been recorded. The Companies have
purchased life insurance policies to fund a portion of this obligation.

Effective December 14, 1995, CMS/TemPro of Indianapolis, Inc. entered into
a deferred compensation agreement with a key executive which provides benefits
payable either in a lump sum amount or over a fifteen-year period commencing at
retirement as defined in the agreement. Under certain circumstances, including
death, total disability, or a change in ownership control of the Company,
payment of the benefit would be accelerated. The accumulated and vested benefit
of the agreement as of December 31, 1997 was approximately $111,000. The Company
has purchased life insurance policies to fund a portion of this obligation.

Incentive Pay

The Companies have an incentive plan pursuant to which certain members of
management and key employees receive discretionary and formula driven incentive
pay principally based upon the achievement by the Companies of annual
performance goals.

7. INCOME TAXES

CMS Management Services Co., TemPro Resources, Inc. and CMS Services, Inc.,
with the consent of their stockholders, have elected to have their income taxed
under Section 1362 of the Internal Revenue Code and a similar section of the
state tax laws which provide that, in lieu of corporation income taxes, the
stockholders account for their proportionate shares of the Companies' items of
income, deduction, losses, and credits. Also, CMS/TemPro of Nashville, LLC is a
limited liability company and its members account for

F-67
122
CMS MANAGEMENT SERVICES COMPANY

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

their proportionate shares of the Company's items of income, deduction, losses,
and credits. Therefore, these statements do not include any provision for income
taxes for these entities. The amount of net income included in the combined
statement of income related to these entities was approximately $295,000 for the
year ended December 31, 1997.

For CMS/TemPro of Indianapolis, Inc., deferred taxes are provided on a
liability method whereby deferred income tax assets and liabilities are computed
annually for differences between the financial statement and tax bases of assets
and liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets and
liabilities.

This entity files its income tax returns under the cash basis method.
Therefore, the composition of the deferred tax assets and liabilities in the
accompanying combined balance sheet at December 31, 1997 primarily relates to
the difference between the accrual basis of reporting for financial statement
purposes and the cash basis of reporting for income tax purposes and consist of
the following:

Gross deferred tax assets:
Accrued expenses.......................................... $ 20,000
Deferred compensation..................................... 44,000
Net operating losses...................................... 21,000
---------
85,000
---------
Gross deferred tax liabilities:
Trade receivables......................................... (41,000)
Prepaid expenses.......................................... (230,000)
Depreciation.............................................. (3,000)
---------
(274,000)
---------
Net deferred tax (liabilities).............................. $(189,000)
=========
Presented in the accompanying balance sheet as follows:
Long-term deferred tax assets............................. $ 41,000
Current deferred tax liabilities.......................... (230,000)
---------
$(189,000)
=========

The provision for federal and state income taxes for the year ended
December 31, 1997 consists of a $61,000 reduction in the net deferred tax
liabilities.

8. LEASE OBLIGATIONS

The Companies lease their office space under operating leases which require
monthly rentals currently totaling $19,096, plus the payment of property taxes,
normal maintenance, and insurance on the properties, and which expire at various
dates through December 2004.

F-68
123
CMS MANAGEMENT SERVICES COMPANY

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The total minimum rental commitment under the above leases at December 31,
1997 is due as follows:

During the year ending December 31,
1998............................................. $ 222,705
1999............................................. 204,237
2000............................................. 190,367
2001............................................. 190,367
2002............................................. 190,367
Thereafter....................................... 344,639
----------
$1,342,682
==========

The rent expense, excluding property taxes, maintenance, and insurance,
included in the combine statement of income for the year ended December 31, 1997
was approximately $210,000.

9. CASH FLOWS INFORMATION

Supplemental information relative to the statement of cash flows for the
year ended December 31, 1997 is as follows:

Supplemental disclosures of cash flows information:
Cash payments for:
Interest.................................................... $44,144
Income taxes................................................ $16,678

10. SUBSEQUENT EVENT

On May 1,1998, Corporate Staffing Resources, Inc. acquired substantially
all of the assets and liabilities of CMS Management Services Co., TemPro
Resources, Inc., CMS Services, Inc. and CMS/TemPro of Nashville, LLC. and
acquired 100% of the stock of CMS/TemPro of Indianapolis, Inc.

F-69
124

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Intranational Computer Consultants, Inc.

We have audited the accompanying balance sheet of Intranational Computer
Consultants, Inc., as of December 31, 1997, and the related statements of income
and retained earnings and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Intranational Computer
Consultants, Inc., as of December 31, 1997, and the results of its operations
and cash flows for the year then ended, in conformity with generally accepted
accounting principles.

MOSS-ADAMS LLP

Santa Rosa, California
February 6, 1998 (except for Note 11,
as to which the date is March 1, 1998)

F-70
125

INTRANATIONAL COMPUTER CONSULTANTS, INC.

BALANCE SHEET
AS OF DECEMBER 31, 1997

ASSETS

DECEMBER 31,
1997
------------

Current assets:
Cash...................................................... $ 32,400
Accounts receivable....................................... 1,640,900
Refundable income taxes................................... 7,800
Prepaid expenses.......................................... 10,400
Note receivable -- stockholder............................ 43,000
----------
Total current assets.............................. 1,734,500
Property and equipment, net................................. 108,900
Deposits.................................................... 8,500
----------
Total assets...................................... $1,851,900
==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Outstanding checks, net of bank balance................... $ 40,200
Line of credit............................................ 55,000
Accounts payable.......................................... 452,300
Accrued payroll and related liabilities................... 644,700
Deferred income taxes..................................... 43,000
----------
Total current liabilities......................... 1,235,200
----------
Deferred income taxes....................................... 143,000
Stockholders' equity
Common stock, no par value; 500,000 shares authorized,
52,000 shares issued and outstanding................... 5,000
Retained earnings........................................... 468,700
----------
Total stockholders' equity........................ 473,700
----------
Total liabilities and stockholders' equity........ $1,851,900
==========

See accompanying notes.

F-71
126

INTRANATIONAL COMPUTER CONSULTANTS, INC.

STATEMENT OF INCOME AND RETAINED EARNINGS
YEAR ENDED DECEMBER 31, 1997

Revenues.................................................... $14,512,300
Cost of services.......................................... 10,890,200
-----------
Gross profit................................................ 3,622,100
Operating expenses:
Selling, general, and administrative expenses............. 3,520,800
Depreciation and amortization............................. 21,700
-----------
Operating income............................................ 79,600
-----------
Other income (expense):
Interest expense.......................................... (11,900)
Other, net................................................ (14,300)
-----------
(26,200)
-----------
Income before benefit from income taxes..................... 53,400
Benefit from income taxes................................... 39,200
-----------
Net income.................................................. 92,600
Retained earnings, December 31, 1996 (as restated).......... 376,100
-----------
Retained earnings, December 31, 1997........................ $ 468,700
===========

See accompanying notes.

F-72
127

INTRANATIONAL COMPUTER CONSULTANTS, INC.

STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997

OPERATING ACTIVITIES
Net income.................................................. $ 92,600
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.............................................. 21,700
Deferred income taxes..................................... (42,000)
Change in:
Accounts receivable.................................... 120,600
Prepaid expenses....................................... 4,900
Refundable income taxes................................ (800)
Deposits............................................... (5,100)
Accounts payable....................................... 235,500
Accrued liabilities.................................... (416,600)
Income taxes payable................................... (2,000)
---------
Net cash provided by operating activities................... 8,800
---------
INVESTING ACTIVITIES
Purchases of property and equipment......................... (76,000)
Payments on note receivable from stockholder................ 1,700
---------
Net cash (used in) investing activities..................... (74,300)
---------
FINANCING ACTIVITIES
Net repayments under line of credit......................... (167,900)
Outstanding checks, net of bank balance..................... 40,200
---------
Net cash (used in) financing activities..................... (127,700)
---------
Decrease in cash............................................ (193,200)
Cash, December 31, 1996..................................... 225,600
---------
Cash, December 31, 1997..................................... $ 32,400
=========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
Interest.................................................. $ 11,900
Income taxes.............................................. 7,000

See accompanying notes.

F-73
128

INTRANATIONAL COMPUTER CONSULTANTS, INC.

NOTES TO FINANCIAL STATEMENTS

1. DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Operations

Intranational Computer Consultants, Inc., is a professional services firm
specializing in providing technical support for mainframe and mid-range computer
operations, technical consulting, and software development services, to
organizations with large-scale information processing and distribution needs
located in the San Francisco Bay Area.

Accounts Receivable

Accounts receivable are stated at net realizable value. An allowance for
doubtful accounts was not considered necessary at December 31, 1997.

Property and Equipment

Property and equipment are stated at cost and depreciated using accelerated
and straight line methods over estimated useful lives ranging from 3 to 7 years.
Additions or improvements are capitalized at cost, while maintenance and repair
expenditures are charged to operations.

Income Taxes

Income taxes are recognized using enacted tax rates and are composed of
taxes on financial accounting income that is adjusted for requirements of
current tax law, and deferred taxes. Deferred taxes are the expected future tax
consequences of temporary differences between the financial statement carrying
amounts and tax basis of existing assets and liabilities.

Use of Estimates

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions affecting the reported amounts of assets, liabilities, revenues,
expenses, and the disclosure of contingent assets and liabilities. The amounts
estimated could differ from actual results.

Advertising

Advertising costs are expensed as incurred and were $47,000 for the year
ended December 31, 1997.

Concentrations of Risk

Financial instruments potentially subjecting the Company to concentrations
of credit risk consist primarily of trade receivables. This credit risk is
limited due to the financial strength of the Company's customers. Three
customers account for 30% of revenues and $305,100 of trade receivables for the
year ended and as of December 31, 1997.

2. ACCOUNTS RECEIVABLE

Trade............................................ $1,631,200
Other receivables................................ 9,700
----------
$1,640,900
==========

F-74
129
INTRANATIONAL COMPUTER CONSULTANTS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. NOTE RECEIVABLE -- STOCKHOLDER

The note receivable from stockholder is due in semi-monthly installments of
$200, including interest at 7% and is secured by computer equipment. The note
was repaid in full subsequent to December 31, 1997. Interest received from the
stockholder was $3,000 for the year ended December 31, 1997.

4. PROPERTY AND EQUIPMENT

Computers and equipment..................................... $125,900
Furniture and fixtures...................................... 45,700
Other....................................................... 15,900
--------
187,500
Less accumulated depreciation............................... 78,600
--------
$108,900
========

5. BORROWINGS UNDER LINE OF CREDIT

The Company has available a $1,000,000 line of credit that is subject to a
limitation equal to 80% of eligible accounts receivable. Interest is at the
bank's prime rate plus 1.5%. The line of credit matures November 1998, and is
secured by substantially all assets of the Company and the stockholders'
personal guarantees.

6. COMMITMENTS AND RELATED PARTY TRANSACTIONS

The Company rents office space under an operating lease expiring in
February 1999. The monthly lease payment, currently $6,350, is adjusted annually
based on increases in the Consumer Price Index, as defined in the agreement. In
no case will the annual increase be less than 3% nor more than 6%. The Company
is responsible for substantially all costs associated with repairs, maintenance,
taxes, and insurance. An option exists to extend the lease for an additional
four year period.

The Company leases computer equipment from a stockholder under an operating
lease expiring in July 2000. The lease requires semi-annual payments of $17,000,
with the Company responsible for maintenance, taxes and insurance.

The Company leases additional office space under operating leases expiring
through August 1998.

Future minimum lease payments are as follows:

YEAR ENDING DECEMBER 31,

1998.............................................. $112,300
1999.............................................. 40,600
2000.............................................. 17,000
--------
$169,900
========

Rent expense for the year ended December 31, 1997, was $133,700, including
$34,000 paid to a stockholder.

7. PENSION PLAN

The Company provides an Internal Revenue Code Section 401(k) Plan covering
substantially all employees meeting certain age and service requirements. Plan
contributions are made at the discretion of the Board of Directors. The Company
did not contribute to the plan during the year ended December 31, 1997.

F-75
130
INTRANATIONAL COMPUTER CONSULTANTS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

8. BENEFIT FROM INCOME TAXES

The significant temporary differences between the carrying amounts and tax
basis of existing assets and liabilities that give rise to deferred tax assets
and liabilities include using a different method of depreciation for tax
purposes; deduction of paid vacation pay, actual bad debt write-offs, paid
stockholder salaries, and the current state tax liability in the following year.
During the year ended December 31, 1997, the Company changed from the cash
method of accounting for income taxes to the accrual method. The Company is
allowed to recognize the tax liability generated by this change over a four year
period, which is recognized as a deferred tax liability.

Provision for income taxes
Federal................................................... $ 1,900
California................................................ 900
--------
2,800
Change in deferred income taxes............................. (42,000)
--------
$(39,200)
========
Current deferred income taxes consist of the following:
Gross deferred tax assets................................. $ (8,200)
Gross deferred tax liabilities............................ 51,200
--------
$ 43,000
========
Non-current deferred income taxes consist of the following:
Gross deferred tax assets................................. $ (9,800)
Gross deferred tax liabilities............................ 152,800
--------
$143,000
========

9. PRIOR PERIOD ADJUSTMENT

The Company, in reviewing certain transactions associated with accrued
commissions, concluded that the full accrual required for commission expense had
not been included in the December 31, 1996, financial statements. Accordingly,
to reflect the impact those liabilities would have had on the prior year's
financial statements, the Company has reduced retained earnings by $61,500 from
that previously reported. As the Company was on the cash basis of accounting for
tax purposes, this adjustment has no effect on prior year income taxes.

10. CONTINGENCIES

The Company has employment agreements with certain of its executive
officers that provide for lump sum severance payments upon termination of
employment under certain circumstances or a change of control, as defined in the
agreements. The maximum contingent liability under these agreements is
approximately $150,000. See Note 11.

The Company has been notified of a potential claim regarding amounts owed
to a former hourly contractor. Damages, if any, can not be estimated at this
time. Management believes the claim is without merit and intends to vigorously
defend its position.

11. SUBSEQUENT EVENTS

Subsequent to year end, the stockholders of the Company sold all of the
issued and outstanding stock to a previously unrelated corporation.

F-76
131

NPS OF ATLANTA, INC.
AND AFFILIATE

UNAUDITED CONDENSED COMBINED BALANCE SHEET

AS OF JANUARY 31, 1998

ASSETS

Current assets:
Cash...................................................... $ 92,739
Accounts receivable -- trade, net......................... 685,872
Advances to employees..................................... 6,497
Prepaid expenses.......................................... 12,555
Income tax refunds receivable............................. 20,885
Deferred income taxes, current portion.................... 6,500
----------
Total current assets.............................. 825,048
Property and equipment, net................................. 269,546

Other assets
Advances to stockholder................................... 187,514
Deposits.................................................. 1,107
Deferred income taxes..................................... 56,000
----------
Total assets...................................... $1,339,215
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit............................................ $ 453,249
Accounts payable.......................................... 5,059
Accrued wages, payroll taxes and other liabilities........ 91,830
Capital lease obligation -- current portion............... 1,703
Deferred compensation short-term.......................... 30,000
Deferred income taxes..................................... 49,600
----------
Total current liabilities......................... 631,441
Long-term liabilities
Capital lease obligation, net............................. 322
Deferred compensation Long-term........................... 202,500
Deferred income taxes..................................... 11,400
----------
845,663
Stockholders' equity
Common stock.............................................. 2,000
Paid in capital........................................... 161,056
Retained earnings......................................... 330,496
----------
Total stockholders' equity........................ 493,552
----------
Total liabilities and stockholders' equity........ $1,339,215
==========

See accompanying notes.

F-77
132

NPS OF ATLANTA, INC.
AND AFFILIATE

UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED
JANUARY 31,
-----------------------
1997 1998
---------- ----------

Revenues.................................................... $2,384,339 $2,233,847
Direct cost of sales...................................... 1,735,322 1,638,056
---------- ----------
Gross profit................................................ 649,017 595,791
Operating expenses
Selling, general and administrative expenses.............. 800,174 650,483
Depreciation.............................................. 19,177 16,902
---------- ----------
Operating loss............................................ (170,334) (71,594)
Other income (expense)
Interest expense.......................................... (8,666) (13,643)
---------- ----------
Loss before income taxes.................................... (179,000) (85,237)
Provision for income taxes.................................. -- --
---------- ----------
Net loss.................................................... $ (179,000) $ (85,237)
========== ==========

See accompanying notes.

F-78
133

NPS OF ATLANTA, INC.
AND AFFILIATE

UNAUDITED CONDENSED COMBINED STATEMENT OF CASH FLOWS

THREE MONTHS ENDED
JANUARY 31,
---------------------
1997 1998
--------- ---------

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.................................................... (179,000) $ (85,237)
--------- ---------
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization............................. 19,177 16,902
(Increase) decrease in:
Accounts receivable.................................... (13,655) 386,785
Unbilled revenue....................................... -- 242,270
Other current assets................................... 9,077 6,712
Increase (decrease) in:
Checks in excess of cash in bank....................... -- (73,409)
Accounts payable....................................... (4,604) (18,407)
Accrued wages, payroll taxes and other liabilities..... 6,121 (197,936)
Deferred compensation.................................. -- (7,500)
Total adjustments........................................... 16,116 355,417
--------- ---------
Net cash provided by (used in) operating activities......... (162,884) 270,180
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment....................... (46,542) (1,520)
Advances to stockholder..................................... -- (6,764)
--------- ---------
Net cash used in investing activities....................... (46,542) (8,284)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in line of credit....................... 100,000 (166,187)
Distributions to stockholders............................... -- (2,700)
Payments on capital lease obligations....................... -- (370)
--------- ---------
Net cash provided by financing activities................... 100,000 (169,257)
--------- ---------
Net increase (decrease) in cash............................. (109,426) 92,639
Cash at beginning of period................................. 113,666 100
--------- ---------
Cash at end of period....................................... $ 4,240 $ 92,739
========= =========

See accompanying notes.

F-79
134

NPS OF ATLANTA, INC.
AND AFFILIATE

NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS

JANUARY 31, 1998

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements are presented on a combined basis. Both companies
are located in Atlanta, Georgia, incorporated in the State of Georgia, and are
under common control and ownership. The following companies are included in
these combined financial statements:

TAX DATE FISCAL
NAME OF COMPANY STATUS INCORPORATED YEAR END
- --------------- ------ ------------ --------

NPS of Atlanta, Inc............................. C-Corporation 01-11-91 10/31
NPS Staffing Specialist, Inc.................... S-Corporation 02-22-95 12/31

Intercompany transactions and balances have been eliminated in combination.

Organization and Business

NPS of Atlanta, Inc. provides temporary and permanent staffing solutions to
companies and organizations located throughout metro Atlanta on a fee basis.

NPS Staffing Specialists, Inc. provides promotional and marketing services
to the staffing industry. NPS Staffing Specialists, Inc.'s sole customer is NPS
of Atlanta, Inc.

NPS of Atlanta, Inc. and its Affiliate (the "Company") operate five offices
throughout the Atlanta, metropolitan area.

Basis of Presentation

The unaudited condensed combined financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (considering of normal recurring accruals)
considered necessary for a fair presentation have been included. These financial
statements should be read in conjunction with NPS of Atlanta, Inc. and Affiliate
audited financial statements for the year ended January 31, 1998, included
elsewhere in this Prospectus.

2. SUBSEQUENT EVENTS

On February 23, 1998, the shareholders of NPS of Atlanta, Inc. and the
shareholder of NPS Staffing Specialists, Inc. sold all of the issued and
outstanding stock of these companies to a previously unrelated corporation for
cash that was paid at closing.

The primary shareholder continues to be employed by NPS of Atlanta, Inc. at
a salary of $5,000 per month until June 30, 1998. Effective July 1, 1998, both
shareholders will be engaged as consultants by NPS of Atlanta, Inc. for an
eighteen-month period for an aggregate fee of $75,000, payable in 12 monthly
amounts of $6,250 commencing July 1, 1998.

F-80
135

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of
NPS of Atlanta, Inc. and Affiliate

We have audited the accompanying combined balance sheet of NPS of Atlanta,
Inc. and Affiliate, (a Georgia Corporation) as of October 31, 1997, and the
related combined statements of operations, stockholders' equity, and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of NPS of
Atlanta, Inc. and its Affiliate as of October 31, 1997, and the results of their
operations and their cash flows for the period then ended, in conformity with
generally accepted accounting principles.

BROOKS, HOLMES, WILLIAMS & COOK, LLC

Atlanta, Georgia
January 19, 1998, except for Note 10,
as to which the date is February 23, 1998

F-81
136

NPS OF ATLANTA, INC.
AND AFFILIATE

COMBINED BALANCE SHEET
AS OF OCTOBER 31, 1997

ASSETS

Current assets:
Cash...................................................... $ 100
Accounts receivable -- trade, net (Note 1)................ 1,072,657
Unbilled revenue.......................................... 242,270
Advances to employees..................................... 2,267
Prepaid expenses.......................................... 23,497
Income tax refunds receivable............................. 20,885
Deferred income taxes, current portion (Note 8)........... 6,500
----------
Total current assets.............................. 1,368,176
Property and equipment, net (Note 2)........................ 284,928

Other assets
Advances to stockholder (Note 3).......................... 180,750
Deposits.................................................. 1,107
Deferred income taxes (Note 8)............................ 56,000
----------
Total assets...................................... $1,890,961
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Checks issued in excess of cash in bank................... $ 73,409
Line of credit (Note 6)................................... 619,436
Accounts payable.......................................... 23,466
Accrued wages, payroll taxes and other liabilities........ 289,766
Capital lease obligation -- current portion (Note 5)...... 1,612
Deferred compensation short-term (Note 11)................ 30,000
Deferred income taxes (Note 8)............................ 49,600
----------
Total current liabilities......................... 1,087,289
Long-term liabilities
Capital lease obligation, net (Note 5).................... 783
Deferred compensation Long-term (Note 11)................. 210,000
Deferred income taxes (Note 8)............................ 11,400
----------
1,309,472
Commitments (Note 9)
Stockholders' equity
Common stock (Note 7)..................................... 2,000
Paid in capital........................................... 161,056
Retained earnings......................................... 418,433
----------
Total stockholders' equity........................ 581,489
----------
Total liabilities and stockholders' equity........ $1,890,961
==========

See accompanying notes.

F-82
137

NPS OF ATLANTA, INC.
AND AFFILIATE

COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED OCTOBER 31, 1997

Revenues.................................................... $11,071,827
Direct cost of sales...................................... 8,090,318
-----------
Gross profit................................................ 2,981,509
Operating expenses
Selling, general and administrative expenses.............. 2,962,080
Depreciation.............................................. 73,193
-----------
Operating loss............................................ (53,764)
Other income (expense)
Gain on sale.............................................. 3,232
Interest expense.......................................... (46,929)
-----------
Loss before income taxes.................................... (97,461)
Provision for income taxes -- benefit (Note 8).............. 61,068
-----------
Net loss.................................................... $ (36,393)
===========

See accompanying notes.

F-83
138

NPS OF ATLANTA, INC.
AND AFFILIATE

COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE TWELVE MONTHS ENDED OCTOBER 31, 1997

COMMON RETAINED
STOCK PAID-IN EARNINGS
(NOTE 7) CAPITAL (DEFICIT) TOTAL
-------- -------- --------- ---------

Balance at October 31, 1996....................... $2,000 $161,056 $ 585,009 $ 748,065
Net loss........................................ -- -- (36,393) (36,393)
Distributions to stockholder.................... -- -- (130,183) (130,183)
------ -------- --------- ---------
Balance at October 31, 1997....................... $2,000 $161,056 $ 418,433 $ 581,489
====== ======== ========= =========

See accompanying notes.

F-84
139

NPS OF ATLANTA, INC.
AND AFFILIATE

COMBINED STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED OCTOBER 31, 1997

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.................................................... $ (36,393)
---------
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization............................. 73,193
(Increase) decrease in:
Accounts receivable.................................... (333,230)
Unbilled revenue....................................... (88,095)
Other current assets................................... 21,908
(Increase) decrease in:
Checks in excess of cash in bank....................... 73,409
Accounts payable....................................... (6,180)
Accrued wages, payroll taxes and other liabilities..... 83,899
Deferred compensation.................................. (60,000)
Deferred income taxes.................................. (42,548)
---------
Total adjustments........................................... (277,644)
---------
Net cash used in operating activities....................... (314,037)
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment....................... (96,317)
Proceeds from sale of investment............................ 57,500
---------
Net cash used in investing activities....................... (38,817)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in line of credit.................................. 369,471
Distributions to stockholders............................... (130,183)
---------
Net cash provided by financing activities................... 239,288
---------
Net decrease in cash........................................ (113,566)
Cash at beginning of period................................. 113,666
---------
Cash at end of period....................................... $ 100
=========
SUPPLEMENTAL DISCLOSURES
Interest paid............................................. $ 46,424
Income tax refunds received............................... $ 16,139
Assets acquired through capital leases.................... $ 3,185

See accompanying notes.

F-85
140

NPS OF ATLANTA, INC.
AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS
OCTOBER 31, 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

TAX DATE FISCAL
NAME OF COMPANY STATUS INCORPORATED YEAR END
- --------------- ------ ------------ --------

NPS of Atlanta, Inc............................. C-Corporation 01-11-91 10/31
NPS Staffing Specialist, Inc.................... S-Corporation 02-22-95 12/31

Intercompany transactions and balances have been eliminated in combination.

Organization and Business

NPS of Atlanta, Inc. provides temporary and permanent staffing solutions to
companies and organizations located throughout metro Atlanta on a fee basis.

NPS Staffing Specialists, Inc. provides promotional and marketing services
to the staffing industry. NPS Staffing Specialists, Inc.'s sole customer is NPS
of Atlanta, Inc.

NPS of Atlanta, Inc. and its Affiliate (the "Company") operate five offices
throughout the Atlanta, metropolitan area.

Business and Credit Concentrations

Financial instruments that potentially subject the Company to
concentrations of credit risk are accounts receivable. The Company continually
evaluates the credit worthiness of its customers; however, the Company generally
does not require collateral. The Company maintains cash balances in various
accounts at a financial institution which, in the aggregate, may exceed
federally insured amounts at times.

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.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and investments with
purchased original maturities of three months or less. As of October 1997, the
Company held no investments.

Revenue Recognition

The Company recognizes revenue as services are performed net of estimated
credits and uncollectible amounts. The company sells its services to its
customers primarily on a fee basis.

F-86
141
NPS OF ATLANTA, INC.
AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Unbilled Revenue

The Company accrues the earned revenues and the related costs of employee
services which have not been billed at the end of an accounting period.

Financial Instruments

The fair market value of financial instruments is determined by reference
to various market data and other valuation techniques as appropriate. The
Company believes that the fair values of financial instruments approximate their
recorded values.

Allowance for Doubtful Accounts

Management evaluates on a regular basis the need for an allowance for
doubtful accounts and provides for amounts which may eventually become
uncollectible and any disputed charges. The allowance for doubtful accounts as
of October 31, 1997 is $10,000.

Property and Equipment

Property and equipment are stated at cost. Depreciation for financial
statement purposes is provided by the straight-line method over the estimated
economic lives of the depreciable assets. Maintenance and repairs are charged to
operations as incurred, while major renewals and betterments which substantially
extend the useful life of property and equipment are capitalized.

Income Taxes

NPS Staffing Specialists, Inc., with the consent of its stockholder,
elected under the Internal Revenue Code and comparable state regulations to be
an S Corporation. Under these provisions, the Company does not pay federal or
state corporate income taxes on its taxable income, rather, the stockholder of
the S Corporation reports the Company's taxable income (or loss) and any tax
credits on his personal income tax returns. Therefore, no provision or liability
for federal income taxes has been included for this entity in these combined
financial statements as it relates to NPS Staffing Specialists, Inc.

For tax purposes, NPS of Atlanta, Inc. is a regular corporation subject to
federal and state income taxes. See Note 8 regarding the tax provision (benefit)
as it relates to NPS of Atlanta, Inc.'s taxable income or loss. Generally,
income tax expense (benefit) for this entity includes federal and state taxes
currently payable and deferred taxes arising from temporary differences in bases
of assets and liabilities for financial reporting and income tax purpose. These
differences result principally from depreciation, deferred compensation,
allowance for doubtful accounts and the use of the cash basis of accounting for
tax purposes.

Other

The Company operates in an industry, staffing, which has a large employee
base, is prone to workers compensation claims and is subject to the risks
inherent with such employment.

Advertising

The Company follows the policy of charging the costs of advertising to
expense as incurred. Advertising expense was $137,802 for the year ended
December 31, 1997.

F-87
142
NPS OF ATLANTA, INC.
AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

2. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

YEARS
-----

Furniture and equipment..................................... 7 $ 375,753
Leasehold improvements...................................... 5 109,597
---------
485,350
Less accumulated depreciation............................... (200,422)
---------
Property and equipment, net................................. $ 284,928
=========

Depreciation expense for the year ended October 31, 1997 is $73,193.

3. ADVANCES TO STOCKHOLDER

As of October 31, 1997, advances had been made to the sole shareholder
aggregating $180,750. These amounts are unsecured and non interest-bearing.

4. RELATED PARTY TRANSACTIONS

The Company leases office space for two of its offices from an
officer/shareholder of NPS of Atlanta, Inc. and Affiliate. Under these leases,
the Companies are responsible for property taxes, insurance, utilities and
substantially all repairs and maintenance of the properties. Lease terms include
annual rent payments of $109,092 through October 31, 2002; thereafter an annual
rent payment of $13,092 through January 31, 2004. Rent payments to be
officer/shareholders for the twelve months ended October 31, 1997 totaled
$106,553.

5. CAPITAL LEASE OBLIGATIONS

In 1997, the Company acquired a copier for $3,185. This system was financed
through a lease. For financial reporting purposes, $3,185 has been capitalized
representing the minimum lease payments over 36 months, with the lease expiring
in 1999. The property under capital lease as of October 31, 1997 is as follows:

Capitalized cost............................................ $3,185
Less accumulated depreciation............................... (228)
------
Net book value.............................................. $2,957
======

The future minimum lease payments under the capital lease and the net
present value of the future minimum lease payments at October 31, 1997 are as
follows:

1998........................................................ $1,984
1999........................................................ 827
------
Total minimum lease payments................................ 2,811
Less amount representing interest........................... 416
------
Present value of net minimum lease payments................. 2,395
Less current maturities of capital lease.................... 1,612
------
Long-term capital lease obligation.......................... $ 783
======

F-88
143
NPS OF ATLANTA, INC.
AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

6. LINE OF CREDIT

NPS of Atlanta, Inc. has a $1,000,000 revolving line of credit facility for
the purpose of financing accounts receivables. Interest accrues at prime plus
1.0% and is payable monthly. The outstanding balance is due the earlier of March
15, 1998 or on demand by the financial institution and is guaranteed by NPS
Staffing Specialists, Inc. and the officers and shareholders of NPS of Atlanta,
Inc.

Accounts receivable are pledges as collateral and the available credit is
limited to 80% of the accounts receivable less than 60 days outstanding. The
interest rate at October 31, 1997 was 9.25%.

7. COMMON STOCK

The following details corporate shares authorized, issued and outstanding,
and the initial capitalization for each corporation in the group. These are no
treasury shares.

ISSUED AND
NAME OF COMPANY AUTHORIZED OUTSTANDING PAR VALUE AMOUNT
--------------- ---------- ----------- --------- ------

NPS of Atlanta, Inc.
Class A -- voting............................ 1,000,000 10,000 None $1,000
Class B -- non voting........................ 1,000,000 None None
NPS Staffing Specialists, Inc.................. 1,000,000 1,000 None 1,000
------
Balance October 31, 1997....................... $2,000
======

8. INCOME TAXES

The income tax provision in these financial statements represents only the
related income tax benefits of NPS of Atlanta, Inc. which incurred an operating
loss of $462,000 for financial reporting purposes and $279,000 for tax purposes
for its fiscal year ended October 31, 1997. The primary difference between the
financial reporting loss and taxable loss is income taxable in the current year
due to a change in accounting methods in 1994 which for tax purposes could be
taken into taxable income over a four year period. This income was recorded for
financial reporting purposes in a lump sum in 1994.

NPS of Atlanta, Inc. has net operating loss carryforwards and charitable
contributions carryforwards available to offset future taxable income. The
amounts and expiration dates of these carryforwards are listed below:

CARRYFORWARDS AMOUNT EXPIRATION
------------- -------- ----------------

Net operating loss........................................ $198,500 October 31, 2012
Charitable contributions -- federal/state income tax...... 6,600 October 31, 2002

Provision for income taxes -- benefit:
Current income tax benefit.............................. $20,315
Deferred income tax benefit............................. 40,753
-------
Total provision for income taxes -- benefit............... $61,068
=======

9. OPERATING LEASES

The Company leases five office facilities in Atlanta, GA. These leases
expire in 1998 through 2004.

The Company leases office equipment under a non-cancelable operating lease
over a 51-month term, expiring February 2001.

F-89
144
NPS OF ATLANTA, INC.
AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

This lease has been classified as an operating lease under the provisions
of Financial Accounting Standards Board Statement 13. The following summarizes
the future minimum rentals required by the noncancelable lease for the years
ending December 31:

1998.............................................. $184,524
1999.............................................. 172,093
2000.............................................. 140,811
2001.............................................. 142,080
2002.............................................. 125,909
2003.............................................. 13,092
2004.............................................. 3,273
--------
$781,782
========

Rent expense for the twelve months ended October 31,1997 is $179,303.

10. SUBSEQUENT EVENTS

11. DEFERRED COMPENSATION AGREEMENT

On November 12, 1996, NPS of Atlanta, Inc. executed a deferred compensation
agreement with a former key employee for past services rendered. Terms of the
agreement include monthly compensation of $2,500 beginning December 1996 through
November 2005. The agreement also states that should substantially all the
capital stock or assets of NPS of Atlanta, Inc. be sold, the unpaid balance of
the agreement shall become due within ten days of the sale closing date. At
October 31,1997, the balance of the unpaid deferred compensation was $240,000 of
which $30,000 is classified as a current liability (due within twelve months)
and $210,000 is classified as a non-current liability (due beyond twelve
months). Deferred compensation expense was $30,000 for the year ended December
31,1997.

12. CONTINGENCIES

Certain claims, suits, and complaints arising in the ordinary course of
operations have been filed or are pending against the Company. Management
believes that the outcome of such matters, if any, will not have a material
impact on the Company's financial position or results of future operations.

F-90
145

PROGRAMMING MANAGEMENT & SYSTEMS, INC.

UNAUDITED CONDENSED BALANCE SHEET

AS OF JUNE 30, 1998

ASSETS
Current assets
Cash...................................................... $ 38,138
Accounts receivable....................................... 1,147,894
Prepaid expenses.......................................... 82,971
----------
Total current assets................................. 1,269,003
Property and equipment, net................................. 21,662
Other assets................................................ 95,812
----------
Total assets......................................... $1,386,477
==========
LIABILITIES AND OWNERS' EQUITY
Current liabilities
Accounts payable.......................................... $ 285,880
Accrued expenses.......................................... 377,825
----------
Total current liabilities............................ 663,705
Deferred income taxes....................................... 173,000
----------
Total liabilities.................................... 836,705
Owners' equity
Common stock.............................................. 300
Additional paid in capital................................ 8,986
Retained earnings......................................... 543,872
Less cost of 100 shares of treasury stock................. (3,386)
----------
Total owners' equity................................. 549,772
----------
Total liabilities and owners' equity................. $1,386,477
==========

See accompanying notes.

F-91
146

PROGRAMMING MANAGEMENT & SYSTEMS, INC.

UNAUDITED CONDENSED STATEMENTS OF INCOME

SIX MONTHS ENDED
JUNE 30,
------------------------
1997 1998
---------- ----------

Service revenues............................................ $4,226,555 $4,556,598
Cost of services.......................................... 3,136,669 3,296,401
---------- ----------
Gross profit................................................ 1,089,886 1,260,197
Operating expenses:
Selling, general, and administrative expenses............. 945,601 783,664
Depreciation.............................................. 3,874 3,312
---------- ----------
Operating income............................................ 140,411 473,221
---------- ----------
Other (income) expense:
Interest Expense.......................................... 517 570
Other, net................................................ (2,572) (4,342)
---------- ----------
(2,055) (3,772)
---------- ----------
Income before provision for income taxes.................... 142,466 476,993
Provision for income taxes.................................. 59,380 1,000
---------- ----------
Net income.................................................. 83,086 475,993
========== ==========

See accompanying notes.

F-92
147

PROGRAMMING MANAGEMENT & SYSTEMS, INC.

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED
JUNE 30,
-------------------
1997 1998
---- ----

OPERATING ACTIVITIES
Net income.................................................. $ 83,086 $475,993
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.............................................. 3,874 3,312
Provision for deferred income taxes....................... -- (16,000)
Changes in assets and liabilities:
Accounts receivable.................................... (98,115) (231,811)
Prepaid expenses....................................... (23,483) (72,462)
Other assets........................................... 6,470 3,748
Accounts payable....................................... 165,878 252,980
Accrued expenses....................................... 145,982 25,774
-------- --------
Net cash provided by operating activities................... 283,692 441,534
Investing activities........................................ -- --
Capital expenditures........................................ (13,462) --
-------- --------
Net cash used in investing activities....................... (13,462) --
FINANCING ACTIVITIES
Proceeds from (principal payments on) note payable, net..... (112,000) (10,000)
Distributions to stockholders............................... -- (394,143)
-------- --------
Net cash provided (used) by financing activities............ (112,000) (404,143)
-------- --------
Increase in cash............................................ 158,230 37,391
Cash at beginning of period................................. 14,569 747
-------- --------
Cash at end of period....................................... $172,799 $ 38,138
======== ========

See accompanying notes.

F-93
148

PROGRAMMING MANAGEMENT & SYSTEMS, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

JUNE 30, 1998

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

Nature of Business

Programming Management & Systems, Inc. is an information technology
staffing firm specializing in outplacement services. These services are offered
to customers primarily in the Midwestern United States.

Basis of Presentation

The unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (considering normal recurring accruals) considered
necessary for a fair presentation have been included. These financial statements
should be read in conjunction with Programming Management & Systems, Inc.
audited financial statements for the year ended December 31, 1997, included
elsewhere in this Prospectus.

2. SUBSEQUENT EVENT

On July 2, 1998, Corporate Staffing Resources, Inc. acquired 100% of the
stock of Programming Management & Systems, Inc.

F-94
149

INDEPENDENT AUDITORS' REPORT

Board of Directors

Programming Management & Systems, Inc.

St. Louis, Missouri

We have audited the accompanying balance sheet of Programming Management &
Systems, Inc. as of December 31, 1997 and the related statements of income
changes in stockholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Programming Management &
Systems, Inc. as of December 31, 1997, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.

/s/ STONE CARLIE & COMPANY, L.L.C.

St. Louis, Missouri

June 16, 1998

F-95
150

PROGRAMMING MANAGEMENT & SYSTEMS, INC.

BALANCE SHEET

DECEMBER 31, 1997

ASSETS

Current assets
Cash and cash equivalents................................. $ 747
Accounts receivable....................................... 916,083
Prepaid expenses.......................................... 10,509
Deferred income taxes..................................... 33,000
----------
Total current assets................................. 960,339
----------
Property and equipment
Computer equipment........................................ 92,372
Furniture and fixtures.................................... 22,160
----------
114,532
Less accumulated depreciation............................. 89,558
----------
24,974
----------
Other assets
Cash surrender value of life insurance policies........... 69,155
Other..................................................... 30,405
----------
99,560
----------
$1,084,873
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable.............................................. $ 10,000
Accounts payable.......................................... 32,900
Accrued salaries and wages................................ 164,867
Accrued health care liability............................. 67,000
Other accrued expenses.................................... 120,184
----------
Total current liabilities............................ 394,951
----------
Deferred income taxes....................................... 222,000
----------
Stockholders' equity
Common stock; $1 par value, 30,000 shares authorized, 300
shares issued and outstanding.......................... 300
Additional paid-in capital................................ 8,986
Retained earnings......................................... 462,022
----------
471,308
Less cost of 100 shares of treasury stock................. 3,386
----------
467,922
----------
$1,084,873
==========

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

F-96
151

PROGRAMMING MANAGEMENT & SYSTEMS, INC.

STATEMENT OF INCOME

YEAR ENDED DECEMBER 31, 1997

Net sales................................................... $8,567,749
Cost of services............................................ 6,260,993
----------
Gross profit................................................ 2,306,756
Selling, general and administrative expenses................ 2,307,718
----------
Loss from operations........................................ (962)
Other income................................................ 29,342
----------
Income before income taxes.................................. 28,380
Income tax expense.......................................... 7,000
----------
Net income.................................................. $ 21,380
==========

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

F-97
152

PROGRAMMING MANAGEMENT & SYSTEMS, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

YEAR ENDED DECEMBER 31, 1997

COMMON STOCK ADDITIONAL TREASURY STOCK
--------------- PAID-IN RETAINED ----------------
SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT TOTAL
------ ------ ---------- -------- ------ ------ -----

Balance, December 31, 1996...... 180 $180 $9,106 $440,642 100 ($3,386) $446,542
Shares of common stock
retired....................... (80) (80) 80 -- -- -- --
Shares of common stock issued... 200 200 ($ 200) -- -- -- --
Net income...................... -- -- -- 21,380 -- -- 21,380
--- ---- ------ -------- --- ------- --------
Balance, December 31, 1997...... 300 $300 $8,986 $462,022 100 ($3,386) $467,922
=== ==== ====== ======== === ======= ========

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

F-98
153

PROGRAMMING MANAGEMENT & SYSTEMS, INC.

STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 1997

CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................................. $ 21,380
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.............................................. 7,188
Deferred income taxes..................................... (55,000)
Changes in operating assets and liabilities
Accounts receivable.................................... 15,521
Prepaid expenses....................................... 27,772
Other assets........................................... 12,244
Accounts payable....................................... 26,681
Accrued salaries and wages............................. 28,466
Accrued health care liability.......................... (12,000)
Other accrued expenses................................. 70,191
---------
Net cash provided by operating activities................... 142,443
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment.......................... (13,463)
Increase in cash surrender value of life insurance
policies.................................................. (20,802)
---------
Net cash used by investing activities....................... (34,265)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable.................................. 300,000
Principal payments on note payable.......................... (422,000)
---------
Net cash used by financing activities....................... (122,000)
---------
Net decrease in cash and cash equivalents................... (13,822)
Cash and cash equivalents, beginning of year................ 14,569
---------
Cash and cash equivalents, end of year...................... $ 747
=========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest...................................... $ 840
=========
Cash paid for income taxes.................................. $ 2,836
=========

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

F-99
154

PROGRAMMING MANAGEMENT & SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

NOTE 1 -- DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Programming Management & Systems, Inc. (the company) is a St. Louis based
staffing company specializing in the placement of information technology
personnel on a contract basis with Midwestern manufacturing and health care
companies.

CASH AND CASH EQUIVALENTS

The company considers all highly liquid financial instruments purchased
with a maturity of three months or less to be cash equivalents.

The company places its cash and cash equivalents in a high quality bank.
These balances occasionally exceed federally insured limits.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost and depreciated using the
straight-line method over estimated useful lives of five to seven years.

ACCRUED HEALTH CARE LIABILITY

The accrued health care liability represents the estimated costs of known
and anticipated claims under the company's health insurance policies. For each
claim, the company self-insures up to the actual amount or deductible of the
claim, whichever is lower.

REVENUE RECOGNITION

Revenues are recognized as income in the period the related services are
provided.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts in the financial statements and the
accompanying notes. Actual results could differ from those estimates.

INCOME TAXES

Income taxes are computed using the liability method. Under this method,
income tax expense is the tax payable or refundable for the current period plus
or minus the net change in deferred tax assets and liabilities. Deferred income
tax assets and liabilities are computed for those differences between the
financial and tax basis of assets and liabilities that have future tax
consequences, using the currently enacted tax laws and rates. Deferred income
tax assets and liabilities are classified as current and noncurrent based on the
classification of the related assets or liabilities for financial reporting
purposes, or based on the expected reversal date for deferred taxes that are not
related to an asset or liability. Valuation allowances are established, if
necessary, to reduce a deferred tax asset to the amount that will more likely
than not be realized.

CONCENTRATION OF CREDIT RISKS

The company's principal financial instruments subject to credit risk are
accounts receivable. Management provides an allowance for doubtful accounts
based on an evaluation of potentially uncollectible accounts. Management has
determined that an allowance for doubtful accounts is not necessary at December
31, 1997.

F-100
155

PROGRAMMING MANAGEMENT & SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2 -- NOTE PAYABLE

The note payable balance is the amount drawn on a $500,000 line of credit
with a bank. Amounts drawn on the line are due on demand. The line of credit
expires April 18, 1998. Outstanding balances are secured by accounts receivable.
Interest accrues at the bank's prime rate plus 1.5 percent (10 percent at
December 31, 1997) and is payable monthly.

Upon expiration of the note agreement, the company renewed the line of
credit through April 1999 under the same terms and conditions except for the
interest rate, which is equal to the bank's prime rate plus one percent.

NOTE 3 -- INCOME TAXES

The components of income tax expense for the year ended December 31, 1997
are as follows:

Current income tax expense
Federal................................................... $ 52,000
State..................................................... 10,000
--------
62,000
Deferred income tax benefit (55,000)
--------
$ 7,000
========

The tax effects of temporary differences that give rise to the deferred tax
assets and liabilities at December 31, 1997 are as follows:

Current deferred income tax assets:
Accrued vacation.......................................... $ 7,000
Accrued health care liability............................. 24,000
Other..................................................... 2,000
---------
$ 33,000
=========
Noncurrent deferred income tax liabilities:
Cash to accrual conversion................................ $(213,000)
Depreciation.............................................. (9,000)
---------
$(222,000)
=========

Effective January 1, 1997, the company converted from the cash to accrual
basis of accounting for income tax purposes. The deferred tax liability
presented above represents the remaining balance of income taxes to be paid as a
result of this conversion. The company will make these payments in four equal
annual installments beginning in 1997.

NOTE 4 -- LEASES

The Company leases equipment and office space under noncancellable
operating lease agreements that expire at various dates through 1999. Future
minimum lease payments required under agreements with lease terms in excess of
one year are as follows at December 31, 1997:

1998............................................... $23,760
1999............................................... 5,640
-------
$29,400
=======

F-101
156

PROGRAMMING MANAGEMENT & SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Rent expense is $24,648 for the year ended December 31, 1997. The office
space is leased from a partnership related through common ownership. Rent
expense under this lease is $9,300 for the year ended December 31, 1997.

NOTE 5 -- BENEFIT PLANS

The Company sponsors a defined contribution 401(k) plan that covers
employees who have met certain eligibility requirements. An employee can defer
up to 20 percent of eligible compensation under the plan, subject to Internal
Revenue Service limitations. The plan provides for a company match of 75 percent
of the first 6 percent of an employee's deferral as well as discretionary
company profit sharing contributions. Company contributions are $274,907 for the
year ended December 31, 1997.

NOTE 6 -- BUSINESS CONCENTRATIONS

Approximately 71 percent of net sales for the year ended December 31, 1997
relates to four significant customers, each representing greater than 10 percent
of net sales. The loss of one or more of these customers could have a material
adverse effect on the company. Accounts receivable related to these customers is
$447,472 at December 31, 1997.

NOTE 7 -- SUBSEQUENT EVENTS

Effective January 1, 1998, the Company elected to be taxed under the
provisions of subchapter "S" of the Internal Revenue Code. Under these
provisions, the Company does not pay federal or state corporate income taxes on
its taxable income. Instead, the stockholders report their proportionate share
of the company's taxable income or loss on their personal income tax returns.

As a result of the election, deferred income tax assets of $33,000 and
deferred income tax liabilities of $9,000 at December 31, 1997 will be reversed
and charged to income tax expense during 1998. The remaining deferred income
taxes represent certain corporate level income taxes related to the conversion
from the cash to the accrual basis of accounting for income tax purposes (See
Note 3).

The company is currently negotiating the sale of its business to Corporate
Staffing Resources, Inc. Under the terms of the proposed sale, Corporate
Staffing Resources, Inc. will acquire 100 percent of the outstanding common
stock of the company for an amount equal to a multiple of earnings before
interest and taxes adjusted for certain recurring, nonrecurring and contingent
amounts.

F-102
157

================================================================================

No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or the Selling
Stockholders or any Underwriter. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any of the securities offered hereby
to whom it is unlawful to make such offer in such jurisdiction to any person in
any jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that
information contained herein is correct as of any time subsequent to the date
hereof or that there has been no change in the affairs of the Company since such
date.

----------------------------

TABLE OF CONTENTS

----------------------------

PAGE
----

Prospectus Summary.................... 3
Risk Factors.......................... 7
The Company........................... 14
Use of Proceeds....................... 15
Dividend Policy....................... 15
Capitalization........................ 16
Dilution.............................. 17
Selected Financial Data............... 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 20
Business.............................. 28
Management............................ 36
Certain Relationships and Related
Transactions........................ 42
Principal and Selling Stockholders.... 46
Description of Capital Stock.......... 47
Shares Eligible for Future Sale....... 49
Underwriting.......................... 50
Legal Matters......................... 51
Experts............................... 51
Additional Information................ 52
Index to Financial Statements......... F-1

------------------------

Until , 1998 (25 days after the commencement of this offering) all
dealers effecting transactions in the Common Stock offered hereby, whether or
not participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
acting as Underwriters and with respect to their unsold allotments or
subscriptions.

================================================================================

CORPORATE STAFFING
RESOURCES, INC.

[LOGO]

COMMON STOCK

------------------------

PROSPECTUS

------------------------
NationsBanc Montgomery
Securities LLC

BT Alex. Brown

The Robinson-Humphrey
Company
, 1998

================================================================================
158

PART II.

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses in connection with this
Registration Statement. The Company will pay all expenses of the offering. All
of such expenses are estimates, other than the filing fees payable to the
Securities and Exchange Commission, NASD and Nasdaq.

Securities and Exchange Commission Filing Fee............... $ 25,443.75
NASD Filing Fee............................................. 9,125.00
Nasdaq Listing Fee.......................................... 85,000.00
Printing Fees and Expenses.................................. 150,000.00
Legal Fees and Expenses..................................... 250,000.00
Accounting Fees and Expenses................................ 250,000.00
Blue Sky Fees and Expenses.................................. 5,000.00
Transfer Agent's and Registrar's Fees....................... 5,000.00
Miscellaneous............................................... 20,431.25
-----------
TOTAL............................................. $800,000.00
===========

The Selling Stockholders will bear the underwriting commissions and
discounts associated with the Common Stock sold by them in the Offering, the
fees and expenses of their legal counsel and certain other expenses.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Delaware General Corporation Law (the "DGCL") provides that a
corporation's charter may include a provision which restricts or limits the
liability of its directors or officers to the corporation or its stockholders
for money damages except: (1) to the extent that it is provided that the person
actually received an improper benefit or profit in money, property or services,
for the amount of the benefit or profit in money, property or services actually
received, or (2) to the extent that a judgment or other final adjudication
adverse to the person is entered in a proceeding based on a finding in the
proceeding that the person's action, or failure to act, was the result of active
and deliberate dishonesty and was material to the cause of action adjudicated in
the proceeding.

The Company's Charter provides that the Company shall, to the fullest
extent permitted by Section 145 of the General Company Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities or other matters referred to in
or covered by said section, and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a Director, officer, employee or agent and shall
insure to the benefit of the heirs, executors and administrators of such person.

The Company's Bylaws provide that the Company shall indemnify to the
maximum extent permitted by law any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Company) by reason of the fact
that he is or was a director or officer of the Company, or is or was serving at
the request of the Company as a director or officer of another Company,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect to
any criminal action or proceeding, had no reasonable

II-1
159

cause to believe his conduct was unlawful. To the extent that a present or
former director or officer of the Company shall be successful on the merits or
otherwise in defense of any action, suit or proceeding, or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.

The form of underwriting agreement, filed as Exhibit 1.01 hereto, contains
provisions by which the Underwriters agree to indemnify the Company and each
officer, director and controlling person of the Company against certain
liabilities.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In the three years preceding the filing of this registration statement, the
Company has issued securities in the following transactions, each of which was
intended to be exempt from the registration requirements of the Securities Act
of 1933, as amended, by virtue of Section 4(2) or 3(a)(9) thereunder. No
underwriters were involved in connection with the sales of these securities.

EXEMPTION
SECURITIES SOLD PURCHASERS CONSIDERATION CLAIMED
--------------- ---------- ------------- ---------

4,425,002 shares of Common Temporary Simon, L.L.C., IPP All outstanding capital stock of Section 4(2)
Stock on December 3, 1997 97 Private Equity, L.L.C., CSR, Inc.
ING (U.S.) Capital
Corporation, Mellon
Ventures, L.P., William W.
Wilkinson, William J.
Wilkinson, Thomas E. Murphy
and five other individuals
2,839,779 shares of Common D. Crawford Gallimore, T. Exchange of each share of the Section 3(a)(9)
Stock on December 3, 1997 Wayne McCreight, Jerry F. Company's non-voting common stock
Stone, H. Ronald Stone, for .3994 shares of Common Stock
Ginger S. McDonald Trust,
Sarah Katherine Stone Trust,
Carmen Nicole Stone Trust,
Sarah Ashley Stone Trust,
Heath Shepherd Stone Trust
and Hal H. Bibee
362,376 shares of Common Stock CreditAanstalt Corporate Exchange of outstanding warrants Section 3(2)(9)
on December 3, 1997 Finance, Inc. (each exerciseable into 1 share of
Common Stock) for new warrants
(each exerciseable into .699718858
shares of Common Stock) and
exercise of such warrants
796,752 shares of Common Stock D. Crawford Gallimore, T. All outstanding membership Section 4(2)
and 794,748 shares of Wayne McCreight interests in The Hamilton-Ryker
non-voting common stock on Company, LLC
March 12, 1997
2,897,140 shares of Common Jerry F. Stone, H. Ronald Capital contribution of all Section 4(2)
Stock, 2,897,134 shares of non- Stone, Ginger S. McDonald outstanding capital stock of Mega
voting common stock and Trust, Sarah Katherine Stone Force Staffing Services, Inc.
springing warrants to purchase Trust, Carmen Nicole Stone
99,594 pre-split shares of Trust, Sarah Ashley Stone
Common Stock on March 12, 1997 Trust, Heath Shepherd Stone
Trust, and Hal H. Bibee
258,944 warrants (each CreditAnstalt Corporate Extension of credit under Loan Section 4(2)
exerciseable into 1 share of Finance, Inc. Agreement
Common Stock at $.01) on March
12, 1997

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160

ITEM 16. EXHIBITS.

(a)

EXHIBIT NO. DESCRIPTION PAGE NUMBER
----------- ----------- -----------

**1.01 -- Form of Underwriting Agreement
2.01 -- Business Combination Agreement, by and among Mega Force
Staffing Services, Inc., the MFSS Shareholders and The
Hamilton-Ryker Company, L.L.C., dated as of March 12,
1997.
*2.02 -- Agreement and Plan of Merger by and between CSR, Inc.
and The Mega Force Staffing Companies, Inc., dated as of
December 3, 1997.
2.03 -- Stock Purchase Agreement by and among Corporate Staffing
Resources, Inc., Richard Niermann and Mary Ann Niermann,
dated as of February 23, 1998.
2.04 -- Stock Purchase Agreement by and between Corporate
Staffing Resources, Inc. and the Krauthamer Family
Limited Partnership, dated as of March 2, 1998.
2.05 -- Stock Purchase Agreement by and among Corporate Staffing
Resources, Inc., Corporate Staffing Resources of
Indiana, Inc., CMS Management Services LLC, CMS
Management Services, Co., TemPro Resources, Inc., CMS
Services, Inc., CMS/TemPro Resources of Nashville LLC,
CMS/TemPro Resources of Indianapolis, Inc., Joseph A.
Noto, Joseph R. Pozsgai, Jr., Donald E. Zerfas, Richard
G. Halstead, Patrick B. Laake, and C. Rick Bellar dated
as of May 1, 1998.
*2.06 -- Asset Purchase Agreement, dated as of May 6, 1998, by
and among Corporate Staffing Resources LLC, Monday
Temporary Services, Inc. and John Monday and Susan
Monday.
*2.07 -- Stock Purchase Agreement, dated as of July 2, 1998, by
and among Corporate Staffing Resources, Inc. and Susan
E. Volk and Gary T. Volk, Trustees under the Volk Living
Trust, and Gerald R. Miller.
*2.08 -- Stock Purchase Agreement, dated as of June 25, 1998, by
and among Corporate Staffing Resources, Inc. and Scott
M. Herron and Darryl Vidal.
*3.01 -- Restated Articles of Incorporation
*3.02 -- Bylaws
**4.01 -- Specimen Common Stock Certificate
*5.01 -- Form of Opinion of Latham & Watkins***
10.01 -- Employment Agreement between Corporate Staffing
Resources, Inc. and William W. Wilkinson, dated as of
May 1, 1998.
10.02 -- Employment Agreement between Corporate Staffing
Resources, Inc. and William J. Wilkinson, dated as of
May 1, 1998.
*10.03 -- Employment Agreement between Corporate Staffing
Resources, Inc. and Thomas E. Murphy, dated as of
.
*10.04 -- Employment Agreement between Corporate Staffing
Resources, Inc. and Jerry F. Stone, dated as of
.
*10.05 -- Employment Agreement between Corporate Staffing
Resources, Inc. and T. Wayne McCreignt, dated as of
.
*10.06 -- Employment Agreement between Corporate Staffing
Resources, Inc. and D. Crawford Gallimore, dated as of
.
*10.07 -- Corporate Staffing Resources, Inc. Non-Qualified Stock
Option Plan

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161

EXHIBIT NO. DESCRIPTION PAGE NUMBER
----------- ----------- -----------

*10.08 -- First Amendment to the Corporate Staffing Resources,
Inc. Non-Qualified Stock Option Plan
*10.09 -- Amended and Restated Loan Agreement, dated as of May 14,
1998, by and among Corporate Staffing Resources, Inc.,
as Borrower, ING (U.S.) Capital Corporation and
CreditAnstalt Corporate Finance, Inc. as Co-Agents, ING
(U.S.) Capital Corporation, CreditAnstalt Corporate
Finance, Inc. and Societe Generale, as Lenders and ING
(U.S.) Capital Corporation, as Administrative Agent.
*10.10 -- Registration Rights Agreement
*10.11 -- Stockholders Agreement
**10.12 -- Amendment of Stockholders Agreement
*22.01 -- Subsidiaries of the registrant
23.01 -- Consent of Independent Accountants
*23.01(a) -- Consent of Ernst & Young LLP with respect to the
financial statements of Corporate Staffing Resources,
Inc.
*23.01(b) -- Consent of Crowe, Chizek and Company LLP with respect to
the financial statements of CSR, Inc. and Subsidiaries
and Predecessor
*23.01(c) -- Consent of Ernst & Young LLP with respect to the
financial statements of The Hamilton-Ryker Company, LLC
*23.01(d) -- Consent of McGladrey & Pullen, LLP with respect to the
financial statements of CMS Management Services Company
*23.01(e) -- Consent of Moss-Adams, LLP with respect to the financial
statements of Intranational Computer Consultants, Inc.
*23.01(f) -- Consent of Brooks, Holmes, Williams & Cook, LLC with
respect to the financial statements of NPS of Atlanta,
Inc.
*23.01(g) -- Consent of Stone, Carlie & Company, L.L.C. with respect
to the financial statements of Programming Management &
Systems, Inc.
23.02 -- Consent of Latham & Watkins
24.01 -- Power of Attorney (included on signature pages hereto)
*27.01 -- Financial Data Schedule

- ---------------

* Filed herewith

** To be filed by amendment.

*** Executed opinion to be filed by amendment.

(b) Financial Statement Schedules:

SCHEDULE NO. DESCRIPTION PAGE NO.
------------ ----------- --------

II Valuation and Qualifying Accounts S-3

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in this Registration Statement
or otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling persons of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of

II-4
162

whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each posteffective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-5
163

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in South Bend, Indiana on
September 25, 1998.

CORPORATE STAFFING RESOURCES, INC.

By /s/ WILLIAM W. WILKINSON
--------------------------------------
William W. Wilkinson
Chairman and Chief Executive Officer

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

/s/ WILLIAM W. WILKINSON Chairman of the Board and Chief
- ------------------------------------------------ Executive Officer (Principal
William W. Wilkinson Executive Officer)

/s/ THOMAS E. MURPHY* Chief Financial Officer (Principal
- ------------------------------------------------ Financial Officer)
Thomas E. Murphy

/s/ T. WAYNE MCCREIGHT* Director
- ------------------------------------------------
T. Wayne McCreight

/s/ WILLIAM J. WILKINSON* Director
- ------------------------------------------------
William J. Wilkinson

/s/ JOHN GEER* Director
- ------------------------------------------------
John Geer

/s/ ROBERT W. MACDONALD* Director
- ------------------------------------------------
Robert W. MacDonald

/s/ CONOR T. MULLETT* Director
- ------------------------------------------------
Conor T. Mullett

/s/ JOHN P. SHOEMAKER* Director
- ------------------------------------------------
John P. Shoemaker

/s/ H. RONALD STONE* Director
- ------------------------------------------------
H. Ronald Stone

/s/ D. CRAWFORD GALLIMORE* Director
- ------------------------------------------------
D. Crawford Gallimore

/s/ JERRY F. STONE* Director
- ------------------------------------------------
Jerry F. Stone

*By: /s/ WILLIAM W. WILKINSON
-------------------------------------------
William W. Wilkinson
Individually and as
Attorney-in-Fact

S-1
164

CORPORATE STAFFING RESOURCES, INC.

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995

ADDITIONS
BALANCE AT CHARGED TO DEDUCTIONS
BEGINNING COSTS AND FROM BALANCE AT
OF PERIOD EXPENSES RESERVES END OF PERIOD
---------- ---------- ---------- -------------

Year ended December 31, 1997:
Allowance for doubtful accounts.................. $122,132 $179,711 $ 81,943 $219,900
Year ended December 31, 1996:
Allowance for doubtful accounts.................. 50,000 109,546 37,414 122,132
Year ended December 31, 1995:
Allowance for doubtful accounts.................. 40,000 194,545 184,545 50,000

S-2