STAFFMARK INC, S-1/A, 1996-09-19

STAFFMARK INC
S-1/A, 1996-09-19
HELP SUPPLY SERVICES

Previous: IMMUSOL INC, 8-A12G, 1996-09-19

Next: INGRAM MICRO INC, 8-A12B, 1996-09-19

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 19, 1996.

REGISTRATION NO. 333-7513
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------

AMENDMENT NO. 2

TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
STAFFMARK, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE
(State or other jurisdiction 7363 71-0788538
of incorporation or (Primary Standard Industrial (I.R.S. employer
organization) Classification Code Number) identification no.)
</TABLE>

302 EAST MILLSAP ROAD, FAYETTEVILLE, ARKANSAS 72703
(501) 973-6000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

---------------------
CLETE T. BREWER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
STAFFMARK, INC.
302 EAST MILLSAP ROAD
FAYETTEVILLE, ARKANSAS 72703
(501) 973-6000
(501) 973-6019 (FAX)
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

---------------------
Copies of all correspondence to:

C. DOUGLAS BUFORD, JR., ESQ.
WRIGHT, LINDSEY & JENNINGS
200 WEST CAPITOL, SUITE 2200
LITTLE ROCK, ARKANSAS 72201
(501) 371-0808
(501) 376-9442 (FAX)
GLENN W. STURM, ESQ.
NELSON MULLINS RILEY & SCARBOROUGH, L.L.P.
400 COLONY SQUARE, SUITE 2200
1201 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30361
(404) 817-6000
(404) 817-6050 (FAX)

---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

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.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

STAFFMARK, INC.

CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K

<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM AND CAPTION LOCATION IN PROSPECTUS
- -------------------------------------------------- ------------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of
Prospectus.............................. Outside Front Cover Page; Inside Front and
Outside Back Cover Pages; Cross
Reference Sheet
2. Inside Front and Outside Back Cover Pages
of Prospectus........................... Inside Front and Outside Back Cover Pages
of Prospectus; Additional Information
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges...... Prospectus Summary; Risk Factors; The
Company
4. Use of Proceeds........................... Prospectus Summary; Use of Proceeds
5. Determination of Offering Price........... Outside Front Cover Page; Risk Factors;
Underwriting
6. Dilution.................................. Dilution
7. Selling Security Holders.................. Not Applicable
8. Plan of Distribution...................... Outside Front Cover Page; Underwriting
9. Description of Securities to be
Registered.............................. Description of Capital Stock; Dividend
Policy
10. Interests of Named Experts and Counsel.... Legal Matters; Experts
11. Information with Respect to the
Registrant.............................. Prospectus Summary; Risk Factors; The
Company; Dividend Policy;
Capitalization; Selected Financial Data;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management;
Certain Transactions; Principal
Stockholders; Shares Eligible for Future
Sale; Consolidated Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. Not Applicable
</TABLE>

<PAGE> 3

***************************************************************************
* *
* 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 State in which *
* such offer, solicitation or sale would be unlawful prior to *
* registration or qualification under the securities laws of any such *
* State. *
* *
***************************************************************************

SUBJECT TO COMPLETION, DATED SEPTEMBER 19, 1996

PROSPECTUS

5,500,000 SHARES

[STAFFMARK LOGO]

COMMON STOCK

The 5,500,000 shares of Common Stock offered hereby are being sold by
StaffMark, Inc. (the "Company"). Prior to this offering (the "Offering"), there
has been no public market for the Common Stock. Approximately $15.1 million of
the proceeds of the Offering will directly benefit affiliates of the Company and
a portion of the indebtedness to be repaid with proceeds of the Offering is
guaranteed by affiliates of the Company. See "Certain
Transactions -- Organization of the Company." Affiliates of the Company, upon
completion of the Offering, will beneficially own approximately 39.4% of the
Common Stock of the Company. It is currently anticipated that the initial public
offering price will be between $9.00 and $11.00 per share. See "Underwriting"
for information relating to the factors to be considered in determining the
initial public offering price. Application has been made for the Common Stock to
be approved for quotation on The Nasdaq Stock Market's National Market (the
"Nasdaq National Market") under the symbol "STAF."

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE 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.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Per Share......................... $ $ $
- ------------------------------------------------------------------------------------------------
Total(3).......................... $ $ $
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated to be $2,700,000.
(3) The Company has granted the Underwriters an over-allotment option to
purchase up to 825,000 additional shares of Common Stock on the same terms
and conditions as set forth above. If all such shares are purchased by the
Underwriters, the total Price to Public will be $ , the total
Underwriting Discount will be $ and the total Proceeds to Company
will be $ . See "Underwriting."

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

The shares of Common Stock are offered subject to receipt and acceptance by
the Underwriters, to prior sale and to the Underwriters' right to reject any
order in whole or in part and to withdraw, cancel or modify the offer without
notice. It is expected that certificates for the shares of Common Stock will be
available for delivery on or about , 1996.

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

Stephens Inc.
[J.C. BRADFORD & CO.]
, 1996
<PAGE> 4

[INSIDE FRONT PAGE OF PROSPECTUS]

The Company has included on this page a map of the United States with
eight states highlighted, including Arkansas, Colorado, Georgia, North
Carolina, Oklahoma, South Carolina, Tennessee and Virginia. Below the map is a
list of such states and a listing of each city in those states in which the
Company has offices and identifying such office as Commercial, Specialty
Medical or Professional.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED THROUGH THE NASDAQ NATIONAL MARKET, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

Following consummation of the Offering, the Company intends to furnish its
stockholders with annual reports containing financial statements audited by
independent accountants.
<PAGE> 5

PROSPECTUS SUMMARY

Simultaneously with and as a condition to the closing of this Offering,
StaffMark, Inc. will acquire, in separate merger transactions (the "Mergers") in
exchange for cash and shares of its Common Stock, all of the common stock of six
staffing service businesses (each a "Founding Company" and collectively, the
"Founding Companies"). Unless otherwise indicated, all references herein to the
"Company" include the Founding Companies, and references herein to "StaffMark"
shall mean StaffMark, Inc. prior to the consummation of the Mergers.

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements and
related notes appearing elsewhere in this Prospectus. Unless otherwise
indicated, all share, per share and financial information set forth herein: (i)
has been adjusted to give effect to the Mergers; (ii) assumes an initial public
offering price of $10.00 per share, the midpoint of the range set forth on the
cover page of this Prospectus; (iii) has been adjusted to reflect a
1,355-for-one stock split in the form of a stock dividend prior to the Offering;
and (iv) assumes no exercise of the Underwriters' over-allotment option.

This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."

THE COMPANY

StaffMark was founded in March 1996 to create a leading provider of
diversified staffing services to businesses, healthcare providers, professional
and service organizations and governmental agencies, primarily in growth markets
in the southeastern and southwestern United States. StaffMark has entered into
agreements to acquire, simultaneously with the closing of this Offering, the six
Founding Companies, which have on average operated for over 13 years. The
Company will provide a wide variety of staffing services through 91 branch
offices located in Arkansas, Colorado, Georgia, North Carolina, Oklahoma, South
Carolina, Tennessee and Virginia. The Company's senior management will be
comprised primarily of stockholders of the Founding Companies. Currently, the
six Founding Companies provide more than 10,000 field employees to over 2,500
clients during a typical week. Since 1993, the Founding Companies have expanded
by acquiring six staffing businesses with 19 offices and by opening an
additional 32 branch offices.

The Company's business is organized into three divisions: Commercial,
Specialty Medical, and Professional. The Commercial division provides clerical
and light industrial staffing services, and generated approximately 89.9% and
88.2% of the Company's revenues and 92.1% and 91.1% of the Company's cost of
services for the year ended December 31, 1995 and the six months ended June 30,
1996, respectively. The Specialty Medical division provides healthcare and
medical staffing services, such as physical and occupational therapists, speech
pathologists and clinical trials support services, and generated approximately
8.3% and 7.3% of the Company's revenues and 6.2% and 4.8% of the Company's cost
of services for the year ended December 31, 1995 and the six months ended June
30, 1996, respectively. The Professional division provides technical,
professional and information technology staffing services and generated
approximately 1.8% and 4.5% of the Company's revenues and 1.7% and 4.1% of the
Company's cost of services for the year ended December 31, 1995 and the six
months ended June 30, 1996, respectively. According to Staffing Industry Report,
an industry publication, technical, professional and healthcare staffing are
among the fastest growing sectors of the staffing industry. The Company believes
that these specialized services offer a greater opportunity for growth and
profitability than commercial staffing services alone.

3
<PAGE> 6

The Company will seek to combine a decentralized, entrepreneurial operating
structure, which promotes decision-making, accountability and local name
recognition at the branch level, with strong corporate management, information
systems and marketing support. Following the consummation of the Offering, the
Company intends to centralize certain administrative functions, reduce or
eliminate redundant functions and facilities and implement the best practices of
the Founding Companies on a Company-wide basis. The Company's objective is to
become a premier provider of quality personnel staffing services to clients in
selected markets throughout the United States. The Company seeks to accomplish
this objective by undertaking the following growth strategy:

Pursuing Strategic Acquisitions. The Company seeks acquisitions of
profitable, well-managed staffing companies that will expand the
geographic scope of its operations, increase the revenues of its
Professional and Specialty Medical divisions, or offer services that may
be cross-sold to the Company's existing client base. The Company has
acquired six staffing businesses over the past three years.

Growing Internally. The Company intends to increase the productivity and
profitability of existing operations by expanding and enhancing services
and by increasing penetration in existing geographic markets through
"spinning-off" new branches from existing branches. During fiscal 1995
and the first six months of 1996, the Company opened 19 spin-off
branches. In addition, the Company may open new branch offices by
following existing clients into new geographic areas.

Increasing Vendor-On-Premises Relationships. The Company currently has
16 vendor-on-premises ("VOP") partnering relationships, as compared to
10 at December 31, 1995. VOP relationships represented 9.4% and 14.6% of
the Company's revenues for the year ended December 31, 1995 and the six
months ended June 30, 1996, respectively. Under these programs, the
Company assumes administrative responsibility for coordinating all
temporary personnel services throughout a client's location or
organization, including skills testing and training. The VOP program
provides the Company with an opportunity to establish long-term client
relationships, which results in a more stable source of revenue.

Cross-Selling Professional Services. The Company currently provides
commercial staffing services in the majority of its offices and plans to
introduce its professional services to certain branches that currently
do not offer such services. The Company believes there are substantial
growth opportunities that may be realized from the introduction of its
broad range of existing services throughout its network of branch
offices.

Expanding Specialty Medical Services. The Company believes that revenue
and profitability can be enhanced by providing specialty medical
services in additional markets. The Specialty Medical division generally
enjoys higher gross margins than the Commercial division because it
offers specialized expertise. The Company intends to expand its
Specialty Medical division through acquisitions and internal
development.

THE OFFERING

Common Stock offered by the Company..... 5,500,000 shares

Common Stock to be outstanding after the
Offering................................ 12,473,249 shares(1)

Use of proceeds......................... To repay indebtedness, to pay the
cash portion of the purchase price
for the Founding Companies and for
general corporate purposes,
including acquisitions.

Proposed Nasdaq National Market
symbol.................................. STAF
- ---------------

(1) Includes (i) 1,355,000 shares issued by StaffMark prior to the Offering, and
(ii) 5,618,249 shares of Common Stock to be issued to the stockholders of
the Founding Companies in connection with the Mergers, but excludes up to
935,494 shares of Common Stock subject to options to be issued under the
Company's 1996 Stock Option Plan. See "Management -- 1996 Stock Option
Plan."

4
<PAGE> 7

SUMMARY FINANCIAL DATA

StaffMark will acquire, simultaneously with the closing of this Offering,
the Founding Companies. Pursuant to the requirements of the Securities and
Exchange Commission's Staff Accounting Bulletin No. 97 ("SAB 97"), which was
issued and became effective July 31, 1996, Brewer Personnel Services, Inc.
("Brewer") has been designated as the acquirer, for financial reporting
purposes, of Prostaff, Maxwell, HRA, First Choice and Blethen (each hereinafter
defined) (the "Other Founding Companies"). Accordingly, the primary financial
information presented below relates to Brewer. For a discussion of the pro forma
combined operating results, see the Unaudited Pro Forma Combined Financial
Statements of the Company and related notes thereto.

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
----------------------------------------------- -----------------
1991 1992 1993 1994 1995 1995 1996
------ ------- ------- ------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
BREWER:
Revenues................................ $6,665 $11,159 $12,313 $27,894 $ 43,874 $15,928 $30,556
Cost of services........................ 5,465 9,609 10,063 22,906 35,115 12,969 24,028
------- ------- ------- -------- -------- ------- -------
Gross profit............................ 1,200 1,550 2,250 4,988 8,759 2,959 6,528
Operating expenses...................... 895 1,156 1,744 3,739 6,395 2,255 5,011
------- ------- ------- -------- -------- ------- -------
Operating income........................ 305 394 506 1,249 2,364 704 1,517
Interest expense........................ 27 26 54 92 801 32 880
Net income.............................. 279 381 478 1,177 1,587 691 634
PRO FORMA(1):
Revenues(2)................................................................... $171,463 $91,430
Operating income(3)........................................................... 7,603 4,286
Net income(3)(4).............................................................. 3,106 2,049
Net income per share.......................................................... 0.36 0.24
Weighted average shares outstanding(5)........................................ 8,565 8,565
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
---------------------------------
PRO FORMA AS ADJUSTED
ACTUAL (1)(6) (1)(7)
------- --------- -----------
<S> <C> <C> <C>
BREWER BALANCE SHEET DATA:
Working capital....................................................... $ 98 $(18,600 ) $14,275
Total assets.......................................................... 27,141 48,538 50,092
Long-term debt, including current maturities.......................... 18,626 23,190 --
Stockholders' equity (deficit)........................................ 3,722 (11,334 ) 36,971
</TABLE>

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

(1) See the Unaudited Pro Forma Combined Financial Statements of the Company for
pro forma financial information relating to fiscal year 1995 and the six
months ended June 30, 1996.

(2) Adjusted to reflect the acquisition of the Other Founding Companies, and the
acquisitions of E.P. Enterprises Corporation d/b/a Caldwell Services, Inc.
("Caldwell"), On Call Employment Services, Inc. ("On Call") and Strategic
Sourcing, Inc. ("SSI").

(3) Adjusted to reflect the acquisition of the Other Founding Companies, the
acquisitions of Caldwell, On Call and SSI and reductions in salaries to
certain owners of the Founding Companies which have been agreed to in
connection with the Mergers (the "Compensation Differential").

(4) Gives effect to certain tax adjustments related to the taxation of certain
Founding Companies as S Corporations prior to the consummation of the
Mergers and the tax impact of the Compensation Differential in each period.

(5) Includes (i) 1,355,000 shares issued by StaffMark prior to the Offering;
(ii) 5,618,249 shares to be issued to the stockholders of the Founding
Companies in connection with the Mergers; and (iii) 1,591,751 shares to be
issued in connection with the Offering to pay the cash portion of the
consideration for the Founding Companies, but excludes up to 935,494 shares
of Common Stock subject to options to be issued under the Company's 1996
Stock Option Plan.

(6) Gives effect to: (i) the acquisition of the Other Founding Companies at
historical cost in accordance with SAB 97; (ii) the combination of the
Founding Companies with StaffMark as if such combination had occurred as of
June 30, 1996; (iii) a liability for the cash consideration of $15,917,510
to be paid to the stockholders of the Founding Companies in connection with
the Mergers; (iv) the transfer by the Founding Companies of certain assets
to their stockholders in connection with the Mergers; (v) the additional
cash to be borrowed to fund the distribution of certain Founding Companies'
S Corporation Accumulated Adjustment Accounts; and (vi) the acquisition of
SSI by First Choice on July 1, 1996.

(7) Adjusted to reflect the sale of 5,500,000 shares of Common Stock offered
hereby at an assumed initial public offering price of $10.00 per share and
the application of the estimated net proceeds therefrom. See "Use of
Proceeds."

5
<PAGE> 8

SUMMARY FINANCIAL DATA

The following table represents summary data for each of the Other Founding
Companies for the three most recent years as well as the most recent interim
period and comparative period of the prior year.

<TABLE>
<CAPTION>
PERIODS ENDED
YEARS ENDED DECEMBER 31,(1) JUNE 30,(2)
--------------------------------- --------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
PROSTAFF:
Revenues........................................... $27,245 $30,608 $34,330 $16,063 $18,920
Cost of services................................... 22,858 25,456 28,234 13,239 15,384
------- ------- ------- ------- -------
Gross profit....................................... 4,387 5,152 6,096 2,824 3,536
Operating expenses................................. 3,756 4,359 5,559 2,534 2,895
------- ------- ------- ------- -------
Operating income................................... 631 793 537 290 641
Interest expense................................... 87 29 20 10 29
Net income......................................... 399 522 446 197 623
MAXWELL:
Revenues........................................... $16,324 $21,226 $23,093 $11,533 $13,232
Cost of services................................... 11,253 16,004 17,748 8,644 9,892
------- ------- ------- ------- -------
Gross profit....................................... 5,071 5,222 5,345 2,889 3,340
Operating expenses................................. 3,658 3,928 4,433 2,314 2,553
------- ------- ------- ------- -------
Operating income................................... 1,413 1,294 912 575 787
Interest expense................................... 28 34 -- -- 22
Net income......................................... 1,296 1,263 920 567 820
HRA:
Revenues........................................... $13,333 $16,453 $18,307 $13,174 $16,883
Cost of services................................... 10,985 13,367 14,940 10,745 13,551
------- ------- ------- ------- -------
Gross profit....................................... 2,348 3,086 3,367 2,429 3,332
Operating expenses................................. 2,141 2,427 3,504 2,418 3,053
------- ------- ------- ------- -------
Operating income (loss)............................ 207 659 (137) 11 279
Interest expense................................... 84 101 107 70 78
Net income (loss).................................. 85 353 (147) (35) 270
FIRST CHOICE:
Revenues........................................... $10,808 $13,007 $13,703 $ 6,640 $ 7,885
Cost of services................................... 8,825 10,573 11,149 5,404 6,386
------- ------- ------- ------- -------
Gross profit....................................... 1,983 2,434 2,554 1,236 1,499
Operating expenses................................. 1,397 2,519 2,291 1,044 1,185
------- ------- ------- ------- -------
Operating income (loss)............................ 586 (85) 263 192 314
Interest expense................................... -- 26 20 11 14
Net income......................................... 351 59 243 181 300
BLETHEN:
Revenues........................................... $11,198 $11,967 $13,380 $ 6,461 $ 7,721
Cost of services................................... 8,132 8,806 9,917 4,897 5,918
------- ------- ------- ------- -------
Gross profit....................................... 3,066 3,161 3,463 1,564 1,803
Operating expenses................................. 3,178 2,837 3,044 1,380 1,359
------- ------- ------- ------- -------
Operating income (loss)............................ (112) 324 419 184 444
Interest expense................................... 135 137 141 69 82
Net income (loss).................................. (91) 141 208 74 303
</TABLE>

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

(1) Amounts for HRA are reported for the fiscal years ended September 30.

(2) Amounts for HRA are reported for the nine months ended June 30, 1996.

6
<PAGE> 9

SUMMARY FINANCIAL DATA

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- ------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- -------- -------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
COMBINED STATEMENT OF INCOME DATA(1)(2):
Revenues.................................. $41,687 $70,663 $91,221 $121,156 $146,687 $65,557 $89,854
Cost of services.......................... 32,683 55,845 72,117 97,112 117,103 52,428 70,807
------- ------- ------- -------- -------- ------- -------
Gross profit.............................. 9,004 14,818 19,104 24,044 29,584 13,129 19,047
Operating expenses........................ 7,734 12,272 15,873 19,809 25,226 11,262 15,116
------- ------- ------- -------- -------- ------- -------
Operating profit.......................... $ 1,270 $ 2,546 $ 3,231 $ 4,235 $ 4,358 $ 1,867 $ 3,931
</TABLE>

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

(1) StaffMark will acquire, simultaneously with the closing of this Offering,
the Founding Companies. Based on the provisions of SAB 97, which was issued
and became effective July 31, 1996, Brewer has been designated as the
acquirer, for financial reporting purposes, of the Other Founding Companies.
The acquisitions of the Other Founding Companies will be accounted for as
combinations using historical cost. The summary information presented above
represents the combination of the historical financial statements of each of
the Founding Companies for all periods presented at historical cost, as if
these companies had been members of the same operating group. However,
during the periods presented, the Founding Companies were not under common
control or management. Therefore, the data presented may not be comparable
to or indicative of post combination results to be achieved by the Company
subsequent to the Mergers. Additionally, the Founding Companies' results of
operations reflect two tax structures, S Corporations and C Corporations.
Accordingly, line items which are not meaningful on a combined basis due to
the combination of companies with differing tax structures, such as the
provision for income taxes and net income, have been omitted. For a
discussion of the combined operating results, see "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

(2) Amounts for HRA are reported for the fiscal years ended September 30.

7
<PAGE> 10

RISK FACTORS

In addition to the other information contained in this Prospectus, the
following risk factors should be considered carefully in evaluating the Company
and its business before purchasing shares of the Common Stock offered hereby.

ABSENCE OF COMBINED OPERATING HISTORY. StaffMark was founded in March 1996
but has conducted no operations and generated no revenues to date. StaffMark has
entered into agreements to acquire the Founding Companies simultaneously with
the closing of this Offering. The Founding Companies have been operating as
separate independent entities, and there can be no assurance that the Company
will be able to successfully integrate the Founding Companies businesses,
achieve any cost savings as a result of the Mergers or institute the necessary
systems and procedures to successfully manage the combined enterprise on a
profitable basis. The Company may experience delays, complications and expenses
in implementing, integrating and operating such systems, any of which could have
a material adverse effect on the Company's business, financial condition and
results of operations. The management group on a combined basis has been
assembled only recently and there can be no assurance that the management group
will be able to oversee the combined entity and effectively implement the
Company's operating, growth, acquisition or business strategies. The combined
historical financial results of the Founding Companies cover periods when the
Founding Companies were not under common control or management and, therefore,
may not be indicative of the Company's future financial or operating results.
The Mergers involve the assumption of legal liabilities and amortization of
certain acquired intangible assets, some or all of which could have a material
adverse effect on the Company's business, financial condition and results of
operations. The inability of the Company to successfully integrate or operate
the Founding Companies would have a material adverse effect on the Company's
business, financial condition and results of operations and would make it
unlikely that the Company's acquisition program will be successful. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Management" and "Certain Transactions -- Organization of the
Company."

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 United States. 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
pressure during periods of economic downturn. Therefore, any significant
economic downturn could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

RISKS RELATED TO THE COMPANY'S ACQUISITION STRATEGY. One of the Company's
primary business strategies is to increase its revenues and expand the markets
it serves through the acquisition of additional staffing service businesses.
Competition for acquisitions in the staffing industry has increased
significantly in recent years and, as a result, there may be fewer acquisition
candidates available to the Company, and the price of acquisitions may be
higher. There can be no assurance that the Company will be able to identify,
acquire or profitably manage additional businesses or successfully integrate
acquired businesses, if any, into the Company without substantial costs, delays
or other operational or financial problems. Further, acquisitions involve a
number of special risks, including possible adverse effects on the Company's
operating results, diversion of management's attention, dependence on retention,
hiring and training of key personnel, risks associated with unanticipated
problems or legal liabilities, and realization of acquired intangible assets,
some or all of which could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, there can
be no assurance that the Founding Companies or other staffing service businesses
acquired in the future will achieve anticipated revenues and earnings. To the
extent that the Company is unable to acquire additional staffing businesses or
integrate such businesses successfully, its ability to expand its operations and
increase its revenues to the degree desired would be reduced significantly. The
inability to acquire additional staffing businesses could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Operating Strategy" and "-- Growth Strategy."

8
<PAGE> 11

ABILITY TO CONTINUE GROWTH. Certain of the Founding Companies have
experienced significant growth in the past, principally through acquisitions,
growth of existing offices and the opening of new offices. There can be no
assurance that the Company will be able to expand its market presence in its
current locations, successfully enter other markets through acquisitions or the
opening of new offices or integrate future acquired businesses, if any, into the
Company without substantial costs, delays or other operational or financial
problems. There also can be no assurance that future acquisitions or recently
completed acquisitions will not have an adverse effect on the Company's
operating results, particularly in the fiscal quarters immediately following the
consummation of such transactions. The ability of the Company to continue its
growth will depend on a number of factors, including the availability of working
capital to support such growth, existing and emerging competition and the
Company's ability to maintain profitability while facing pricing pressures. 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. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources -- Combined" and "Business -- Operating Strategy" and "-- Growth
Strategy."

RISKS RELATED TO ACQUISITION FINANCING. The Company currently intends to
finance future acquisitions by using cash and shares of the Company's Common
Stock for all or a substantial 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 the Company's 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 initiate and
maintain its acquisition program. Immediately following this Offering, the
Company will have limited cash resources to pursue acquisitions. 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. There can be no assurance that the Company will be able to obtain
such financing if and when it is needed or that, if available, such financing
can be obtained on terms the Company deems acceptable. The inability to acquire
such financing, if needed, could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources -- Combined" and "Business -- Growth Strategy."

COMPETITIVE MARKET. The temporary staffing industry is highly competitive,
with 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 competitors have
greater marketing, financial and other resources and more established operations
than the Company. 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, financial
condition and results of operations. See "Business -- The Staffing Services
Industry" and "-- Competition."

DEPENDENCE ON AVAILABILITY OF QUALIFIED TEMPORARY PERSONNEL. The Company
depends on its ability to attract, train and retain personnel who possess the
skills and experience necessary to meet the staffing requirements of its
clients. Competition for individuals with proven skills in certain areas,
particularly medical and technical, is intense. The Company competes in several
markets in which unemployment is relatively low thereby increasing competition
for employees. The Company is also adversely affected by certain special events
such as the 1996 Summer Olympic Games in Atlanta, which have further reduced the
number of qualified temporary candidates available for the Company's Atlanta
branch offices. The Company must continually evaluate, train and upgrade its
base of available personnel to keep pace with 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. The
inability to attract and retain qualified personnel could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Operations -- Employees/Personnel."

INCREASED EMPLOYEE COSTS. The Company is required to pay unemployment
insurance premiums and workers' compensation for its temporary employees.
Unemployment insurance premiums may increase as a result of, among other things,
increased levels of unemployment and the lengthening periods for which

9
<PAGE> 12

unemployment benefits are available. Workers' compensation costs may increase as
a result of changes in the Company's experience rating or applicable laws. Each
Founding Company maintains worker's compensation insurance which will remain in
effect after the Mergers. The worker's compensation limit is statutory for each
Founding Company, except that the limit is $1,000,000 for First Choice, the
Professional Resources subsidiary of Prostaff and Maxwell's Louisiana
operations. The self-insured retention is $50,000 for Brewer, $200,000 for
Prostaff and $250,000 for Maxwell. The employer's liability limit is $1,000,000
for Brewer and Maxwell's Louisiana and Oklahoma operations, $500,000 for
Prostaff and HRA and $100,000 for all other Founding Companies . Although
management believes its workers' compensation coverage amounts are adequate,
there can be no assurance that the Company's actual future workers' compensation
claims will not exceed the coverage amounts. The Company is evaluating various
forms of worker's compensation insurance and will implement a new program at
such time as, in management's judgment, a more cost-effective program is
identified. The Company's workers' compensation insurance premiums are 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 claims (up to the deductible amount), but
such reserves are only estimates of future payments relating to claims and are
based upon limited prior experience. 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. The Company may incur costs related to workers'
compensation claims at a higher rate due to such causes as higher than
anticipated losses from known claims or an increase in the number and severity
of new claims. See "Business -- Operations -- Workers' Compensation Program."

RISK OF GOVERNMENT REGULATIONS AND LEGISLATIVE PROPOSALS. The Company's
costs could increase if there are any material changes in government
regulations. Recent federal and certain state legislative proposals have
included provisions extending health insurance benefits to employees who do not
presently receive 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. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and
"Business -- Operations -- Employees/Personnel."

REGULATION OF INTERNATIONAL RECRUITING. The Company currently recruits
physical and occupational therapists internationally for domestic placement. The
entry of these employees into the United States is regulated by the U.S.
Department of Labor and U.S. Department of Justice -- Immigration and
Naturalization Services. The regulations governing the hiring of foreign
nationals are complex and change often. If either of these authorities or any
other regulatory or judicial body should determine that the Company is not in
compliance with the regulations, the Company could be subject to fines and/or
suspension of this part of the Company's business. Further, regulations could
change in a manner which would limit the Company's ability to employ foreign
nationals. Any of the foregoing could have a material adverse effect on the
Company's business, financial condition and results of operation.

INDUSTRY RISKS. Providers of temporary staffing services generally place
their employees in the workplace of other businesses. An attendant risk of such
activity includes possible claims of discrimination and harassment, employment
of illegal aliens and other similar claims. Management has adopted and
implemented policies and guidelines to reduce the Company's exposure to these
risks. However, a failure of any Company employee to follow these policies and
guidelines may result in negative publicity, injunctive relief and the
assessment against the Company of damages or fines. Moreover, in certain
circumstances, the Company may be held responsible for the actions at a
workplace of persons not under the direct control of the Company.

Temporary staffing providers are also affected by fluctuations in the
business of their clients. Interruptions in the business of its clients can
adversely affect the Company's business. For example, inclement weather or

10
<PAGE> 13

natural disasters, which may require clients to close or reduce their hours of
operation, could adversely affect the Company's business, financial condition
and results of operations.

RELIANCE ON KEY PERSONNEL. The Company is highly dependent on its
management. The Company believes that its success will depend to a significant
extent upon the efforts and abilities of the key executives of the Founding
Companies. 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 are unable to continue in their position with the Company, or if the
Company is unable to attract and retain other skilled employees, the Company's
business, financial condition and results of operation could be adversely
affected. See "Management."

CONTROL BY EXISTING MANAGEMENT AND STOCKHOLDERS. Following the completion
of this Offering, officers and directors of the Company, and entities affiliated
with them, will beneficially own approximately 39.4% of the then outstanding
shares of Common Stock (37.0%, if the Underwriters' over-allotment option is
exercised in full) and are likely to exercise substantial control over the
Company's affairs. These stockholders 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 Stockholders."

POTENTIAL LIABILITY AND INSURANCE; LEGAL PROCEEDINGS. The provision of
professional services, specialty medical and clinical trials services entails an
inherent risk of professional malpractice and other similar claims. The Company
expects to maintain insurance coverage that it believes will be adequate both as
to risks and amounts. Each Founding Company will maintain its existing insurance
coverage after the Mergers. The Company is evaluating various insurance options
and will implement a new program at such time as, in management's judgment, a
more cost-effective program is identified. The Company believes that such
insurance will extend to professional liability claims that may be asserted
against field employees of the Company. In the ordinary course of its business,
the Company is periodically threatened with or named as a defendant in various
lawsuits, including discrimination and harassment and other similar claims,
which could have a material adverse effect on the Company's business, financial
condition and results of operations.

POTENTIAL EFFECT OF SHARES FOR FUTURE SALE ON PRICE OF COMMON STOCK. The
5,500,000 shares being sold in this Offering will be freely tradeable unless
acquired by affiliates of the Company. The market price of the Common Stock of
the Company could be adversely affected by the sale of substantial amounts of
Common Stock of the Company in the public market following this Offering.

Simultaneously with the closing of this Offering, the stockholders of the
Founding Companies will receive, in the aggregate, 5,618,249 shares of Common
Stock as a portion of the consideration for their businesses. These shares are
not being offered by this Prospectus and have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and, therefore, may
not be sold unless registered under the Securities Act or sold pursuant to an
exemption from registration, such as the exemption provided by Rule 144.
Furthermore, the stockholders who will receive these shares have agreed with the
Company not to sell, transfer or otherwise dispose of any of these shares for
two years following consummation of this Offering. However, the stockholders who
will receive these shares have certain demand registration rights with respect
to these shares, beginning 22 months after the closing of this Offering, as well
as certain piggyback registration rights with respect to these shares. In
addition, existing stockholders of StaffMark will hold, in the aggregate
1,355,000 shares of Common Stock. See "Certain Transactions -- Organization of
the Company." None of these shares have been registered under the Securities Act
and, accordingly, may not be sold unless registered under the Securities Act or
sold pursuant to an exemption from registration, such as the exemption provided
by Rule 144. The holders of these shares also have certain piggyback
registration rights with respect to these shares and have agreed with StaffMark
to the same two-year restriction on dispositions described above. Upon future
registration, such restricted shares will be eligible for resale in the public
market.

The Company, all of the stockholders of the Founding Companies and the
executive officers and directors of the Company have agreed not to offer or sell
any shares of Common Stock of the Company for a period of 180 days (the "Lockup
Period") after the date hereof without the prior written consent of J.C.
Bradford & Co. and Stephens Inc., as representatives of the Underwriters (the
"Representatives"), except that the Company may issue shares of Common Stock in
connection with acquisitions or upon the exercise of options granted under the
Company's 1996 Stock Option Plan. After the Lockup Period, all of such shares
would be eligible for sale in accordance with Rule 144 promulgated under the
Securities Act, subject to the volume, holding period and other limitations of
Rule 144. See "Underwriting." However, the stockholders of the Founding
Companies and StaffMark have agreed with the Company that they will not sell the
6,973,249 shares of

11
<PAGE> 14

Common Stock issued to them for a period of two years after the closing of this
Offering, except as described above.

The Company intends to issue under its 1996 Stock Option Plan options to
purchase up to an aggregate of 935,494 shares of Common Stock. The sale of
Common Stock underlying such options will be subject to the expiration of the
Lockup Period. Substantially all of these options will vest over a period of
five years. The Company intends to register the shares issuable upon exercise of
options granted under its 1996 Stock Option Plan and, upon such registration,
such shares will be eligible for resale in the public market. See
"Management -- 1996 Stock Option Plan."

The Company plans to register up to an additional 4,000,000 shares of its
Common Stock with the Securities and Exchange Commission (the "Commission")
under the Securities Act as soon as practicable after completion of this
Offering for use by the Company as all or a portion of the consideration to be
paid in conjunction with future acquisitions. These shares may be freely
tradeable after their issuance, unless the sale of such shares is contractually
restricted. The piggyback registration rights described above will not apply to
the registration statement to be filed with respect to these 4,000,000 shares.
See "Shares Eligible for Future Sale."

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE. Prior to this
Offering, there has been no public market for the Common Stock. The Company has
filed application for the Common Stock to be approved for quotation on the
Nasdaq National Market; however, there can be no assurance that, following this
Offering, a regular trading market for the Common Stock will develop or be
sustained. The initial public offering price has been determined by negotiation
among the Company and the Representatives and may bear no relationship to the
market price of the Common Stock after this Offering. See "Underwriting." The
market price of the Common Stock could be subject to significant fluctuations in
response to variations in quarterly operating results and other factors. In
addition, the stock market in recent years has experienced extreme price and
volume fluctuations that often have been unrelated or disproportionate to the
operating performance of companies. Factors such as actual or anticipated
operating results, growth rates, changes in estimates by analysts, market
conditions in the industry, announcements by competitors, regulatory actions and
general economic conditions will vary from period to period. As a result of the
foregoing, the Company's operating results and prospects from time to time may
be below the expectations of public market analysts and investors. Any such
event would likely result in a material adverse effect on the price of the
Common Stock.

DIVIDEND POLICY; RESTRICTIONS ON PAYMENT. The Company anticipates that for
the foreseeable future its earnings will be retained for the operation and
expansion of its business and that it will not pay cash dividends. In addition,
the Company anticipates that its proposed credit facility will limit the payment
of cash dividends without the lender's consent. See "Dividend Policy."

SUBSTANTIAL PROCEEDS OF OFFERING PAYABLE TO AFFILIATES. Approximately $15.9
million of the net proceeds of this Offering will be used to pay the cash
portion of the purchase price for the common stock of the Founding Companies.
Approximately $11.0 million of such amount, representing 22.7% of the net
proceeds of the Offering, will be paid to stockholders of the Founding Companies
who will become executive officers, directors or greater than 5% stockholders of
the Company. In addition, approximately $29.5 million, representing
approximately 60.8% of the net proceeds from the Offering, will be used to repay
indebtedness assumed by the Company in the acquisition of the Founding
Companies. Approximately $14.5 million of such indebtedness is guaranteed by
stockholders of the Founding Companies and approximately $4.1 million of such
indebtedness either has or is expected to be incurred by the Founding Companies
in connection with S Corporation distributions to stockholders of the Founding
Companies prior to the Mergers. See "Use of Proceeds" and "Certain
Transactions."

IMMEDIATE AND SUBSTANTIAL DILUTION. The purchasers of the shares of Common
Stock offered hereby will experience immediate dilution in the net tangible book
value of their shares of $8.60 per share. In the event the Company issues
additional Common Stock in the future, including shares which may be issued in
connection with future acquisitions, purchasers of Common Stock in this Offering
may experience further dilution in the net tangible book value per share of the
Common Stock of the Company. See "Dilution."

ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS. The Board of Directors
of the Company is empowered to issue preferred stock in one or more series
without stockholder action. The existence of this "blank-check" preferred stock
provision could render more difficult or discourage an attempt to obtain control
of the Company by means of a tender offer, merger, proxy contest or otherwise.
Certain provisions of the Delaware General Corporation Law may also discourage
takeover attempts that have not been approved by the Board of Directors. See
"Description of Capital Stock."

12
<PAGE> 15

THE COMPANY

StaffMark, a Delaware corporation, was founded in March 1996 to create a
leading provider of diversified staffing services to businesses, healthcare
providers, professional and service organizations and governmental agencies,
primarily in growth markets located in the southeastern and southwestern United
States. Although it has conducted no operations to date, StaffMark has entered
into agreements to acquire, simultaneously with and as a condition to the
consummation of the Offering, the following established staffing businesses and
their affiliates: (i) Brewer; (ii) Prostaff Personnel, Inc. and its related
entities ("Prostaff"); (iii) Maxwell Staffing, Inc. and its related entities
("Maxwell"); (iv) HRA, Inc. ("HRA"); (v) First Choice Staffing, Inc. ("First
Choice"); and (vi) Blethen Temporaries, Inc. and its related entities
("Blethen"). Each of the Founding Companies will become a wholly-owned
subsidiary of the Company. For a description of the transactions pursuant to
which these businesses will be acquired, see "Certain
Transactions -- Organization of the Company."

The Company's business is organized into three divisions: Commercial,
Professional and Specialty Medical. The Commercial division provides clerical
and light industrial staffing services. The Professional division provides
technical, professional and information technology staffing services. The
Specialty Medical division provides healthcare and medical staffing services.

The Company's senior management will be comprised primarily of stockholders
of the Founding Companies. Clete T. Brewer, President and Chief Executive
Officer of Brewer, will serve as President, Chief Executive Officer and a
director of the Company. Ted Feldman, President and Chief Executive Officer of
HRA, will become Chief Operating Officer of the Company. W. David Bartholomew,
Secretary/Treasurer of HRA, will become Executive Vice President -- Southeastern
Operations and a director of the Company. Donald A. Marr, Jr., Vice President of
Operations of Brewer, will become Executive Vice President -- Southwestern
Operations of the Company. Together, Messrs. Bartholomew and Marr will directly
manage the Company's Commercial and Professional divisions. Steven E. Schulte,
President and Chief Executive Officer of Prostaff, will become Executive Vice
President -- Administration and a director of the Company. The Specialty Medical
division of the Company will be managed directly by John H. Maxwell, Jr. and
Janice Blethen. Mr. Maxwell, President of Maxwell, will become the Executive
Vice President -- Medical Services and a director of the Company. Ms. Blethen,
the President and Chief Executive Officer of Blethen, will become the Executive
Vice President -- Clinical Trials Support Services and a director of the
Company. See "Management."

Certain information regarding the Founding Companies is set forth below:

<TABLE>
<CAPTION>
FISCAL 1995 BRANCHES
OPERATING AS OF
YEAR FISCAL 1995 INCOME JULY 31,
COMPANY FOUNDED REVENUE (LOSS)(1) 1996 STATES SERVICES PROVIDED
- ------------------- ------- ----------- ----------- -------- ------------ --------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Brewer............. 1988 $43,874 $ 2,364 27 AR, CO, GA, Commercial/Professional
TN, VA
Prostaff........... 1973 34,330 537 25 AR Commercial/Professional/
Specialty Medical
Maxwell............ 1979 23,093 912 9 OK Commercial/Professional/
Specialty Medical
HRA................ 1991 18,306 (137) 15 TN Commercial/Professional
First Choice....... 1986 13,703 263 8 SC, NC Commercial/Professional
Blethen............ 1981 13,380 419 7 NC Commercial/Professional/
Specialty Medical
</TABLE>

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

(1) Represents operating income before interest expense, other income or
expense, and income taxes.

13
<PAGE> 16

The aggregate consideration to be paid by StaffMark in the Mergers is
approximately $72.1 million, consisting of approximately $15.9 million in cash
and 5,618,249 shares of Common Stock.

The following table sets forth the consideration being paid for each
Founding Company:

<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------
COMPANY CASH SHARES VALUE OF SHARES(1) TOTAL
- ------------------------------------------------ ------- --------- ------------------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Brewer.......................................... $ 2,950 1,935,000 $19,350 $22,300
Prostaff........................................ 4,500 1,050,000 10,500 15,000
Maxwell......................................... 2,280 912,000 9,120 11,400
HRA............................................. 2,348 615,175 6,152 8,500
First Choice.................................... 2,075 622,500 6,225 8,300
Blethen......................................... 1,764 483,574 4,836 6,600
------- --------- ------- -------
Total................................. $15,917 5,618,249 $56,183 $72,100
======= ========= ======= =======
</TABLE>

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

(1) Represents the aggregate value of the shares of Common Stock issued as
consideration, based upon an assumed initial public offering price of
$10.00 per share.

In conjunction with the Mergers, certain of the Founding Companies either
have made or plan to make distributions totaling approximately $5.3 million to
their stockholders, representing their estimated S Corporation Accumulated
Adjustment Accounts as of June 30, 1996. Additionally, in conjunction with the
Mergers, certain of the Founding Companies either have made or plan to make
distributions of certain assets with a net book value of approximately $349,000
as of June 30, 1996.

The Company maintains its principal executive offices at 302 East Millsap
Road, Fayetteville, Arkansas, 72703. Its telephone number is (501) 973-6000.

14
<PAGE> 17

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 5,500,000 shares of
Common Stock offered hereby are estimated to be approximately $48.5 million
($56.1 million if the Underwriters' over-allotment option is exercised in full),
after deducting underwriting discounts and other offering expenses (estimated to
be approximately $2.7 million), all of which are payable by the Company.

Of this amount, $15.9 million will be used to pay the cash portion of the
purchase price for the Founding Companies, of which approximately $11.0 million,
representing 22.7% of the net proceeds of this Offering, will be paid to
stockholders of the Founding Companies who will become officers, directors, key
employees or holders of more than 5% of the Common Stock of the Company. In
addition, approximately $29.5 million of the net proceeds, as detailed below,
will be used to repay indebtedness of the Founding Companies, approximately
$14.5 million of which is guaranteed by stockholders of the Founding Companies
and approximately $4.1 million of which either has been or is expected to be
incurred by the Founding Companies in connection with S Corporation
distributions to stockholders of the Founding Companies prior to the Mergers.
See "Certain Transactions -- Organization of the Company."

The remaining net proceeds of approximately $3.1 million will be used for
working capital and for general corporate purposes, which are expected to
include future acquisitions. The Company currently has no agreements with
respect to any future acquisitions. Pending such uses, the Company plans to
invest the net proceeds in short-term, interest bearing, investment grade
securities.

The Company has received a commitment from a major lending institution for
a credit facility of $50.0 million to be used for working capital and other
general corporate purposes, including future acquisitions. There can be no
assurance the Company will enter into an agreement for this credit facility. See
"Risk Factors -- Risks Related to Acquisition Financing" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Combined."

The following is a description of the indebtedness to be retired with the
proceeds from the Offering:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE MATURITY
INDEBTEDNESS OUTSTANDING AS OF JUNE 30, 1996 AMOUNT RATE(1) DATE(S)(2)
------------------------------------------------------------- -------------- -------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Brewer Line of Credit(3)..................................... $ 1,546 9.79% 6/98
Brewer Term Loan(4).......................................... 15,458 8.86 10/95 - 6/01
Brewer Note Payable(5)....................................... 3,100 8.00 6/98 - 6/01
Prostaff Line of Credit(6)................................... 1,078 8.63 On demand
Maxwell Term Loan(6)......................................... 1,750 8.25 11/96
HRA Line of Credit(3)........................................ 1,020 9.31 1/97
Blethen Line of Credit(3).................................... 1,053 10.79 4/97
Indebtedness less than $500,000.............................. 1,536 8.01 On demand - 3/03
-------
26,541
-------
PRO FORMA ADJUSTMENTS
-------------------------------------------------------------
HRA Line of Credit(7)........................................ 850 9.31 1/97
First Choice Notes Payable(8)................................ 750 7.63 10/96 - 9/99
S Corporation Distributions(9)............................... 1,360 N/A N/A
-------
2,960
------- -----
Total............................................ $29,501 8.77%
======= =====
</TABLE>

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

(1) Represents weighted average interest rate for the six months ended June 30,
1996, except for HRA, which represents the weighted average interest rate
for the nine months ended June 30, 1996. Weighted average interest rates for
the applicable pro forma adjustments are computed as discussed in notes (7)
and (8) below.

(2) Represents maturity date and range of maturity dates for indebtedness
requiring periodic principal payments.

(3) Amounts incurred for working capital requirements and general corporate
purposes.

(4) Amounts incurred in conjunction with the acquisitions of On Call and
Caldwell as disclosed elsewhere in this Prospectus.

15
<PAGE> 18

(5) Amount incurred in conjunction with the acquisition of Caldwell as disclosed
elsewhere in this Prospectus.

(6) Amounts incurred primarily for the distribution of certain Founding
Companies' S Corporation Accumulated Adjustment Accounts as disclosed
elsewhere in this Prospectus.

(7) Amount borrowed on HRA's line of credit in conjunction with the acquisition
of Dorothy Johnson's Career Consultants, Inc. ("Career Consultants," which
provides permanent placement services) effective July 11, 1996. The amount
incurred represents the entire purchase price of Career Consultants. The pro
forma effects of this acquisition have been excluded from the unaudited pro
forma financial information appearing elsewhere in this Prospectus as
amounts are immaterial to the operations and financial position of HRA. For
further discussion, see the financial statements of HRA and related notes
thereto appearing elsewhere in this Prospectus.

(8) Amounts incurred (representing two notes of $375,000 each, bearing interest
at 8.25% and 7.00%, respectively) in conjunction with the acquisition of SSI
(which provides permanent and temporary placement services of technology
professionals) by First Choice effective July 1, 1996. Interest rates are
fixed over the terms of the respective notes. The amounts incurred represent
the entire purchase price for SSI. For further discussion, see the financial
statements of First Choice and related notes thereto appearing elsewhere in
this Prospectus.

(9) Represents pro forma adjustment in conjunction with the anticipated
distribution of certain Founding Companies' estimated S Corporation
Accumulated Adjustment Accounts. The pro forma adjustment is based on the
assumption that distributions will be funded with additional borrowings.

DIVIDEND POLICY

The Company does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future because it intends to retain its earnings, if
any, to finance the expansion of its business and for general corporate
purposes, including future acquisitions. Any payment of future dividends will be
at the discretion of the Board of Directors and will depend upon, among other
things, the Company's earnings, financial condition, capital requirements, level
of indebtedness, contractual restrictions with respect to the payment of
dividends and other factors that the Company's Board of Directors deems
relevant. In the event the Company is successful in obtaining one or more lines
of credit, it is likely that any such facility will include restrictions on the
ability of the Company to pay dividends without the consent of the lender.

16
<PAGE> 19

DILUTION

The pro forma deficit in net tangible book value of the Company at June 30,
1996 was ($31.1) million or ($4.46) per share after giving effect to the
Mergers. The deficit in pro forma net tangible book value per share represents
the amount by which the Company's pro forma total liabilities exceeds the
Company's pro forma net tangible assets divided by the number of shares of
Common Stock outstanding after giving effect to the Mergers. After giving effect
to the sale of the 5,500,000 shares of Common Stock offered hereby at an assumed
initial public offering price of $10.00 per share and after deducting the
underwriting discount and estimated offering expenses, the pro forma net
tangible book value of the Company at June 30, 1996 would have been $17.4
million or $1.40 per share, representing an immediate increase in net tangible
book value of $5.86 per share to existing stockholders and an immediate dilution
of $8.60 per share to the new investors purchasing the shares in this Offering.
The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price........................... $10.00
Pro forma deficit in net tangible book value before
Offering................................................... $(4.46)
Increase attributable to the sale of shares offered hereby.... 5.86
-----
Pro forma net tangible book value after Offering................ 1.40
------
Dilution in net tangible book value to new investors............ $ 8.60
======
</TABLE>

The following table sets forth, on a pro forma basis to give effect to the
Mergers as of June 30, 1996, the number of shares of Common Stock purchased from
the Company, the total consideration paid and the average price per share paid
by existing stockholders and the new investors after giving effect to the
transactions described under "Certain Transactions -- Organization of the
Company."

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION(1) AVERAGE
---------------------- ------------------------ PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders................. 6,973,249 55.9% $(11,334,000) (26.0)% $ (1.63)
New investors......................... 5,500,000 44.1 55,000,000 126.0 10.00
---------- ----- ------------ -----
Total....................... 12,473,249 100.0% $ 43,666,000 100.0%
========== ===== ============ =====
</TABLE>

- ---------------
(1) Total consideration paid by existing stockholders represents the combined
stockholders' equity of the Founding Companies before this Offering,
adjusted to reflect: (i) the cash portion of the consideration payable to
the stockholders of the Founding Companies in connection with the Mergers;
(ii) the transfer of selected assets to certain stockholders of the Founding
Companies in connection with the Mergers; (iii) the distribution of certain
of the Founding Companies' S Corporation Accumulated Adjustment Accounts;
and (iv) a liability for deferred income taxes. See "Use of Proceeds" and
"Capitalization."

17
<PAGE> 20

CAPITALIZATION

The following table sets forth the short-term borrowings and current
portion of long-term debt and capitalization at June 30, 1996, of: (i) Brewer;
(ii) the Company on a pro forma basis to give effect to the acquisition of the
Other Founding Companies and Mergers; and (iii) the Company on a pro forma as
adjusted basis, to give effect to both the Mergers and this Offering, and the
application of the estimated net proceeds from this Offering. See "Selected
Financial Data" and "Use of Proceeds." This table should be read in conjunction
with the Unaudited Pro Forma Combined Financial Statements of the Company and
the related notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
--------------------------------------------
PRO AS
BREWER FORMA(1) ADJUSTED(1)(2)
--------- ----------- --------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Short-term borrowings and current portion of long-term
debt................................................. $ 3,968 $ 10,843 $ --
======= ======== =======
Long-term debt, excluding current portion.............. $16,204 $ 17,393 $ --
------- -------- -------
Stockholders' equity:
Preferred Stock...................................... -- -- --
Common Stock(3)...................................... -- 70 125
Additional paid-in capital........................... 497 514 37,071
Subscriptions receivable............................. (80) (80) (80)
Retained earnings.................................... 3,305 (11,838) (145)
------- -------- -------
Total stockholders' equity................... 3,722 (11,334) 36,971
------- -------- -------
Total capitalization.................... $19,926 $ 6,059 $36,971
======= ======== =======
</TABLE>

As of June 30, 1996 the par value, shares authorized, issued and
outstanding were as follows:

<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
------------------------------------------
PRO AS
BREWER FORMA(1) ADJUSTED(1)(2)
------- ----------- --------------
<S> <C> <C> <C>
Preferred Stock:
Par value........................................ -- $ .01 $ .01
Shares authorized................................ -- 1,000,000 1,000,000
Shares issued and outstanding.................... -- -- --
Common Stock:
Par value........................................ $ .01 $ .01 $ .01
Shares authorized................................ 10,000 26,000,000 26,000,000
Shares issued and outstanding(3)................. 132.5 6,973,249 12,473,249
</TABLE>

- ---------------
(1) Gives effect to: (i) the acquisition of the Other Founding Companies at
historical cost in accordance with SAB 97; (ii) the combination of the
Founding Companies with StaffMark as if such combination had occurred as of
June 30, 1996; (iii) a liability for the cash consideration of $15,917,510
to be paid to the stockholders of the Founding Companies in connection with
the Mergers; (iv) the transfer by the Founding Companies of certain assets
to their stockholders in connection with the Mergers; (v) the additional
cash to be borrowed to fund the distribution of certain Founding Companies'
S Corporation Accumulated Adjustment Accounts; and (vi) the acquisition of
SSI by First Choice on July 1, 1996.

(2) Adjusted to reflect the sale of 5,500,000 shares of Common Stock offered
hereby at an assumed initial public offering price of $10.00 per share and
the application of the estimated net proceeds therefrom. See "Use of
Proceeds."

(3) As Adjusted amount excludes up to 935,494 shares of Common Stock subject to
options to be issued under the Company's 1996 Stock Option Plan. See
"Management -- 1996 Stock Option Plan."

18
<PAGE> 21

SELECTED FINANCIAL DATA

StaffMark will acquire, simultaneously with the closing of this Offering,
the Founding Companies. Pursuant to the requirements of SAB 97, which was issued
and became effective July 31, 1996, Brewer has been designated, for financial
reporting purposes, as the acquirer of the Other Founding Companies.
Accordingly, the primary financial information presented below relates to
Brewer. For a discussion of the pro forma combined operating results, see the
Unaudited Pro Forma Combined Financial Statements of the Company and related
notes thereto. The Selected Financial Data should be read in conjunction with
the audited financial statements of Brewer and related notes thereto, the
Unaudited Pro Forma Combined Financial Statements of the Company and related
notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------------------- -----------------
1991 1992 1993 1994 1995 1995 1996
------ ------- ------- ------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
BREWER:
Revenues................................ $6,665 $11,159 $12,313 $27,894 $43,874 $15,928 $30,556
Cost of services........................ 5,465 9,609 10,063 22,906 35,115 12,969 24,028
------- ------- ------- -------- -------- ------- -------
Gross profit............................ 1,200 1,550 2,250 4,988 8,759 2,959 6,528
Operating expenses:
Selling, general and administrative... 797 1,043 1,623 3,483 5,804 2,119 4,445
Depreciation and amortization......... 98 113 121 256 591 136 566
------- ------- ------- -------- -------- ------- -------
Operating income........................ 305 394 506 1,249 2,364 704 1,517
Interest expense........................ 27 26 54 92 801 32 880
Net Income.............................. 279 381 478 1,177 1,587 691 634
PRO FORMA(1):
Revenues(2)................................................................... $171,463 $91,430
Operating income(3)........................................................... 7,603 4,286
Net income(3)(4).............................................................. 3,106 2,049
Net income per share.......................................................... 0.36 0.24
Weighted average shares outstanding(5)........................................ 8,565 8,565
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
AS OF DECEMBER 31, -----------------------------------
----------------------------------------------- PRO FORMA AS ADJUSTED
1991 1992 1993 1994 1995 ACTUAL (1)(6) (1)(7)
------ ------ ------ ------ ------- ------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BREWER BALANCE SHEET DATA:
Working capital............... $ 345 $ (324) $ 366 $1,157 $ 1,508 $ 98 $(18,600) $14,275
Total assets.................. 1,050 2,321 2,917 4,054 21,752 27,141 48,538 50,092
Long-term debt, incl. current
maturities.................. 209 -- 1,232 224 15,986 18,626 23,190 --
Stockholders' equity
(deficit)................... 494 846 1,110 2,110 2,786 3,722 (11,334) 36,971
</TABLE>

- ---------------
(1) See the Unaudited Pro Forma Combined Financial Statements of the Company for
pro forma financial information relating to fiscal year 1995 and the six
months ended June 30, 1996.

(2) Adjusted to reflect the acquisition of the Other Founding Companies as well
as the acquisitions of Caldwell, On Call and SSI.

(3) Adjusted to reflect the acquisition of the Other Founding Companies, the
acquisitions of Caldwell, On Call and SSI and the Compensation Differential.

(5) Includes: (i) 1,355,000 shares issued by StaffMark prior to the Offering;
(ii) 5,618,249 shares to be issued to the stockholders of the Founding
Companies in connection with the Mergers; and (iii) 1,591,751 shares to be
issued in connection with the Offering to pay the cash portion of the
consideration for the Founding Companies, but excludes up to 935,494 shares
of Common Stock subject to options to be issued under the Company's 1996
Stock Option Plan.

19
<PAGE> 22

SELECTED FINANCIAL DATA

The following table represents selected data for each of the Other Founding
Companies for the three most recent years as well as the most recent interim
period and comparative period of the prior year.

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

(1) Amounts for HRA are reported for the fiscal years ended September 30.

(2) Amounts for HRA are reported for the nine months ended June 30, 1996.

20
<PAGE> 23

SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- ------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- -------- -------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
COMBINED STATEMENT OF INCOME DATA(1)(2):
Revenues................................ $41,687 $70,663 $91,221 $121,156 $146,687 $65,557 $89,854
Cost of services........................ 32,683 55,845 72,117 97,112 117,103 52,428 70,807
------- ------- ------- -------- -------- ------- -------
Gross profit............................ 9,004 14,818 19,104 24,044 29,584 13,129 19,047
Operating expenses:
Selling, general and administrative... 7,514 11,940 15,358 19,067 24,069 10,857 14,197
Depreciation and amortization......... 220 332 515 742 1,157 405 919
------- ------- ------- -------- -------- ------- -------
Operating profit........................ $ 1,270 $ 2,546 $ 3,231 $ 4,235 $ 4,358 $ 1,867 $ 3,931
</TABLE>

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

(1) StaffMark will acquire, simultaneously with the closing of this Offering,
the Founding Companies. Based on the provisions of SAB 97, which was issued
and became effective July 31, 1996, Brewer has been designated as the
acquirer, for financial reporting purposes, of the Other Founding Companies.
The acquisitions of the Other Founding Companies will be accounted for as
combinations using historical costs. The summary information presented above
represents the combination of the historical financial statements of each of
the Founding Companies for all periods presented at historical costs, as if
these companies had been members of the same operating group. However,
during the periods presented, the Founding Companies were not under common
control or management. Therefore, the data presented may not be comparable
to or indicative of post combination results to be achieved by the Company
subsequent to the Mergers. Additionally, the Founding Companies' results of
operations reflect two tax structures, S Corporations and C Corporations.
Accordingly, line items which are not meaningful on a combined basis due to
the combination of companies with differing tax structures, such as the
provision for income taxes and net income, have been omitted. For a
discussion of the combined operating results, see "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

(2) Amounts for HRA are reported for the fiscal years ended September 30.

The selected financial information shown above as of December 31, 1994 and
1995 and June 30, 1996, and for each of the three years in the period ended
December 31, 1995, and for the six months ended June 30, 1996 has been derived
from financial statements audited by Arthur Andersen LLP which appear elsewhere
in this Prospectus. The selected financial data as of December 31, 1991, 1992
and 1993 and for the years ended December 31, 1991 and 1992, and for the six
months ended June 30, 1995 has been derived from unaudited financial statements
which have been prepared on the same basis as the audited financial statements
and, in the opinion of management of the Founding Companies, reflect all
adjustments, consisting only of normal, recurring adjustments, necessary for a
fair presentation of such data.

21
<PAGE> 24

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

The following discussion should be read in conjunction with the "Selected
Financial Data" and related notes thereto, and each of the Founding Companies'
audited financial statements and related notes thereto appearing elsewhere in
this Prospectus.

INTRODUCTION

StaffMark will acquire, simultaneously with the closing of this Offering,
the Founding Companies. Pursuant to the requirements of SAB 97, which was issued
and became effective July 31, 1996, Brewer has been designated as the acquirer
of the other Founding Companies for financial reporting purposes. The
information below is intended to discuss the financial condition and results of
operations of Brewer, each of the Other Founding Companies and the combined
Founding Companies for the first six months of 1996 as compared to the first six
months of 1995, fiscal year 1995 as compared to fiscal year 1994, and fiscal
year 1994 as compared to fiscal year 1993.

The Company's revenues are derived from temporary staffing and permanent
placement services provided to its clients. Because the Company compensates its
temporary employees only for the hours actually worked, wages for the Company's
temporary personnel are a variable cost that increases or decreases in
proportion to revenues. Cost of services consists primarily of wages paid to
temporary employees, workers' compensation expenses and payroll taxes related to
temporary employees. Selling, general and administrative expenses consist
primarily of compensation and related benefits to the Founding Companies'
owners, administrative salaries and benefits, marketing and rent.

Certain of the Founding Companies have made, or are in the process of
making, acquisitions of other personnel service businesses whose financial
results are either completely excluded or only partially included (i.e.,
presentation of financial results of a company from the date of an acquisition
accounted for as a purchase) in the Founding Companies' individual financial
statements included herein. The financial results of these companies, had they
been included in the historical financial statements, would have had a
significant impact on the Company's financial results. Accordingly, pro forma
financial information has been provided elsewhere in this Prospectus for the
year ended December 31, 1995 and the six months ended June 30, 1996, reflecting
the estimated financial results of the Founding Companies and the companies
which either have been acquired, or are expected to be acquired, before the date
of the Mergers.

The Founding Companies have been managed throughout the periods presented
as independent private companies, and, as such, their results of operations
reflect two tax structures, S Corporations and C Corporations, which have
influenced, among other things, the historical levels of their owners'
compensation. Certain owners have agreed to reductions in their compensation and
benefits in connection with the Mergers. The Compensation Differential and the
related income tax effects have been reflected as pro forma adjustments in the
accompanying pro forma financial information provided elsewhere in this
Prospectus.

The Company has preliminarily analyzed the savings that it expects to
realize as a result of: (i) consolidating certain general and administrative
functions, including workers' compensation insurance programs; (ii) the
reduction in interest payments related to the prepayment of the Founding
Companies' debt; and (iii) its ability to borrow at lower interest rates than
the Founding Companies. The Company cannot quantify these savings prior to
completion of the Mergers. It is anticipated that these savings will be
partially offset by the costs of being a public company and the incremental
increase in costs related to the Company's new corporate management. However,
these costs also cannot be accurately quantified. Accordingly, neither the
anticipated savings nor the anticipated costs have been included in the pro
forma financial information included herein. As a result, historical combined
results may not be comparable to, or indicative of, future performance.

The financial information provided below has been rounded in order to
simplify its presentation. However, the percentages provided below are
calculated using the detailed financial information contained in the financial
statements, the notes thereto and the other financial data included elsewhere in
this Prospectus.

22
<PAGE> 25

RESULTS OF OPERATIONS -- BREWER

BREWER RESULTS FOR THE FIRST SIX MONTHS OF 1996 COMPARED TO THE FIRST SIX MONTHS
OF 1995

Revenues. Revenues increased $14.6 million, or 91.8%, to $30.6 million for
the first six months of 1996 compared to $15.9 million for the first six months
of 1995. This increase was primarily attributable to the acquisition of Caldwell
in July 1995 and the acquisition of On Call in February 1996. The acquisitions
of Caldwell and On Call accounted for $10.2 million and $6.1 million,
respectively, of the increase in revenues, which was partially offset by a
decrease in Brewer's revenues, exclusive of acquisitions, of approximately $1.7
million.

Cost of Services. Cost of services increased $11.1 million, or 85.3%, to
$24.0 million for the first six months of 1996 compared to $13.0 million for the
first six months of 1995. This increase was primarily attributable to the
Caldwell and On Call acquisitions, which accounted for $8.0 million and $5.0
million, respectively, of the increase, which was partially offset by a decrease
in Brewer's cost of services, exclusive of acquisitions, of approximately $2.0
million.

Gross Profit. Gross profit increased $3.6 million, or 120.6%, to $6.5
million for the first six months of 1996 compared to $3.0 million for the first
six months of 1995. This increase was primarily attributable to the acquisitions
of Caldwell and On Call. Gross margin increased to 21.4% during the first six
months of 1996 compared to 18.6% during the first six months of 1995. This
increase was primarily attributable to the acquisition of Caldwell, as well as
an increase in Brewer's gross margin resulting from a decrease in the Arkansas
state unemployment tax rate.

Operating Expenses. Selling, general and administrative expenses ("SG&A")
increased $2.3 million, or 109.8%, to $4.4 million for the first six months of
1996 compared to $2.1 million for the first six months of 1995. This increase
was primarily attributable to the acquisitions of Caldwell and On Call, which
accounted for $1.1 million and $665,000 of the increase, respectively. This
increase was also influenced by Brewer's decision to enhance its organizational
structure in order to achieve its growth strategy, which resulted in an increase
in personnel costs and costs associated with moving into its new corporate
headquarters. SG&A as a percentage of revenues increased to 14.5% for the first
six months of 1996 compared to 13.3% for the first six months of 1995.
Depreciation and amortization expense increased $430,000, or 314.8%, to $566,000
for the first six months of 1996 compared to $136,000 for the first six months
of 1995. This increase was primarily attributable to increased amortization of
intangibles resulting from the acquisitions of Caldwell and On Call, which were
accounted for using the purchase accounting method.

Operating Income. Operating income increased $813,000, or 115.5%, to $1.5
million for the first six months of 1996 compared to $704,000 for the first six
months of 1995. Operating income as a percentage of revenues increased to 5.0%
during the first six months of 1996 compared to 4.4% during the first six months
of 1995.

Interest Expense. Interest expense increased $848,000 to $880,000 for the
first six months of 1996 compared to $32,000 for the first six months of 1995.
This increase was primarily attributable to debt incurred to finance the
acquisitions of Caldwell and On Call.

Net Income. Net income decreased $57,000, or 8.3%, to $634,000 for the
first six months of 1996 compared to $691,000 for the first six months of 1995.
Net income as a percentage of revenues decreased to 2.1% during the first six
months of 1996 compared to 4.3% during the first six months of 1995.

BREWER RESULTS FOR 1995 COMPARED TO 1994

Revenues. Revenues increased $16.0 million, or 57.3%, to $43.9 million for
1995 compared to $27.9 million for 1994. This increase was primarily
attributable to the acquisition of Caldwell in July 1995, which accounted for
$11.7 million of the increase in revenues.

Cost of Services. Cost of services increased $12.2 million, or 53.3%, to
$35.1 million for 1995 compared to $22.9 million for 1994. This increase was
primarily related to the Caldwell acquisition, which accounted for $9.4 million
of the increase.

23
<PAGE> 26

Gross Profit. Gross profit increased $3.8 million, or 75.6%, to $8.8
million for 1995 compared to $5.0 million for 1994. Gross margin increased to
20.0% for 1995 compared to 17.9% for 1994. These increases were primarily
attributable to the impact of the acquisition of Caldwell and the improvement in
gross margins for the branches acquired from Aaron in November 1993.

Operating Expenses. SG&A increased $2.3 million, or 66.6%, to $5.8 million
for 1995 compared to $3.5 million for 1994. This increase was primarily
attributable to the acquisition of Caldwell. SG&A as a percentage of revenues
increased to 13.2% for 1995 compared to 12.5% for 1994. Depreciation and
amortization expense increased $334,000, or 130.5%, to $590,000 for 1995
compared to $256,000 for 1994. This increase was primarily attributable to
increased amortization of intangibles resulting from the acquisition of
Caldwell.

Operating Income. Operating income increased $1.1 million, or 89.3%, to
$2.4 million for 1995 compared to $1.2 million for 1994. Operating income as a
percentage of revenues increased to 5.4% for 1995 compared to 4.5% for 1994.

Interest Expense. Interest expense increased $709,000 to $801,000 for 1995
compared to $92,000 for 1994. This increase was primarily attributable to higher
interest costs on debt incurred to finance the acquisition of Caldwell.

Net Income. Net income increased $410,000, or 34.8%, to $1.6 million for
1995 compared to $1.2 million for 1994. Net income as a percentage of revenues
decreased to 3.6% for 1995 compared to 4.2% for 1994.

BREWER RESULTS FOR 1994 COMPARED TO 1993

Revenues. Revenues increased $15.6 million, or 126.5%, to $27.9 million for
1994 compared to $12.3 million for 1993. This increase was primarily
attributable to the acquisition of Aaron, which accounted for $13.0 million of
the increase.

Cost of Services. Cost of services increased $12.8 million, or 127.6%, to
$22.9 million for 1994 from $10.1 million for 1993. This increase was primarily
due to the acquisition of Aaron, which accounted for $11.2 million of the
increase.

Gross Profit. Gross profit increased $2.7 million, or 121.6%, to $5.0
million for 1994 compared to $2.3 million for 1993. This increase was primarily
attributable to the acquisition of Aaron. Gross margin decreased slightly to
17.9% for 1994 compared to 18.3% for 1993 because Aaron had historically lower
gross margins than Brewer.

Operating Expenses. SG&A increased $1.9 million, or 114.6%, to $3.5 million
for 1994 compared to $1.6 million for 1993, which was primarily attributable to
the acquisition of Aaron. SG&A as a percentage of revenues decreased to 12.5%
for 1994 compared to 13.2% for 1993. Depreciation and amortization expense
increased $135,000, or 110.8%, to $256,000 for 1994 compared to $121,000 for
1993. This increase was primarily attributable to increased amortization of
intangibles resulting from the acquisition of Aaron.

Operating Income. Operating income increased $743,000, or 146.6%, to $1.2
million for 1994 compared to $506,000 for 1993. Operating income as a percentage
of revenues increased to 4.5% for 1994 compared to 4.1% for 1993.

Interest Expense. Interest expense increased $38,000 to $92,000 for 1994
compared to $54,000 for 1993. This increase was primarily attributable to debt
incurred to finance the acquisition of Aaron.

Net Income. Net income increased $699,000, or 146.4%, to $1.2 million for
1994 compared to $478,000 for 1993. Net income as a percentage of revenues
increased to 4.2% for 1994 from 3.9% for 1993.

LIQUIDITY AND CAPITAL RESOURCES -- BREWER

Net cash provided by operating activities was $368,000, $894,000, $1.6
million and $77,000 in 1993, 1994, 1995 and the first six months of 1996,
respectively. The net cash provided by operating activities for the periods
presented was primarily attributable to net income and changes in operating
assets and liabilities.

24
<PAGE> 27

Cash used in investing activities was $308,000, $345,000, $12.0 million and
$3.4 million in 1993, 1994, 1995 and the first six months of 1996, respectively.
Cash used in investing activities in 1993 was primarily attributable to the
acquisition of Aaron and routine capital expenditures. Cash used in investing
activities in 1994 was primarily attributable to routine capital expenditures.
Cash used in investing activities in 1995 and the first six months of 1996 was
primarily attributable to the acquisitions of Caldwell and On Call,
respectively.

Cash provided by (used in) financing activities was ($179,000), ($512,000),
$10.6 million and $3.8 million in 1993, 1994, 1995 and the first six months of
1996, respectively. Cash used in financing activities in 1993 was primarily for
cash dividends paid to Brewer's stockholders. Cash used in financing activities
in 1994 was primarily attributable to debt repayments and was also influenced by
cash dividends paid to Brewer's stockholders. Cash provided by financing
activities in 1995 and the first six months of 1996 was primarily attributable
to the proceeds from debt issued in conjunction with the acquisitions of
Caldwell and On Call, respectively.

As a result of the foregoing, cash and cash equivalents decreased $119,000
in 1993 and increased $37,000, $211,000 and $459,000 in 1994, 1995 and the first
six months of 1996, respectively.

Brewer's primary sources of funds are from operations and the issuance of
debt under its term loan and line of credit arrangements. Brewer's principal
uses of cash are for acquisitions, working capital purposes and capital
expenditures.

As of June 30, 1996, Brewer had total debt outstanding of approximately
$20.2 million.

While there can be no assurance, management of Brewer believes that the
funds currently available on hand, funds to be provided by operations and funds
available through existing credit facilities will be sufficient to meet Brewer's
anticipated needs for working capital and capital expenditures through the date
of the anticipated merger with StaffMark.

RESULTS OF OPERATIONS -- PROSTAFF

PROSTAFF RESULTS FOR THE FIRST SIX MONTHS OF 1996 COMPARED TO THE FIRST SIX
MONTHS OF 1995

Revenues. Revenues increased $2.9 million, or 17.8%, to $18.9 million for
the first six months of 1996 compared to $16.1 million for the first six months
of 1995. The increase in Prostaff's revenues was primarily attributable to the
opening of several new branches during 1995 and during the first six months of
1996, a significant increase in business conducted with its largest client and
the addition of a new significant client in 1996.

Cost of Services. Cost of services increased $2.1 million, or 16.2%, to
$15.4 million for the first six months of 1996 compared to $13.2 million for the
first six months of 1995.

Gross Profit. Gross profit increased $711,000, or 25.2%, to $3.5 million
for the first six months of 1996 compared to $2.8 million for the first six
months of 1995. Gross margin increased to 18.7% for the first six months of 1996
compared to 17.6% for the first six months of 1995, primarily attributable to a
decrease in the Arkansas state unemployment tax rate.

Operating Expenses. Operating expenses increased $361,000, or 14.2%, to
$2.9 million for the first six months of 1996 compared to $2.5 million for the
first six months of 1995. This increase was primarily attributable to the
opening of several new branches in 1995 and the hiring of a significant number
of new employees, partially offset by a decrease in accrued bonuses to the
owners of Prostaff. Operating expenses as a percentage of revenues decreased to
15.3% for the first six months of 1996 compared to 15.8% for the first six
months of 1995. This decrease was influenced by a reduction in accrued bonuses
to the owners of Prostaff from $344,000 during the first six months of 1995 to
$0 for the first six months of 1996.

Operating Income. Operating income increased $350,000, or 120.6%, to
$641,000 for the first six months of 1996 compared to $291,000 for the first six
months of 1995. Operating income as a percentage of revenues increased to 3.4%
for the first six months of 1996 compared to 1.8% for the first six months of
1995.

25
<PAGE> 28

Net Income. Net income increased $426,000, or 215.6%, to $623,000 for the
first six months of 1996 compared to $197,000 for the first six months of 1995.
Net income as a percentage of revenues increased to 3.3% for the first six
months of 1996 compared to 1.2% for the first six months of 1995.

PROSTAFF RESULTS FOR 1995 COMPARED TO 1994

Revenues. Revenues increased $3.7 million, or 12.2%, to $34.3 million for
1995 compared to $30.6 million for 1994. The increase was primarily attributable
to the addition of new significant clients, as well as the opening of several
branches in 1995.

Cost of Services. Cost of services increased $2.8 million, or 10.9%, to
$28.2 million for 1995 compared to $25.5 million for 1994.

Gross Profit. Gross profit increased $944,000, or 18.3%, to $6.1 million
for 1995 compared to $5.2 million for 1994. Gross margin increased to 17.8% for
1995 compared to 16.8% for 1994. This increase in gross margin was attributable
to slightly improved rates charged to clients and a decrease in the Arkansas
state unemployment tax rate.

Operating Expenses. Operating expenses increased $1.2 million, or 27.5%, to
$5.6 million for 1995 compared to $4.4 million for 1994. This increase was
attributable to increased compensation relating to the opening of several new
branches and expansion of the corporate headquarters. Operating expenses as a
percentage of revenues increased to 16.2% for 1995 compared to 14.2% for 1994.

Operating Income. Operating income decreased $256,000, or 32.3%, to
$537,000 for 1995 compared to $793,000 for 1994. Operating income as a
percentage of revenues decreased to 1.6% for 1995 compared to 2.6% for 1994.

Net Income. Net income decreased $76,000, or 14.5%, to $446,000 for 1995
compared to $522,000 for 1994. Net income as a percentage of revenues decreased
to 1.3% for 1995 compared to 1.7% for 1994.

PROSTAFF RESULTS FOR 1994 COMPARED TO 1993

Revenues. Revenues increased $3.4 million, or 12.3%, to $30.6 million for
1994 compared to $27.2 million for 1993. The increase was primarily attributable
to the opening of several new branches during 1994.

Cost of Services. Cost of services increased $2.6 million, or 11.4%, to
$25.5 million for 1994 compared to $22.9 million for 1993.

Gross Profit. Gross profit increased $766,000, or 17.5%, to $5.2 million
for 1994 compared to $4.4 million for 1993. Gross margin increased slightly to
16.8% for 1994 compared to 16.1% for 1993. The overall increase in gross margin
was primarily the result of a slight increase in rates charged to clients and a
decrease in the Arkansas state unemployment tax rate.

Operating Expenses. Operating expenses increased $603,000, or 16.1%, to
$4.4 million for 1994 compared to $3.8 million for 1993. Operating expenses as a
percentage of revenues increased slightly to 14.2% for 1994 compared to 13.8%
for 1993.

Operating Income. Operating income increased $162,000, or 25.7%, to
$793,000 for 1994 compared to $631,000 for 1993. Operating income as a
percentage of revenues increased slightly to 2.6% for 1994 compared to 2.3% for
1993.

Net Income. Net income increased $123,000, or 30.8%, to $522,000 for 1994
compared to $399,000 for 1993. Net income as a percentage of revenues increased
to 1.7% for 1994 compared to 1.5% for 1993.

LIQUIDITY AND CAPITAL RESOURCES -- PROSTAFF

Net cash provided by operating activities was $781,000, $740,000, $986,000
and $134,000 in 1993, 1994, 1995 and the first six months of 1996, respectively.
The net cash provided by operating activities for each period presented resulted
primarily from changes in operating assets and liabilities and net income.

Cash used in investing activities was $405,000, $293,000, $514,000 and
$80,000 in 1993, 1994, 1995 and the first six months of 1996, respectively. Cash
used in investing activities in 1995 was primarily for capital

26
<PAGE> 29

expenditures associated with the opening of several new branches. Cash used in
investing activities for the first six months of 1996 was primarily for capital
expenditures, partially offset by cash provided by the sale of certificates of
deposit.

Cash used in financing activities was $390,000, $261,000, $512,000 and
$167,000 in 1993, 1994, 1995 and the first six months of 1996, respectively. The
cash used in financing activities in 1995 was the result of additional net
payments on the line of credit. The cash used in financing activities in the
first six months of 1996 was for distributions made to the owners of Prostaff
representing their estimated S Corporation Accumulated Adjustment Account at
June 30, 1996, which were funded by significant borrowings on the line of
credit.

As a result of the foregoing, cash and cash equivalents decreased $15,000
in 1993, increased $186,000 in 1994 and decreased $40,000 and $114,000 in 1995
and in the first six months of 1996, respectively.

As of June 30, 1996, Prostaff had total debt, including line of credit and
current maturities of long-term debt of $1.4 million. Prostaff currently has
three revolving credit facilities, with funds available under these facilities
totaling approximately $623,000 at June 30, 1996.

While there can be no assurance, management of Prostaff believes that the
funds currently available on hand, funds to be provided by operations and funds
available through existing credit facilities will be sufficient to meet
Prostaff's anticipated needs for working capital and capital expenditures
through the date of the anticipated merger with StaffMark.

RESULTS OF OPERATIONS -- MAXWELL

MAXWELL RESULTS FOR THE FIRST SIX MONTHS OF 1996 COMPARED TO THE FIRST SIX
MONTHS OF 1995

Revenues. Revenues increased $1.7 million, or 14.7%, to $13.2 million for
the first six months of 1996 compared to $11.5 million for the first six months
of 1995. This increase was primarily attributable to a significant client
contract, which began in July 1995, and the acquisition of Sumner-Ray Technical
Resources, Inc. ("Sumner-Ray") in February 1996. This increase was partially
offset by a decrease in the staffing needs of another significant client and the
result of government shutdowns in December 1995 and January 1996, which caused
delays in the issuance of H1-B Visas to foreign-trained therapists and delays in
the therapists' arrival in the U.S.

Cost of Services. Cost of services increased $1.2 million, or 14.4%, to
$9.9 million for the first six months of 1996 compared to $8.6 million for the
first six months of 1995. This increase was primarily the result of increased
revenues but was partially offset by a reduction in workers' compensation
expense of approximately $584,000 due to a reduction in the actuarially
determined reserves. This reduction resulted primarily from the use of Maxwell's
claims development experience rather than industry development factors which
have been used in previous actuarial valuations. The reduction was partially
offset by an increase of approximately $100,000 in compensation paid to the
Company's foreign-trained therapists resulting from a change in the Company's
orientation policy.

Gross Profit. Gross profit increased $451,000, or 15.6%, to $3.3 million
for the first six months of 1996 compared to $2.9 million for the first six
months of 1995. Gross margin increased slightly to 25.2% for the first six
months of 1996 compared to 25.0% for the first six months of 1995.

Operating Expenses. Operating expenses increased $239,000, or 10.3%, to
$2.6 million for the first six months of 1996 compared to $2.3 million for the
first six months of 1995. Operating expenses as a percentage of revenues
decreased to 19.3% for the first six months of 1996 compared to 20.1% for the
first six months of 1995.

Operating Income. Operating income increased $212,000, or 37.0%, to
$787,000 for the first six months of 1996 compared to $574,000 for the first six
months of 1995. Operating income as a percentage of revenues increased to 5.9%
for the first six months of 1996 compared to 5.0% for the first six months of
1995.

27
<PAGE> 30

Net Income. Net income increased $253,000, or 44.7%, to $820,000 for the
first six months of 1996 compared to $567,000 for the first six months of 1995.
Net income as a percentage of revenues increased to 6.2% for the first six
months of 1996 compared to 4.9% for the first six months of 1995.

MAXWELL RESULTS FOR 1995 COMPARED TO 1994

Revenues. Revenues increased $1.9 million, or 8.8%, to $23.1 million for
1995 compared to $21.2 million for 1994. This increase was primarily
attributable to a significant client contract, which started in July 1995, and
an increase in the average number of foreign-trained therapists working.

Cost of Services. Cost of services increased $1.7 million, or 10.9%, to
$17.7 million for 1995 compared to $16.0 million for 1994.

Gross Profit. Gross profit increased $122,000, or 2.3%, to $5.3 million for
1995 compared to $5.2 million for 1994. Gross margin decreased to 23.1% for 1995
compared to 24.6% for 1994. This decrease resulted primarily from increased
competition and a high volume, lower margin contract with one significant
client.

Operating Expenses. Operating expenses increased $505,000, or 12.9%, to
$4.4 million for 1995 compared to $3.9 million for 1994. This increase was
partially attributable to the write-off of $165,000 in accounts receivable
related to one client. Operating expenses as a percentage of revenues increased
to 19.2% for 1995 compared to 18.5% for 1994.

Operating Income. Operating income decreased $383,000, or 29.6%, to
$912,000 for 1995 compared to $1.3 million for 1994. Operating income as a
percentage of revenues decreased to 3.9% for 1995 compared to 6.1% for 1994.

Net Income. Net income decreased $344,000, or 27.2%, to $920,000 for 1995
compared to $1.3 million for 1994. Net income as a percentage of revenues
decreased to 4.0% for 1995 compared to 6.0% for 1994.

MAXWELL RESULTS FOR 1994 COMPARED TO 1993

Revenues. Revenues increased $4.9 million, or 30.0%, to $21.2 million for
1994 compared to $16.3 million for 1993. This increase was primarily
attributable to the addition of a significant client during 1994, which
accounted for increased revenues of $2.5 million, and an increase in business
conducted with certain other clients.

Cost of Services. Cost of services increased $4.8 million, or 42.2%, to
$16.0 million for 1994 compared to $11.3 million for 1993. This increase was
also primarily attributable to the addition of a significant client during 1994.

Gross Profit. Gross profit increased $152,000, or 3.0%, to $5.2 million for
1994 compared to $5.1 million for 1993. Gross margin decreased to 24.6% for 1994
compared to 31.1% for 1993. This decrease was a result of lower margin contracts
negotiated with two of the Company's significant clients as well as increased
workers' compensation costs and increased competition.

Operating Expenses. Operating expenses increased $270,000, or 7.4%, to $3.9
million for 1994 compared to $3.7 million for 1993. Operating expenses as a
percentage of revenues decreased to 18.5% for 1994 compared to 22.4% for 1993.

Operating Income. Operating income remained fairly constant at $1.3 million
for 1994 compared to $1.4 million for 1993. Operating income as a percentage of
revenues decreased to 6.1% for 1994 compared to 8.7% for 1993.

Net Income. Net income was $1.3 million for both 1994 and 1993. Net income
as a percentage of revenues decreased to 6.0% for 1994 compared to 7.9% for
1993.

28
<PAGE> 31

LIQUIDITY AND CAPITAL RESOURCES -- MAXWELL

Net cash provided by operating activities was $1.4 million, $719,000, $1.9
million and $913,000 in 1993, 1994, 1995 and the first six months of 1996,
respectively. Net cash provided by operating activities for each period
presented resulted primarily from changes in operating assets and liabilities
and net income.

Cash used in investing activities was $264,000, $225,000, $174,000 and
$268,000 in 1993, 1994, 1995 and the first six months of 1996, respectively.
Cash used in investing activities in 1993, 1994 and 1995 was primarily for
additions of property and equipment and purchases of investments. Cash used in
investing activities in the first six months of 1996 was primarily for the
acquisition of Sumner-Ray and other capital expenditures.

Cash used in financing activities was $860,000, $1.0 million, $1.2 million
and $1.0 million in 1993, 1994, 1995 and the first six months of 1996,
respectively. Cash used in financing activities in 1993, 1994 and 1995 was
primarily for dividends paid to stockholders. Cash used in financing activities
in the first six months of 1996 was for a significant dividend, which
represented the Company's estimated S Corporation Accumulated Adjustment
Account. This dividend was partially funded by proceeds from a $1.75 million
term loan issued in May 1996.

As a result of the foregoing, cash and cash equivalents increased $241,000
in 1993, decreased $510,000 in 1994, increased $485,000 in 1995 and decreased
$376,000 in the first six months of 1996, respectively.

While there can be no assurance, management of Maxwell believes that the
funds currently available on hand, funds to be provided by operations and funds
available through existing credit facilities will be sufficient to meet
Maxwell's anticipated needs for working capital and capital expenditures through
the date of the anticipated merger with StaffMark.

RESULTS OF OPERATIONS -- HRA

HRA RESULTS FOR THE NINE MONTHS ENDED JUNE 30, 1996 COMPARED TO THE NINE MONTHS
ENDED JUNE 30, 1995

Revenues. Revenues increased $3.7 million, or 28.2% to $16.9 million for
the nine months ended June 30, 1996 compared to $13.2 million for the nine
months ended June 30, 1995. This increase was primarily attributable to the
opening of new branches.

Cost of Services. Cost of services increased $2.8 million, or 26.1%, to
$13.6 million for the nine months ended June 30, 1996 compared to $10.7 million
for the nine months ended June 30, 1995. This increase was primarily
attributable to the opening of new branches.

Gross Profit. Gross profit increased $903,000, or 37.2%, to $3.3 million
for the nine months ended June 30, 1996 compared to $2.4 million for the nine
months ended June 30, 1995. Gross margin increased to 19.7% for the nine months
ended June 30, 1996 compared to 18.4% for the nine months ended June 30, 1995.

Operating Expenses. Operating expenses increased $635,000 or 26.3%, to $3.1
million for the nine months ended June 30, 1996 compared to $2.4 million for the
nine months ended June 30, 1995. This increase was primarily due to increased
overhead associated with the opening of new branches. In addition, HRA expensed
a severance arrangement of approximately $136,000 during the nine months ended
June 30, 1996. Operating expenses as a percentage of revenues decreased to 18.1%
for the nine months ended June 30, 1996 compared to 18.4% for the nine months
ended June 30, 1995.

Operating Income. Operating income increased $268,000, or 2,648.4%, to
$279,000 for the nine months ended June 30, 1996 compared to $11,000 for the
nine months ended June 30, 1995. Operating income as a percentage of revenues
increased to 1.7% for the nine months ended June 30, 1996 compared to 0.1% for
the nine months ended June 30, 1995.

Interest and Other, Net. Interest and other increased $238,000 to $244,000
of income for the nine months ended June 30, 1996 compared to $6,000 of income
for the nine months ended June 30, 1995. This increase was principally related
to a legal settlement HRA received from a professional firm that had previously
represented HRA in certain actions related to workers' compensation insurance.

29
<PAGE> 32

Net Income (Loss). Net income increased $305,000 from a $35,000 net loss
for the nine months ended June 30, 1995 to a net income of $270,000 for the nine
months ended June 30, 1996.

HRA RESULTS FOR 1995 COMPARED TO 1994

Revenues. Revenues increased $1.8 million, or 11.3%, to $18.3 million for
1995 compared to $16.5 million for 1994. This increase was attributable to the
opening of new branches.

Cost of Services. Cost of services increased $1.6 million, or 11.8%, to
$14.9 million for 1995 compared to $13.4 million for 1994. This increase was
primarily attributable to the opening of new branches and an increase in
workers' compensation costs.

Gross Profit. Gross profit increased $281,000, or 9.1%, to $3.4 million for
1995 compared to $3.1 million for 1994. Gross margin decreased to 18.4% for 1995
compared to 18.8% for 1994.

Operating Expenses. Operating expenses increased $1.1 million, or 44.4%, to
$3.5 million for 1995 compared to $2.4 million for 1994. This increase was
partially attributable to the overhead costs associated with the opening of new
branches. Operating expenses as a percentage of revenues increased to 19.1% for
1995 compared to 14.8% for 1994.

Operating Income (Loss). Operating income decreased $796,000 to an
operating loss of $137,000 for 1995 compared to operating income of $659,000 for
1994.

Net Income (Loss). Net income decreased $500,000 to a net loss of $147,000
for 1995 compared to net income of $353,000 for 1994. Net income as a percentage
of revenues decreased to (0.8)% for 1995 compared to 2.1% for 1994.

HRA RESULTS FOR 1994 COMPARED TO 1993

Revenues. Revenues increased $3.1 million, or 23.4%, to $16.5 million for
1994 compared to $13.3 million for 1993. This increase was primarily
attributable to an increase in business conducted with new and existing clients.

Cost of Services. Cost of services increased $2.4 million, or 21.7%, to
$13.4 million for 1994 compared to $11.0 million for 1993. This increase was
primarily attributable to the increase in revenues and rising workers'
compensation and temporary employee vacation costs.

Gross Profit. Gross profit increased $738,000, or 31.4%, to $3.1 million
for 1994 compared to $2.3 million for 1993. Gross margin increased to 18.8% for
1994 compared to 17.6% for 1993.

Operating Expenses. Operating expenses increased $286,000, or 13.3%, to
$2.4 million for 1994 compared to $2.1 million for 1993. Operating expenses as a
percentage of revenues decreased to 14.8% for 1994 compared to 16.1% for 1993.

Operating Income. Operating income increased $452,000, or 219.0%, to
$659,000 for 1994 compared to $207,000 for 1993. Operating income as a
percentage of revenues increased to 4.0% for 1994 compared to 1.5% for 1993.

Net Income. Net income increased $268,000 to $353,000 for 1994 compared to
$85,000 for 1993. Net income as a percentage of revenues increased to 2.1% for
1994 compared to 0.6% for 1993.

LIQUIDITY AND CAPITAL RESOURCES -- HRA

Net cash provided by (used in) operating activities was $101,000, $98,000,
$89,000 and ($14,000) in 1993, 1994, 1995 and the nine months ended June 30,
1996, respectively. The net cash provided by operating activities for each of
the periods presented was primarily due to changes in operating assets and
liabilities and net income (loss).

30
<PAGE> 33

Net cash used in investing activities was $41,000, $40,000, $152,000 and
$135,000 in 1993, 1994, 1995 and the nine months ended June 30, 1996,
respectively. Cash used in investing activities in each of the periods presented
was primarily for additions and replacements of office and computer equipment
and software.

Net cash provided by (used in) financing activities was $328,000, $68,000,
($146,000) and $287,000 in 1993, 1994, 1995 and the nine months ended June 30,
1996, respectively. Cash used in financing activities during 1995 consisted
primarily of net payments on the receivable financing agreement and repayment of
borrowings from a stockholder. Cash provided by financing activities for the
nine months ended June 30, 1996 consisted primarily of net borrowings under the
line of credit.

As a result of the foregoing, cash and cash equivalents increased $388,000,
$126,000 and $138,000 in 1993, 1994, and the nine months ended June 30, 1996,
respectively, and decreased $209,000 in 1995.

HRA is obligated under certain compensation and non-compete agreements to
make payments to a former consultant, former stockholder and other third parties
over the next ten years. HRA anticipates that cash generated by operations and
borrowings available under its line of credit will be sufficient to meet these
requirements.

While there can be no assurance, management of HRA believes that the funds
currently available on hand, funds to be provided by operations and funds
available through existing credit facilities will be sufficient to meet HRA's
anticipated needs for working capital and capital expenditures through the date
of the anticipated merger with StaffMark.

RESULTS OF OPERATIONS -- FIRST CHOICE

FIRST CHOICE RESULTS FOR THE FIRST SIX MONTHS OF 1996 COMPARED TO THE FIRST SIX
MONTHS OF 1995

Revenues. Revenues increased $1.2 million, or 18.7%, to $7.9 million for
the first six months of 1996 compared to $6.6 million for the first six months
of 1995. This increase was primarily attributable to the opening of a new branch
location during the first quarter of 1996.

Cost of Services. Cost of services increased $982,000, or 18.2%, to $6.4
million for the first six months of 1996 compared to $5.4 million for the first
six months of 1995. This increase, which corresponds to the increase in
revenues, was primarily attributable to an increase in wages for temporary
personnel which was partially offset by a decrease in workers' compensation
expense.

Gross Profit. Gross profit increased $262,000, or 21.2%, to $1.5 million
for the first six months of 1996 compared to $1.2 million for the first six
months of 1995. Gross margin increased slightly to 19.0% for the first six
months of 1996 compared to 18.6% for the first six months of 1995.

Operating Expenses. Operating expenses increased $140,000, or 13.4%, to
$1.2 million for the first six months of 1996 compared to $1.0 million for the
first six months of 1995. This increase is primarily attributable to an increase
in recruiting and testing expenses, communication costs and occupancy costs.
These increases were partially offset by decreases in training costs. Operating
expenses as a percentage of revenues decreased slightly to 15.0% for the first
six months of 1996 compared to 15.7% for the first six months of 1995.

Operating Income. Operating income increased $122,000, or 63.3%, to
$314,000 for the first six months of 1996 compared to $192,000 for the first six
months of 1995. Operating income as percentage of revenues increased to 4.0% for
the first six months of 1996 compared to 2.9% for the first six months of 1995.

Net Income. Net income increased $119,000, or 65.8%, to $301,000 for the
first six months of 1996 compared to $181,000 for the first six months of 1995.
Net income as a percentage of revenues increased 3.8% for the first six months
of 1996 compared to 2.7% for the first six months of 1995.

FIRST CHOICE RESULTS FOR 1995 COMPARED TO 1994

Revenues. Revenues increased $696,000, or 5.4%, to $13.7 million for 1995
compared to $13.0 million for 1994. This increase was attributable to the
opening of a new branch location as well as an overall increase in demand for
temporary services. This growth was partially offset by the loss of three
significant customers.

31
<PAGE> 34

Cost of Services. Cost of services increased $576,000, or 5.4%, to $11.1
million for 1995 compared to $10.6 million for 1994. This increase, which
corresponds to the increase in revenues, was primarily attributable to increases
in both wages for temporary personnel and workers' compensation expense.

Gross Profit. Gross profit increased $120,000, or 4.9%, to $2.6 million for
1995 compared to $2.4 million for 1994. Gross margin remained steady, however,
at 18.6% for 1995 compared to 18.7% for 1994.

Operating Expenses. Operating expenses decreased $228,000, or 9.0%, to $2.3
million for 1995 compared to $2.5 million for 1994. This decrease was primarily
attributable to a $680,000 decrease in compensation to First Choice's president
and majority stockholder. This decrease was partially offset by increases in
administrative salaries, recruiting, testing and rent expense in 1995. Operating
expenses as a percentage of revenues decreased to 16.7% for 1995 compared to
19.4% for 1994.

Operating Income (Loss). Operating income increased $348,000 to $263,000
for 1995 compared to an operating loss of $85,000 for 1994.

Net Income. Net income increased $184,000 to $243,000 for 1995 compared to
$59,000 for 1994. Net income as a percentage of revenues increased to 1.8% for
1995 compared to 0.5% for 1994.

FIRST CHOICE RESULTS FOR 1994 COMPARED TO 1993

Revenues. Revenues increased $2.2 million, or 20.3%, to $13.0 million for
1994 compared to $10.8 million for 1993. This increase was primarily
attributable to a significant increase in First Choice's customer base as a
result of an overall increase in demand for temporary services.

Cost of Services. Cost of services increased $1.7 million, or 19.8%, to
$10.6 million for 1994 compared to $8.8 million for 1993. This increase, which
corresponds to the increase in revenues, was primarily attributable to increases
in wages for temporary personnel and workers' compensation expense.

Gross Profit. Gross profit increased $451,000, or 22.7%, to $2.4 million
for 1994 compared to $2.0 million for 1993. Gross margin increased to 18.7% for
1994 compared to 18.3% for 1993.

Operating Expenses. Operating expenses increased $1.1 million, or 80.4%, to
$2.5 million for 1994 compared to $1.4 million for 1993. This increase was
primarily attributable to a $657,000 increase in compensation to First Choice's
president and majority stockholder. Operating expenses as a percentage of
revenues increased to 19.4% for 1994 compared to 12.9% for 1993.

Operating Income (Loss). First Choice generated an operating loss of
$85,000 for 1994 compared to operating income generated for 1993 of $586,000.

Net Income. Net income decreased $292,000 to $59,000 for 1994 compared to
$351,000 for 1993. Net income as a percentage of revenues decreased to 0.5% for
1994 compared to 3.2% for 1993.

LIQUIDITY AND CAPITAL RESOURCES -- FIRST CHOICE

Net cash provided by (used in) operating activities was $208,000, $46,000,
$108,000 and ($165,000) in 1993, 1994, 1995 and the first six months of 1996,
respectively. The net cash provided by (used in) operating activities for each
period presented resulted primarily from changes in operating assets and
liabilities and net income.

Net cash used in investing activities was $54,000, $120,000, $164,000 and
$101,000 in 1993, 1994, 1995 and the first six months of 1996, respectively.
Cash used in investing activities for each period presented was primarily for
additions to property and equipment.

Net cash provided by (used in) financing activities was ($182,000),
$241,000, $130,000 and $10,000 in 1993, 1994, 1995 and the first six months of
1996, respectively. Cash provided by (used in) financing activities consisted
primarily of proceeds from the issuance of short-term debt obligations and a
note payable to a stockholder and principal payments on such instruments.

32
<PAGE> 35

As a result of the foregoing, cash and cash equivalents decreased $27,000
in 1993, increased $166,000 in 1994, increased $74,000 in 1995, and decreased
$256,000 in the first six months of 1996.

As of June 30, 1996, First Choice had total debt of $390,000.

While there can be no assurance, management of First Choice believes that
the funds currently available on hand, funds to be provided by operations and
funds available through existing credit facilities will be sufficient to meet
First Choice's anticipated needs for working capital and capital expenditures
through the date of the anticipated merger with StaffMark.

RESULTS OF OPERATIONS -- BLETHEN

BLETHEN RESULTS FOR THE FIRST SIX MONTHS OF 1996 COMPARED TO THE FIRST SIX
MONTHS OF 1995

Revenues. Revenues increased $1.3 million, or 19.5%, to $7.7 million for
the first six months of 1996 compared to $6.5 million for the first six months
of 1995, primarily due to increased demand for clinical trial support services.

Cost of Services. Cost of services increased $1.0 million, or 20.9%, to
$5.9 million for the first six months of 1996 compared to $4.9 million for the
first six months of 1995. This increase, which corresponds to the increase in
clinical trial support services revenues, was primarily attributable to
increases in wages for temporary personnel.

Gross Profit. Gross profit increased $239,000, or 15.3%, to $1.8 million
for the first six months of 1996 compared to $1.6 million for the first six
months of 1995. Gross margin decreased to 23.3% during the first six months of
1996 compared to 24.2% during the first six months of 1995.

Operating Expenses. Operating expenses decreased $22,000, or 1.6%, for the
first six months of 1996 compared to the first six months of 1995. Operating
expenses as a percentage of revenues decreased to 17.6% for the first six months
of 1996 compared to 21.4% for the first six months of 1995.

Operating Income. Operating income increased $261,000, or 142.1%, to
$444,000 for the first six months of 1996 compared to $184,000 for the first six
months of 1995. Operating income as a percentage of revenues increased to 5.8%
during the first six months of 1996 compared to 2.8% for the first six months of
1995.

Net Income. Net income increased $228,000, or 307.3%, to $303,000 for the
first six months of 1996 compared to $74,000 for the first six months of 1995.
Net income as a percentage of revenues increased to 3.9% for the first six
months of 1996 compared to 1.2% for the first six months of 1995.

BLETHEN RESULTS FOR 1995 COMPARED TO 1994

Revenues. Revenues increased $1.4 million, or 11.8%, to $13.4 million for
1995 compared to $12.0 million for 1994. This increase was primarily
attributable to the opening of a new branch location in 1995.

Cost of Services. Cost of services increased $1.1 million, or 12.6%, to
$9.9 million for 1995 compared to $8.8 million for 1994. This increase, which
corresponds to the increase in revenues, was primarily attributable to increases
in wages for temporary personnel.

Gross Profit. Gross profit increased $302,000, or 9.6%, to $3.5 million for
1995 compared to $3.2 million for 1994. Gross margin decreased to 25.9% for 1995
compared to 26.4% for 1994.

Operating Expenses. Operating expenses increased $207,000, or 7.3%, to $3.0
million for 1995 compared to $2.8 million for 1994. Operating expenses as a
percentage of revenues decreased to 22.7% for 1995 compared to 23.7% for 1994.

Operating Income. Operating income increased $95,000, or 29.3%, to $419,000
for 1995 compared to $324,000 for 1994. Operating income as a percentage of
revenues increased to 3.1% for 1995 compared to 2.7% for 1994.

33
<PAGE> 36

Net Income. Net income increased 48.2% to $208,000, or 1.6% of revenues for
1995 compared to $141,000, or 1.2% of revenues for 1994.

BLETHEN RESULTS FOR 1994 COMPARED TO 1993

Revenues. Revenues increased $769,000, or 6.9%, to $12.0 million for 1994
compared to $11.2 million for 1993. This increase was primarily attributable to
the opening of a new branch location in 1994.

Cost of Services. Cost of services increased $674,000, or 8.3%, to $8.8
million for 1994 compared to $8.1 million for 1993. This increase, which
corresponds to the increase in revenues, was primarily attributable to increases
in wages for temporary personnel.

Gross Profit. Gross profit increased $95,000, or 3.1%, to $3.2 million for
1994 compared to $3.1 million for 1993. Gross margin decreased to 26.4% for 1994
compared to 27.4% for 1993.

Operating Expenses. Operating expenses decreased $341,000, or 10.7%, to
$2.8 million for 1994 compared to $3.2 million for 1993. Operating expenses as a
percentage of revenues decreased to 23.7% for 1994 compared to 28.4% for 1993.
The decrease was primarily attributable to higher levels of expenses in 1993
related to growth of the business coupled with 1993 being the final year of a
$50,000 payment required under a noncompete agreement.

Operating Income (Loss). Operating income increased $436,000 to $324,000
for 1994 compared to a loss of $112,000 for 1993.

Net Income (Loss). Net income increased $232,000 to $141,000 for 1994
compared to a loss of $91,000 for 1993.

LIQUIDITY AND CAPITAL RESOURCES -- BLETHEN

Net cash provided by operating activities was $67,000, $218,000, $100,000
and $207,000 in 1993, 1994, 1995 and the first six months of 1996, respectively.
Net cash provided by operating activities for all periods presented was
primarily due to changes in operating assets and liabilities and net income
(loss).

Net cash used in investing activities was $130,000, $72,000, $25,000 and
$58,000 in 1993, 1994, 1995 and the first six months of 1996, respectively. Cash
used in investing activities for all periods presented was primarily for capital
expenditures related to the opening of new branches.

Net cash used in financing activities was $129,000, $61,000 and $74,000 in
1994, 1995 and the first six months of 1996, respectively. Cash used in
financing activities during the first six months of 1996 was primarily for
payments on capital lease obligations and payments to stockholders.

As a result of the foregoing, cash and cash equivalents decreased $64,000
in 1993, increased $17,000 in 1994, and increased $13,000 and $75,000 in 1995
and in the first six months of 1996, respectively.

As of June 30, 1996, Blethen had total debt of $1.2 million.

While there can be no assurance, management of Blethen believes that the
funds currently available on hand, funds to be provided by operations and funds
available through existing credit facilities will be sufficient to meet
Blethen's anticipated needs for working capital and capital expenditures through
the date of the anticipated merger with StaffMark.

34
<PAGE> 37

RESULTS OF OPERATIONS -- COMBINED

The combined results discussed below occurred when the Founding Companies
were not under common control or management and may not be comparable to, or
indicative of, future performance. See "Risk Factors -- Absence of Combined
Operating History."

The following table sets forth the percentage of revenues represented by
certain line items in the combined Founding Company financial statements for the
indicated periods:

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------- ---------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenues................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of services......................... 79.1 80.2 79.8 80.0 78.8
----- ----- ----- ----- -----
Gross profit margin...................... 20.9 19.8 20.2 20.0 21.2
Operating expenses:
Selling, general and administrative.... 16.8 15.7 16.4 16.6 15.8
Depreciation and amortization.......... 0.6 0.6 0.8 0.6 1.0
----- ----- ----- ----- -----
Operating profit......................... 3.5% 3.5% 3.0% 2.8% 4.4%
===== ===== ===== ===== =====
</TABLE>

COMBINED RESULTS FOR THE FIRST SIX MONTHS OF 1996 COMPARED TO THE FIRST SIX
MONTHS OF 1995

Combined Revenues. Combined revenues increased $24.3 million, or 37.1%, to
$89.9 million for the first six months of 1996 compared to $65.6 million for the
first six months of 1995. This increase was largely attributable to: (i) an
increase in Brewer's revenues of $14.6 million, primarily attributable to the
acquisitions of Caldwell in July 1995 and On Call in February 1996; (ii) an
increase in Prostaff's revenues of $2.9 million, primarily due to the opening of
new branches and an increase in business conducted with a significant client;
and (iii) an increase in HRA's revenues of $2.6 million, primarily attributable
to the opening of several new branches. Also contributing to the increase in
combined revenues was an increase in Maxwell's, Blethen's and First Choice's
revenues of $1.7 million, $1.3 million and $1.2 million, respectively.

Combined Cost of Services. Combined cost of services increased $18.4
million, or 35.1%, to $70.8 million for the first six months of 1996 compared to
$52.4 million for the first six months of 1995. This increase was primarily
attributable to: (i) an increase in Brewer's cost of services of $11.1 million,
largely due to the acquisitions of Caldwell and On Call; (ii) an increase in
Prostaff's cost of services of $2.1 million, primarily due to the opening of new
branches and an increase in business conducted with a significant client; and
(iii) an increase in HRA's cost of services of $1.9 million, primarily
attributable to the opening of several new branches. Also contributing to the
increase in combined cost of services was an increase in Maxwell's, Blethen's
and First Choice's cost of services of $1.2 million, $1.0 million and $982,000,
respectively.

Combined Gross Profit. Combined gross profit increased $5.9 million, or
45.0%, to $19.0 million for the first six months of 1996 compared to $13.1
million for the first six months of 1995. Combined gross margin increased to
21.2% during the first six months of 1996 compared to 20.0% during the first six
months of 1995. This increase in combined gross margin was primarily due to the
acquisition of Caldwell, as well as an increase in Brewer's gross margin,
exclusive of acquisitions.

Combined Operating Expenses. Combined SG&A increased $3.3 million, or
30.8%, to $14.2 million for the first six months of 1996 compared to $10.9
million for the first six months of 1995. This increase was primarily
attributable to the opening of several new branches by many of the Founding
Companies, as well as an increase in Brewer's SG&A of $2.3 million, primarily
attributable to the acquisitions of Caldwell and On Call. Combined SG&A as a
percentage of combined revenues decreased to 15.8% for the first six months of
1996 compared to 16.6% for the first six months of 1995. Combined depreciation
and amortization expense increased $513,000, or 126.8%, to $918,000 for the
first six months of 1996 compared to $405,000 for the first six months of 1995.
This increase was primarily attributable to an increase in Brewer's depreciation
and

35
<PAGE> 38

amortization of $430,000, largely due to increased amortization of intangibles,
which resulted from the acquisitions of Caldwell and On Call.

Combined Operating Profit. Combined operating profit increased $2.1
million, or 110.5%, to $3.9 million for the first six months of 1996 compared to
$1.9 million for the first six months of 1995. Combined operating profit as a
percentage of combined revenues increased to 4.4% for the first six months of
1996 compared to 2.8% for the first six months of 1995.

COMBINED RESULTS FOR 1995 COMPARED TO 1994

Combined Revenues. Combined revenues increased $25.5 million, or 21.1%, to
$146.7 million for 1995 compared to $121.2 million for 1994. This increase was
largely due to: (i) an increase in Brewer's revenues of $16.0 million, primarily
attributable to the acquisition of Caldwell in July 1995; (ii) an increase in
Prostaff's revenues of $3.7 million, primarily due to the addition of new
significant clients and the opening of several new branches; and (iii) an
increase in Maxwell's revenues of $1.9 million, primarily attributable to a
significant client contract. Also contributing to the increase in combined
revenues was an increase in HRA's, Blethen's and First Choice's revenues of $1.8
million, $1.4 million and $696,000, respectively.

Combined Cost of Services. Combined cost of services increased $20.0
million, or 20.6%, to $117.1 million for 1995 compared to $97.1 million for
1994. This increase was primarily attributable to: (i) an increase in Brewer's
cost of services of $12.2 million, largely due to the Caldwell acquisition; (ii)
an increase in Prostaff's cost of services of $2.8 million, primarily due to the
addition of significant clients and the opening of several new branches; and
(iii) an increase in Maxwell's cost of services of $1.7 million, primarily due
to a significant client contract. Also contributing to the increase in combined
cost of services was an increase in HRA's, Blethen's and First Choice's cost of
services of $1.6 million, $1.1 million and $576,000, respectively.

Combined Gross Profit. Combined gross profit increased $5.5 million, or
23.0%, to $29.6 million for 1995 compared to $24.0 million for 1994. Combined
gross margin increased to 20.2% for 1995 compared to 19.8% for 1994. This
increase in combined gross margin was largely the result of the acquisition of
Caldwell by Brewer.

Combined Operating Expenses. Combined SG&A increased $5.0 million, or
26.2%, to $24.1 million for 1995 compared to $19.0 million for 1994. This
increase was primarily attributable to: (i) an increase in Brewer's SG&A of $2.3
million, largely related to the acquisition of Caldwell; (ii) an increase in
Prostaff's SG&A of $1.2 million, primarily due to increased compensation
associated with the opening of several new branches; and (iii) an increase in
HRA's SG&A of $1.0 million, primarily attributable to costs associated with the
opening of several new branches. Combined SG&A as a percentage of combined
revenues increased to 16.4% for 1995 compared to 15.7% for 1994. Combined
depreciation and amortization expense increased $415,000, or 56.0%, to $1.2
million for 1995 compared to $742,000 for 1994. This increase was primarily
attributable to increased amortization of intangibles by Brewer, resulting from
the acquisition of Caldwell in 1995.

Combined Operating Profit. Combined operating profit increased $123,000, or
2.9%, to $4.4 million for 1995 compared to $4.2 million for 1994. Combined
operating profit as a percentage of combined revenues decreased to 3.0% for 1995
compared to 3.5% for 1994.

COMBINED RESULTS FOR 1994 COMPARED TO 1993

Combined Revenues. Combined revenues increased $29.9 million, or 32.8%, to
$121.2 million for 1994 compared to $91.2 million for 1993. The increase is
primarily attributable to: (i) an increase in Brewer's revenue of $15.6 million,
largely due to the acquisition of Aaron Temporary Services, Inc. ("Aaron") in
November 1993; (ii) an increase in Prostaff's revenues of $3.4 million,
primarily due to the opening of new branches; and (iii) an increase in Maxwell's
revenues of $4.9 million, primarily attributable to the addition of a
significant customer. Also contributing to the increase in combined revenues was
an increase in HRA's, First Choice's and Blethen's revenues of $3.1 million,
$2.2 million and $769,000, respectively.

36
<PAGE> 39

Combined Cost of Services. Combined cost of services increased $25.0
million, or 34.6%, to $97.1 million for 1994 compared to $72.1 million for 1993.
This increase was attributable to: (i) an increase in Brewer's cost of services
of $12.8 million, primarily due to the acquisition of Aaron; (ii) an increase in
Prostaff's cost of services of $2.6 million, primarily due to the opening of new
branches; and (iii) an increase in Maxwell's cost of services of $4.8 million,
primarily due to the addition of a significant client in 1994. Also contributing
to the increase in combined cost of services was an increase in HRA's, First
Choice's and Blethen's cost of services of $2.4 million, $1.7 million and
$674,000, respectively.

Combined Gross Profit. Combined gross profit increased $4.9 million, or
25.9%, to $24.0 million for 1994 compared to $19.1 million for 1993. Combined
gross margin decreased to 19.8% for 1994 compared to 20.9% for 1993 primarily
due to a decrease in Maxwell's gross margin, which resulted from lower margin
contracts negotiated with two significant customers and increased competition.

Combined Operating Expenses. Combined SG&A increased $3.7 million, or
24.2%, to $19.1 million for 1994 compared to $15.4 million for 1993. This
increase was primarily attributable to an increase in Brewer's SG&A of $1.9
million, related to the acquisition of Aaron during November 1993. Combined SG&A
as a percentage of revenues decreased to 15.7% for 1994 compared to 16.8% for
1993. Combined depreciation and amortization expense increased $227,000, or
44.0%, to $742,000 for 1994 compared to $515,000 for 1993. This increase was
primarily attributable to significant capital expenditures by many of the
Founding Companies during 1993 and 1994.

Combined Operating Profit. Combined operating profit increased $1.0
million, or 31.1%, to $4.2 million for 1994 compared to $3.2 million for 1993.
Combined operating profit as a percentage of combined revenues remained
unchanged at 3.5% for 1994 and 1993.

LIQUIDITY AND CAPITAL RESOURCES -- COMBINED

Net cash provided by combined operating activities was $2.9 million, $2.7
million, $4.8 million and $1.4 million in 1993, 1994, 1995 and the first six
months of 1996, respectively. The net cash provided by combined operating
activities for the periods presented was primarily attributable to net income
and changes in operating assets and liabilities.

Net cash used in combined investing activities was $1.2 million, $985,000,
$13.0 million and $4.0 million in 1993, 1994, 1995 and the first six months of
1996, respectively. Cash used in combined investing activities in 1993 was
primarily attributable to the acquisition of Aaron by Brewer and significant
capital expenditures. Cash used in combined investing activities in 1994 was
primarily for significant capital expenditures by several of the Founding
Companies. Cash used in combined investing activities in 1995 was primarily
related to the acquisition of Caldwell by Brewer for cash totaling $11.5
million. Cash used in combined investing activities in the first six months of
1996 was largely for the acquisition of On Call by Brewer for cash totaling $3.0
million.

Net cash provided by (used in) combined financing activities was ($1.3)
million, ($1.6) million, $8.7 million and $2.9 million in 1993, 1994, 1995 and
the first six months of 1996, respectively. Cash used in combined financing
activities in 1993 and 1994 consisted of dividends paid to owners of the
individual Founding Companies, partially offset by proceeds from issuances of
long-term debt obligations, net of repayments. Cash provided by combined
financing activities in 1995 and the first six months of 1996 was primarily
attributable to the proceeds from debt issued by Brewer in conjunction with the
acquisitions of Caldwell and On Call, respectively, partially offset by
dividends paid to the owners of the individual Founding Companies.

As a result of the foregoing, combined cash and cash equivalents increased
$404,000, $22,000, $534,000 and $252,000 in 1993, 1994, 1995 and the first six
months of 1996, respectively.

As of June 30, 1996, the Company had total borrowings outstanding of $5.0
million on various lines of credit facilities. In addition, the Company had
total long-term debt outstanding, including current maturities, of approximately
$21.1 million as of June 30, 1996. The Company plans to repay all indebtedness
with proceeds from the Offering.

37
<PAGE> 40

In conjunction with the Mergers, certain of the Founding Companies either
have made or plan to make cash distributions to their stockholders which
represent the companies' estimated S Corporation Accumulated Adjustment
Accounts. Distributions subsequent to June 30, 1996 are estimated to total
approximately $1.4 million, as follows: (i) Brewer, $300,000; (ii) Blethen,
$270,000; and (iii) First Choice, $790,000. During the first six months of 1996,
certain of the Founding Companies distributed all or a portion of their
estimated S Corporation Accumulated Adjustment Account, as follows: (i)
Prostaff, $1.3 million; and (ii) Maxwell, $2.6 million. These distributions
either were or will be funded with additional debt, which the Company plans to
repay with proceeds from the Offering. See "Certain Transactions."

The net proceeds from the Offering, after deducting: (i) underwriting
discounts; (ii) offering expenses; (iii) the cash portion of the consideration
being paid for the Founding Companies; and (iv) the repayment of all debt
obligations, are expected to total approximately $3.1 million. The Company plans
to use these net proceeds for working capital and general corporate purposes,
including future acquisitions. Pending such uses, the Company plans to invest
the net proceeds in short-term, interest bearing, investment grade securities.

The Company has received a commitment from a major lending institution for
a credit facility of $50.0 million to be used for working capital and other
general corporate purposes, including future acquisitions. The commitment
includes a $20.0 million revolving credit facility and a $30.0 million
acquisition facility. The maturity of the facility will be five years and
interest will be computed at the Company's option at either LIBOR or the bank's
prime rate and incrementally adjusted based on the Company's operating leverage
ratios. The credit facility will be secured by all assets of the Company and a
pledge of 100% of the stock of all subsidiaries.

The Company also plans to register up to an additional 4,000,000 shares of
its Common Stock as soon as practicable after completion of this Offering for
use by the Company as consideration to be paid in conjunction with future
acquisitions.

While there can be no assurance, management of the Founding Companies
believes that the funds currently available on hand, funds to be provided by
operations, and funds available through the existing credit facilities, coupled
with management's assessment of the Founding Companies' additional borrowing
capacity, will be sufficient to meet the Founding Companies' anticipated needs
for working capital, capital expenditures and future acquisitions through the
expiration date of the credit facility discussed above. Management plans to
periodically reassess the adequacy of the Company's credit facilities, taking
into consideration current and anticipated operating cash flow, anticipated
capital expenditures and acquisition plans in order to ensure the Company's
negotiated credit facilities are adequate to meet the Company's liquidity needs
on a short-term and long-term basis.

38
<PAGE> 41

BUSINESS

The Company's business is organized into three divisions: Commercial,
Specialty Medical and Professional. The Commercial division provides clerical
and light industrial staffing services, and generated approximately 89.9% and
88.2% of the Company's revenues for the year ended December 31, 1995 and the six
months ended June 30, 1996, respectively. The Specialty Medical division
provides healthcare and medical staffing services, such as physical and
occupational therapists, speech pathologists and clinical trials support
services, and generated approximately 8.3% and 7.3% of the Company's revenues
for the year ended December 31, 1995 and the six months ended June 30, 1996,
respectively. The Professional division provides technical, professional and
information technology staffing services and generated approximately 1.8% and
4.5% of the Company's revenues for the year ended December 31, 1995 and the six
months ended June 30, 1996, respectively. According to Staffing Industry Report,
an industry publication, technical, professional and healthcare staffing are
among the fastest growing sectors of the staffing industry. The Company believes
that these specialized services offer a greater opportunity for growth and
profitability than commercial staffing services alone.

The Company's immediate goal is to expand throughout the regions it
currently serves, and ultimately to expand nationally to meet the broad
geographic needs of regional and national companies seeking to centralize
purchasing decisions for temporary staffing needs. The Company plans to achieve
these goals through acquisitions and internal growth.

OPERATING STRATEGY

Provide a Decentralized Entrepreneurial Environment. The Company believes
an entrepreneurial business environment that rewards performance tends to
attract and retain self-motivated, achievement-oriented individuals. Each of the
Company's branches will operate as a separate profit center with local
management having primary profit and loss responsibility. Each branch office
will be given latitude in many fundamental operational functions, including
hiring, pricing, training, sales, and marketing. This will permit each branch
manager to be flexible and responsive to the specific needs of local clientele.
In addition, the Company intends to establish profit-based compensation at the
regional and local levels and to implement a stock option program to further
motivate employees through ownership in the Company. See "Management -- 1996
Stock Option Plan."

Capitalize on Strong Reputation and Local Name Recognition. The Company
intends to continue to build on the Founding Companies' strong reputations and
client familiarity with their local names. The Company believes that its local
presence, accessible management and sophisticated support services position it
as a provider of choice of staffing services in the markets it serves. The
Company believes that it is one of the leading providers of staffing services in
most of its markets.

39
<PAGE> 42

Capitalize on New Corporate Structure. The Company intends to take
advantage of its new corporate structure by:

Increasing Operating Efficiencies. The Company believes that it can
achieve economies of scale by combining a number of general and
administrative functions at the corporate level and by reducing or
eliminating redundant functions and facilities of the Founding Companies.
The Founding Companies have made substantial investments in technology and
systems, which will facilitate the integration of the operational,
financial and administrative functions of their respective businesses.
Currently, four of the six Founding Companies employ versions of the
Caldwell-Spartin computer system, and the Company plans to add the other
two companies to the system within six months of the completion of this
Offering. The Company will benefit from further economies of scale through
common regional management and the spreading of recruiting, training,
advertising, administrative and branch office costs over a larger number of
temporary employees and clients.

Centralizing Control Functions. The Company will support its branch
office network by providing risk management, payroll, billing and
collection, purchasing, cash management, internal audit, human resources
and other administrative support services. This centralization will provide
senior management with a significant source of control and the ability to
monitor the key operating areas of the Company at the branch level.

Adopting the Best Practices of Founding Companies. Management of the
Company routinely evaluates the operating policies and procedures of each
of the Founding Companies and will implement Company-wide the practices
that best serve the needs of the Company. For example, three of the
Founding Companies employ an incentive compensation system for their branch
offices which encourages cost savings at the branch level by rewarding
branch office profitability. Management intends to implement this
compensation system throughout the Company.

Offer a Diversified Range of Services. The Company provides virtually all
commercial staffing services, including secretarial, clerical, word processing,
light industrial and electronic assembly. In addition to commercial staffing
services, the Company provides professional and specialty medical staffing
services in certain markets by providing personnel such as computer operators,
programmers, engineers, physical and occupational therapists, and clinical trial
support employees. The Professional and Specialty Medical divisions, which
management believes offer substantial growth opportunities, tend to generate
higher gross margins than the Commercial division. The Company also offers
permanent placement services in several of its branches and believes that the
relatively higher margins and cross-selling opportunities associated with
permanent placement make it a profitable complement to its other staffing
services.

Offer Customized Client Services. The Company seeks to satisfy the needs of
its clients by providing customized services such as on-site management and
permanent placement services. The flexibility of the Company's decentralized
organization will allow it to tailor its operations to meet local client
requirements. For example, clients may be provided with customized billings,
utilization reports, and safety awareness and training programs. The Company
believes that the quality of the Founding Companies' services has enabled them
to establish and maintain long-term relationships with clients by understanding
the clients' businesses, responding promptly to client requests, proactively
assessing clients' staffing needs, and continually monitoring job performance
and client satisfaction. Certain of the Founding Companies maintain quality
assurance programs that include such procedures as: (i) a 30 minute response
time on status of pending orders; (ii) customized reporting and invoicing for
clients; and (iii) customized Caldwell-Spartin call-back reports and other
personalized daily reports to ensure a timely response to the daily needs of its
clients and temporary employees.

Attract and Retain Qualified Management and Personnel. The Company believes
that experienced management and branch office personnel with strong ties to and
knowledge of the local community are integral to establishing long-term
relationships at the local level. The Company believes that its decentralized
structure, which grants regional and local management significant autonomy, will
result in the attraction and retention of experienced, entrepreneurial managers.

40
<PAGE> 43

GROWTH STRATEGY

Pursuing Strategic Acquisitions. The Company seeks acquisitions of
profitable, well-managed staffing companies that will expand the geographic
scope of its operations, increase the revenues of its Professional and Specialty
Medical divisions, or offer services that may be cross-sold to the Company's
existing client base. The Company has acquired six staffing businesses over the
past three years as outlined below:

<TABLE>
<CAPTION>
ACQUISITION ACQUIRED SERVICES ACQUIRED
ACQUIRING COMPANY DATE COMPANY LOCATION OFFERED BRANCHES REVENUES(1)
- --------------------------- ----------- ----------------- -------- ----------- -------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Brewer..................... 11/93 Aaron Temporaries AR Commercial 7 $ 10,000
Brewer..................... 7/95 Caldwell GA Commercial 5 17,000
Brewer..................... 2/96 On Call CO Commercial/ 4 12,000
Professional
Maxwell.................... 2/96 Sumner-Ray OK Professional 1 1,400
First Choice............... 7/96 SSI NC Professional 1 1,200
HRA........................ 7/96 Career TN Professional 1 1,000
Consultants
</TABLE>

- ---------------
(1) Represents approximate revenues for fiscal year prior to acquisition.

Immediately following the consummation of the Offering, the Company intends
to pursue a strategic acquisition program. The Company will evaluate
acquisitions using numerous criteria, including profitability of operations,
management strength, market location, market share, staffing services offered,
and the quality of service. Certain of the Company's executive officers and
directors hold leadership positions in national and regional staffing trade
associations, and as a result have developed personal relationships with the
owners of numerous independent staffing companies. The Company believes that it
will have a strategic advantage in completing acquisitions based on (i) these
personal relationships, (ii) the successful assimilation of previous
acquisitions, (iii) its decentralized entrepreneurial environment and (iv) its
greater visibility and resources as a public company.

As consideration for future acquisitions, the Company intends to use
various combinations of equity, debt or cash. The Company initially plans to
register up to an additional 4,000,000 shares of its Common Stock as soon as
practicable after completion of the Offering for use in future acquisitions. The
Company has also received a commitment from a major lending institution to
provide the Company with a credit facility of $50.0 million, some or all of
which could be used in connection with future acquisitions. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Combined."

Growing Internally. A key element of the Company's growth strategy is to
increase the productivity and profitability of existing operations by expanding
and enhancing services and by increasing penetration in existing geographic
markets. Spinning-off new branch offices from existing branches is a primary
method of expansion in the Company's existing markets. Spin-offs usually occur
in metropolitan areas where a branch has grown too large to efficiently manage
the number of temporary staffing hours generated. The branch splits into two
offices which allows the new branch to open with an existing client base and
provides the Company with geographical expansion at low marginal cost. During
fiscal 1995 and the first six months of 1996, the Company opened 19 spin-off
branches. In addition, the Company may open new branch offices by following
existing clients into new geographic areas.

Increasing Vendor-on-Premises Relationships. The Company currently has 16
VOP partnering relationships, as compared to 10 at December 31, 1995. VOP
relationships represented 9.4% and 14.6% of the Company's revenues for the year
ended December 31, 1995 and the six months ended June 30, 1996, respectively.
Under these programs, the Company assumes administrative responsibility for
coordinating all temporary personnel services throughout a client's location or
organization, including skills testing and training. While these partnering
relationships tend to have lower gross margins than traditional temporary
staffing services, the higher volumes and comparatively lower operating expenses
associated with these relationships result in attractive operating profits for
the Company. The Company seeks to expand its VOP

41
<PAGE> 44

program to comprehensive outsourcing arrangements, in which the Company staffs
and manages an entire department or function on a turn-key basis. The VOP
program provides the Company with an opportunity to establish long-term client
relationships, which result in a more stable source of revenue, while providing
clients with a dedicated on-site account manager who can more effectively meet
the client's changing staffing needs with high quality and consistent service.

Cross-Selling Professional Services. The Company currently provides
commercial staffing services in the majority of its offices and plans to
introduce its professional services to certain branches that currently do not
offer such services. The Company believes there are substantial growth
opportunities through the introduction of its broad range of existing services
throughout its network of branch offices.

Expanding Specialty Medical Services. The Company believes that revenue and
profitability can be enhanced by providing specialty medical services in
additional markets. The Company's specialty medical services personnel currently
include physical and occupational therapists, speech pathologists, and clinical
trials support services such as clinical monitoring, project management, data
management, programming, statistical analysis, regulatory affairs, medical
writing and training. The Specialty Medical division generally enjoys higher
gross margins than the Commercial division because it offers specialized
expertise. The Company intends to expand its Specialty Medical division through
acquisitions and internal development.

THE STAFFING SERVICES INDUSTRY

The temporary staffing industry has grown rapidly in recent years as
competitive pressures have caused businesses to focus on reducing costs,
including converting fixed labor costs to variable costs. The use of temporary
employees also enables companies to improve flexibility in employee hiring and
scheduling and allows them to focus on their core business functions. According
to NATSS, the U.S. market for temporary services grew at a compound average
annual growth rate of approximately 17.7%, from approximately $20.4 billion in
revenue in 1991 to approximately $39.2 billion in 1995. Studies show that more
than 90% of all U.S. businesses use temporary staffing services, and that
temporary staffing personnel now account for approximately 2% of the total U.S.
workforce. The use of temporary personnel has become widely accepted as a
valuable tool for managing personnel costs, supplementing permanent workforces
and meeting specialized or fluctuating employment requirements. Vacations,
illnesses, resignations, seasonal increases in work volume, marketing promotions
and month-end requirements have historically created demand for temporary
staffing. More recently, the growing cost and difficulty of hiring, laying off
and terminating full-time workers has also encouraged greater use of temporary
workers. In addition, entrants into the labor force increasingly look to
temporary assignments as a way to build experience, make contacts, and receive
training and valuable exposure to a variety of work settings, as well as a means
to gain full-time employment.

Organizations have also begun using flexible staffing to reduce
administrative overhead by strategically outsourcing operations that are not
part of their core business functions, such as recruiting, training and benefit
administration. By utilizing temporary employees, businesses are able to avoid
the management and administrative costs incurred if full-time personnel are
employed. An ancillary benefit, particularly for smaller businesses, is that use
of temporary employees shifts certain employment costs and risks (e.g., workers'
compensation and unemployment insurance) to the temporary personnel provider,
which can spread the costs and risks over a much larger pool of employees.
Businesses are also utilizing staffing services to selectively hire and add to
their full-time staff. This concept, typically referred to as "temp-to-perm,"
provides the client with an opportunity to evaluate skills and proficiency prior
to extending full-time employment offers. NATSS estimates that approximately 40%
of temporary employees are ultimately offered full-time employment by clients.

THE COMPANY'S STAFFING SERVICES

The Company's staffing services are provided through three divisions:

Commercial Division. The Company's Commercial division, which accounted for
approximately 89.9% and 88.2% of the Company's revenues for the year ended
December 31, 1995 and the six months ended June 30, 1996, respectively, provides
personnel to clients with traditional clerical and light industrial needs.

42
<PAGE> 45

The Company's clerical services personnel include secretarial, clerical and word
processing personnel, receptionist/switchboard operators, typists, data entry
operators, cashiers, client service representatives, medical/legal
transcriptionists, file clerks, and other miscellaneous office personnel. Light
industrial services personnel include warehouse workers, maintenance workers,
assemblers, quality control clerks, order pullers, food service workers,
production workers, shipping/receiving clerks, janitors, packagers, inventory
clerks, textile manufacturers, and machinists.

Specialty Medical Division. The Company's Specialty Medical division
accounted for 8.3% and 7.3% of the Company's revenues for the year ended
December 31, 1995 and the six months ended June 30, 1996, respectively. The
Company offers specialty medical staffing services to meet the growing demand
for physical and occupational therapists in the U.S. healthcare market. The
Company recruits, both domestically and internationally, trained physical
therapists, occupational therapists and speech pathologists to work in a variety
of healthcare settings in more than 15 states. The Company also provides
complete physical therapy management and staffing services to out-patient
clinics as well as rural and suburban acute care hospitals. The Company targets
hospitals in the 80-250 bed range with at least one orthopedic surgeon on staff,
minimal competition in the area, and moderate to heavy surrounding industry.

Professional Division. The Company's Professional division provides
personnel for technical, information technology, legal and accounting services
and accounted for 1.8% and 4.5% of the Company's revenues for the year ended
December 31, 1995 and the six months ended June 30, 1996, respectively. The
Company provides technical services personnel such as drafters, designers and
engineers in the mechanical and electrical engineering and computer science
fields. Information technology services include systems planning and design,
project management, software applications development, systems and network
implementation, systems integration and higher-level contract programming
services, facilities management, systems maintenance, "help-desk" assistance and
education and training. The Company also provides accounting personnel,
paralegals and other legal assistants, and sales and marketing professionals.

The Company offers clinical trials support personnel to meet the demands of
the pharmaceutical, biotechnology, medical device and medical research data
industries. The Company provides contract personnel with a wide variety of
expertise in the clinical research field, including clinical monitoring, project
management, data management, programming, statistical analysis, regulatory
affairs, medical review and writing and training. The Company maintains a
national database of qualified contract professionals and is able to source
potential candidates for its clients on a nationwide basis.

OPERATIONS

Branch Offices. The Company offers its services through 91 branch offices
in Arkansas, Colorado, Georgia, North Carolina, Oklahoma, South Carolina,
Tennessee and Virginia. Branch managers will operate their offices with a
significant degree of autonomy and accountability and will receive bonuses based
on the profitability of the branch. This compensation system is designed to
motivate the managers to maximize the growth and profitability of their offices.
Other branch personnel, including account coordinators, will also receive
bonuses directly related to the growth and profitability of their branch. Branch
managers will report to regional managers or subsidiary presidents. Operating
within the guidelines set by the Company, the branch managers will be
responsible for pursuing new business opportunities and focusing on sales and
marketing, account development, and employee recruitment and retention.

Sales and Marketing. StaffMark's services are marketed through its network
of offices whose branch managers, supported by the Company's marketing staff,
make regular personal sales visits to clients and prospects. 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 client referrals,
telemarketing and advertising in a variety of local and regional media,
including television, radio, direct mail, Yellow Pages, newspapers, magazines
and trade publications. The Company will continue to sponsor job fairs and other
community events. The Company's officers and senior management also participate
in national and regional trade associations, local chambers of commerce and
other civic associations.

43
<PAGE> 46

Recruiting. One of the Company's most successful recruiting tools is
referrals by its field employees. The Company finds that referrals from its
existing labor force provide the highest quality and largest number of new
temporary employees and, in certain markets, the Company pays a referral fee to
employees for recruiting a new temporary employee. The Company employs full-time
regional recruiters who regularly monitor the skills and availability of their
region's temporary employees to ensure a base of qualified employees to meet
client demands. These recruiters also visit schools, clubs, and professional
associations and present career development programs to various organizations.
In addition, the Company obtains applicants from advertising on radio,
television, in the Yellow Pages and through other print media.

Employees/Personnel. Currently, the six Founding Companies provide over
10,000 field employees to more than 2,500 clients during a typical week. As of
June 30, 1996, the Company employed approximately 500 internal staff. None of
the Company's employees, including its field employees, are represented by a
collective bargaining agreement. The Company believes its employee relations are
good. Hourly wages for the Company's field employees are determined according to
market conditions. The Company pays mandated costs of employment, including the
employer's share of social security taxes (FICA), federal and state unemployment
taxes, unemployment compensation insurance, general payroll expenses and
workers' compensation insurance. The Company offers access to various insurance
programs and benefits to its field employees.

Assessment, Training and Quality Control. The Company uses a comprehensive
system to assess, select and train its field employees in order to provide
quality assurance for its temporary personnel operations. Applicants are given a
range of tests, applicable to the position(s) they seek. Clerical and
office-support applicants receive state-of-the-art tests in computer skills,
word processing, typing, data entry, accounting, and other business
applications. These sophisticated tests cover the latest software, and
thoroughly and objectively evaluate each individuals' skills and experience. The
Company feels it is imperative to customize testing and training to match the
specific office environment in which the individual will be placed. In the
technical arena, specific programming tests are also given to assess the
expertise of the candidate seeking placement. Such testing measures proficiency
in programming languages, electromechanical skills, autocad, schematics and
other technical applications. Industrial electronic assembly applicants are
tested to determine basic competency, industrial aptitude, hand and finger
dexterity, soldering, mathematics, ability to read a blue print, and measurement
calculations.

Management recognizes that certain clients have specialized staffing
requirements that can only be fulfilled with customized training. The Company
provides training programs for specific staffing requirements, such as
electronic or mechanical assembly or the use of specialized software
applications. Computerized tutorials are generally available for temporary
employees seeking to upgrade their typing, data entry, office automation or word
processing skills, and classes on topics such as spreadsheets and software
applications are conducted periodically in branch offices.

The Company stresses specialization, training and empowerment of employees
to ensure that clients receive the highest quality service for the most
cost-effective price. The Company currently operates a career training center
where temporary employees as well as the general public can enroll in career
advancement classes. This center helps to increase the number of trained and
qualified applicants eligible for placement with the Company's clients.

Management Information Systems. The operating system software utilized by
the Company is the Caldwell-Spartin system which management believes is
currently one of the leading applications software systems in the staffing
industry. This system permits access to a shared database at the branch level,
allowing the branch office to fill client orders, communicate with clients
regarding invoices and screen candidates for the most suitable job opportunity.
As of the date of this Offering, four of the six Founding Companies utilize
versions of the Caldwell-Spartin system. The Company anticipates the other
Founding Companies will be brought on-line with this system within six months of
the completion of the Offering. The Company believes that the Caldwell-Spartin
system, once implemented throughout the Founding Companies and connected to all
branch offices, can readily be expanded to meet increased demands without
significant additional capital expenditures.

44
<PAGE> 47

Workers' Compensation Program. The Company intends to maintain workers'
compensation insurance for all claims in excess of a retention level of $250,000
per occurrence. The Company's risk management team will take a proactive
approach to safety and risk control. The team will work diligently to train the
Company's full-time staff to better screen, test and orient the Company's
temporary employees to a more safety-conscious environment. The team will also
perform periodic safety inspections at client locations to help determine
potential risk for employee injury and to assist clients in making the workplace
safer through customized safety program development, implementation and
evaluation. Company policies prohibit staffing of high risk activities such as
working on unprotected elevated platforms or the handling of hazardous
materials. The risk management team will evaluate new clients and will have the
authority to decline service if the work environment is perceived to be unsafe
or potentially hazardous.

An independent actuary provides advice on overall workers' compensation
costs and performs an actuarial valuation regarding the adequacy of the
accruals. The Company believes such accruals are reasonable. Currently, three of
the Founding Companies are self-insured in the states of Arkansas, Georgia and
Oklahoma. One Founding Company participates in a large retention program and
another participates in a group captive program. The remaining company
participates in the voluntary insurance market. The Founding Companies and any
acquired operations will be integrated into the Company's program at such time
as, in management's judgment, is most cost effective.

COMPETITION

The staffing industry is highly competitive and highly fragmented,
consisting of more than 7,000 firms. There are limited barriers to entry and new
competitors frequently enter the market. The Company also faces intense
competition from large international, national, regional and local companies.
Principal competitors in the Company's markets are generally national temporary
personnel companies with substantially greater financial and marketing resources
than those of the Company.

The Company competes for qualified temporary staffing employees and for
clients who require the services of such employees. The principal competitive
factors in attracting and retaining qualified temporary staffing employees are
competitive salaries and benefits, quality and frequency of assignments and
responsiveness to employee needs. The Company believes that many persons who
seek temporary employment are also seeking regular employment and that the
availability of assignments which may lead to regular employment is an important
factor in its ability to attract qualified temporary staffing employees.

The principal competitive factors in obtaining clients are a strong sales
and marketing program, the timely availability of qualified temporary staffing
employees, the ability to match client requirements with available temporary
staffing employees, competitive pricing of services and satisfying work
production requirements. The Company believes its long-term client relationships
and strong emphasis on providing service and value to its clients and temporary
staffing employees are important competitive advantages.

The Company also competes for acquisition candidates. The Company believes
that further industry consolidation will continue during the next few years.
However, there is likely to be significant competition which could lead to
higher prices being paid for such businesses. The Company believes that it will
have a strategic advantage in completing acquisitions as a result of: (i)
management's personal relationships with existing staffing companies; (ii) the
successful assimilation of previous acquisitions; (iii) its decentralized
entrepreneurial environment and (iv) its greater visibility and resources as a
public company. See "-- Growth Strategy." However, no assurance can be given
that the Company's acquisition program will be successful or that the Company
will be able to compete effectively in its markets.

45
<PAGE> 48

FACILITIES

The Company owns no real property. It leases its corporate headquarters as
well as space for all of its branch offices. 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.

The Company's headquarters is located at 302 East Millsap Road,
Fayetteville, Arkansas 72703. The premises are leased from a related party for a
term ending on January 1, 2001, with three options to renew for five additional
years each. A substantial number of other facilities are also 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
Transactions -- Lease of Facilities."

REGULATION

The Company's operations are not generally 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.

State mandated workers' compensation and unemployment insurance premiums
have increased in recent years and have directly increased the Company's cost of
services. In addition, 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 level.
Proposals have been made to mandate that employers provide health insurance
benefits to staffing employees, and some states could impose sales taxes, or
raises 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 -- Increased Employee Costs" and "-- Risk of Government
Regulations and Legislative Proposals."

The Company currently recruits physical and occupational therapists
internationally for domestic placement. The entry of these employees into the
United States is regulated by the U.S. Department of Labor and U.S. Department
of Justice -- Immigration and Naturalization Services. The regulations governing
the hiring of foreign nationals are complex and change often. If either of these
authorities or any other regulatory or judicial body should determine that the
Company is not in compliance with the regulations, the Company could be subject
to fines and/or suspension of this part of the Company's business. Further,
regulations could change in a manner which would limit the Company's ability to
employ foreign nationals. Any of the foregoing could have a material adverse
effect on the Company's business, financial condition, and results of operation.

INTELLECTUAL PROPERTY

The Company has applied for Federal Service Mark registration of
"StaffMark" and the associated Company logo with the U.S. Patent and Trademark
Office. No assurance can be given that any such registration will be granted or
that, if granted, such registration will be effective to prevent others from:
(i) using the mark concurrently; or (ii) challenging the Company's use of the
service mark in certain locations. The Company owns and licenses several other
state and federal trademarks used by the Founding Companies. The Company
believes that it has all rights to trademarks and trade names necessary for the
conduct of its business.

LEGAL AND ADMINISTRATIVE PROCEEDINGS

On July 13, 1995, Liberty Mutual Insurance Company ("Liberty") filed a
complaint against HRA in the Chancery Court of Davidson County, Tennessee, Case
No. 95-2160 II (III) alleging that HRA failed to pay certain insurance premiums
due and owing to Liberty for its provision of worker's compensation insurance to

46
<PAGE> 49

HRA in fiscal years 1993 and 1994, and a portion of fiscal year 1995. A judgment
was rendered against the Company for approximately $718,000, which was inclusive
of the disputed amounts plus accrued interest. The Company filed an appeal to
this judgment and is negotiating settlement. HRA reserved the full $718,000
related to these disputed amounts, including accrued interest, during the fiscal
years for which the claims were raised. Accordingly, management anticipates that
the ultimate resolution of this matter will not have a material adverse effect
on the financial position or results of operations of the Company.

In the ordinary course of its business, the Company is periodically
threatened with or named as a defendant in various lawsuits, including
discrimination and harassment and other similar claims. The Company maintains
insurance in such amounts and with such coverage and deductibles as management
believes are reasonable.

47
<PAGE> 50

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning each of the
directors, executive officers and persons who will become directors or executive
officers of the Company following consummation of this Offering:

<TABLE>
<CAPTION>
NAME AGE POSITION
------------------------------------- --- -------------------------------------
<S> <C> <C>
Jerry T. Brewer(1)................... 55 Chairman of the Board
Clete T. Brewer(1)................... 31 Chief Executive Officer and
President; Director
Terry C. Bellora..................... 50 Chief Financial Officer
Ted Feldman.......................... 43 Chief Operating Officer
Robert H. Janes III.................. 30 Executive Vice President -- Mergers
and Acquisitions
W. David Bartholomew................. 39 Executive Vice
President -- Southeastern Operations;
Director
Donald A. Marr, Jr. ................. 32 Executive Vice
President -- Southwestern Operations
Steven E. Schulte.................... 33 Executive Vice President --
Administration; Director
John H. Maxwell, Jr.(2).............. 53 Executive Vice President -- Medical
Services; Director
Janice Blethen....................... 52 Executive Vice President -- Clinical
Trials Support Services; Director
William T. Gregory................... 54 General Manager -- Carolina Region;
Director
Mary Sue Maxwell(2).................. 53 General Manager -- Oklahoma Region
William J. Lynch..................... 53 Director
R. Clayton McWhorter................. 62 Director
Charles A. Sanders, M.D.............. 64 Director
</TABLE>

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

(1) Jerry T. Brewer is the father of Clete T. Brewer.

(2) John H. Maxwell, Jr. is the husband of Mary Sue Maxwell.

Jerry T. Brewer co-founded StaffMark in March 1996 and has served since
then as its Chairman of the Board. Mr. Brewer also co-founded Brewer in July
1988, and currently serves as its Chairman of the Board. From July 1988 to April
1995, Mr. Brewer served as President and Chief Executive Officer of Brewer.

Clete T. Brewer co-founded StaffMark in March 1996 and has served since
then as its President and Chief Executive Officer and a director. Mr. Brewer
also co-founded Brewer in July 1988, and has served since April 1995 as
President, Chief Executive Officer and a Director of Brewer. From July 1988 to
April 1995, Mr. Brewer served as Vice President and a Director of Brewer.

Terry C. Bellora became the Chief Financial Officer of StaffMark in August
1996. Prior to joining StaffMark, Mr. Bellora served as Chief Financial Officer
of Pace Industries, Inc. from 1986 to August 1996. Mr. Bellora served as a
director of Pace from 1988 to 1993 and as an advisory director of Pace from 1993
to 1996. Mr. Bellora is a Certified Public Accountant and was previously the
audit partner for Gaddy & Co., Certified Public Accountants.

Ted Feldman will become Chief Operating Officer of the Company upon
consummation of this Offering. Mr. Feldman founded HRA in 1991 and since its
inception has served as its President and Chief Executive

48
<PAGE> 51

Officer. He will continue to serve in that capacity after the consummation of
this Offering. From 1979 until 1992, Mr. Feldman served as President of
Nashville Trunk & Bag Co.

Robert H. Janes III co-founded StaffMark in March 1996 and has served since
then as its Executive Vice President -- Mergers and Acquisitions. Mr. Janes has
served as Vice President of Finance of Brewer since April 1995. From 1988 to
1990 and 1992 to 1995, he was employed in the corporate finance department of
Stephens Inc., an investment banking firm and one of the Representatives. In
1992, Mr. Janes obtained an MBA from The Wharton School.

W. David Bartholomew will become a director and Executive Vice
President -- Southeastern Operations of the Company upon consummation of this
Offering and will oversee the Company's Commercial and Professional divisions in
that region. Mr. Bartholomew has served as Secretary/Treasurer of HRA since 1993
and will continue to serve in that capacity after the consummation of this
Offering. From 1991 through 1993, Mr. Bartholomew was President of Cobble
Personnel of Nashville.

Donald A. Marr, Jr. will become Executive Vice President -- Southwestern
Operations of the Company upon consummation of this Offering and will oversee
the Company's Commercial and Professional divisions in that region. He has been
employed by Brewer since 1990 and has served as Brewer's Vice President of
Operations since 1994 and will continue to serve in that capacity after the
consummation of this Offering.

Steven E. Schulte will become a director and Executive Vice
President -- Administration of the Company upon consummation of this Offering.
He has been employed by Prostaff since August 1987, and has served as Prostaff's
President and Chief Executive Officer since June 1992 and will continue to serve
in that capacity after the consummation of this Offering.

John H. Maxwell, Jr. will become a director and Executive Vice
President -- Medical Services of the Company upon the consummation of this
Offering. Mr. Maxwell has served as the Chief Executive Officer of Maxwell since
1973 and will continue to serve in that capacity after the consummation of this
Offering. He is a Certified Personnel Consultant and a Certified International
Personnel Consultant.

Janice Blethen will become a director and Executive Vice
President -- Clinical Trials Support Services of the Company upon the
consummation of this Offering. Ms. Blethen has served as Chief Executive Officer
of Blethen since its inception in 1975 and will continue to serve in that
capacity after the consummation of this Offering. Ms. Blethen is a Certified
Personnel Consultant.

William T. Gregory will become a director and General Manager -- Carolina
Region of the Company upon the consummation of this Offering. Mr. Gregory has
served as President of First Choice since 1985 and will continue to serve in
that capacity after the consummation of this Offering. Mr. Gregory is a
Certified Personnel Consultant.

Mary Sue Maxwell will become General Manager -- Oklahoma Region of the
Company upon consummation of this Offering. Ms. Maxwell has served as President
of Maxwell Staffing, Inc. since 1983 and will continue to serve in that capacity
after the consummation of this Offering.

William J. Lynch will become a director of the Company upon the
consummation of this Offering. Mr. Lynch is a Managing Director of Capstone
Partners, LLC, a special situations venture capital firm. From October 1989 to
March 1996, Mr. Lynch was a partner of the law firm of Morgan, Lewis & Bockius
LLP. Mr. Lynch also serves as a director of Sanifill, Inc., a publicly traded
environmental services company and Coach USA, Inc., a publicly traded motorcoach
services company.

R. Clayton McWhorter will become a director of the Company upon
consummation of this Offering. Mr. McWhorter is a distinguished professor of
entrepreneurship at the Jack C. Massey Graduate School of Business at Belmont
University. Mr. McWhorter is a member of the Board of Directors of Columbia/HCA
Healthcare and served as Chairman of the Board from April 1995 to May 1996. Mr.
McWhorter was Chairman and Chief Executive Officer of Healthtrust, Inc. from
1987 to April 1995 and was President of Healthtrust from 1991 to April 1995. Mr.
McWhorter served as President and Chief Operating Officer of Hospital
Corporation of America (HCA's predecessor) from 1985 to 1987, and as a Director
of Hospital

49
<PAGE> 52

Corporation of America from 1983 to 1987. Mr. McWhorter is a director of
SunTrust Bank in Nashville and Ingram Industries, Inc. and is a member of the
Board of the Foundation for State Legislatures.

Charles A. Sanders, M.D. will become a director of the Company upon
consummation of this Offering. Dr. Sanders is retired from Glaxo, Inc. where he
served as Chief Executive Officer from 1989 through 1994 and Chairman from 1992
through 1995. Dr. Sanders currently serves as Chairman of The Commonwealth Fund
and Project HOPE and serves on the Board of Trustees of The University of North
Carolina at Chapel Hill. Dr. Sanders is a former director of Merrill Lynch &
Co., Inc., Morton International, Inc. and Reynolds Metals Company.

The number of directors on the Board of Directors is currently fixed at
nine. Directors of the Company are elected at the annual meeting of
stockholders. Officers of the Company are appointed at the first meeting of the
Board of Directors after each annual meeting of stockholders. Directors and
executive officers of the Company are elected to serve until they resign or are
removed or are otherwise disqualified to serve, or until their successors are
elected and qualified.

The Company expects that the Board of Directors will establish an Audit
Committee, a Compensation Committee, and an Executive Committee. The members of
each committee are expected to be determined at the first meeting of the Board
of Directors following the closing of the Offering, however, the members of the
Audit and Compensation Committees will consist solely of outside directors.

DIRECTOR COMPENSATION

Directors who are employees of the Company do not receive additional
compensation for serving as directors. Each director who is not an employee of
the Company will receive a fee of $2,000 for attendance at each Board of
Directors meeting and $500 for each committee meeting (unless held on the same
day as a Board of Directors meeting). Each non-employee Director who has agreed
to serve as such prior to the consummation of this Offering has also been
granted nonqualified stock options to purchase 10,000 shares of Common Stock at
an exercise price equal to the initial public offering price per share in this
Offering, exercisable in three equal installments on the date of grant and the
next two anniversaries thereof. Non-employee directors will, beginning with the
first annual meeting of the Company's stockholders, receive annual grants of
non-qualified stock options to purchase 2,000 shares of Common Stock. See
"Management -- 1996 Stock Option Plan." All directors of the Company are
reimbursed for out-of-pocket expenses incurred in attending meetings of the
Board of Directors or committees thereof, or for other expenses incurred in
their capacity as Directors.

EXECUTIVE COMPENSATION; EMPLOYMENT AGREEMENTS; COVENANTS NOT TO COMPETE

StaffMark was incorporated in March 1996, and did not conduct any
operations prior to that time. The Company anticipates that during fiscal 1996
its Chief Executive Officer and the four other most highly compensated officers,
and their annualized base salaries for 1996, will be: Clete T. Brewer --
$150,000, Terry C. Bellora -- $150,000, Ted Feldman -- $145,000, W. David
Bartholomew -- $125,000 and Steven E. Schulte -- $125,000 (collectively, the
"named executive officers").

Messrs. Brewer, Feldman, Bartholomew and Schulte will enter into employment
agreements with the Company or a subsidiary thereof, commencing on the date of
the closing of this Offering. Pursuant to such employment agreements, each such
officer will be eligible for additional year-end bonus compensation to be
determined pursuant to an incentive bonus plan to be established by the Company.
Each employment agreement will be for a term of five years, and unless
terminated or not renewed by the Company or not renewed by the employee, the
term will continue thereafter on a year-to-year basis on the same terms and
conditions existing at the time of renewal.

Each of the employment agreements for Messrs. Brewer, Feldman, Bartholomew
and Schulte will provide that, in the event of a termination of employment by
the Company, except for specific instances of "cause" as defined in the
employment agreement, such employee shall be entitled to receive from the
Company such employee's then current salary for a period no longer than two
years after this Offering. Each

50
<PAGE> 53

employment agreement will contain a covenant not to compete with the Company for
a period of two years immediately following the termination of his employment.

Mr. Bellora has entered into an employment agreement with the Company
providing for an annual base salary, a bonus to be determined annually pursuant
to an incentive bonus plan to be established by the Company and options to
purchase 150,000 shares of Common Stock at the initial public offering price,
exercisable over a period of five years. The employment agreement is for a term
of five years. The agreement provides for the payment of two years' salary in
the event of termination without cause. In the event of a change in control of
the Company, he may elect to terminate his employment and receive the amount he
would receive pursuant to a termination without cause. Mr. Bellora's employment
agreement contains a covenant not to compete with the Company for a period
equivalent to the longer of two years immediately following termination of
employment or, in the case of a termination by the Company without cause in the
absence of a change in control, for a period of one year following termination
of employment. In the event of a change in control without 15 days notice, such
non-competition provisions would not apply.

1996 STOCK OPTION PLAN

The Company was incorporated in March 1996 and did not conduct any
operations prior to that time. Accordingly, no stock options were granted to, or
exercised by or held by any executive officers in fiscal 1995. In June 1996, the
Board of Directors and the Company's stockholders approved the Company's 1996
Stock Option Plan (the "Plan"). The purpose of the Plan is to provide directors,
officers, key employees and consultants with additional incentives by increasing
their ownership interests in the Company. Directors, officers and other key
employees of the Company and its subsidiaries are eligible to participate in the
Plan. In addition, awards may be granted to consultants providing valuable
services to the Company. Awards under the Plan are granted by the Compensation
Committee of the Board of Directors and may include incentive stock options
("ISOs"), and/or non-qualified stock options ("NQSOs").

The Compensation Committee of the Board of Directors, which will administer
the Plan, is required to consist of two or more directors who qualify as
disinterested persons within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Compensation
Committee generally has discretion to determine the terms of an option grant,
including the number of option shares, option price, term, vesting schedule, the
post-termination exercise period, and whether the grant will be an ISO or NQSO.
Notwithstanding this discretion: (i) the number of shares subject to options
granted to any individual in any calendar year may not exceed 500,000 shares;
(ii) the option price per share of Common Stock may not be less than 100% of the
fair market value of such share at the time of grant or 110% of the fair market
value of such shares if the option is intended to be an ISO and is granted to a
stockholder owning more than 10% of the combined voting power of all class of
the Company stock or of its parent or subsidiary on the date of the grant of the
option; and (iii) the term of any option may not exceed 10 years or five years
if the option is intended to be an ISO and is granted to a stockholder owning
more than 10% of the total combined voting power of all classes of stock on the
date of the grant of the option. In addition, unless otherwise specified by the
Compensation Committee, all outstanding options vest upon a "change in control"
of the Company (as defined in the Plan), and all options will terminate three
months following any termination of employment.

The Plan also provides for automatic option grants to directors who are not
otherwise employed by the Company or its subsidiaries. Upon commencement of
service (or upon agreeing to serve in the case of the initial non-employee
directors), a non-employee director will receive an NQSO to purchase 10,000
shares of Common Stock, and continuing non-employee directors will receive
annual options to purchase 2,000 shares of Common Stock. Options granted to
non-employee directors become exercisable one-third on the date of grant and
one-third on each of the next two anniversaries of the date of grant.
Non-employee directors' options have a term of five years from the date of
grant.

The maximum number of shares of Common Stock that may be subject to
outstanding options, determined immediately after the grant of any option, is
the greater of 1,500,000 or 12% of the aggregate number of shares of the
Company's Common Stock outstanding, provided, however, that options to purchase
no more than 1,500,000 shares of Common Stock may be granted as ISOs as of the
preceding January 1, less,

51
<PAGE> 54

in each case, the number of shares subject to previously outstanding awards
under the Plan. Shares of Common Stock which are attributable to awards which
have expired, terminated or been cancelled or forfeited during any calendar year
are available for issuance or use in connection with future awards during such
calendar year.

The Plan will remain in effect until terminated by the Board of Directors.
No ISO may be granted more than 10 years after the adoption of the Plan by the
Board or approval of the Plan by the stockholders, whichever is earlier. The
Plan may be amended by the Board of Directors without the consent of the
stockholders of the Company, except that any amendment, although effective when
made, will be subject to stockholder approval within one year after approval by
the Board of Directors if required by any Federal or state law or regulation or
by the rules of any stock exchange or automated quotation system on which the
Common Stock may then be listed or quoted.

The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to the
Internal Revenue Code of 1986, as amended, which generally disallows a public
company's tax deduction for compensation to the chief executive officer and the
four other most highly compensated executive officers in excess of $1 million in
any tax year beginning on or after January 1, 1994. Compensation that qualifies
as "performance-based compensation" is excluded from the $1 million
deductibility cap, and therefore remains fully deductible by the company that
pays it. The Company intends that options granted with an exercise price at
least equal to 100% of fair market value of the underlying stock at the date of
grant will qualify as such "performance-based compensation," although other
awards under the Plan may not so qualify. Until final regulations are adopted
and other guidance made available by the Internal Revenue Service, there can be
no assurance that any awards under the Plan will qualify as "performance-based
compensation" that is fully deductible by the Company under Section 162(m).

The Company plans to issue options to purchase a total of up to 919,097
shares of Common Stock upon completion of this Offering at the initial public
offering price. In addition and in accordance with the Mergers, options to
purchase an aggregate of one share of Brewer's common stock previously granted
to employees of On Call will be converted into options to purchase 16,397 shares
of StaffMark at $2.13 per share. Options to be issued, other than those granted
to non-employee directors and Mr. Bellora, will generally be exercisable as to
40% of the underlying shares two years from the date of grant and as to an
additional 20% on each of the next three anniversaries of the date of option
grant. No options were granted during fiscal year 1995.

OFFICER AND DIRECTOR LIABILITY

Pursuant to the Company's Certificate of Incorporation and under Delaware
law, directors of the Company are not liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty, except for liability in
connection with a breach of duty of loyalty, for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, for
dividend payments or stock repurchases illegal under Delaware law, or any
transaction in which a director has derived 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 require directors to repay the
amount of any expenses advanced if it shall be determined that they shall not
have been entitled to indemnification.

The Company intends to maintain liability insurance for the benefit of its
directors and officers.

52
<PAGE> 55

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock of the Company, after giving effect to
the Mergers and this Offering, by: (i) each person known to the Company to be
the beneficial owner of 5% or more of the outstanding shares of Common Stock;
(ii) each director and person who will become a director upon consummation of
the Offering; (iii) each named executive officer; and (iv) all executive
officers and directors as a group. All persons listed have an address c/o the
Company's principal executive offices and have sole voting and investment power
with respect to their shares unless otherwise indicated.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER THE
OFFERING
----------------------
NAME NUMBER PERCENT
- ----------------------------------------------------------------------- --------- -------
<S> <C> <C>
Jerry T. Brewer(1)..................................................... 722,944 5.8%
Clete T. Brewer........................................................ 1,067,954 8.5
Terry C. Bellora(2).................................................... 25,000 *
Chad J. Brewer(3)...................................................... 680,022 5.4
Ted Feldman............................................................ 302,611 2.4
W. David Bartholomew(4)................................................ 282,437 2.3
Steven E. Schulte(5)................................................... 455,925 3.7
John H. Maxwell, Jr.(6)................................................ 719,623 5.8
Mary Sue Maxwell(7).................................................... 719,623 5.8
Janice Blethen(8)...................................................... 476,478 3.8
William T. Gregory..................................................... 435,750 3.5
William J. Lynch(9).................................................... 139,375 1.1
R. Clayton McWhorter(10)............................................... 3,333 *
Charles A. Sanders, M.D.(10)........................................... 3,333 *
All directors and executive officers as a group (14 persons)........... 4,936,732 39.5
</TABLE>

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

* Less than 1%.

(1) Includes 225,000 shares held by Mr. Brewer's spouse, as to which Mr. Brewer
disclaims beneficial ownership.

(2) Represents 25,000 shares subject to options which are exercisable within 60
days of the Offering.

(3) Includes 66,044 shares held by the Chad Brewer Irrevocable Trust for the
benefit of Chad Brewer and for which Chad Brewer is the trustee. Chad J.
Brewer is the son of Jerry T. Brewer and the brother of Clete T. Brewer.

(4) These shares are held by Bartfund I Limited Partnership, of which Mr.
Bartholomew is the general partner.

(5) Includes 437,025 shares held by the Steven E. Schulte Revocable Trust for
which Mr. Schulte is a trustee.

(6) Includes 354,402 shares held by the John H. Maxwell, Jr. Revocable Living
Trust, of which Mr. Maxwell is the trustee, and includes 365,221 shares
held by a trust for the benefit of Mr. Maxwell's spouse, as to which Mr.
Maxwell disclaims beneficial ownership.

(7) Includes 365,221 shares held by the Mary Sue Maxwell Revocable Living
Trust, of which Ms. Maxwell is the trustee, and includes 354,402 shares
held by a trust for the benefit of Ms. Maxwell's spouse, as to which Ms.
Maxwell disclaims beneficial ownership.

(8) Includes 71,905 shares held by Blethen Family Investments Limited
Partnership, the general partner of which is a corporation controlled by
Ms. Blethen.

(9) Includes 136,042 shares held by Capstone Partners LLC, of which Mr. Lynch
is a manager and 3,333 shares subject to options which are exercisable
within 60 days of the Offering.

(10) Represents 3,333 shares subject to options which are exercisable within 60
days of the Offering.

53
<PAGE> 56

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company's authorized capital stock consists of 26,000,000 shares of
Common Stock, par value $.01 per share (the "Common Stock"), and 1,000,000
shares of preferred stock, par value $.01 per share (the "Preferred Stock").
After giving effect to the Mergers, but prior to the consummation of this
Offering, the Company will have outstanding 6,973,249 shares of Common Stock and
no shares of Preferred Stock. Upon completion of this Offering, the Company will
have outstanding 12,473,249 shares of Common Stock (13,298,249 if the
Underwriters' over-allotment option is exercised in full) and no shares of
Preferred Stock. Prior to the Mergers and as of June 30, 1996, there were 10
record holders of Common Stock.

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share on all
matters voted upon by stockholders, including the election of directors.

Subject to the rights of any then outstanding shares of Preferred Stock,
the holders of the Common Stock are entitled to such dividends as may be
declared in the discretion of the Board of Directors out of funds legally
available therefore. See "Dividend Policy." Holders of Common Stock are entitled
to share ratably in the net assets of the Company upon liquidation after payment
or provision for all liabilities and any preferential liquidation rights of any
Preferred Stock then outstanding. The holders of Common Stock have no preemptive
rights to purchase shares of stock of the Company. Shares of Common Stock are
not subject to any redemption provisions and are not convertible into any other
securities of the Company. All outstanding shares of Common Stock are, and the
shares of Common Stock to be issued pursuant to this Offering will be upon
payment therefor, fully paid and non-assessable.

PREFERRED STOCK

The Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more classes or series. Subject to the provisions
of the Company's Certificate of Incorporation and limitations prescribed by law,
the Board of Directors is expressly authorized to adopt resolutions to issue the
shares, to fix the number of shares and to change the number of shares
constituting any series, and to provide for or change the voting powers,
designations, preferences and relative, participating, optional or other special
rights, qualifications, limitations or restrictions thereof, including dividend
rights (including whether dividends are cumulative), dividend rates, terms of
redemption (including sinking fund provisions), redemption prices, conversion
rights and liquidation preferences of the shares constituting any class or
series of the Preferred Stock, in each case without any further action or vote
by the stockholders. The Company has no current plans to issue any shares of
Preferred Stock of any class or series.

One of the effects of undesignated Preferred Stock may be to enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of the Company by means of a tender offer, proxy contest, merger
or otherwise, and thereby to protect the continuity of the Company's management.
The issuance of shares of the Preferred Stock pursuant to the Board of
Directors' authority described above may adversely affect the rights of the
holders of Common Stock. For example, Preferred Stock issued by the Company may
rank prior to the Common Stock as to dividend rights, liquidation preference or
both, may have full or limited voting rights and may be convertible into shares
of Common Stock. Accordingly, the issuance of shares of Preferred Stock may
discourage bids for the Common Stock or may otherwise adversely affect the
market price of the Common Stock.

STATUTORY BUSINESS COMBINATION 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 became an interested

54
<PAGE> 57

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 by the
corporation's board of directors and by the holders of at least 66 2/3% of the
corporation's outstanding voting stock at an annual or special meeting,
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 of the Company are not liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty, except for liability in
connection with a breach of duty of loyalty, for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, for
dividend payments or stock repurchases illegal under Delaware law or any
transaction in which a director has derived an improper personal benefit.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is Boatmen's Trust
Company, St. Louis, Missouri.

55
<PAGE> 58

CERTAIN TRANSACTIONS

ORGANIZATION OF THE COMPANY

In connection with the formation of the Company, the Company issued 1,000
shares of Common Stock at $.01 per share and subsequently declared a stock
dividend of 1,355 shares of Common Stock for each share of Common Stock
outstanding. The shares were issued to various members of management including:
Jerry T. Brewer -- 179,944 shares; Clete T. Brewer -- 457,042 shares; Chad J.
Brewer -- 252,978 shares; Donald A. Marr, Jr. -- 34,010 shares; Robert H. Janes
III -- 184,957 shares; and Janice Blethen -- 25,068 shares. The Company also
issued 136,042 shares to Capstone Partners, LLC, a Delaware Limited Liability
Company, of which William J. Lynch is a member.

Simultaneously with the closing of this Offering, StaffMark will acquire by
merger all of the issued and outstanding stock of the six Founding Companies, at
which time each Founding Company will become a wholly-owned subsidiary of the
Company. The aggregate consideration to be paid by StaffMark in the Mergers is
approximately $72.1 million, consisting of approximately $15.9 million in cash
and 5,618,249 shares of Common Stock. In addition, in conjunction with the
Mergers certain of the Founding Companies either have made or plan to make
distributions totaling approximately $5.3 million, representing S Corporation
earnings previously taxed to their respective stockholders. Also, prior to the
Mergers, certain of the Founding Companies either have made or plan to make
distributions of certain assets with a net book value totaling approximately
$349,000.

The consummation of each Merger is subject to customary conditions. These
conditions include, among others, the continuing accuracy on the closing date of
the Mergers of the representations and warranties of the Founding Companies and
the principal stockholders thereof and of StaffMark, the performance by each of
the parties of all covenants included in the agreements relating to the Mergers
and the nonexistence of a material adverse change in the results of operations,
financial condition or business of each Founding Company.

There can be no assurance that the conditions of the Mergers will be
satisfied or waived or that the acquisition agreements will not be terminated
prior to consummation. If any of the Mergers is terminated for any reason, the
Company likely will not consummate this Offering on the terms described herein.
The following table sets forth the consideration being paid for each Founding
Company:

<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------
COMPANY CASH SHARES VALUE OF SHARES(1) TOTAL
- ------------------------------------------------ ------- --------- ------------------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Brewer.......................................... $ 2,950 1,935,000 $ 19,350 $22,300
Prostaff........................................ 4,500 1,050,000 10,500 15,000
Maxwell......................................... 2,280 912,000 9,120 11,400
HRA............................................. 2,348 615,175 6,152 8,500
First Choice.................................... 2,075 622,500 6,225 8,300
Blethen......................................... 1,764 483,574 4,836 6,600
------- --------- ------- -------
Total...................................... $15,917 5,618,249 $ 56,183 $72,100
======= ========= ======= =======
</TABLE>

- ---------------
(1) Represents the aggregate value of the shares of Common Stock issued as
consideration, based upon an assumed initial public offering price of
$10.00 per share.

56
<PAGE> 59

In connection with the Mergers, and as consideration for their interests in
the Founding Companies, certain officers, directors, key employees and holders
of more than 5% of the outstanding shares of the Company will receive cash and
shares of Common Stock of the Company as follows:

<TABLE>
<CAPTION>
FOUNDING COMPANY
CONSIDERATION
-------------------------------
SHARES OF
NAME CASH COMMON STOCK
-------------------------------------------------- -------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Jerry T. Brewer................................... $ 1,376 318,000
Clete T. Brewer................................... -- 743,000
Chad J. Brewer.................................... 600 361,000
Ted Feldman....................................... 1,009 302,611
W. David Bartholomew.............................. 1,210 282,437
Donald A. Marr, Jr. .............................. -- 83,000
Steven E. Schulte................................. 1,954 455,925
John H. Maxwell, Jr. ............................. 886 354,402
Mary Sue Maxwell.................................. 913 365,221
Janice Blethen.................................... 1,626 451,410
William T. Gregory................................ 1,453 435,750
------- ---------
Total................................... $11,027 4,152,756
======= =========
</TABLE>

Pursuant to the agreements to be entered into in connection with the
Mergers, all of the stockholders of the Founding Companies have agreed not to
compete with the Company for five years, unless reduced by applicable state law,
commencing on the date of consummation of this Offering.

Certain of the Founding Companies have incurred indebtedness which has been
personally guaranteed by its stockholders or by entities controlled by its
stockholders. The Company has agreed to repay approximately $29.5 million of
indebtedness of the Founding Companies with certain of the net proceeds of this
Offering, of which approximately $14.5 million will directly or indirectly
benefit persons who will become officers, directors or greater than 5%
stockholders of the Company as follows: Clete T. Brewer -- approximately $6.1
million; Chad J. Brewer -- approximately $3.0 million; Janice
Blethen -- approximately $1.1 million; Steven E. Schulte -- approximately $1.3
million; Ted Feldman -- approximately $510,000; W. David Bartholomew --
approximately $510,000; John H. Maxwell, Jr. -- approximately $1.8 million; Mary
Sue Maxwell -- approximately $1.8 million; and William T.
Gregory -- approximately $250,000. In each case, such person was either a direct
obligor or a guarantor of such indebtedness. See "Use of Proceeds." Further,
approximately $4.1 million of such indebtedness either has been or is expected
to be incurred by the Founding Companies in connection with S Corporation
distributions to the stockholders of the Founding Companies prior to the
Mergers.

LEASES OF FACILITIES

In connection with the acquisition of Brewer, the Company will assume a
lease by Brewer of property in Fayetteville, Arkansas that is owned by Brewer
Investments, an Arkansas limited partnership whose partners are Jerry T. Brewer
and Kay Brewer. Jerry T. Brewer is the father of Clete T. Brewer and Chad J.
Brewer and Kay Brewer is the mother of Clete T. Brewer and Chad J. Brewer and
each is an officer, director and principal stockholder of Brewer. Lease payments
to Brewer Investments were $60,000 in each of 1993, 1994 and 1995. In January
1996, Brewer Investments began leasing a new and larger building to Brewer which
will become the Company's headquarters. The total lease payments to Brewer
Investments for the six months ended June 30, 1996 were $105,000. The annual
rent for the building is $225,000 and the lease extends for five years. The
building leased during previous years is no longer being leased to Brewer.
Brewer is responsible for all real estate taxes, insurance and maintenance.

In connection with the acquisition of Prostaff, the Company will assume
leases by Prostaff of property in Little Rock, Arkansas used by Prostaff in its
operations that are owned by an Arkansas limited liability

57
<PAGE> 60

company, one of whose members is Steven E. Schulte, an officer, director and
principal stockholder of Prostaff. The aggregate rental expenses for this
property was approximately $61,100, $73,761 and $114,180 for fiscal years 1993,
1994 and 1995, respectively, and approximately $62,550 for the six months ended
June 30, 1996. The annual rent is $127,200 and Prostaff is responsible for all
real estate taxes, insurance and maintenance.

Prior to the Mergers, Maxwell distributed real estate owned by it to John
H. Maxwell, Jr. and Mary Sue Maxwell, with an aggregate carrying value of
approximately $221,000. Such real estate will be leased to the Company at an
annual rent of $100,000. The lease has a three year term and a two year renewal
option.

The Company believes that the rent payments to be made for leased
facilities with related parties will be on terms that are as favorable to the
Company as those that could be obtained from unaffiliated third parties.

CERTAIN LOANS

In February 1996, Brewer advanced Donald A. Marr, Jr. the principal amount
of $80,000 due on February 14, 1999 pursuant to a promissory note that accrues
interest at six percent per annum. At June 30, 1996, Mr. Marr was indebted to
Brewer in the full principal amount of the note.

Blethen has made advances to Janice Blethen which totaled $250,752 as of
June 30, 1996. Such amount is expected to be repaid prior to the consummation of
the Mergers.

First Choice has an unsecured demand note payable to William T. Gregory in
the principal amount of $140,000 as of June 30, 1996 with interest payable
semiannually at 8% per annum.

OTHER TRANSACTIONS

In December 1995, a note receivable from Brewer Investments in the amount
of approximately $345,000 was distributed pro-rata to the individual
shareholders of Brewer, including $80,000 to Jerry T. Brewer, $132,000 to Clete
T. Brewer, $75,000 to Chad J. Brewer, and $58,000 to Kay Brewer.

In November 1995, Ted Feldman and Bartfund I Limited Partnership, an
affiliate of W. David Bartholomew, purchased the common stock of a former
stockholder of HRA for $150,000, each issuing to him a promissory note in the
amount of $75,000. HRA guaranteed payment of Mr. Feldman's and Bartfund I
Limited Partnership's promissory notes to the former stockholder. Such amounts
are expected to be repaid prior to the consummation of the Mergers. In addition,
HRA agreed to pay the former shareholder a $30,000 bonus for fiscal 1995;
$150,000 as a severance arrangement to be paid in monthly installments of $5,690
through November 15, 1996; $5,647 through November 15, 1997, and $1,163 through
November 15, 1998; and $236,518 as a non-compete agreement payable monthly
through November 15, 2003.

In November 1995, Mr. Feldman and Mr. Bartholomew purchased an option held
by certain parties to acquire 30% of the common stock of HRA for $250,000. In
conjunction with this transaction, HRA advanced to each of Mr. Feldman and Mr.
Bartholomew the sum of $125,000. Such amounts are expected to be repaid prior to
the consummation of the Mergers. In addition, HRA entered into a Settlement
Agreement and Release with the holders of the option which released all claims
against HRA for the sum of $90,000.

COMPANY POLICY

Following the closing of this Offering, all transactions with the Company's
stockholders, officers and directors or their affiliates, if any, will be
subject to the approval of a majority of the independent and disinterested
outside directors and will be conducted on terms no less favorable than could be
obtained from unaffiliated third parties.

58
<PAGE> 61

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this Offering and the consummation of the Mergers, the
Company will have outstanding 12,473,249 shares of Common Stock. The 5,500,000
shares sold in this Offering (plus any additional shares sold upon exercise of
the Underwriters' over-allotment option) will be freely tradeable without
restriction unless purchased by affiliates of the Company. None of the remaining
6,973,249 outstanding shares of Common Stock (collectively, the "Restricted
Shares") have been registered under the Securities Act, which means that they
may be resold publicly only upon registration under the Securities Act or in
compliance with an exemption from the registration requirements of the
Securities Act, including the exemption provided by Rule 144 thereunder.

In general, under Rule 144 as currently in effect, if two years have
elapsed since the later of the date of the acquisition of restricted shares of
Common Stock from the Company or any affiliate of the Company, the acquiror or
subsequent holder thereof may sell, within any three-month period commencing 90
days after the date of this Prospectus, a number of shares that does not exceed
the greater of 1% of the then outstanding shares of Common Stock or the average
weekly trading volume of the Common Stock on the Nasdaq National Market during
the four calendar weeks preceding the date on which notice of the sale is filed
with the Securities and Exchange Commission (the "Commission"). Sales under Rule
144 are also subject to certain manner of sale provisions, notice requirements
and the availability of current public information about the Company. If three
years have elapsed since the later of the date of acquisition of restricted
shares of Common Stock from the Company or from any affiliate of the Company and
the acquiror or subsequent holder thereof is deemed not to have been an
affiliate of the Company at any time during the 90 days preceding a sale, such
person would be entitled to sell such shares under Rule 144(k) without regard to
the limitations described above.

The Company, all of the former stockholders of the Founding Companies and
the executive officers and directors of the Company have agreed that they will
not offer or sell any shares of Common Stock of the Company for a period of 180
days after the date hereof without the prior written consent of the
Representatives of the Underwriters, except that the Company may issue shares of
Common Stock in connection with acquisitions or upon the exercise of options
granted under the Company's 1996 Stock Option Plan. See "Underwriting." In
addition, the stockholders of the Founding Companies and StaffMark, who own in
the aggregate 6,973,249 shares of Common Stock, have agreed with the Company
that they will not sell any of their shares for a period of two years after the
closing of this Offering. These stockholders, however, have the right, in the
event the Company proposes to register under the Securities Act any Common Stock
for its own account or for the account of others, subject to certain exceptions,
to require the Company to include their shares in the registration, subject to
the right of any managing underwriter of any such offering to exclude some or
all of the shares for marketing reasons. In addition, 22 months after the
closing of this Offering and upon the affirmative vote of the holders of at
least 876,450 shares of the Common Stock issued in connection with the Mergers,
the stockholders of the Founding Companies have certain limited demand
registration rights to require the Company to register shares held by them.

The Company intends to issue under its 1996 Stock Option Plan options to
purchase up to an aggregate of 935,494 shares of Common Stock. The sale of
Common Stock underlying such options will be subject to the expiration of the
Lockup Period. Substantially all of the options will vest over a period of five
years (40% two years after the date of grant and 20% each year thereafter). The
Company intends to register the shares issuable upon exercise of options granted
under the Plan and, upon such registration, such shares will be eligible for
resale in the public market.

As soon as practical after the closing of this Offering, the Company
intends to register up to 4,000,000 shares of its Common Stock under the
Securities Act for use by the Company in connection with future acquisitions.
These shares will generally be freely tradeable after their issuance, unless the
sale thereof is contractually restricted. The piggyback registration rights
described above do not apply to the registration statement relating to these
4,000,000 shares.

Prior to this Offering, there has been no public market for the Common
Stock, and no prediction can be made as to the effect, if any, that the sale of
shares or the availability of shares for sale will have on the market price
prevailing from time to time. Nevertheless, sales of substantial amounts of the
Common Stock in the public market could adversely affect prevailing market
prices and the ability of the Company to raise equity capital in the future.

59
<PAGE> 62

UNDERWRITING

Pursuant to the Underwriting Agreement, and subject to the terms and
conditions thereof, the Underwriters named below, acting through J.C. Bradford &
Co. and Stephens Inc., as representatives of the several underwriters (the
"Representatives"), have severally agreed to purchase from the Company the
number of shares of Common Stock set forth below opposite their names:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
-------------------------------------------------------------- ----------------
<S> <C>
J.C. Bradford & Co............................................
Stephens Inc. ................................................

----------
Total....................................................... 5,500,000
==========
</TABLE>

In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all shares of Common Stock
offered hereby, if any of such shares are purchased.

The Company has been advised by the Representatives that the Underwriters
propose initially to offer the shares of Common Stock to the public at the
initial public offering price set forth on the cover page of this Prospectus and
to certain dealers at such price less a concession not in excess of
$ per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per share to certain
other dealers. After the initial public offering, the public offering price and
concessions may be changed. The Representatives have informed the Company that
the Underwriters do not intend to confirm sales to accounts over which they
exercise discretionary authority.

The Offering of the shares of Common Stock is made for delivery when, as
and if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any offer for the purchase of shares.

The Company has granted the Underwriters an option, exercisable not later
than 30 days from the date of this Prospectus, to purchase up to 825,000
additional shares of Common Stock to cover over-allotments, if any. To the
extent that the Underwriters exercise such option, each of them will have a firm
commitment to purchase approximately the same percentage thereof which the
number of shares of Common Stock to be purchased by it shown in the table above
bears to the total number of shares in such table, and the Company will be
obligated, pursuant to the option, to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of the 5,500,000 shares of Common Stock offered hereby.
If purchased, the Underwriters will sell these additional shares on the same
terms as those on which the 5,500,000 shares are being offered.

Prior to the Offering, there has been no public market for the Common
Stock. The offering price has been determined by negotiation among the Company
and the Representatives. In determining such price, consideration was given to,
among other things, the financial and operating history and trends of the
Company, the experience of its management, the position of the Company in its
industry, the Company's prospects and the Company's financial results. In
addition, consideration was given to the status of the securities markets,
market conditions for new offerings of securities and the prices of similar
securities of comparable companies.

The Company, its executive officers and directors and all of its
stockholders, have agreed with the Representatives not to offer, sell or
otherwise dispose of any shares of Common Stock, any securities exercisable for
or convertible into Common Stock or any options to acquire Common Stock owned by
them prior to the expiration of 180 days from the date of this Prospectus,
without the prior written consent of the Representatives, except that the
Company may issue shares in connection with acquisitions or upon the

60
<PAGE> 63

exercise of stock options granted or to be granted under the Company's stock
option plan. See "Shares Eligible for Future Sale." In addition, the
stockholders of the Founding Companies and StaffMark, who own in the aggregate
6,973,249 shares of Common Stock, have agreed with the Company that they will
not sell any of their shares for a period of two years after the closing of this
Offering. These stockholders, however, have the right, in the event the Company
proposes to register under the Securities Act any Common Stock for its own
account or for the account of others, subject to certain exceptions, to require
the Company to include their shares in the registration, subject to the right of
any managing underwriter of any such offering to exclude some or all of the
shares for marketing reasons. In addition, 22 months after the closing of this
Offering and upon the affirmative vote of the holders of at least 876,450 shares
of the Common Stock issued in connection with the Mergers, the stockholders of
the Founding Companies have certain limited demand registration rights to
require the Company to register shares held by them.

The Underwriting Agreement provides that the Company will indemnify the
Underwriters and controlling persons, if any, against certain civil liabilities,
including liabilities under the Securities Act, or will contribute to payments
that the Underwriters or any such controlling persons may be required to make in
respect thereof.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby is being passed
upon for the Company by Wright, Lindsey & Jennings, Little Rock, Arkansas.
Certain legal matters related to this Offering will be passed upon for the
Underwriters by Nelson Mullins Riley & Scarborough, L.L.P., Atlanta, Georgia.

EXPERTS

The audited financial statements included elsewhere in this Prospectus have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving such reports.

61
<PAGE> 64

ADDITIONAL INFORMATION

The Company has filed with the Commission, a Registration Statement on Form
S-1 under the Securities Act, with respect to the Common Stock offered hereby.
The Prospectus, which constitutes a part of the Registration Statement, does not
contain all the information set forth in the Registration Statement (and the
exhibits and schedules thereto), certain portions of which have been omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock, reference is made
to such Registration Statement and the exhibits and schedules filed as part
thereof. 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 document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference to such exhibit.

As a result of this Offering, the Company will be subject to the
informational requirements of the Exchange Act and, in accordance therewith,
will file reports and other information with the Commission. A copy of the
Registration Statement, including exhibits and schedules thereto, may be
inspected without charge at the Commission's principal offices, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of
the Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such materials may be obtained from the
Public Reference Section of the Commission, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and its public reference facilities in New York,
New York and Chicago, Illinois, upon payment of prescribed fees. Electronic
registration statements, reports, proxy and information statements and other
information regarding registrants filed through the Electronic Data Gathering,
Analysis and Retrieval ("EDGAR") system are publicly available through the
Commission's Web Site (http://www.sec.gov). This Registration Statement, as well
as all exhibits and amendments hereto, have been filed through EDGAR.

62
<PAGE> 65

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
STAFFMARK, INC. UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS:
Introduction to Unaudited Pro Forma Combined Financial Statements.................. F-3
Unaudited Pro Forma Combined Balance Sheet......................................... F-4
Notes to Unaudited Pro Forma Combined Balance Sheet................................ F-8
Unaudited Pro Forma Combined Statement of Income for the Six Months Ended
June 30, 1996................................................................... F-9
Notes to Unaudited Pro Forma Combined Statement of Income for the Six Months Ended
June 30, 1996................................................................... F-11
Unaudited Pro Forma Combined Statement of Income for the Year Ended December 31,
1995............................................................................ F-13
Notes to Unaudited Pro Forma Combined Statement of Income for the Year Ended
December 31, 1995............................................................... F-15
HISTORICAL FINANCIAL STATEMENTS OF FOUNDING COMPANIES:
STAFFMARK, INC.
Report of Independent Public Accountants........................................... F-17
Balance Sheet...................................................................... F-18
Notes to Balance Sheet............................................................. F-19
BREWER PERSONNEL SERVICES, INC.
Report of Independent Public Accountants........................................... F-21
Balance Sheets..................................................................... F-22
Statements of Income............................................................... F-23
Statements of Stockholders' Equity................................................. F-24
Statements of Cash Flows........................................................... F-25
Notes to Financial Statements...................................................... F-26
THE PROSTAFF COMPANIES
Report of Independent Public Accountants........................................... F-36
Combined Balance Sheets............................................................ F-37
Combined Statements of Income...................................................... F-38
Combined Statements of Stockholders' Equity........................................ F-39
Combined Statements of Cash Flows.................................................. F-40
Notes to Combined Financial Statements............................................. F-41
THE MAXWELL COMPANIES
Report of Independent Public Accountants........................................... F-48
Combined Balance Sheets............................................................ F-49
Combined Statements of Income...................................................... F-50
Combined Statements of Stockholders' Equity........................................ F-51
Combined Statements of Cash Flows.................................................. F-52
Notes to Combined Financial Statements............................................. F-53
HRA, INC.
Report of Independent Public Accountants........................................... F-60
Balance Sheets..................................................................... F-61
Statements of Income (Loss)........................................................ F-62
Statements of Stockholders' Equity................................................. F-63
Statements of Cash Flows........................................................... F-64
Notes to Financial Statements...................................................... F-65
</TABLE>

F-1
<PAGE> 66

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
FIRST CHOICE STAFFING, INC.
Report of Independent Public Accountants........................................... F-74
Balance Sheets..................................................................... F-75
Statements of Income............................................................... F-76
Statements of Stockholders' Equity................................................. F-77
Statements of Cash Flows........................................................... F-78
Notes to Financial Statements...................................................... F-79
THE BLETHEN GROUP
Report of Independent Public Accountants........................................... F-85
Combined Balance Sheets............................................................ F-86
Combined Statements of Income (Loss)............................................... F-87
Combined Statements of Stockholders' Equity........................................ F-88
Combined Statements of Cash Flows.................................................. F-89
Notes to Combined Financial Statements............................................. F-90
HISTORICAL FINANCIAL STATEMENTS OF ACQUIRED COMPANIES:
E.P. ENTERPRISES CORPORATION
Report of Independent Public Accountants........................................... F-98
Balance Sheets..................................................................... F-99
Statements of Income............................................................... F-100
Statements of Stockholders' Equity (Deficit)....................................... F-101
Statements of Cash Flows........................................................... F-102
Notes to Financial Statements...................................................... F-103
ON CALL EMPLOYMENT SERVICES, INC.
Report of Independent Public Accountants........................................... F-107
Balance Sheets..................................................................... F-108
Statements of Income............................................................... F-109
Statements of Stockholders' Equity (Deficit)....................................... F-110
Statements of Cash Flows........................................................... F-111
Notes to Financial Statements...................................................... F-112
STRATEGIC SOURCING, INC.
Report of Independent Public Accountants........................................... F-115
Balance Sheets..................................................................... F-116
Statements of Income (Loss)........................................................ F-117
Statements of Stockholders' Equity (Deficit)....................................... F-118
Statements of Cash Flows........................................................... F-119
Notes to Financial Statements...................................................... F-120
</TABLE>

F-2
<PAGE> 67

STAFFMARK, INC.

INTRODUCTION TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

StaffMark, through wholly-owned subsidiaries, will merge, simultaneously
with and as a condition to the closing of the Offering, with Brewer, Prostaff,
Maxwell, HRA, First Choice and Blethen. Pursuant to the requirements of SAB 97,
Brewer has been designated as the acquirer for financial reporting purposes, of
the Other Founding Companies. Based upon the provisions of SAB 97, these
acquisitions will be accounted for as combinations at historical cost because:
(i) the Founding Companies' stockholders are transferring assets to StaffMark in
exchange for Common Stock simultaneously with StaffMark's initial public
offering; (ii) the nature of future operations of the Company will be
substantially identical to the combined operations of the Founding Companies;
(iii) the stockholders of each of the Founding Companies may be considered
promoters; and (iv) no former stockholder group of any of the Founding Companies
will obtain a majority of the outstanding voting shares of the Company.
Accordingly, historical financial statements of the Founding Companies have been
combined throughout all relevant periods as if the Founding Companies had always
been members of the same operating group. However, since the Founding Companies
were not under common control or management, historical combined results may not
be comparable to, or indicative of, future performance.

The following unaudited pro forma combined financial statements present
Brewer combined with StaffMark and give effect to the following pro forma
adjustments: (i) the acquisition of the Other Founding Companies at historical
cost in accordance with the applicable provisions of SAB 97; (ii) the effect of
the acquisitions of Caldwell, On Call and SSI; (iii) the adjustment to
compensation expense for the Compensation Differential; (iv) the incremental
provision for income taxes attributable to the income of S Corporations, net of
the income tax benefits related to the Compensation Differential; (v) the
liability for the cash consideration to be paid to the stockholders of the
Founding Companies; (vi) the transfer of selected assets to the stockholders of
certain of the Founding Companies; (vii) the additional cash to be borrowed from
banks to pay S Corporation Accumulated Adjustment Account balances; (viii) the
issuance of 5,618,249 shares of Common Stock to stockholders of the Founding
Companies in connection with the Mergers; (ix) the issuance of 1,355,000 shares
by StaffMark prior to the Offering; and (x) the adjustment to record the net
deferred income tax liabilities attributable to the temporary differences
between the financial reporting and income tax basis of assets and liabilities
currently held in S Corporations. In addition, the "As Adjusted" combined
balance sheet of StaffMark includes post merger adjustments for the sale of
5,500,000 shares of Common Stock and the application of the estimated net
proceeds. No pro forma statement of income adjustment is necessary to give
effect to the transfer of selected assets to the Founding Companies'
stockholders as the assets to be distributed had substantially no effect on net
income.

The Company has performed a preliminary analysis of the savings that it
expects to realize as a result of: (i) consolidating certain general and
administrative functions, including workers' compensation programs; (ii) the
reduction in interest payments related to the repayment of outstanding Founding
Company debt; (iii) its ability to borrow at lower interest rates than the
Founding Companies; (iv) the interest earned on the net proceeds of the Offering
remaining after payment of the expenses of the Offering, the cash portion of the
consideration paid for the Founding Companies and the repayment of outstanding
Founding Company debt; and (v) efficiencies in other general and administrative
areas. The Company has not and cannot quantify these savings until completion of
the combination of the Founding Companies. It is anticipated that these savings
will be partially offset by the costs of being a public company. However, these
costs, like the savings that they offset, cannot be quantified accurately.
Accordingly, neither the anticipated savings nor the anticipated costs have been
included in the accompanying pro forma financial information of StaffMark.

The pro forma financial data do not purport to represent what the Company's
financial position or results of operations would actually have been if such
transactions in fact had occurred on those dates or to project the Company's
financial position or results of operations for any future period. See "Risk
Factors" included elsewhere herein.

These pro forma combined financial statements should be read in conjunction
with other information contained elsewhere in this Prospectus under the heading
"Selected Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and the historical financial statements of
StaffMark, Brewer and the Other Founding Companies. See "Index to Financial
Statements."

F-3
<PAGE> 68

STAFFMARK, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 1996
(IN THOUSANDS)

ASSETS
<TABLE>
<CAPTION>
ACQUIRED FOUNDING
COMPANIES(A)
---------------------------
BREWER PROSTAFF MAXWELL HRA
------- -------- ------- ------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................................................. $ 778 $ 75 $ 666 $ 506
Restricted cash and certificates of deposit............................................... -- -- 109 --
Accounts receivable, net of allowance for doubtful accounts............................... 6,260 3,952 2,676 2,784
Prepaid expenses and other................................................................ 275 150 137 775
Deferred income taxes..................................................................... -- -- -- 227
Advances to stockholders.................................................................. -- -- -- 340
------- -------- ------- ------
Total current assets................................................................ 7,313 4,177 3,588 4,632
PROPERTY AND EQUIPMENT, net................................................................. 994 830 295 196
INTANGIBLE ASSETS, net...................................................................... 18,606 -- 297 166
DEFERRED OFFERING COSTS..................................................................... -- -- -- --
OTHER ASSETS:
Advances to stockholders.................................................................. -- -- -- --
Deferred income taxes..................................................................... -- -- -- 57
Advances to StaffMark, Inc................................................................ 188 31 31 31
Cash surrender value of officers' life insurance.......................................... -- 41 -- --
Other..................................................................................... 40 15 -- 1
------- -------- ------- ------
Total other assets.................................................................. 228 87 31 89
------- -------- ------- ------
$27,141 $5,094 $4,211 $5,083
======= ======= ======== ======

ACQUIRED FOUNDING
COMPANIES(A) COMBINED
---------------------- FOUNDING
FIRST CHOICE BLETHEN COMPANIES
------------ -------- ---------

<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................................................. $ 12 $ 119 $ 2,156
Restricted cash and certificates of deposit............................................... -- -- 109
Accounts receivable, net of allowance for doubtful accounts............................... 1,672 1,683 19,027
Prepaid expenses and other................................................................ 39 16 1,392
Deferred income taxes..................................................................... -- 8 235
Advances to stockholders.................................................................. -- -- 340
------ ------ -------
Total current assets................................................................ 1,723 1,826 23,259
PROPERTY AND EQUIPMENT, net................................................................. 350 279 2,944
INTANGIBLE ASSETS, net...................................................................... -- -- 19,069
DEFERRED OFFERING COSTS..................................................................... -- -- --
OTHER ASSETS:
Advances to stockholders.................................................................. -- 251 251
Deferred income taxes..................................................................... -- -- 57
Advances to StaffMark, Inc................................................................ 32 31 344
Cash surrender value of officers' life insurance.......................................... -- -- 41
Other..................................................................................... 50 12 118
------ ------ -------
Total other assets.................................................................. 82 294 811
------ ------ -------
$2,155 $2,399 $46,083
====== ====== =======

</TABLE>

The accompanying notes are an integral part of this balance sheet.

F-4
<PAGE> 69

STAFFMARK, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 1996
(IN THOUSANDS)

ASSETS -- Continued
<TABLE>
<CAPTION>
ACQUISITION RELATED ADJUSTMENTS
COMBINED ------------------------------------ PRO FORMA
FOUNDING STAFFMARK, PRO FORMA TOTAL MERGER
COMPANIES INC. SSI(B) ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS
---------- --------------- ------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents........... $ 2,156 $ 236 $ 68 $ (68)(c) $ -- $ 1,360(f)
(1,360)(g)
Restricted cash and certificates of
deposit........................... 109 -- -- -- -- --
Accounts receivable, net of
allowance for doubtful accounts... 19,027 -- 138 (138)(c) -- --
Prepaid expenses and other.......... 1,392 -- 7 (7)(c) -- --
Deferred income taxes............... 235 -- -- -- -- (235)(j)
Advances to stockholders............ 340 -- -- -- -- --
------- ------ ---- ----- ---- -------
Total current assets.......... 23,259 236 213 (213) -- (235)
PROPERTY AND EQUIPMENT, net........... 2,944 -- 19 -- 19 (86)(h)
INTANGIBLE ASSETS, net................ 19,069 -- -- 731(d) 731 --
DEFERRED OFFERING COSTS............... -- 1,888 -- -- -- --
OTHER ASSETS:
Advances to stockholders............ 251 -- -- -- -- --
Deferred income taxes............... 57 -- -- -- -- (57)(j)
Advances to StaffMark, Inc.......... 344 -- -- -- -- --
Cash surrender value of officers'
life insurance.................... 41 -- -- -- -- (41)(h)
Other............................... 118 -- 2 (2)(c) -- --
------- ------ ---- ----- ---- -------
Total other assets............ 811 -- 2 (2) -- (98)
------- ------ ---- ----- ---- -------
$46,083 $2,124 $234 $ 516 $750 $ (419)
======= ====== ==== ===== ==== =======

POST MERGER
PRO FORMA ADJUSTMENTS AS ADJUSTED
--------- ----------- -----------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents........... $ 2,392 $ 48,450(m) $ 6,416
(28,651)(n)
(15,917)(p)
142(s)
Restricted cash and certificates of
deposit........................... 109 109
Accounts receivable, net of
allowance for doubtful accounts... 19,027 -- 19,027
Prepaid expenses and other.......... 1,392 -- 1,392
Deferred income taxes............... -- -- --
Advances to stockholders............ 340 -- 340
------- -------- -------
Total current assets.......... 23,260 4,024 27,284
PROPERTY AND EQUIPMENT, net........... 2,877 -- 2,877
INTANGIBLE ASSETS, net................ 19,800 (238)(o) 19,562
DEFERRED OFFERING COSTS............... 1,888 (1,888)(s) --
OTHER ASSETS:
Advances to stockholders............ 251 -- 251
Deferred income taxes............... -- -- --
Advances to StaffMark, Inc.......... 344 (344)(r) --
Cash surrender value of officers'
life insurance.................... -- -- --
Other............................... 118 -- 118
------- -------- -------
Total other assets............ 713 (344) 369
------- -------- -------
$48,538 $ 1,554 $50,092
======= ======== =======
</TABLE>

The accompanying notes are an integral part of this balance sheet.

F-5
<PAGE> 70

STAFFMARK, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 1996
(IN THOUSANDS)

LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ACQUIRED FOUNDING
COMPANIES(A)
---------------------------
BREWER PROSTAFF MAXWELL HRA
------- -------- ------- ------
<S> <C> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable and other accrued liabilities............................................ $ 587 $ 98 $ 242 $ 321
Outstanding checks........................................................................ 342 250 -- 261
Payroll and related liabilities........................................................... 1,569 1,233 886 710
Reserve for workers' compensation claims.................................................. 749 638 912 1,788
Short-term borrowings..................................................................... 1,546 1,177 -- 1,020
Current maturities of notes payable to stockholders....................................... -- 30 -- --
Current maturities of debt................................................................ 2,422 67 1,827 111
Income taxes payable...................................................................... -- -- -- 190
Deferred income taxes..................................................................... -- -- -- --
Pro forma distribution to Founding Companies' stockholders................................ -- -- -- --
------- ------- ------ ------
Total current liabilities........................................................... 7,215 3,493 3,867 4,401
LONG-TERM DEBT, less current maturities..................................................... 16,204 77 78 265
NOTES PAYABLE TO STOCKHOLDERS............................................................... -- -- -- 116
ADVANCES FROM FOUNDING COMPANIES............................................................ -- -- -- --
DEFERRED INCOME TAXES....................................................................... -- -- -- --
------- ------- ------ ------
Total liabilities................................................................... 23,419 3,570 3,945 4,782
STOCKHOLDERS' EQUITY:
Common stock.............................................................................. -- 11 5 13
Paid-in capital........................................................................... 497 -- -- --
Subscriptions receivable.................................................................. (80) -- -- --
Retained earnings......................................................................... 3,305 1,513 261 288
------- ------- ------ ------
Total stockholders' equity.......................................................... 3,722 1,524 266 301
------- ------- ------ ------
$27,141 $5,094 $4,211 $5,083
======= ======= ====== ======

ACQUIRED FOUNDING
COMPANIES(A) COMBINED
---------------------- FOUNDING
FIRST CHOICE BLETHEN COMPANIES
------------ ------- ---------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable and other accrued liabilities............................................ $ 97 $ 107 $ 1,452
Outstanding checks........................................................................ -- -- 853
Payroll and related liabilities........................................................... 500 506 5,404
Reserve for workers' compensation claims.................................................. 50 -- 4,137
Short-term borrowings..................................................................... 250 1,053 5,046
Current maturities of notes payable to stockholders....................................... 140 82 252
Current maturities of debt................................................................ -- 10 4,437
Income taxes payable...................................................................... -- 78 268
Deferred income taxes..................................................................... -- -- --
Pro forma distribution to Founding Companies' stockholders................................ -- -- --
------ ------ -------
Total current liabilities........................................................... 1,037 1,836 21,849
LONG-TERM DEBT, less current maturities..................................................... -- 19 16,643
NOTES PAYABLE TO STOCKHOLDERS............................................................... -- 47 163
ADVANCES FROM FOUNDING COMPANIES............................................................ -- -- --
DEFERRED INCOME TAXES....................................................................... -- 10 10
------ ------ -------
Total liabilities................................................................... 1,037 1,912 38,665
STOCKHOLDERS' EQUITY:
Common stock.............................................................................. 10 8 47
Paid-in capital........................................................................... -- 9 506
Subscriptions receivable.................................................................. -- -- (80)
Retained earnings......................................................................... 1,108 470 6,945
------ ------ -------
Total stockholders' equity.......................................................... 1,118 487 7,418
------ ------ -------
$2,155 $2,399 $46,083
====== ====== =======

</TABLE>

The accompanying notes are an integral part of this balance sheet.

F-6
<PAGE> 71

STAFFMARK, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 1996
(IN THOUSANDS)

LIABILITIES AND STOCKHOLDERS' EQUITY -- Continued
<TABLE>
<CAPTION>
ACQUISITION RELATED ADJUSTMENTS
COMBINED ------------------------------------ PRO FORMA
FOUNDING STAFFMARK, PRO FORMA TOTAL MERGER
COMPANIES INC. SSI(B) ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS PRO FORMA
--------- ---------- ------ ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable and other accrued
liabilities........................... $ 1,452 $1,746 $ 9 $ (9)(c) $ -- $ -- $ 3,198
Outstanding checks...................... 853 -- -- -- -- -- 853
Payroll and related liabilities......... 5,404 -- 25 (25)(c) -- -- 5,404
Reserve for workers' compensation
claims................................ 4,137 -- -- -- -- -- 4,137
Short-term borrowings................... 5,046 -- 10 (10)(c) -- -- 5,046
Current maturities of notes payable to
stockholders.......................... 252 -- 48 (48)(c) -- -- 252
Current maturities of debt.............. 4,437 -- -- -- 1,360(f) 5,797
Income taxes payable.................... 268 -- -- -- -- -- 268
Deferred income taxes................... -- -- -- -- -- 988(j) 988
Pro forma distribution to Founding
Companies' stockholders............... -- -- -- -- -- 15,917(i) 15,917
------- ------ ---- ---- ---- -------- --------
Total current liabilities......... 21,849 1,746 92 (92) -- 18,265 41,860
LONG-TERM DEBT, less current maturities... 16,643 -- -- 750(e) 750 -- 17,393
NOTES PAYABLE TO
STOCKHOLDERS............................ 163 -- 60 (60)(c) -- -- 163
ADVANCES FROM FOUNDING COMPANIES.......... -- 344 -- -- -- -- 344
DEFERRED INCOME TAXES..................... 10 -- -- -- -- 102(j) 112
------- ------ ---- ---- ---- -------- --------
Total liabilities................. 38,665 2,090 152 598 750 18,367 59,872
STOCKHOLDERS' EQUITY:
Common stock............................ 47 14 3 (3)(c) -- (47)(k) 70
56(l)
Paid-in capital......................... 506 17 -- -- -- 47(k) 514
(56)(l)
Subscriptions receivable................ (80) -- -- -- -- -- (80)
Retained earnings....................... 6,945 3 79 (79)(c) -- (1,360)(g) (11,838)
(127)(h)
(15,917)(i)
(1,382)(j)
------- ------ ---- ---- ---- -------- --------
Total stockholders' equity........ 7,418 34 82 (82) -- (18,786) (11,334)
------- ------ ---- ---- ---- -------- --------
$46,083 $2,124 $234 $516 $750 $ (419) $ 48,538
======= ====== ==== ==== ==== ======== ========

POST MERGER
ADJUSTMENTS AS ADJUSTED
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and other accrued
liabilities........................... $ (1,746)(s) $ 1,452
Outstanding checks...................... -- 853
Payroll and related liabilities......... -- 5,404
Reserve for workers' compensation
claims................................ -- 4,137
Short-term borrowings................... (5,046)(n) --
Current maturities of notes payable to
stockholders.......................... (252)(n) --
Current maturities of debt.............. (5,797)(n) --
Income taxes payable.................... (93)(o) 175
Deferred income taxes................... -- 988
Pro forma distribution to Founding
Companies' stockholders............... (15,917)(p) --
-------- -------
Total current liabilities......... (28,851) 13,009
LONG-TERM DEBT, less current maturities... (17,393)(n) --
NOTES PAYABLE TO
STOCKHOLDERS............................ (163)(n) --
ADVANCES FROM FOUNDING COMPANIES.......... (344)(r) --
DEFERRED INCOME TAXES..................... -- 112
-------- -------
Total liabilities................. (46,751) 13,121
STOCKHOLDERS' EQUITY:
Common stock............................ 55(m) 125
--
Paid-in capital......................... 48,395(m) 37,071
(11,838)(q)
Subscriptions receivable................ -- (80)
Retained earnings....................... 11,838(q) (145)
(145)(o)

-------- -------
Total stockholders' equity........ 48,305 36,971
-------- -------
$ 1,554 $50,092
======== =======
</TABLE>

The accompanying notes are an integral part of this balance sheet.

F-7
<PAGE> 72

STAFFMARK, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 1996

(a) Based on the provisions of SAB 97, which was issued and effective July 31,
1996, Brewer has been designated as the acquirer, for financial reporting
purposes, of the Other Founding Companies. The acquisitions of the Other
Founding Companies will be accounted for as combinations using historical
cost. The summary information presented represents the combination of the
historical financial statements of each of the Founding Companies at
historical cost, as if these companies had been members of the same
operating group. However, the Founding Companies were not under common
control or management. Therefore, the data presented may not be comparable
to or indicative of post combination results to be achieved by the Company
subsequent to the Mergers. For a discussion of the combined operating
results, see "Management's Discussion and Analysis of Financial Condition
and Results of Operations." Also, see "Selected Financial and Operating
Data."

(b) Records the unaudited balance sheet of SSI, which was purchased by First
Choice on July 1, 1996.

(c) Records the adjustment to remove assets and liabilities not assumed by First
Choice in conjunction with their acquisition of SSI.

(d) Records an estimate of the intangible assets to be recorded by First Choice
in conjunction with the acquisition of SSI.

(e) Records the debt to be incurred by First Choice in conjunction with the
acquisition of SSI.

(f) Records cash borrowed from banks to fund the distribution of certain
Founding Companies' S Corporation Accumulated Adjustment Account balances.

(g) Records the distribution of certain Founding Companies' S Corporation
Accumulated Adjustment Account balances.

(h) Records the dividend of certain automobiles, cash surrender value of life
insurance policies, facilities and equipment to certain stockholders of the
Founding Companies.

(i) Records the liability for the cash consideration to be paid to the
stockholders of the Founding Companies in connection with the Mergers.

(j) Records the adjustment to the recorded deferred income tax balances
attributable to the temporary differences between the financial reporting
and income tax basis of assets and liabilities currently held in S
Corporations.

(k) Records the elimination of the Founding Companies' Common Stock as
additional paid-in capital.

(l) Records the issuance of 5,618,249 shares to be issued to the stockholders of
the Founding Companies in connection with the Mergers.

(m) Records the proceeds from the issuance of 5,500,000 shares of Common Stock
at an assumed initial public offering price of $10.00 per share, net of
estimated offering costs. Offering costs primarily consist of underwriting
discounts and commissions, accounting fees, legal fees and printing
expenses.

(n) Records the repayment of all debt obligations with proceeds from the
Offering.

(o) Records the elimination of capitalized deferred financing costs, net of the
applicable income tax benefit.

(p) Records the distribution of the cash portion of consideration due to the
Founding Companies' stockholders in connection with the Mergers.

(q) Records the elimination of the retained earnings of the Founding Companies.

(r) Records the elimination of the funds advanced from the Founding Companies to
StaffMark to fund organizational and other costs related to the planned
merger and initial public offering.

(s) Records the elimination of deferred offering costs and restores cash used
prior to June 30, 1996 to pay offering costs since the total estimated
offering costs are considered in the pro forma adjustment discussed in note
(m) above.

F-8
<PAGE> 73

STAFFMARK, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACQUIRED FOUNDING
COMPANIES(A)
----------------------------
BREWER PROSTAFF MAXWELL HRA
------- -------- ------- -------
<S> <C> <C> <C> <C>
SERVICE REVENUES........................................................................... $30,556 $18,920 $13,232 $11,540
COST OF SERVICES........................................................................... 24,028 15,384 9,892 9,199
------- ------- ------- -------
Gross profit....................................................................... 6,528 3,536 3,340 2,341
OPERATING EXPENSES:
Selling, general and administrative...................................................... 4,445 2,767 2,480 2,064
Depreciation and amortization............................................................ 566 128 73 49
------- ------- ------- -------
Operating income................................................................... 1,517 641 787 228
------- ------- ------- -------
OTHER INCOME (EXPENSE):
Interest expense......................................................................... (880) (29) (22) (54)
Other, net............................................................................... (3) 11 55 334
------- ------- ------- -------
INCOME BEFORE INCOME TAXES................................................................. 634 623 820 508
INCOME TAX PROVISION....................................................................... -- -- -- 210
------- ------- ------- -------
Net income......................................................................... $ 634 $ 623 $ 820 $ 298
======= ======= ======= =======

ACQUIRED FOUNDING
COMPANIES(A) COMBINED
---------------------- FOUNDING
FIRST CHOICE BLETHEN COMPANIES
------------ ------- ---------
<S> <C> <C> <C>
SERVICE REVENUES........................................................................... $7,885 $7,721 $89,854
COST OF SERVICES........................................................................... 6,386 5,918 70,807
------ ------ -------
Gross profit....................................................................... 1,499 1,803 19,047
OPERATING EXPENSES:
Selling, general and administrative...................................................... 1,138 1,303 14,197
Depreciation and amortization............................................................ 47 56 919
------ ------ -------
Operating income................................................................... 314 444 3,931
------ ------ -------
OTHER INCOME (EXPENSE):
Interest expense......................................................................... (14) (82) (1,081)
Other, net............................................................................... -- 1 398
------ ------ -------
INCOME BEFORE INCOME TAXES................................................................. 300 363 3,248
INCOME TAX PROVISION....................................................................... -- 60 270
------ ------ -------
Net income......................................................................... $ 300 $ 303 $ 2,978
====== ====== =======

</TABLE>

The accompanying notes are an integral part of this statement.

F-9
<PAGE> 74

STAFFMARK, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME -- (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
ACQUISITION RELATED ADJUSTMENTS
-------------------------------------------------------------------
ON CALL FOR THE
COMBINED PERIOD FROM JANUARY
FOUNDING STAFFMARK, 1, 1996 TO FEBRUARY PRO FORMA TOTAL
COMPANIES INC. 2, 1996(B) SSI(C) ADJUSTMENTS ADJUSTMENTS
---------- ---------- ------------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
SERVICE REVENUES.................. $ 89,854 $ -- $ 1,127 $ 449 $ -- $ 1,576
COST OF SERVICES.................. 70,807 -- 945 240 -- 1,185
------- ------- ------ ---- ---- ------
Gross profit.............. 19,047 -- 182 209 -- 391
OPERATING EXPENSES:
Selling, general and
administrative................ 14,197 -- 116 143 -- 259
Depreciation and amortization... 919 -- 3 3 16(d) 40
18(e)
------- ------- ------ ---- ---- ------
Operating income.......... 3,931 -- 63 63 (34) 92
------- ------- ------ ---- ---- ------
OTHER INCOME (EXPENSE):
Interest expense................ (1,081) -- -- -- (27)(f) (55)
(28)(g)
Other, net...................... 398 3 5 -- -- 5
------- ------- ------ ---- ---- ------
INCOME BEFORE INCOME TAXES........ 3,248 3 68 63 (89) 42
INCOME TAX PROVISION.............. 270 -- -- -- -- --
------- ------- ------ ---- ---- ------
Net income (loss)......... $ 2,978 $ 3 $ 68 $ 63 $ (89) $ 42
======= ======= ====== ==== ==== ======
PRO FORMA NET INCOME PER COMMON
SHARE...........................
WEIGHTED AVERAGE SHARES
OUTSTANDING.....................

PRO FORMA
MERGER POST MERGER
ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
SERVICE REVENUES.................. $ -- $91,430 $ -- $91,430
COST OF SERVICES.................. -- 71,992 -- 71,992
----- ------- ------ -------
Gross profit.............. -- 19,438 -- 19,438
OPERATING EXPENSES:
Selling, general and
administrative................ (263)(h) 14,193 -- 14,193
Depreciation and amortization... -- 959 -- 959

----- ------- ------ -------
Operating income.......... 263 4,286 -- 4,286
----- ------- ------ -------
OTHER INCOME (EXPENSE):
Interest expense................ -- (1,136) 1,136(k) --

Other, net...................... -- 406 -- 406
----- ------- ------ -------
INCOME BEFORE INCOME TAXES........ 263 3,556 1,138 4,692
INCOME TAX PROVISION.............. 1,237(i) 1,507 443(k) 1,950
----- ------- ------ -------
Net income (loss)......... $(974) $ 2,049 $ 693 $ 2,742
===== ======= ====== =======
PRO FORMA NET INCOME PER COMMON
SHARE........................... $ 0.24 $ 0.24
=======
WEIGHTED AVERAGE SHARES
OUTSTANDING..................... 8,565(j) 11,430(l)
======= =======
</TABLE>

The accompanying notes are an integral part of this statement.

F-10
<PAGE> 75

STAFFMARK, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1996

(a) Based on the provisions of SAB 97, which was issued and became effective
July 31, 1996, Brewer has been designated as the acquirer, for financial
reporting purposes, of the Other Founding Companies. The acquisitions of the
Other Founding Companies will be accounted for as combinations using
historical costs. The summary information presented represents the
combination of the historical financial statements of each of the Founding
Companies at historical cost, as if these companies had been members of the
same operating group. However, the Founding Companies were not under common
control or management. Therefore, the data presented may not be comparable
to or indicative of post combination results to be achieved by the Company
subsequent to the Mergers. For a discussion of the combined operating
results, see "Management's Discussion and Analysis of Financial Condition
and Results of Operations." Also, see "Selected Financial Data."

(b) Records the audited financial results of On Call, which was purchased by
Brewer on February 2, 1996, for the period from January 1, 1996 through the
date of acquisition.

(d) Adjustment to reflect the amortization expense relating to the intangible
assets recorded in conjunction with the acquisition of On Call for the
period from January 1, 1996 through the date of acquisition. Intangible
assets recorded in conjunction with this acquisition include goodwill of
approximately $3.1 million which is being amortized over thirty years, a
noncompete agreement of approximately $360,000 which is being amortized over
five years and deferred financing fees of approximately $56,000 which are
being amortized over five years.

(e) Adjustment to reflect the amortization expense relating to the intangible
assets to be recorded in conjunction with the acquisition of SSI. This pro
forma calculation is based upon an allocation of approximately $73,000 of
the SSI purchase price to a noncompete agreement which will be amortized
over five years and an allocation of approximately $657,000 to goodwill
which will be amortized over thirty years.

(f) Adjustment to reflect the increase in interest expense relating to debt
incurred in conjunction with the acquisition of On Call for the period from
January 1, 1996 through the date of acquisition. This pro forma expense
calculation is based on the $3.0 million borrowed by Brewer under a term
note in conjunction with this acquisition. Pro forma interest is computed
based upon the applicable variable rate in effect on the term note which,
based upon the terms of the agreement, would have approximated 9.9% during
the pro forma period. A variance of .125% in the interest rate on this debt
would have resulted in a change in pro forma interest expense of
approximately $350 and a change in pro forma net income of approximately
$215.

(g) Adjustment to reflect the increase in interest expense relating to debt
incurred in conjunction with the acquisition of SSI. This pro forma expense
allocation is based on debt totaling $750,000 incurred in conjunction with
this acquisition. Of this amount, $375,000 was financed with a term note
maturing from July 1996 through June 1999 which bears interest at 8.25% and
$375,000 was financed with a note payable to the selling stockholder which
matures from July 1997 through July 1999 and bears interest at 7.00%.

F-11
<PAGE> 76

(h) Adjusts compensation to the level the owners have agreed to receive from the
Founding Companies subsequent to the Mergers as follows:

<TABLE>
<S> <C>
Brewer........................................... $ 595
Prostaff......................................... (57,961)
Maxwell.......................................... (73,860)
HRA.............................................. (7,972)
First Choice..................................... 922
Blethen.......................................... (124,745)
---------
Total.................................. $(263,021)
=========
</TABLE>

(i) Records the incremental provision to reflect federal and state income taxes
as if the Founding Companies had been C Corporations. This adjustment
records income tax expense at an effective combined tax rate of 39%,
adjusted for nondeductible goodwill amortization.

(j) Includes: (i) 1,355,000 shares issued by StaffMark prior to the Offering;
(ii) 5,618,249 shares to be issued to the stockholders of the Founding
Companies in connection with the Mergers; and (iii) 1,591,751 shares to be
issued at an assumed initial public offering price of $10.00 per share in
connection with the Offering to pay the cash portion of the consideration
for the Founding Companies but excludes up to 935,494 shares of Common
Stock subject to options to be issued under the 1996 Stock Option Plan.

(k) Adjustment to reflect the elimination of interest expense, net of applicable
income taxes, related to the repayment of all outstanding debt which is to
be repaid from the Offering proceeds.

(l) Includes: (i) 1,355,000 shares issued by StaffMark prior to the Offering;
(ii) 5,618,249 shares to be issued to the stockholders of the Founding
Companies in connection with the Mergers; (iii) 1,591,751 shares to be
issued at an assumed initial public offering price of $10.00 per share in
connection with the Offering to pay the cash portion of the consideration
for the Founding Companies; and (iv) 2,865,186 shares to be issued at an
assumed initial public offering price of $10.00 per share in connection with
the Offering to repay all debt obligations of the Founding Companies but
excludes up to 935,494 shares of Common Stock subject to options to be
issued under the 1996 Stock Option Plan.

F-12
<PAGE> 77

STAFFMARK, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACQUIRED FOUNDING COMPANIES(A)
--------------------------------
BREWER PROSTAFF MAXWELL HRA
------- -------- ------- -------
<S> <C> <C> <C> <C>
SERVICE REVENUES............................................................. $43,874 $34,330 $23,093 $18,307
COST OF SERVICES............................................................. 35,115 28,234 17,748 14,940
------- ------- ------- -------
Gross profit............................................................. 8,759 6,096 5,345 3,367
OPERATING EXPENSES:
Selling, general and administrative........................................ 5,804 5,339 4,297 3,438
Depreciation and amortization.............................................. 591 220 136 66
------- ------- ------- -------
Operating Income......................................................... 2,364 537 912 (137)
------- ------- ------- -------
OTHER INCOME (EXPENSE):
Interest expense........................................................... (801) (20) -- (107)
Other, net................................................................. 24 26 8 13
------- ------- ------- -------
INCOME BEFORE INCOME TAXES................................................... 1,587 543 920 (231)
INCOME TAX PROVISION (BENEFIT)............................................... -- 97 -- (84)
------- ------- ------- -------
Net income............................................................... $ 1,587 $ 446 $ 920 $ (147)
======= ======= ======= =======

<CAPTION>
ACQUIRED FOUNDING COMPANIES(A) COMBINED
------------------------------ FOUNDING
FIRST CHOICE BLETHEN COMPANIES
------------ ------- ---------
<S> <C> <C> <C>
SERVICE REVENUES............................................................. $13,703 $13,380 $146,687
COST OF SERVICES............................................................. 11,149 9,917 117,103
------- ------- --------
Gross profit............................................................. 2,554 3,463 29,584
OPERATING EXPENSES:
Selling, general and administrative........................................ 2,258 2,933 24,069
Depreciation and amortization.............................................. 33 111 1,157
------- ------- --------
Operating Income......................................................... 263 419 4,358
------- ------- --------
OTHER INCOME (EXPENSE):
Interest expense........................................................... (20) (141) (1,089)
Other, net................................................................. -- 11 82
------- ------- --------
INCOME BEFORE INCOME TAXES................................................... 243 289 3,351
INCOME TAX PROVISION (BENEFIT)............................................... -- 81 94
------- ------- --------
Net income............................................................... $ 243 $ 208 $ 3,257
======= ======= ========
</TABLE>

The accompanying notes are an integral part of this statement.

F-13
<PAGE> 78

STAFFMARK, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
ACQUISITION RELATED ADJUSTMENTS
-----------------------------------------------------------------
CALDWELL FOR
THE PERIOD FROM
COMBINED JANUARY 1, 1995
FOUNDING STAFFMARK, TO JULY 10, PRO FORMA TOTAL
COMPANIES INC. 1995(B) ON CALL(C) SSI(D) ADJUSTMENTS ADJUSTMENTS
--------- --------- --------------- ---------- ------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
SERVICE REVENUES.................... $146,687 $ -- $11,035 $12,498 $1,243 $ -- $24,776
COST OF SERVICES.................... 117,103 -- 8,752 10,203 612 -- 19,567
-------- -------- ------- ------- ------ ------- -------
Gross profit................ 29,584 -- 2,283 2,295 631 -- 5,209
OPERATING EXPENSES:
Selling, general and
administrative.................. 24,069 -- 1,331 1,305 414 -- 3,050
Depreciation and amortization..... 1,157 -- 17 25 5 293(e) 563
186(f)
37(g)
-------- -------- ------- ------- ------ ------- -------
Operating income............ 4,358 -- 935 965 212 (516) 1,596
-------- -------- ------- ------- ------ ------- -------
OTHER INCOME (EXPENSE):
Interest expense.................. (1,089) -- (15) -- -- (816)(h) (1,189)
(302)(i)
(56)(j)
Other, net........................ 82 -- 34 43 1 -- 78
-------- -------- ------- ------- ------ ------- -------
INCOME BEFORE INCOME TAXES.......... 3,351 -- 954 1,008 213 (1,690) 485
INCOME TAX PROVISION................ 94 -- -- -- -- -- --
-------- -------- ------- ------- ------ ------- -------
Net income.................. $ 3,257 $ -- $ 954 $ 1,008 $ 213 $(1,690) $ 485
======== ======== ======= ======= ====== ======= =======
PRO FORMA NET INCOME PER COMMON
SHARE.............................
WEIGHTED AVERAGE SHARES
OUTSTANDING.......................

PRO FORMA
MERGER POST MERGER
ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
SERVICE REVENUES.................... $ -- $171,463 $ -- $171,463
COST OF SERVICES.................... -- 136,670 -- 136,670
------- -------- ------ --------
Gross profit................ -- 34,793 -- 34,793
OPERATING EXPENSES:
Selling, general and
administrative.................. (1,649)(k) 25,470 -- 25,470
Depreciation and amortization..... -- 1,720 -- 1,720

------- -------- ------ --------
Operating income............ 1,649 7,603 -- 7,603
------- -------- ------ --------
OTHER INCOME (EXPENSE):
Interest expense.................. -- (2,278) 2,278(n) --

Other, net........................ -- 160 160
------- -------- ------ --------
INCOME BEFORE INCOME TAXES.......... 1,649 5,485 2,278 7,763
INCOME TAX PROVISION................ 2,285(l) 2,379 888(n) 3,267
------- -------- ------ --------
Net income.................. $ (636) $ 3,106 $1,390 $ 4,496
======= ======== ====== ========
PRO FORMA NET INCOME PER COMMON
SHARE............................. $ 0.36 $ 0.39
======== ========
WEIGHTED AVERAGE SHARES
OUTSTANDING....................... 8,565(m) 11,430(o)
======== ========
</TABLE>

The accompanying notes are an integral part of this statement.

F-14
<PAGE> 79

STAFFMARK, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995

(a) Based on the provisions of SAB 97, which was issued and became effective
July 31, 1996, Brewer has been designated as the acquirer of the other
Founding Companies for financial reporting purposes. The acquisitions by
Brewer of the other Founding Companies will be accounted for as
combinations using historical costs. The summary information presented
represents the combination of the historical financial statements of each
of the Founding Companies for all periods presented at historical costs, as
if these companies had been members of the same operating group. However,
during the periods presented, the Founding Companies were not under common
control or management. Therefore, the data presented may not be comparable
to or indicative of post combination results to be achieved by the Company
subsequent to the Merger. For a discussion of the combined operating
results, see "Management's Discussion and Analysis of Financial Condition
and Results of Operations." Also, see "Selected Financial Data."

(b) Records the audited financial results of Caldwell, which was purchased by
Brewer on July 10, 1995, for the period from January 1, 1995 through the
date of acquisition.

(d) Records the 1995 audited financial results of SSI, which was purchased by
First Choice on July 1, 1996.

(e) Adjustment to reflect the amortization expense relating to the intangible
assets recorded in conjunction with the acquisition of Caldwell for the
period from January 1, 1995 through the date of acquisition. Intangible
assets recorded in conjunction with the acquisition of Caldwell include
goodwill of approximately $15.3 million which is being amortized over
thirty years and deferred financing fees of approximately $272,000 which
are being amortized over five years.

(f) Adjustment to reflect the amortization expense relating to the intangible
assets recorded in conjunction with the acquisition of On Call. Intangible
assets recorded in conjunction with the acquisition of On Call include
goodwill of approximately $3.1 million which is being amortized over thirty
years, a noncompete agreement of approximately $360,000 which is being
amortized over five years and deferred financing fees of approximately
$56,000 which are being amortized over five years.

(g) Adjustment to reflect the amortization expense relating to the intangible
assets to be recorded in conjunction with the acquisition of SSI. This pro
forma calculation is based upon an allocation of approximately $73,000 of
the SSI purchase price to a noncompete agreement which will be amortized
over five years and an allocation of approximately $657,000 to goodwill
which will be amortized over thirty years.

(h) Adjustment to reflect the increase in interest expense relating to debt
incurred in conjunction with the acquisition of Caldwell for the period
from January 1, 1995 through the date of acquisition. This pro forma
expense calculation is based on debt totaling $16.1 million incurred in
conjunction with this acquisition. Of this amount, $3.1 million bears
interest at a fixed rate of 8.0%. The remaining $13.0 million was borrowed
under Brewer's term loan agreement with Boatmen's which bears interest at a
variable rate which, based upon the terms of the agreement, would have
approximated 10.1% during the pro forma period. A variance of .125% in the
interest rate on this component of debt would have resulted in a change in
pro forma interest expense of approximately $8,500 and a change in pro
forma net income of approximately $5,200.

(i) Adjustment to reflect the increase in interest expense relating to debt
incurred in conjunction with the acquisition of On Call. This pro forma
expense calculation is based on the $3.0 million borrowed by Brewer under a
term note in conjunction with this acquisition. Pro forma interest is
computed based upon the applicable variable rate in effect on the term loan
which, based upon the terms of the agreement, would have approximated 9.9%
during the pro forma period. A variance of .125% on the interest rate on

F-15
<PAGE> 80

this debt would have resulted in a change in pro forma interest expense of
approximately $3,750 and a change in pro forma net income of approximately
$2,290.

(j) Adjustment to reflect the increase in interest expense relating to debt
incurred in conjunction with the acquisition of SSI. This pro forma expense
calculation is based on debt totaling $750,000 incurred in conjunction with
this acquisition. This amount includes $375,000 which was financed with a
term note maturing from July 1996 through June 1999 bearing interest at
8.25% and $375,000 which was financed with a note payable to the selling
stockholder maturing from July 1997 through July 1999 which bears interest
at 7.00%.

(k) Adjusts compensation to the level the owners have agreed to receive from
the Founding Companies subsequent to the Mergers as follows:

<TABLE>
<S> <C>
Brewer.......................................... $ (250,016)
Prostaff........................................ (800,000)
Maxwell......................................... (165,000)
HRA............................................. (73,767)
First Choice.................................... (220,586)
Blethen......................................... (139,902)
-----------
Total................................. $(1,649,271)
===========
</TABLE>

(l) Records the incremental provision to reflect federal and state income taxes
as if the Founding Companies had been C Corporations. This adjustment
records income tax expense at an effective combined tax rate of 39%,
adjusted for nondeductible goodwill amortization.

(m) Includes: (i) 1,355,000 shares issued by StaffMark prior to the Offering;
(ii) 5,618,249 shares to be issued to the stockholders of the Founding
Companies in connection with the Mergers; and (iii) 1,591,751 shares to be
issued at an assumed initial public offering price of $10.00 per share in
connection with the Offering to pay the cash portion of the consideration
for the Founding Companies but excludes up to 935,494 shares of Common
Stock subject to options to be issued under the 1996 Stock Option Plan.

(n) Adjustment to reflect the elimination of interest expense, net of
applicable income taxes, related to the repayment of all outstanding
debt which is to be repaid from the Offering proceeds.

(o) Includes: (i) 1,355,000 shares issued by StaffMark prior to the Offering;
(ii) 5,618,249 shares to be issued to the stockholders of the Founding
Companies in connection with the Mergers; (iii) 1,591,751 shares to be
issued at an assumed initial public offering price of $10.00 per share in
connection with the Offering to pay the cash portion of the consideration
for the Founding Companies; and (iv) 2,865,186 shares to be issued at an
assumed initial public offering price of $10.00 per share in connection
with the Offering to repay all debt obligations of the Founding Companies
but excludes up to 935,494 shares of Common Stock subject to options to be
issued under the 1996 Stock Option Plan.

F-16
<PAGE> 81

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To StaffMark, Inc.:

We have audited the accompanying balance sheet of StaffMark, Inc. (a
Delaware corporation, originally One Source Staffing, Inc.) as of June 30, 1996.
This financial statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement 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 balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. 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 balance sheet referred to above presents fairly, in all
material respects, the financial position of StaffMark, Inc. as of June 30,
1996, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Little Rock, Arkansas,
July 26, 1996.

F-17
<PAGE> 82

STAFFMARK, INC.

BALANCE SHEET
JUNE 30, 1996

ASSETS

<TABLE>
<S> <C>
Cash and cash equivalents...................................................... $ 235,574
Deferred offering costs........................................................ 1,888,465
----------
$2,124,039
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable............................................................. $1,746,369
Advances from Founding Companies............................................. 343,750
----------
Total liabilities.................................................... 2,090,119
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; authorized shares of 1,000,000;
no shares issued or outstanding........................................... --
Common stock, $.01 par value; authorized shares of 26,000,000;
shares issued and outstanding of 1,355,000................................ 13,550
Paid-in capital.............................................................. 17,710
Retained earnings............................................................ 2,660
----------
Total stockholders' equity........................................... 33,920
----------
$2,124,039
==========
</TABLE>

The accompanying notes are an integral
part of this balance sheet.

F-18
<PAGE> 83

STAFFMARK, INC.

NOTES TO BALANCE SHEET

1. ORGANIZATION:

StaffMark, Inc. ("StaffMark" or the "Company," a Delaware corporation) was
originally founded as One Source Staffing, Inc. on March 12, 1996, to create a
nationwide provider of temporary staffing services. On June 14, 1996, the
Company changed its name to StaffMark, Inc. The Company intends to acquire six
local and regional temporary staffing companies (the "Founding Companies"),
complete an initial public offering ("IPO") of its common stock and, subsequent
to the IPO, continue to acquire, through merger or purchase, similar companies
to expand the Company's national and regional operations.

In June 1996, StaffMark signed definitive agreements to acquire by merger
the Founding Companies to be effective with the IPO. The companies to be
acquired are Brewer Personnel Services, Inc., The Maxwell Companies, The
Prostaff Companies, Human Resources, Inc., First Choice Staffing, Inc. and The
Blethen Group. Based upon an assumed IPO price of $10 per share, the aggregate
consideration that will be paid by StaffMark to acquire the Founding Companies
is approximately $72.1 million (unaudited) consisting of a combination of cash
and common stock.

As of June 30, 1996, the Company had not conducted any operations, and
activities to date have related primarily to the planned acquisitions and the
IPO. Accordingly, statements of operations, changes in stockholders' equity and
cash flows would not provide meaningful information and have been omitted. There
is no assurance that the pending acquisitions discussed above will be completed
and that StaffMark will be able to generate future operating revenue. StaffMark
is dependent upon the IPO to fund the pending acquisitions and future
operations.

In April 1996, the Founding Companies advanced $375,000 to the Company to
help fund offering related costs. In conjunction with the withdrawal of one of
the original Founding Companies, non-refundable advances to the Company of
$31,250 were reflected as a component of paid-in capital in the accompanying
balance sheet.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Cash and cash equivalents --

Cash and cash equivalents represent demand deposits with a financial
institution or highly liquid money market investments with original maturities
of three months or less.

Deferred offering costs --

Deferred offering costs primarily represent professional fees incurred
through June 30, 1996 in conjunction with the planned IPO and, for financial
reporting purposes, will be netted against the offering proceeds upon completion
of the public offering.

3. STOCKHOLDERS' EQUITY:

In conjunction with the organization and initial capitalization of
StaffMark, the Company issued 1,000 shares of common stock at a par value of
$.01 per share. In June 1996, the Company's Board of Directors declared a
1,355-for-one stock split. The effect of this stock split has been reflected as
a reduction of paid-in capital and an increase in common stock in the
accompanying balance sheet.

In June 1996, the Board of Directors approved the Company's 1996 Stock
Option Plan (the "Plan") which authorizes the issuance of options to purchase up
to 1,500,000 shares of the Company's common stock. As of June 30, 1996, the
Company has not granted options under the Plan. The terms of the options granted
under the Plan will be subject to the discretion of the Board of Directors, and
subject to certain limitations specified in the Plan which include, among other
requirements, that options must be granted at prices no less than market value
at the date of grant. The Company plans to account for stock options granted
pursuant to

F-19
<PAGE> 84

STAFFMARK, INC.

NOTES TO BALANCE SHEET -- (CONTINUED)

the Plan in accordance with the provisions of Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). Based on
the provisions of APB 25, management does not expect the options granted
pursuant to the Plan to have a material impact on the Company's results of
operations or financial position. However, pursuant to the provisions of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," the Company will be required to include supplemental pro forma
disclosures with its subsequent financial statements which reflect the
recognition of compensation expense related to options granted, measured based
on the estimated fair value of the options on date of grant and recognized on a
straight-line basis over the vesting period of the options.

4. SUBSEQUENT EVENTS:

Subsequent to June 30, 1996, the Company has incurred significant
additional costs, including professional fees and travel, associated with the
acquisition of the Founding Companies and the IPO which are not reflected in the
accompanying balance sheet. The Company anticipates that total offering costs
related to the IPO will approximate $2.7 million (unaudited).

In July 1996, StaffMark filed a Registration Statement on Form S-1 for the
sale of its common stock. See "Risk Factors" included elsewhere herein.

F-20
<PAGE> 85

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Brewer Personnel Services, Inc.:

We have audited the accompanying balance sheets of Brewer Personnel
Services, Inc. (the "Company"), as of January 1, 1995, December 31, 1995 and
June 30, 1996, and the related statements of income, stockholders' equity and
cash flows for each of the three years in the period ended December 31, 1995 and
for the six months ended June 30, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with 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 financial statements referred to above present fairly,
in all material respects, the financial position of Brewer Personnel Services,
Inc. as of January 1, 1995, December 31, 1995 and June 30, 1996, and the results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1995 and for the six months ended June 30, 1996 in conformity
with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Little Rock, Arkansas,
July 26, 1996.

F-21
<PAGE> 86

BREWER PERSONNEL SERVICES, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
JUNE 30, 1996
JANUARY 1, DECEMBER 31, --------------------------
1995 1995 ACTUAL PRO FORMA
---------- ------------ ----------- -----------
(UNAUDITED)
(NOTE 14)
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............... $ 108,066 $ 319,159 $ 778,209 $ 778,209
Accounts receivable, net of allowance
for doubtful accounts of $34,308,
$214,187 and $256,603,
respectively......................... 2,703,493 4,798,476 6,260,282 6,260,282
Prepaid expenses and other.............. 191,838 253,143 275,406 275,406
---------- ----------- ----------- -----------
Total current assets............ 3,003,397 5,370,778 7,313,897 7,313,897
PROPERTY AND EQUIPMENT, net............... 486,510 796,930 993,752 993,752
INTANGIBLE ASSETS, net.................... 282,215 15,555,459 18,605,545 18,605,545
OTHER ASSETS:
Related party notes receivable.......... 264,664 -- -- --
Advance to StaffMark, Inc............... -- -- 187,500 187,500
Other................................... 17,262 29,192 40,165 40,165
---------- ----------- ----------- -----------
Total other assets.............. 281,926 29,192 227,665 227,665
---------- ----------- ----------- -----------
$4,054,048 $ 21,752,359 $27,140,859 $27,140,859
========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable........................ $ 179,063 $ 272,329 $ 355,181 $ 355,181
Outstanding checks...................... 135,020 226,307 341,652 341,652
Payroll and related liabilities......... 538,468 1,020,973 1,569,072 1,569,072
Reserve for workers' compensation
claims............................... 130,991 775,801 749,397 749,397
Line of credit.......................... 725,000 309,068 1,545,862 1,545,862
Current maturities of long-term debt.... 126,584 882,487 2,421,713 2,421,713
Accrued interest and other.............. 11,565 375,777 231,692 231,692
---------- ----------- ----------- -----------
Total current liabilities....... 1,846,691 3,862,742 7,214,569 7,214,569
LONG-TERM DEBT, less current maturities... 97,154 15,103,831 16,204,401 16,504,401
COMMITMENTS AND CONTINGENCIES (Notes 9
through 13)
STOCKHOLDERS' EQUITY:
Common stock, no par value in 1994 and
$.01 par value in 1995 and 1996;
authorized shares of 1,000 in 1994,
and 10,000 in 1995 and 1996; shares
issued and outstanding of 117.5 in
1994 and 1995 and 132.5 in 1996...... 40,424 1 1 1
Paid-in capital......................... -- 98,059 497,208 497,208
Subscription receivable................. -- -- (80,000) (80,000)
Retained earnings....................... 2,069,779 2,687,726 3,304,680 3,004,680
---------- ----------- ----------- -----------
Total stockholders' equity...... 2,110,203 2,785,786 3,721,889 3,421,889
---------- ----------- ----------- -----------
$4,054,048 $ 21,752,359 $27,140,859 $27,140,859
========== =========== =========== ===========
</TABLE>

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

F-22
<PAGE> 87

BREWER PERSONNEL SERVICES, INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS --------------------------
----------------------------------------- JULY 2, JUNE 30,
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SERVICE REVENUES............ $12,313,300 $27,894,455 $43,874,246 $15,928,068 $30,556,381
COST OF SERVICES............ 10,062,704 22,906,230 35,115,355 12,968,810 24,027,885
----------- ----------- ----------- ----------- -----------
Gross profit...... 2,250,596 4,988,225 8,758,891 2,959,258 6,528,496
OPERATING EXPENSES:
Selling, general and
administrative......... 1,622,737 3,483,070 5,804,348 2,118,893 4,445,462
Depreciation and
amortization........... 121,395 255,895 590,066 136,463 565,974
----------- ----------- ----------- ----------- -----------
Operating
income.......... 506,464 1,249,260 2,364,477 703,902 1,517,060
OTHER INCOME (EXPENSE):
Interest expense.......... (54,005) (92,132) (800,704) (32,072) (879,924)
Interest and other income
(expense).............. 25,150 19,653 22,765 19,204 (3,182)
----------- ----------- ----------- ----------- -----------
Net income........ $ 477,609 $ 1,176,781 $ 1,586,538 $ 691,034 $ 633,954
=========== =========== =========== =========== ===========
PRO FORMA DATA (Unaudited)
(Note 14):
Historical income before
income taxes........... $ 1,586,538 $ 633,954
Less pro forma provision
for income taxes....... 724,253 363,484
----------- -----------
PRO FORMA NET
INCOME.................... $ 862,285 $ 270,470
=========== ===========
</TABLE>

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

F-23
<PAGE> 88

BREWER PERSONNEL SERVICES, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
----------------- PAID-IN SUBSCRIPTION RETAINED
SHARES AMOUNT CAPITAL RECEIVABLE EARNINGS TOTAL
------ -------- -------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 3, 1993.......... 117.5 $ 37,900 $ -- $ -- $ 807,985 $ 845,885
Net income...................... -- -- -- -- 477,609 477,609
Contribution.................... -- 2,524 -- -- -- 2,524
Dividends....................... -- -- -- -- (216,325) (216,325)
----- -------- -------- -------- ---------- ----------
BALANCE, January 2, 1994.......... 117.5 40,424 -- -- 1,069,269 1,109,693
Net income...................... -- -- -- -- 1,176,781 1,176,781
Dividends....................... -- -- -- -- (176,271) (176,271)
----- -------- -------- -------- ---------- ----------
BALANCE, January 1, 1995.......... 117.5 40,424 -- -- 2,069,779 2,110,203
Change in the par value of
shares of common stock from
no par to $.01 per share..... -- (40,423) 40,423 -- -- --
Net income...................... -- -- -- -- 1,586,538 1,586,538
Contribution.................... -- -- 57,636 -- -- 57,636
Dividends....................... -- -- -- -- (968,591) (968,591)
----- -------- -------- -------- ---------- ----------
BALANCE, December 31, 1995........ 117.5 1 98,059 -- 2,687,726 2,785,786
Net income...................... -- -- -- -- 633,954 633,954
Dividends....................... -- -- -- -- (17,000) (17,000)
Exercise of stock options....... 5.0 -- 80,000 (80,000) -- --
Shares issued in conjunction
with purchase of On Call..... 10.0 -- 319,149 -- -- 319,149
----- -------- -------- -------- ---------- ----------
BALANCE, June 30, 1996............ 132.5 $ 1 $497,208 $(80,000) $3,304,680 $3,721,889
===== ======== ======== ======== ========== ==========
</TABLE>

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

F-24
<PAGE> 89

BREWER PERSONNEL SERVICES, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS --------------------------
---------------------------------------- JULY 2, JUNE 30,
1993 1994 1995 1995 1996
--------- ----------- ------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................... $ 477,609 $ 1,176,781 $ 1,586,538 $ 691,034 $ 633,954
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................. 121,395 255,895 590,066 136,463 565,974
Provision for bad debts........................ 6,664 24,058 169,879 (111) 57,932
Net (gain) loss on sales of property and
equipment.................................... (672) (5,066) 4,095 4,968 --
Change in operating assets and liabilities, net
of effects of acquisitions:
Restricted certificates of deposit........... 750,000 -- -- -- --
Accounts receivable.......................... (870,585) (963,971) (334,940) (684,695) (1,246,671)
Prepaid expenses and other................... (86,090) (49,960) (44,025) 20,023 (22,263)
Other assets................................. -- (16,152) (6,101) (4,555) (2,095)
Accounts payable............................. (252,876) 88,208 21,210 (58,659) 8,644
Outstanding checks........................... 68,552 66,468 (508,117) 348,506 115,345
Payroll and related liabilities.............. 131,887 241,001 (270,377) 216,704 250,733
Reserve for workers' compensation claims..... 54,600 76,391 359,810 171,476 (26,404)
Accrued interest and other................... (32,727) (112) 37,185 23,597 (257,796)
--------- ---------- ------------ ----------- -----------
Net cash provided by operating
activities............................... 367,757 893,541 1,605,223 864,751 77,353
--------- ---------- ------------ ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Aaron............................. (200,000) -- -- -- --
Acquisition of Caldwell.......................... -- -- (11,500,000) -- --
Acquisition of On Call........................... -- -- -- -- (3,000,000)
Capital expenditures............................. (130,665) (253,373) (414,569) (95,917) (234,143)
Acquisition of training licenses and rights...... -- -- (65,262) (65,262) --
Proceeds from the sales of property and
equipment...................................... 10,000 19,067 16,652 -- --
Advance to StaffMark, Inc........................ -- -- -- -- (187,500)
Advances of notes receivable..................... (35,129) (220,445) (40,000) (73,145) --
Receipts on notes receivable..................... 48,116 110,000 -- -- --
--------- ---------- ------------ ----------- -----------
Net cash used in investing activities...... (307,678) (344,751) (12,003,179) (234,324) (3,421,643)
--------- ---------- ------------ ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt................... 85,524 1,584,500 13,366,512 19,272 4,736,794
Payments on debt................................. (103,805) (1,920,296) (1,919,865) (111,642) (860,204)
Cash dividends................................... (163,346) (176,271) (623,484) (572,484) (17,000)
Contributions from stockholder................... 2,524 -- 57,636 57,636 --
Deferred financing costs......................... -- -- (271,750) -- (56,250)
--------- ---------- ------------ ----------- -----------
Net cash provided by (used in) financing
activities............................... (179,103) (512,067) 10,609,049 (607,218) 3,803,340
--------- ---------- ------------ ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS...................................... (119,024) 36,723 211,093 23,209 459,050
CASH AND CASH EQUIVALENTS, beginning of period..... 190,367 71,343 108,066 108,066 319,159
--------- ---------- ------------ ----------- -----------
CASH AND CASH EQUIVALENTS, end of period........... $ 71,343 $ 108,066 $ 319,159 $ 131,275 $ 778,209
========= ========== ============ =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid...................................... $ 51,529 $ 107,222 $ 427,456 $ 29,183 $ 1,042,906
========= ========== ============ =========== ===========
Non-cash transactions:
Notes payable issued in conjunction with
acquisitions................................... $ 299,010 $ -- $ 3,100,000 $ -- $ --
========= ========== ============ =========== ===========
Distribution of notes receivable to
stockholders................................... $ -- $ -- $ 345,107 $ -- $ --
========= ========== ============ =========== ===========
Issuance of subscription receivable in
conjunction with the exercise of stock
options........................................ $ -- $ -- $ -- $ -- $ 80,000
========= ========== ============ =========== ===========
</TABLE>

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

F-25
<PAGE> 90

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

Brewer Personnel Services, Inc. (the "Company") was incorporated in the
state of Arkansas on June 27, 1988. The Company's primary business purpose is to
provide temporary personnel services. The Company is headquartered in
Fayetteville, Arkansas and as of June 30, 1996, operated staffing offices in
Arkansas, Georgia, Colorado, Virginia and Tennessee.

In June 1995, the Company opened the Brewer Career Center, which provides
training services to temporary personnel. In conjunction with opening the
facility, the Company acquired certain training licenses and rights from Career
Blazers Training Services, Inc.

Fiscal Periods --

The Company's reporting periods end on the Sunday closest to month end. The
fiscal years 1993, 1994 and 1995 each included 52 weeks. The interim periods for
the six months ended July 2, 1995 (unaudited) and June 30, 1996 included in the
accompanying financial statements each included 26 weeks.

Interim Financial Statements --

The accompanying interim financial statements for the six months ended July
2, 1995 and related disclosures have not been audited by independent
accountants. However, they have been prepared in conformity with the accounting
principles stated in the audited financial statements for the three years in the
period ended December 31, 1995 and for the six months ended June 30, 1996, and
include all adjustments (which were of a normal, recurring nature) which, in the
opinion of management, are necessary to present fairly the financial position of
the Company and the results of operations and cash flows for each of the periods
presented. The operating results for the interim periods presented are not
necessarily indicative of results for the full year.

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, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in preparing the accompanying financial statements are
based upon management's evaluation of the relevant facts and circumstances as of
the date of the financial statements. However, actual results may differ from
the estimates and assumptions used in preparing the accompanying financial
statements.

Revenue Recognition --

Service revenues are recognized as income at the time staffing services are
provided.

Cash and Cash Equivalents --

For statement of cash flow purposes, the Company considers cash on deposit
with financial institutions and all highly liquid investments with original
maturities of three months or less to be cash equivalents.

Accounts Receivable --

The Company maintains allowances for potential losses which management
believes are adequate to absorb losses to be incurred in realizing the amounts
recorded in the accompanying financial statements. Included in accounts
receivable in the accompanying balance sheets are unbilled amounts of $277,351,
$541,906 and $1,384,449 at January 1, 1995, December 31, 1995 and June 30, 1996,
respectively.

F-26
<PAGE> 91

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Property and Equipment --

Property and equipment are recorded at cost and are depreciated or
amortized on a straight-line basis over the estimated useful lives of the
assets. Leasehold improvements are amortized on a straight-line basis over the
shorter of the estimated economic lives or the terms of the lease. The estimated
useful lives of the Company's assets, by asset classification, were as follows:

<TABLE>
<S> <C>
Office equipment................................... 5 years
Computer equipment................................. 5 years
Vehicles........................................... 5 years
Computer software.................................. 3 years
Leasehold improvements............................. 3 years
</TABLE>

Additions that extend the lives of the assets are capitalized while repairs
and maintenance costs are expensed as incurred. When property and equipment are
retired, the cost of the property and equipment and the related accumulated
depreciation or amortization are removed from the balance sheet and any
resultant gain or loss is recorded.

Intangible Assets --

Intangible assets primarily consist of goodwill, which is amortized using
the straight-line method over periods of 15 to 30 years. Deferred financing
costs are amortized over the life of the respective debt obligation using a
method which approximates the interest method. Intangibles associated with
noncompete agreements are amortized using the straight-line method over the life
of the respective agreements. The Company regularly evaluates whether events and
circumstances have occurred which may indicate the carrying amount of goodwill
or other intangible assets may warrant revision or may not be recoverable. When
factors indicate that certain intangible assets should be evaluated for possible
impairment, the Company uses an estimate of the future undiscounted net cash
flows of the related assets over their remaining life in measuring whether the
assets are recoverable. As of January 1, 1995, December 31, 1995 and June 30,
1996, management considered the Company's intangible assets to be fully
recoverable.

Workers' Compensation --

The Company self-insures certain risks related to workers' compensation
claims. The estimated costs of existing and future claims are accrued as
incidents occur based upon historical loss development trends and may be
subsequently revised based on developments relating to such claims. The Company
engages the services of a third party actuary to assist with the development of
these cost estimates.

Accounting for Stock Options --

During 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation" ("SFAS 123"), which encourages all companies to recognize
compensation expense based on the fair value, at grant date, of instruments
issued pursuant to stock based compensation plans. SFAS 123 requires the fair
value of the instruments granted, which is measured pursuant to the provisions
of the statement, be recognized as compensation expense on a straight-line basis
over the vesting period of the instrument. However, the statement also allows
companies to continue to measure compensation costs for these instruments using
the method of accounting prescribed by Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25"). Companies electing to
account for stock based compensation plans pursuant to the provisions of APB 25
must make pro forma disclosures of net income as if the fair value method
defined in SFAS 123 had been applied. The Company has elected to account for its
stock options under the provisions of APB 25 and has included the disclosures
required by SFAS 123 in Note 8.

F-27
<PAGE> 92

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Fair Value of Financial Instruments --

The Company's financial instruments include cash and cash equivalents,
related party notes receivable and its debt obligations. Management believes
that these instruments bear interest at rates which approximate prevailing
market rates for instruments with similar characteristics and, accordingly, that
the carrying values for these instruments are reasonable estimates of fair
value.

2. BUSINESS COMBINATIONS:

Aaron Temporary Services, Inc. --

On November 22, 1993, the Company acquired certain assets of Aaron
Temporary Services, Inc. ("Aaron"). Aaron was engaged in providing temporary
personnel services in central and northeast Arkansas. The total purchase price
of $527,600 was comprised of a cash payment of $200,000 and the issuance of a
note with payments, including interest, totaling $327,600. The acquisition has
been accounted for as a purchase, and the results of Aaron have been included in
the accompanying financial statements since the date of acquisition. The cost of
the acquisition has been allocated on the basis of the estimated fair market
value of the assets acquired. The assets acquired have been recorded at
historical, depreciated cost, which approximated fair value as of the
acquisition date, with the remaining acquisition costs of $25,000 being recorded
as goodwill.

Caldwell Services, Inc. --

On July 10, 1995, the Company acquired the stock of E.P. Enterprises
Corporation, d.b.a. Caldwell Services, Inc. ("Caldwell"). Caldwell is engaged in
providing temporary personnel services through five staffing offices located in
Georgia. The acquisition has been accounted for as a purchase, and the results
of Caldwell have been included in the accompanying financial statements since
the date of acquisition. The cost of the acquisition has been allocated on the
basis of the estimated fair market value of the assets and liabilities acquired.

Total consideration paid for Caldwell was approximately $17.3 million. The
purchase price included cash of $11.5 million, a note to the seller of $3.1
million and the assumption of certain liabilities of Caldwell. The assets
acquired have been recorded at historical, depreciated cost, which approximated
fair value as of the acquisition date, with the remaining acquisition costs of
approximately $15.3 million being recorded as goodwill.

On Call Employment Services, Inc. --

On February 2, 1996, the Company acquired the stock of On Call Employment
Services, Inc. ("On Call"). On Call is engaged in providing temporary personnel
services through four staffing offices in Colorado. The acquisition has been
accounted for as a purchase, and the results of On Call have been included in
the accompanying financial statements since the date of acquisition. The cost of
the acquisition has been allocated on the basis of the estimated fair market
value of the assets and liabilities acquired.

Total consideration paid for On Call was approximately $3.8 million which
was comprised of cash totaling $3 million, including $360,000 associated with a
noncompete agreement, 10 shares of the Company's common stock valued at
approximately $320,000 and the assumption of liabilities totaling approximately
$480,000. The assets acquired have been recorded at historical, depreciated
cost, which approximated fair value as of the acquisition date, with the
remaining acquisition costs of approximately $3.1 million being recorded as
goodwill.

F-28
<PAGE> 93

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The unaudited consolidated revenues and net income on a pro forma basis as
though Aaron, Caldwell and On Call had been acquired as of the beginning of the
Company's 1993 fiscal year are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS ENDED
--------------------------------------- ------------------------------
1993 1994 1995 JULY 2, 1995 JUNE 30, 1996
----------- ----------- ----------- ------------ -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues........... $55,954,122 $55,546,403 $67,406,685 $ 33,211,694 $ 31,683,472
=========== =========== =========== =========== ===========
Net income......... $ 1,718,024 $ 939,446 $ 2,091,956 $ 833,362 $ 658,304
=========== =========== =========== =========== ===========
</TABLE>

Chad J. Brewer, Incorporated --

In June 1995, the Company entered into an agreement to merge its activities
with Chad J. Brewer, Incorporated (a Virginia corporation, "Chad Brewer"), which
was owned by a related party. The Company issued 17.5 shares of common stock in
exchange for all outstanding shares of Chad Brewer. This merger has been
accounted for as a pooling-of-interests. Accordingly, the accompanying financial
statements have been prepared as if the merger had occurred at the beginning of
fiscal year 1993.

Prior to the merger, the Company maintained a license agreement which
entitled Chad Brewer to do business in the state of Virginia as Brewer Personnel
Services and to use certain information of the Company. In addition, the Company
provided payroll administration, data processing and accounts receivable
financing services to Chad Brewer.

3. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, JUNE 30,
1995 1995 1996
---------- ------------ ----------
<S> <C> <C> <C>
Office equipment................................ $ 243,153 $ 419,606 $ 668,171
Computer equipment.............................. 382,068 687,097 756,122
Vehicles........................................ 167,678 133,722 133,722
Computer software............................... 44,880 62,653 82,478
Leasehold improvements.......................... -- 31,483 43,580
-------- ---------- ----------
837,779 1,334,561 1,684,073
Less accumulated depreciation and
amortization.................................. 351,269 537,631 690,321
-------- ---------- ----------
$ 486,510 $ 796,930 $ 993,752
======== ========== ==========
</TABLE>

Depreciation and amortization expense related to property and equipment for
fiscal years 1993, 1994 and 1995 totaled $68,159, $149,558 and $198,859,
respectively. Depreciation and amortization expense for the six months ended
July 2, 1995 and June 30, 1996 totaled $77,986 (unaudited) and $152,690,
respectively.

F-29
<PAGE> 94

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. INTANGIBLE ASSETS:

Intangible assets consisted of the following:

<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, JUNE 30,
1995 1995 1996
---------- ------------ -----------
<S> <C> <C> <C>
Goodwill......................................... $ 25,000 $ 15,356,334 $18,407,351
Deferred financing costs......................... -- 271,750 328,000
Noncompete agreements............................ 299,010 299,010 659,010
Other............................................ 75,000 140,262 140,262
-------- ----------- -----------
399,010 16,067,356 19,534,623
Less accumulated amortization.................... 116,795 511,897 929,078
-------- ----------- -----------
$ 282,215 $ 15,555,459 $18,605,545
======== =========== ===========
</TABLE>

Amortization expense related to intangible assets totaled $53,236, $106,337
and $391,207 for fiscal years 1993, 1994 and 1995, respectively. Amortization
expense related to intangible assets totaled $58,477 (unaudited) and $413,284
for the six months ended July 2, 1995 and June 30, 1996, respectively.

5. DEBT:

Line of credit balances consisted of the following:

<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, JUNE 30,
1995 1995 1996
---------- ------------ -----------
<S> <C> <C> <C>
Line of credit with Boatmen's National Bank of
St. Louis ("Boatmen's"). Maximum borrowings
equal the lesser of $6 million or 85% of the
Company's eligible accounts receivable balance
reduced by the letters of credit issued as
security for the Company's workers'
compensation obligations. Interest payable
monthly at a variable rate which ranged from
9.5% to 10.00% and averaged 9.79% during the
six months ended June 30, 1996 and 10.23%
during the year ended December 31, 1995.
Principal due on June 29, 1998. Secured by the
assets and common stock of the Company and
partially guaranteed by certain
stockholders................................... $ -- $ 309,068 $ 1,545,862
Line of credit, interest payable quarterly at
prime, 8.0% as of January 1, 1995 and averaging
6.8% for the year then ended. Secured by
accounts receivable and guaranteed by certain
stockholders................................... 725,000 -- --
-------- ----------- -----------
$ 725,000 $ 309,068 $ 1,545,862
======== =========== ===========
Long-term debt consisted of the following:
Term loan note with Boatmen's. Interest payable
monthly at a variable rate which ranged from
8.75% to 9.19% and averaged 8.86% during the
six months ended June 30, 1996 and 9.56% during
the year ended December 31, 1995. Principal due
in quarterly installments beginning October 1,
1995 through maturity on June 30, 2001. Secured
by the assets and common stock of the Company
and partially guaranteed by certain
stockholders................................... $ -- $ 12,750,000 $15,458,400
</TABLE>

F-30
<PAGE> 95

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, JUNE 30,
1995 1995 1996
-------- ----------- -----------
<S> <C> <C> <C>
Note payable to the previous owner of Caldwell,
interest at 8%, payable quarterly. Principal to
be paid in equal annual installments beginning
June 30, 1998 through June 30, 2001 or in full
upon a change in control of the Company.
Secured by a lien on the assets of the Company
and guaranteed by certain stockholders......... $ -- $ 3,100,000 $ 3,100,000
Note payable to the previous owner of Aaron,
imputed interest of 6%, payable in monthly
installments of $9,100. Secured by the personal
assets of the stockholders..................... 197,235 97,332 44,977
Other notes payable, maturing through 1997 with
interest ranging from 6.00% to 6.99%. Secured
by certain assets of the Company............... 26,503 38,986 22,737
-------- ----------- -----------
223,738 15,986,318 18,626,114
Less current maturities.......................... 126,584 882,487 2,421,713
-------- ----------- -----------
$ 97,154 $ 15,103,831 $16,204,401
======== =========== ===========
</TABLE>

The term loan note and line of credit with Boatmen's were entered into in
conjunction with the purchase of Caldwell. Interest on these facilities is
computed, at the Company's option, at either the LIBOR rate plus incremental
increases related to the Company's operating leverage, as defined in the
agreement, or the prime lending rate plus incremental increases related to the
Company's operating leverage. In September 1995, the Company signed a rate cap
transaction agreement with Boatmen's to freeze the LIBOR rate component of the
interest rate on a portion of the term loan note at 8.50% effective September
30, 1995 through September 30, 1998. This rate cap agreement had no impact on
interest expense during fiscal 1995 or during the six months ended June 30,
1996.

In conjunction with the purchase of On Call, the Company amended its term
loan note and line of credit. Under the terms of the amendment, the term loan
note and the maximum borrowings under the line of credit were increased to $16
million and $6 million, respectively.

Under the terms of the credit agreement with Boatmen's, the Company is
required, among other restrictions, to maintain certain financial ratios which
are measured on a quarterly basis. As of June 30, 1996, the Company did not
comply with two of these ratios, however, Boatmen's has waived all events of
noncompliance and default with regard to these ratios as of that date.
Accordingly, these obligations have been classified according to their
originally scheduled maturity dates.

Total maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
YEARS ENDING
----------------------------
DECEMBER 31, JUNE 30,
------------ -----------
<S> <C> <C>
1996.............................. $ 882,487 $ --
1997.............................. 1,444,763 2,421,613
1998.............................. 3,146,568 3,753,900
1999.............................. 3,212,500 3,838,100
2000.............................. 3,900,000 3,587,500
Thereafter........................ 3,400,000 5,025,001
----------- -----------
$ 15,986,318 $18,626,114
=========== ===========
</TABLE>

F-31
<PAGE> 96

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. INCOME TAXES:

The Company operates as an S Corporation for federal and state income tax
reporting purposes. Accordingly, no provision for income taxes has been recorded
in the accompanying financial statements as such taxes are liabilities of the
individual stockholders.

The Company's tax returns are subject to examination by federal and state
taxing authorities. If such examinations result in a change to the Company's
reported income or loss, the taxable income or loss reported by the individual
stockholders could also change.

7. WORKERS' COMPENSATION:

The Company is self-insured for certain workers' compensation claims and is
regulated by the Workers' Compensation Insurance Commissions in the states of
Arkansas and Georgia. The Company had purchased insurance during 1993 and 1994
for medical claims which exceed $25,000 and other claims which exceed $350,000.
During 1995, the Company purchased insurance to cover claims which exceeded
$50,000. The Company maintains letters of credit with a bank to cover any
potential unpaid claims. At June 30, 1996, these letters of credit were in the
amount of $600,000 and $500,000 for Arkansas and Georgia, respectively. Workers'
compensation expense totaled $405,927, $738,663 and $1,317,579 for fiscal years
1993, 1994 and 1995, respectively. Workers' compensation expense totaled
$546,008 (unaudited) and $589,459 for the six months ended July 2, 1995 and June
30, 1996, respectively.

8. COMMON STOCK AND STOCK OPTIONS:

On May 30, 1995, the Company amended and restated its Articles of
Incorporation to increase the number of authorized shares of common stock from
1,000 to 10,000 and to change the par value of the shares of common stock from
no par to $.01 per share.

The Company has granted stock options to certain key employees. These
options were granted at fair value as determined by management, are exercisable
in installments and expire from June 30, 1999 to February 26, 2001.

A summary of stock option activity follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES UNDER PRICE PER
OPTION SHARE
------------ ---------
<S> <C> <C>
Outstanding, January 3, 1993................................. -- $ --
Outstanding, January 2, 1994................................. -- --
Granted.................................................... 5.0 16,000
---- --------
Outstanding, January 1, 1995................................. 5.0 16,000
Granted.................................................... 7.5 30,666
---- --------
Outstanding, December 31, 1995............................... 12.5 24,800
Granted.................................................... 1.0 35,000
Exercised.................................................. (5.0) (16,000)
---- --------
Outstanding, June 30, 1996................................... 8.5 $ 31,176
==== ========
Exercisable, December 31, 1995............................... 5.0 $ 16,000
==== ========
Exercisable, June 30, 1996................................... 1.67 $ 30,000
==== ========
</TABLE>

F-32
<PAGE> 97

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

In March 1996, a key employee exercised his stock options and received five
shares of the Company's common stock. In payment for this exercise, the Company
executed a note receivable from this employee for $80,000, which represented the
entire exercise price of these options. This note has been reflected as a
subscription receivable and is classified as contra equity in the accompanying
financial statements.

As discussed in Note 1, the Company has elected to account for its stock
options under the provisions of APB 25. Accordingly, pursuant to the
requirements of SFAS 123, the following disclosures are presented to reflect the
Company's pro forma net income for the year ended December 31, 1995 and for the
six month period ended June 30, 1996 as if the fair value method of accounting
prescribed by SFAS 123 had been used. In preparing these disclosures, the
Company has determined the value of all options granted during 1995 and the six
month period ended June 30, 1996 using the minimum value method, as discussed in
SFAS 123, and based on the following weighted average assumptions used for
grants:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FISCAL YEAR JUNE 30,
1995 1996
----------- ----------
<S> <C> <C>
Risk-free interest rate....................................... 6.5% 5.6%
Expected dividend yield....................................... 0% 0%
Expected life................................................. 2.5 years 2.0 years
</TABLE>

Options were assumed to be exercised upon vesting for the purpose of this
valuation. Using these assumptions, the fair value of the stock options granted
in 1995 and the six months ended June 30, 1996 was approximately $36,000 and
$4,000, respectively. Had compensation expense been determined consistent with
SFAS 123, utilizing the assumptions above and the straight-line amortization
method over the vesting period, the Company's net income would have been reduced
to the following pro forma amounts:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FISCAL YEAR JUNE 30,
1995 1996
----------- ----------
<S> <C> <C>
Net income, as reported...................................... $ 1,586,538 $633,954
=========== ========
Pro forma net income......................................... $ 1,578,367 $626,694
=========== ========
</TABLE>

9. RELATED PARTY TRANSACTIONS:

The Company rents office space from Brewer Investments, a partnership owned
by certain stockholders. The rent expense related to these transactions was
$60,000 for fiscal years 1993, 1994 and 1995. In January 1996, the Company moved
its corporate offices into a new building, which is also owned by Brewer
Investments. Rent expense related to these leases was approximately $30,000
(unaudited) and $105,000 for the six months ended July 2, 1995 and June 30,
1996, respectively. Future minimum lease payments related to this lease as of
June 30, 1996 approximate $1,015,000 which have been included in the table in
Note 11.

In December 1995, a note receivable from Brewer Investments in the amount
of $345,107 was distributed to the individual stockholders of the Company.

10. COMMITMENTS:

In conjunction with the acquisition of Aaron, the Company entered into an
agreement to pay the former owner $12,000 per month for a five-year period
beginning November 29, 1993, in exchange for consulting services. The expense
associated with this agreement was $12,000 for fiscal year 1993, $144,000 for
fiscal years 1994 and 1995 and $72,000 for the six months ended July 2, 1995
(unaudited) and June 30, 1996.

F-33
<PAGE> 98

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The Company has employment agreements with certain executive officers and
management personnel that provide for annual salaries, cost-of-living
adjustments, additional compensation in the form of performance based bonuses
and, for certain employees, options to purchase shares of the Company's common
stock. Certain agreements include a covenant against competition with the
Company, which extends for a period of time after termination. These agreements
generally continue until terminated by the employee or the Company.

The Company has historically paid dividends to its stockholders in amounts
sufficient to cover their estimated tax payments attributable to the respective
share of the Company's net income which will be included in their individual tax
returns. The Company plans to continue this practice in the future as long as it
maintains its S Corporation status.

11. NONCANCELABLE OPERATING LEASES:

The Company leases office space under noncancelable operating leases. As
discussed in Note 9, certain of these facilities are leased from a related
party. Future minimum annual payments required during each of the next five
years under operating leases that had an initial or remaining noncancelable
lease term in excess of one year are as follows:

<TABLE>
<CAPTION>
YEARS ENDING
---------------------------
DECEMBER 31, JUNE 30,
------------ ----------
<S> <C> <C>
1996............................... $ 506,531 $ --
1997............................... 449,915 502,741
1998............................... 387,285 424,299
1999............................... 383,237 391,143
2000............................... 322,667 369,815
---------- ----------
$2,049,635 $1,687,998
========== ==========
</TABLE>

Rent expense totaled $100,646, $168,956 and $275,460 for fiscal years 1993,
1994 and 1995, respectively. Rent expense totaled $92,447 (unaudited) and
$311,005 for the six months ended July 2, 1995 and June 30, 1996, respectively.

12. CONTINGENCIES:

The Company is a party to certain lawsuits primarily involving workers'
compensation claims. Management believes, based in part on consultation from
legal counsel, that the ultimate outcome of these matters will not have a
materially adverse effect on the Company's financial position, liquidity or
results of operations.

13. PENDING BUSINESS COMBINATION:

In June 1996, the owners of the Company entered into a definitive agreement
to merge with StaffMark, Inc. ("StaffMark") in conjunction with StaffMark's
initial public offering. Prior to or coincident with this proposed merger, the
Company plans to dividend certain assets to the stockholders consisting of
several automobiles, which have an aggregate carrying value of approximately
$51,000 as of June 30, 1996. In addition, the Company plans to make cash
distributions equal to the Company's S Corporation Accumulated Adjustment
Account as of the merger date. As of June 30, 1996 the Company's Accumulated
Adjustment Account totaled approximately $300,000.

In conjunction with the proposed merger discussed above, certain of the
owners will enter into employment agreements which provide for a set base
salary, participation in future incentive bonus plans, certain other benefits
and a covenant not to compete following termination of such person's employment.

F-34
<PAGE> 99

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The Company has advanced $187,500 to StaffMark to fund organizational and
other costs related to the planned merger and StaffMark's initial public
offering.

14. PRO FORMA ADJUSTMENTS TO FINANCIAL STATEMENT PRESENTATION
(UNAUDITED):

In conjunction with the planned merger with StaffMark as discussed in Note
13, the Company will change from an S Corporation to a C Corporation for federal
and state income tax reporting purposes, which will require the Company to
recognize the tax consequences of operations in its statements of income. The
supplemental pro forma information included in the accompanying statements of
income reflect the estimated impact of recognizing income tax expense as if the
Company had been a C Corporation for tax reporting purposes during the twelve
months and six months ended December 31, 1995 and June 30, 1996, respectively.

As discussed in Note 13, the Company intends to make distributions equal to
the Company's S Corporation Accumulated Adjustment Account as of the merger
date. The supplemental pro forma information included in the accompanying
balance sheet reflects the estimated impact of recording these distributions as
if such distributions had occurred as of June 30, 1996. The pro forma
adjustments are based on the assumption that the distributions will be funded
with additional borrowings.

F-35
<PAGE> 100

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Prostaff Companies:

We have audited the accompanying combined balance sheets of the companies
identified in Note 1 to the financial statements ("The Prostaff Companies"), as
of December 31, 1994 and 1995 and June 30, 1996, and the related combined
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1995 and the six months ended June 30,
1996. 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 Prostaff Companies as of
December 31, 1994 and 1995 and the six months ended June 30, 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995 and the six months ended June 30, 1996 in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Little Rock, Arkansas,
July 26, 1996.

F-36
<PAGE> 101

THE PROSTAFF COMPANIES

COMBINED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- JUNE 30,
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............................ $ 228,372 $ 188,145 $ 74,629
Certificates of deposit.............................. 152,028 155,154 --
Accounts receivable, net of allowance for doubtful
accounts of $10,000, $48,500 and $65,000,
respectively...................................... 2,634,108 3,020,622 3,951,580
Deferred tax asset................................... 154,601 -- --
Prepaid expenses and other........................... 86,337 135,673 150,933
---------- ---------- ----------
Total current assets......................... 3,255,446 3,499,594 4,177,142
PROPERTY AND EQUIPMENT, net............................ 640,552 756,983 829,919
OTHER ASSETS:
Cash surrender value of officer's life insurance..... 34,670 41,280 41,280
Advance to StaffMark, Inc............................ -- -- 31,250
Other................................................ 3,675 4,730 14,875
---------- ---------- ----------
Total other assets........................... 38,345 46,010 87,405
---------- ---------- ----------
$3,934,343 $4,302,587 $5,094,466
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit....................................... $ 417,000 $ 20,000 $1,177,300
Current maturities of long-term debt................. 61,742 64,872 66,648
Note payable to stockholder.......................... -- 30,000 30,000
Accounts payable and accrued liabilities............. 83,413 117,339 97,598
Outstanding checks................................... 109,084 -- 249,838
Payroll and related liabilities...................... 703,263 1,129,777 1,233,266
Reserve for workers' compensation claims............. 439,444 635,290 638,000
Income taxes payable................................. 54,883 -- --
---------- ---------- ----------
Total current liabilities.................... 1,868,829 1,997,278 3,492,650
LONG-TERM DEBT, less current maturities................ 170,064 111,459 77,665
DEFERRED INCOME TAXES.................................. 57,885 -- --
COMMITMENTS AND CONTINGENCIES
(Notes 6 through 10)
STOCKHOLDERS' EQUITY:
Common stock, (par values of $.20 to $1.00)
authorized shares of 200,000 in 1994 and 201,000
in 1995 and at June 30, 1996, shares issued and
outstanding of 55,000 in 1994, 55,100 in 1995 and
at June 30, 1996.................................. 11,000 11,100 11,100
Retained earnings.................................... 1,826,565 2,182,750 1,513,051
---------- ---------- ----------
Total stockholders' equity................... 1,837,565 2,193,850 1,524,151
---------- ---------- ----------
$3,934,343 $4,302,587 $5,094,466
========== ========== ==========
</TABLE>

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

F-37
<PAGE> 102

THE PROSTAFF COMPANIES

COMBINED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
----------------------------------------- --------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SERVICE REVENUES............ $27,244,744 $30,607,744 $34,330,413 $16,063,019 $18,919,437
COST OF SERVICES............ 22,858,206 25,455,432 28,234,379 13,238,533 15,383,556
----------- ----------- ----------- ----------- -----------
Gross profit...... 4,386,538 5,152,312 6,096,034 2,824,486 3,535,881
OPERATING EXPENSES:
Selling, general and
administrative......... 3,640,825 4,184,021 5,338,844 2,430,961 2,766,915
Depreciation and
amortization........... 114,796 174,998 220,433 103,005 127,951
----------- ----------- ----------- ----------- -----------
Operating
income.......... 630,917 793,293 536,757 290,520 641,015
OTHER INCOME (EXPENSE):
Interest expense.......... (87,181) (28,689) (20,393) (10,056) (28,953)
Interest income and
other.................. 60,745 10,987 26,537 13,665 10,971
----------- ----------- ----------- ----------- -----------
INCOME BEFORE PROVISION FOR
INCOME TAXES.............. 604,481 775,591 542,901 294,129 623,033
PROVISION FOR INCOME
TAXES..................... 205,742 253,847 96,716 96,716 --
----------- ----------- ----------- ----------- -----------
Net income........ $ 398,739 $ 521,744 $ 446,185 $ 197,413 $ 623,033
=========== =========== =========== =========== ===========
PRO FORMA DATA (Unaudited)
(Note 11):
Historical income before
income taxes........... $ 542,901 $ 623,033
Less pro forma provision
for income taxes....... 211,731 242,983
----------- -----------
PRO FORMA NET INCOME........ $ 331,170 $ 380,050
=========== ===========
</TABLE>

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

F-38
<PAGE> 103

THE PROSTAFF COMPANIES

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
----------------- RETAINED
SHARES AMOUNT EARNINGS TOTAL
------ ------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1992....................... 55,000 $11,000 $ 976,186 $ 987,186
Net income..................................... -- -- 398,739 398,739
Dividends...................................... -- -- (25,625) (25,625)
------ ------- ----------- -----------
BALANCE, December 31, 1993....................... 55,000 11,000 1,349,300 1,360,300
Net income..................................... -- -- 521,744 521,744
Dividends...................................... -- -- (44,479) (44,479)
------ ------- ----------- -----------
BALANCE, December 31, 1994....................... 55,000 11,000 1,826,565 1,837,565
Net income..................................... -- -- 446,185 446,185
Initial capitalization of Professional
Resources, Inc.............................. 100 100 -- 100
Dividends...................................... -- -- (90,000) (90,000)
------ ------- ----------- -----------
BALANCE, December 31, 1995....................... 55,100 11,100 2,182,750 2,193,850
Net income..................................... -- -- 623,033 623,033
Dividends...................................... -- -- (1,292,732) (1,292,732)
------ ------- ----------- -----------
BALANCE, June 30, 1996........................... 55,100 $11,100 $ 1,513,051 $ 1,524,151
====== ======= =========== ===========
</TABLE>

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

F-39
<PAGE> 104

THE PROSTAFF COMPANIES

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------- ------------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................. $ 398,739 $ 521,744 $ 446,185 $ 197,413 $ 623,033
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............ 114,796 174,998 220,433 103,005 127,951
Provision for deferred income taxes...... (35,138) (20,021) -- -- --
Write-off of net deferred tax assets..... -- -- 96,716 96,716 --
Provision for bad debts.................. 27,561 10,000 38,500 12,100 16,500
Loss on sale of property and equipment... -- 20,854 -- -- 2,672
Change in operating assets and
liabilities, net of effects of
acquisition:
Restricted certificates of deposit..... 600,000 -- 152,028 -- --
Accounts receivable.................... (637,401) (143,183) (403,041) (585,986) (947,458)
Prepaid expenses and other............. (38,493) (2,052) (49,336) (14,985) (15,260)
Other assets........................... 2,357 (8,979) (7,665) (2,635) (10,145)
Accounts payable and accrued
liabilities......................... 21,229 (10,535) 33,926 (9,687) (19,741)
Outstanding checks..................... -- 109,084 (109,084) (109,084) 249,838
Payroll and related liabilities........ 193,651 5,365 426,514 871,132 103,489
Reserve for workers' compensation
claims.............................. 148,385 101,480 195,846 92,556 2,710
Income taxes payable................... (15,039) (19,130) (54,883) (54,883) --
--------- --------- --------- --------- -----------
Net cash provided by operating
activities........................ 780,647 739,625 986,139 595,662 133,589
--------- --------- --------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Advance to StaffMark, Inc.................. -- -- -- -- (31,250)
Acquisition of personnel service
business................................. -- -- (30,000) -- --
Capital expenditures....................... (405,265) (293,936) (328,837) (236,228) (203,559)
Purchase of certificates of deposit........ -- -- (155,154) -- --
Proceeds from the sale of property and
equipment................................ -- 1,400 -- -- --
Proceeds from the sale of certificates of
deposit.................................. -- -- -- -- 155,154
--------- --------- --------- --------- -----------
Net cash used in investing
activities........................ (405,265) (292,536) (513,991) (236,228) (79,655)
--------- --------- --------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments) borrowings under line of
credit................................... $(125,000) $(158,000) $(397,000) $(417,000) $ 1,157,300
Proceeds from note payable to
stockholder.............................. -- -- 30,000 -- --
Payments on note payable to stockholder.... (530,000) -- -- -- --
Proceeds from issuance of long-term debt... 290,237 -- -- -- --
Payments on long-term debt................. -- (58,431) (55,475) (24,394) (32,018)
Proceeds from issuance of common stock..... -- -- 100 -- --
Dividends.................................. (25,625) (44,479) (90,000) -- (1,292,732)
--------- --------- --------- --------- -----------
Net cash used in financing
activities........................ (390,388) (260,910) (512,375) (441,394) (167,450)
--------- --------- --------- --------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS................................ (15,006) 186,179 (40,227) (81,960) (113,516)
CASH AND CASH EQUIVALENTS, beginning of
period..................................... 57,199 42,193 228,372 228,372 188,145
--------- --------- --------- --------- -----------
CASH AND CASH EQUIVALENTS, end of period..... $ 42,193 $ 228,372 $ 188,145 $ 146,412 $ 74,629
========= ========= ========= ========= ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid.............................. $ 84,708 $ 30,549 $ 21,006 $ 10,056 $ 28,953
========= ========= ========= ========= ===========
Income taxes paid.......................... $ 242,989 $ 284,847 $ 54,883 $ 54,883 $ --
========= ========= ========= ========= ===========
</TABLE>

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

F-40
<PAGE> 105

THE PROSTAFF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

The combined financial statements of The Prostaff Companies (the "Company")
include the activities of Prostaff Personnel, Inc. ("Prostaff"), d.b.a. Prostaff
Staffing Services, Office Staffing and Medical Staffing, Excel Temporary
Staffing, Inc. ("Excel") and Professional Resources, Inc. ("Professional"),
d.b.a. Performance Staffing which have common ownership. All intercompany
transactions have been eliminated in the combined financial statements.

Prostaff was originally incorporated in the state of Arkansas in 1973 as
Dunhill Personnel Agency of Little Rock, Inc. ("Dunhill"). Dunhill changed its
name to Prostaff in 1988. Prostaff's primary business purpose is to provide
temporary personnel services. At June 30, 1996, Prostaff operated staffing
offices in 23 locations in Arkansas. Excel was incorporated in the state of
Arkansas on October 25, 1990 and is engaged in providing temporary personnel
services to one large cosmetics manufacturer in Little Rock, Arkansas which
represents 100% of the revenue and accounts receivable of Excel. Revenues from
this one customer represent 14%, 13%, 14% and 17% of combined service revenues
for 1993, 1994, 1995 and the six months ended June 30, 1996, respectively.
Professional was incorporated in the state of Arkansas on October 24, 1995
("inception date"). On October 31, 1995, Professional purchased the assets of an
existing temporary personnel service business in Little Rock, Arkansas for
$30,000. This acquisition was accounted for as a purchase. There was no goodwill
recorded in connection with this acquisition. The combined financial statements
of the Company include the results of operations of Professional from the
inception date.

Interim Financial Statements --

The accompanying interim financial statements and related disclosures for
the six months ended June 30, 1995 have not been audited by independent
accountants. However, they have been prepared in conformity with the accounting
principles stated in the audited financial statements for the three years in the
period ended December 31, 1995 and for the six months ended June 30, 1996, and
include all adjustments (which were of a normal, recurring nature) which, in the
opinion of management, are necessary to present fairly the financial position of
the Company and the results of operations and cash flows for each of the periods
presented. The operating results for the interim periods presented are not
necessarily indicative of results for the full year.

Use of Estimates --

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in the accompanying financial statements are based upon
management's evaluation of the relevant facts and circumstances as of the date
of the financial statements. Actual results may differ from the estimates and
assumptions used in preparing the accompanying financial statements.

Revenue Recognition --

Service revenues are recognized as income at the time staffing services are
provided.

Cash and Cash Equivalents --

F-41
<PAGE> 106

THE PROSTAFF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Accounts Receivable --

The Company maintains allowances for potential losses which management
believes are adequate to absorb losses to be incurred in realizing the amounts
recorded in the accompanying financial statements. Included in accounts
receivable in the accompanying balance sheets are unbilled amounts of $343,681,
$441,642 and $869,867 at December 31, 1994, 1995 and June 30, 1996,
respectively.

Property and Equipment --

<TABLE>
<S> <C>
Office equipment................................................. 5 years
Computer equipment............................................... 5 years
Vehicles......................................................... 5 years
Computer software................................................ 5 years
Leasehold improvements........................................... 10 years
</TABLE>

Workers' Compensation and Employee Health Benefits --

The Company self-insures certain risks related to workers' compensation and
employee health benefit claims. The estimated costs of existing and future
claims are accrued as incidents occur based upon historical loss development
trends and may be subsequently revised based on developments relating to such
claims. The Company engages the services of a third party actuary to assist with
the development of the workers' compensation cost estimates.

Fair Value of Financial Instruments --

The Company's financial instruments include cash and cash equivalents,
certificates of deposit, note payable to stockholder and its other debt
obligations. Management believes that these instruments bear interest at rates
which approximate prevailing market rates for instruments with similar
characteristics and, accordingly, that the carrying values for those instruments
are reasonable estimates of fair value.

Income Taxes --

Prior to 1995, the Company operated as a C Corporation for federal and
state tax reporting purposes. Effective January 1, 1993, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" ("SFAS 109"). Under this new statement, deferred income taxes
are provided based on the estimated future tax effects of differences between
the financial statement carrying amounts and the tax basis of existing assets
and liabilities. The adoption of SFAS 109 did not have a material effect on the
Company's financial position or results of operations.

Effective January 1, 1995, the Company elected to be taxed as an S
Corporation for federal and state income tax reporting purposes. Accordingly, no
provision for income taxes has been recorded in the accompanying financial
statements for the period subsequent to January 1, 1995 as such taxes are
liabilities of the individual stockholders. Upon election of S Corporation
status, the Company wrote off net deferred tax

F-42
<PAGE> 107

THE PROSTAFF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

assets totaling $96,716 related to years prior to 1995, which is reflected as
provision for income taxes in the accompanying combined statements of income.

2. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- JUNE 30,
1994 1995 1996
-------- ---------- ----------
<S> <C> <C> <C>
Office equipment................................ $311,414 $ 412,661 $ 478,930
Computer equipment.............................. 382,903 477,744 518,003
Vehicles........................................ 107,900 136,859 107,510
Computer software............................... 113,884 165,635 214,587
Leasehold improvements.......................... 83,593 136,949 171,308
-------- ---------- ----------
999,694 1,329,848 1,490,338
Less accumulated depreciation and
amortization.................................. 359,142 572,865 660,419
-------- ---------- ----------
$640,552 $ 756,983 $ 829,919
======== ========== ==========
</TABLE>

3. DEBT:

Long-term debt consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- JUNE 30,
1994 1995 1996
-------- ---------- ----------
<S> <C> <C> <C>
Term note payable to Boatmen's National Bank in
the original amount of $290,237 due in monthly
installments of $6,079, including interest at
5.5% through August 31, 1998. Secured by
certain equipment of Prostaff and guaranteed
by stockholders............................... $231,806 $ 176,331 $ 144,313
Less current maturities......................... 61,742 64,872 66,648
-------- ---------- ----------
$170,064 $ 111,459 $ 77,665
======== ========== ==========
</TABLE>

Total maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
YEARS ENDING
-------------------------
DECEMBER 31, JUNE 30,
------------ --------
<S> <C> <C>
1996................................. $ 64,872 $ --
1997................................. 68,531 66,648
1998................................. 42,928 70,439
1999................................. -- 7,226
-------- --------
$176,331 $144,313
======== ========
</TABLE>

F-43
<PAGE> 108

THE PROSTAFF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Line of credit balances consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1994 1995 1996
-------- ------- ----------
<S> <C> <C> <C>
Line of credit with Boatmen's Bank. Maximum
borrowings of $1.5 million. Accrues interest at a
variable rate, which ranged from 8.25% to 9.0% and
averaged 8.63% during the six months ended June 30,
1996. Due upon demand. Secured by the accounts
receivable of Prostaff and guaranteed by
stockholders....................................... $417,000 $ -- $1,078,000
Line of credit with First Commercial Bank. Maximum
borrowings of $50,000. Interest payable monthly at
9.5%. Due upon demand. Secured by the assets of
Professional and guaranteed by stockholder......... -- 20,000 21,300
Line of credit with Mercantile Bank. Maximum
borrowings of $250,000. Interest payable monthly at
a fixed rate of 9.25%, which changed to 10.0% in
May 1996 and averaged 9.5% during the six months
ended June 30, 1996. Secured by accounts receivable
of Excel and guaranteed by stockholders............ -- -- 78,000
-------- ------- ----------
$417,000 $20,000 $1,177,300
======== ======= ==========
</TABLE>

4. NOTE PAYABLE TO STOCKHOLDER:

In order to effect the acquisition made by Professional, as discussed in
Note 1, Professional borrowed $30,000 from the sole stockholder and signed a
promissory note dated October 30, 1995. Interest is paid monthly at the rate of
9.25%. The note is due on demand, or if no demand is made, on October 30, 1996.
Total interest paid to the stockholder in 1995 and for the six months ended June
30, 1996 was $246 and $1,156, respectively.

During 1993, the Company repaid a $530,000 note payable to stockholder.
Total interest paid to the stockholder in 1993 was $44,200.

5. INCOME TAXES:

Provision (benefit) for income taxes consisted of the following components
for the years ended December 31:

<TABLE>
<CAPTION>
1993 1994
-------- --------
<S> <C> <C>
Current:
Federal.............................. $213,892 $243,184
State................................ 26,988 30,684
-------- --------
240,880 273,868
-------- --------
Deferred:
Federal.............................. (31,201) (17,778)
State................................ (3,937) (2,243)
-------- --------
(35,138) (20,021)
-------- --------
Total........................ $205,742 $253,847
======== ========
</TABLE>

F-44
<PAGE> 109

THE PROSTAFF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Provision for income taxes differs from amounts computed by applying the
statutory tax rate to pretax income as a result of certain nondeductible
expenses and the utilization of general business credits as follows:

<TABLE>
<CAPTION>
1993 1994
-------- --------
<S> <C> <C>
Income taxes on pretax income at the statutory rate of 34%....... $205,523 $263,701
Increase (reduction) in tax resulting from:
Nondeductible expenses......................................... 16,779 30,242
State income taxes, net of federal income tax benefit.......... 28,049 37,089
Federal general business tax credits........................... (44,609) (77,185)
-------- --------
$205,742 $253,847
======== ========
</TABLE>

Deferred income taxes reflect the impact of "temporary differences" between
the financial and tax basis of assets and liabilities as measured by enacted tax
laws. The temporary differences which gave rise to deferred tax assets and
liabilities as of December 31, 1993 and 1994 were as follows:

<TABLE>
<CAPTION>
1993 1994
-------- --------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts................................ $ 16,465 $ 3,829
Reserve for workers' compensation claims....................... 112,099 150,772
-------- --------
Total deferred tax assets........................................ $128,564 $154,601
-------- --------
Deferred tax liabilities:
Accelerated depreciation....................................... $ 51,869 $ 57,885
======== ========
</TABLE>

6. WORKERS' COMPENSATION:

Prostaff is self-insured for certain workers' compensation claims and is
regulated by the Arkansas Workers' Compensation Insurance Commission (the
"Commission"). As a condition to authorization of the self-insurance program in
1991, the Commission required Prostaff to maintain a $750,000 deposit in a
depository considered acceptable by the Commission. In 1993, the Commission
altered the depository requirement and allowed Prostaff to provide the
Commission a $750,000 letter of credit. The letter of credit is guaranteed by
stockholders of the Company. As a condition to providing the letter of credit,
the bank required Prostaff to maintain as security a $150,000 deposit with the
bank. These restricted funds were in certificates of deposit with one year
maturities and are reflected with accrued interest as certificates of deposit in
the accompanying combined balance sheet at December 31, 1994. In 1995, the bank
no longer required the security for the letter of credit. Accordingly, Prostaff
reinvested these funds in 1995, and they are reflected as certificates of
deposit at December 31, 1995. Prostaff has purchased insurance for individual
claims which exceed $200,000, up to a maximum of $2.0 million. Workers'
compensation expense totaled $820,569, $728,281, $765,893 and $263,287 for 1993,
1994, 1995 and the six months ended June 30, 1996, respectively. Unaudited
workers' compensation expense for the six months ended June 30, 1995 was
$368,055. Excel and Professional are fully insured for workers' compensation.

7. EMPLOYEE BENEFIT PLANS:

The Company adopted a defined contribution benefit plan for its eligible
permanent employees, as defined, effective June 1, 1995. This profit sharing
plan, which operates pursuant to an Internal Revenue Code section 401(k)
arrangement, allows eligible employees to contribute on a tax deferred basis up
to 15% of their annual wages, as defined. The Company makes a matching
contribution equal to 50% of the employees' contributions up to a maximum of 6%
of the respective employees' annual wages. Total matching contribu-

F-45
<PAGE> 110

THE PROSTAFF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

tions made by the Company to the plan for 1995 and the six months ended June 30,
1996 were $12,448 and $8,802, respectively.

On September 1, 1995, the Company established a cafeteria plan to offer
health, dental, term life, accidental death and disability insurance to its
permanent full-time employees. Employees may also obtain coverage for family
members by making tax deferred contributions to the plan trust. The health
insurance coverage portion of the plan is self-insured by the Company. Pursuant
to this self-insurance program, the Company pays for the approved claims costs
of eligible participants subject to certain individual and family deductibles
and co-payments, as defined. The Company maintains insurance for annual claims
per employee in excess of $10,000 and aggregate monthly claims in excess of an
amount equal to $75.80 multiplied by the number of personnel enrolled in the
plan. Total claims expense for 1995 and the six months ended June 30, 1996 was
$35,550 and $40,995, respectively.

8. COMMITMENTS:

The Company has a consulting agreement with the former owner of a temporary
personnel service business the Company acquired in March 1995 which provides for
monthly minimum payments of $5,250 for 36 months through March 1998. These
payments are expensed on a monthly basis as paid. The consulting agreement also
includes a covenant against competition with the Company for a five-year period.

The Company also has a consulting agreement with an individual which
provides for monthly minimum payments of $750, in return for assisting the
Company in developing an affirmative action plan, monitoring unemployment
control and consulting on other human resource issues.

The Company has an employment agreement with one member of management that
provides for a monthly salary of $6,833 through March 1998. The employment
agreement also includes a covenant against competition with the Company, which
extends through March 2000, or for two years after termination.

9. NONCANCELABLE OPERATING LEASES:

The Company leases office space under noncancelable operating leases.
Annual future minimum payments required under operating leases that have an
initial or remaining noncancelable lease term in excess of one year are as
follows:

<TABLE>
<CAPTION>
YEARS ENDING
-------------------------
DECEMBER 31, JUNE 30,
1995 1996
------------ --------
<S> <C> <C>
1996................................. $323,397 $ --
1997................................. 264,480 314,022
1998................................. 216,665 250,926
1999................................. 106,499 183,121
2000................................. 63,424 93,392
-------- --------
$974,465 $841,461
======== ========
</TABLE>

Rent expense totaled $147,835, $197,243, $258,992 and $165,473 for fiscal
years 1993, 1994, 1995 and the six months ended June 30, 1996, respectively.
Unaudited rent expense for the six months ended June 30, 1995 was $121,942. The
Company leases the office facilities of its headquarters from a limited
liability corporation ("LLC") owned by the stockholders of the Company. For the
fiscal years 1993, 1994, 1995 and the six months ended June 30, 1996, rent paid
to the LLC totaled $61,100, $73,761, $114,180 and $62,550, respectively.
Unaudited rent paid to the LLC was $56,128 for the six months ended June 30,
1995.

F-46
<PAGE> 111

THE PROSTAFF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

10. PENDING BUSINESS COMBINATION:

In June 1996, the stockholders of the Company entered into a definitive
agreement to merge with StaffMark, Inc. ("StaffMark") in conjunction with
StaffMark's anticipated initial public offering. Prior to or coincident with
this proposed merger, the Company plans to dividend certain assets to the
stockholders consisting of vehicles and the cash surrender value of an officer's
life insurance policy, which had an aggregate carrying value of $76,223 as of
June 30, 1996. In addition, the Company plans to make cash distributions equal
to the Company's S Corporation Accumulated Adjustment Account as of the merger
date. During 1996, the Company distributed $1,292,732, which represented the
Company's estimated S Corporation Accumulated Adjustment Account at June 30,
1996.

In conjunction with the proposed merger discussed above, certain of the
stockholders will enter into employment agreements which provide for a set base
salary, participation in future incentive bonus plans, certain other benefits
and a covenant not to compete following termination of such person's employment.

The Company has advanced $31,250 to StaffMark to fund organizational and
other costs related to the planned merger and StaffMark's initial public
offering.

11. PRO FORMA ADJUSTMENTS TO FINANCIAL STATEMENT PRESENTATION
(UNAUDITED):

In conjunction with the planned merger with StaffMark as discussed in Note
10, the Company will change from an S Corporation to a C Corporation for federal
and state income tax reporting purposes, which will require the Company to
recognize the tax consequences of operations in its statements of income. The
supplemental pro forma information included in the accompanying statements of
income reflect the estimated impact of recognizing income tax expense as if the
Company had been a C Corporation for tax reporting purposes during the twelve
months and six months ended December 31, 1995 and June 30, 1996, respectively.

F-47
<PAGE> 112

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Maxwell Companies:

We have audited the accompanying combined balance sheets of the companies
identified in Note 1 to the financial statements ("The Maxwell Companies"), as
of December 31, 1994 and 1995 and June 30, 1996, and the related combined
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1995 and for the six months ended June
30, 1996. 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 Maxwell Companies as of
December 31, 1994 and 1995 and June 30, 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995 and for the six months ended June 30, 1996 in conformity with
generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Little Rock, Arkansas,
July 26, 1996.

F-48
<PAGE> 113

THE MAXWELL COMPANIES

COMBINED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ JUNE 30,
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 556,544 $1,041,373 $ 665,639
Restricted cash........................................ 138,453 253,171 109,181
Investments............................................ 209,505 273,354 --
Accounts receivable, net of allowance for doubtful
accounts of $75,711, $63,988 and $109,908,
respectively........................................ 2,810,176 2,536,603 2,676,251
Prepaid expenses and other............................. 96,669 24,628 136,684
---------- ---------- ----------
Total current assets........................... 3,811,347 4,129,129 3,587,755
PROPERTY AND EQUIPMENT, net.............................. 480,594 499,792 295,312
INTANGIBLE ASSETS, net................................... -- -- 297,146
ADVANCE TO STAFFMARK, INC................................ -- -- 31,250
---------- ---------- ----------
$4,291,941 $4,628,921 $4,211,463
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable....................................... $ 167,991 $ 169,250 $ 238,036
Payroll and related liabilities........................ 653,772 570,444 885,804
Reserve for workers' compensation claims............... 476,000 1,153,000 912,000
Current maturities of long-term debt................... -- -- 1,827,361
Accrued dividends...................................... 197,500 151,000 --
Other accrued liabilities.............................. 20,728 25,462 4,127
---------- ---------- ----------
Total current liabilities...................... 1,515,991 2,069,156 3,867,328
LONG-TERM DEBT, less current maturities.................. -- -- 77,562
COMMITMENTS AND CONTINGENCIES (Notes 8 through 12)
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value in 1994, 1995 and 1996;
authorized shares of 110,000 in 1994 and 1995 and
160,000 in 1996; shares issued and outstanding of
4,000 in 1994 and 1995 and 5,000 in 1996............ 4,000 4,000 5,000
Unrealized gain on investments......................... -- 43,296 --
Retained earnings...................................... 2,771,950 2,512,469 261,573
---------- ---------- ----------
Total stockholders' equity..................... 2,775,950 2,559,765 266,573
---------- ---------- ----------
$4,291,941 $4,628,921 $4,211,463
========== ========== ==========
</TABLE>

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

F-49
<PAGE> 114

THE MAXWELL COMPANIES

COMBINED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
----------------------------------------- --------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SERVICE REVENUES............... $16,324,216 $21,225,866 $23,092,606 $11,533,102 $13,232,174
COST OF SERVICES............... 11,253,565 16,003,387 17,748,020 8,644,339 9,892,232
----------- ----------- ----------- ----------- -----------
Gross profit......... 5,070,651 5,222,479 5,344,586 2,888,763 3,339,942
OPERATING EXPENSES:
Selling, general and
administrative............ 3,582,427 3,820,565 4,296,703 2,244,644 2,480,578
Depreciation and
amortization.............. 75,368 107,601 136,135 69,690 72,507
----------- ----------- ----------- ----------- -----------
Operating income..... 1,412,856 1,294,313 911,748 574,429 786,857
OTHER INCOME (EXPENSE):
Interest income.............. 14,767 21,645 43,213 25,235 33,681
Interest expense............. (27,678) (33,849) -- -- (22,174)
Other, net................... (104,397) (18,836) (35,396) (32,837) 21,954
----------- ----------- ----------- ----------- -----------
Net income........... $ 1,295,548 $ 1,263,273 $ 919,565 $ 566,827 $ 820,318
=========== =========== =========== =========== ===========
PRO FORMA DATA (Unaudited)
(Note 15):
Historical income before
income taxes.............. $ 919,565 $ 820,318
Less pro forma provision for
income taxes.............. 358,630 319,924
----------- -----------
PRO FORMA NET INCOME........... $ 560,935 $ 500,394
=========== ===========
</TABLE>

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

F-50
<PAGE> 115

THE MAXWELL COMPANIES

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK UNREALIZED
---------------- GAIN ON RETAINED
SHARES AMOUNT INVESTMENTS EARNINGS TOTAL
------ ------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1992.............. 3,500 $3,500 $ -- $ 1,890,892 $ 1,894,392
Net income............................ -- -- -- 1,295,548 1,295,548
Dividends declared.................... -- -- -- (979,383) (979,383)
----- ------ ------ ----------- -----------
BALANCE, December 31, 1993.............. 3,500 3,500 -- 2,207,057 2,210,557
Net income............................ -- -- -- 1,263,273 1,263,273
Issuance of stock..................... 500 500 -- -- 500
Dividends declared.................... -- -- -- (698,380) (698,380)
----- ------ ------ ----------- -----------
BALANCE, December 31, 1994.............. 4,000 4,000 -- 2,771,950 2,775,950
Net income............................ -- -- -- 919,565 919,565
Dividends declared.................... -- -- -- (1,179,046) (1,179,046)
Net unrealized holding gain on
investments available for sale..... -- -- 43,296 -- 43,296
----- ------ ------ ----------- -----------
BALANCE, December 31, 1995.............. 4,000 4,000 43,296 2,512,469 2,559,765
Net income............................ -- -- -- 820,318 820,318
Issuance of stock..................... 1,000 1,000 -- -- 1,000
Dividends declared:
Cash............................... -- -- -- (2,620,341) (2,620,341)
Investments........................ -- -- (43,296) (230,058) (273,354)
Property........................... -- -- -- (220,815) (220,815)
----- ------ ------ ----------- -----------
BALANCE, June 30, 1996.................. 5,000 $5,000 $ -- $ 261,573 $ 266,573
===== ====== ====== =========== ===========
</TABLE>

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

F-51
<PAGE> 116

THE MAXWELL COMPANIES

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------------------------- --------------------------
1993 1994 1995 1995 1996
---------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................... $1,295,548 $ 1,263,273 $ 919,565 $ 566,827 $ 820,318
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................ 75,368 107,601 136,135 69,690 72,507
Provision for bad debts...................... 77,690 100,615 223,216 196,737 45,920
Loss (gain) on investments................... 102,536 12,500 (2,146) -- --
Change in operating assets and liabilities,
net of effects of acquisition:
Restricted cash............................ (65,954) (72,499) (114,718) 28,805 143,990
Accounts receivable........................ (777,846) (1,073,300) 50,357 168,500 (185,568)
Prepaid expenses and other................. 26,124 (10,457) 72,041 61,474 (112,056)
Accounts payable........................... 40,808 (74,812) 1,259 54,496 68,786
Payroll and related liabilities............ 525,769 33,483 (83,328) 304,624 315,360
Reserve for workers' compensation claims... -- 476,000 677,000 444,500 (241,000)
Other accrued liabilities.................. 64,574 (43,846) 4,734 (61,202) (15,592)
---------- ----------- ---------- ---------- ---------
Net cash provided by operating
activities............................ 1,364,617 718,558 1,884,115 1,834,451 912,665
---------- ----------- ---------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Sumner-Ray Technical Resources,
Inc.......................................... -- -- -- -- (168,000)
Capital expenditures........................... (155,150) (211,595) (155,333) (51,492) (68,810)
Purchase of investments........................ (109,144) (13,750) (116,526) (11,476) --
Sales of investments........................... -- -- 98,119 -- --
Advance to StaffMark, Inc...................... -- -- -- -- (31,250)
---------- ----------- ---------- ---------- ---------
Net cash used in investing activities... (264,294) (225,345) (173,740) (62,968) (268,060)
---------- ----------- ---------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends................................. $ (813,409) $ (666,854) $(1,225,546) $(1,057,559) $(2,771,339)
Proceeds from (payments on) long-term debt..... (46,297) (336,801) -- -- 1,750,000
Issuance of stock.............................. -- 500 -- -- 1,000
---------- ----------- ---------- ---------- ---------
Net cash used in financing activities... (859,706) (1,003,155) (1,225,546) (1,057,559) (1,020,339)
---------- ----------- ---------- ---------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS.................................... 240,617 (509,942) 484,829 713,924 (375,734)
CASH AND CASH EQUIVALENTS, beginning of period... 825,869 1,066,486 556,544 556,544 1,041,373
---------- ----------- ---------- ---------- ---------
CASH AND CASH EQUIVALENTS, end of period......... $1,066,486 $ 556,544 $ 1,041,373 $ 1,270,468 $ 665,639
========== =========== ========== ========== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid.................................. $ 27,678 $ 23,950 $ -- $ -- $ 18,047
========== =========== ========== ========== =========
Non-cash transactions:
Notes payable issued in conjunction with the
purchase of Sumner-Ray Technical Resources,
Inc.......................................... $ -- $ -- $ -- $ -- $ 149,180
========== =========== ========== ========== =========
Transfer of investments to stockholders........ $ -- $ -- $ -- $ -- $ 273,354
========== =========== ========== ========== =========
Transfer of property to stockholders........... $ -- $ -- $ -- $ -- $ 220,815
========== =========== ========== ========== =========
</TABLE>

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

F-52
<PAGE> 117

THE MAXWELL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

The combined financial statements of The Maxwell Companies (the "Company")
include the activities of Maxwell Staffing, Inc. ("Staffing"), Maxwell Staffing
of Bristow, Inc. ("Bristow"), Maxwell/Healthcare, Inc. ("Healthcare"), Square
One Rehab, Inc. ("Square One") and Technical Staffing, Inc. ("Technical"), all
of which are incorporated in Oklahoma and have substantially common ownership.
All significant intercompany transactions have been eliminated in the
accompanying combined financial statements.

Staffing, which was incorporated in 1979, and Bristow, which was
incorporated in 1993, both provide temporary personnel services in the
northeastern Oklahoma area to the clerical, industrial and medical fields.
Healthcare, which was incorporated in 1989 to provide foreign-trained temporary
and permanent physical and occupational therapist services, is licensed to do
business in 22 states. Square One, which was incorporated in 1991, provides
contract management and physical and occupational therapist services to
companies located in the midwestern and southwestern United States. Technical,
which was incorporated in 1996, provides permanent and temporary technical
personnel services to companies located primarily in Oklahoma.

Interim Financial Statements --

The accompanying interim combined financial statements as of June 30, 1995
have not been audited by independent accountants. However, they have been
prepared in conformity with the accounting principles stated in the audited
combined financial statements for the three years in the period ended December
31, 1995 and for the six months ended June 30, 1996, and include all adjustments
(which were of a normal, recurring nature) which, in the opinion of management,
are necessary to present fairly the financial position of the Company and the
results of its operations and cash flows for each of the periods presented. The
operating results for the interim periods presented are not necessarily
indicative of results for the full year.

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, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in preparing the accompanying combined financial statements
are based upon management's evaluation of the relevant facts and circumstances
as of the date of the financial statements. However, actual results may differ
from the estimates and assumptions used in preparing the accompanying combined
financial statements.

Revenue Recognition --

Service revenues are recognized as income at the time services are
provided.

Cash and Cash Equivalents --

Restricted Cash --

Restricted cash represents funds deposited in an account maintained on
behalf of the Company's self-insured health benefits plan. The use of these
assets is restricted to the payment of health benefits of the participating
employees.

F-53
<PAGE> 118

THE MAXWELL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Accounts Receivable --

The Company maintains allowances for potential losses which management
believes are adequate to absorb losses to be incurred in realizing the amounts
recorded in the accompanying financial statements. Included in accounts
receivable in the accompanying combined balance sheets are unbilled amounts of
$392,068, $379,163 and $623,219 at December 31, 1994, December 31, 1995 and June
30, 1996, respectively.

Investment Securities --

Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." In accordance with this pronouncement, investment
securities are to be classified as either trading, available-for-sale or held
for investment. Trading securities are recorded at market value, and any gains
or losses are recognized in the income statement. Securities available-for-sale
are also recorded at market value; however, any unrealized gains or losses are
recorded as an adjustment to stockholders' equity. Securities held for
investment are recorded at amortized cost, adjusted for necessary valuation
allowances.

Upon adoption of SFAS No. 115 on January 1, 1994, the Company classified
its investment securities as available-for-sale. The implementation of this
pronouncement did not have a material impact to the financial statements.

Property and Equipment --

Property and equipment are recorded at cost and are depreciated or
amortized using a method which approximates the straight-line method over the
estimated useful lives of the assets. Leasehold improvements are amortized on a
straight-line basis over the shorter of the estimated economic lives or the
terms of the lease. The estimated useful lives of the Company's assets, by asset
classification, are as follows:

<TABLE>
<S> <C>
Office equipment................................................. 5-7 years
Computer equipment............................................... 5-7 years
Vehicles......................................................... 5 years
Building and improvements........................................ 7-32 years
</TABLE>

Intangible Assets --

Intangible assets consist primarily of goodwill recorded in conjunction
with the acquisition of Sumner-Ray Technical Resources, Inc. ("Sumner-Ray"), as
discussed in Note 2, which is being amortized using the straight-line method
over 30 years. In the event facts and circumstances indicate that the carrying
amount of this goodwill may be impaired, an evaluation of recoverability would
be performed. If an evaluation is required, the estimated future undiscounted
net cash flows of the related assets over their remaining lives would be
compared to the assets' carrying amounts in measuring whether the assets are
recoverable. As of June 30, 1996, the Company's intangible assets were
considered to be fully recoverable.

Workers' Compensation and Health Benefits --

The Company self-insures certain risks related to workers' compensation and
employee health benefits claims. The estimated costs of existing and future
claims are accrued as incidents occur based upon historical

F-54
<PAGE> 119

THE MAXWELL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

loss development trends and may be subsequently revised based on developments
relating to such claims. The Company engages the services of a third party
actuary to assist with the development of these cost estimates.

Fair Value of Financial Instruments --

The Company's financial instruments include cash and cash equivalents,
restricted cash, investments and long-term debt. Excluding investments, which
are carried at fair market value as discussed in Note 4, management believes
that the Company's financial instruments bear interest at rates which
approximate prevailing market rates for instruments with similar characteristics
and, accordingly, that the carrying values for these instruments are reasonable
estimates of fair value.

2. BUSINESS COMBINATIONS:

On February 23, 1996, the Company acquired certain assets of Sumner-Ray,
which is engaged in providing temporary and permanent placement of professional
and technical personnel in the engineering, drafting and manufacturing fields.
The acquisition has been accounted for as a purchase and the results of
Sumner-Ray have been included in the accompanying financial statements since the
date of acquisition. The cost of the acquisition has been allocated on the basis
of the estimated fair value of the assets and liabilities acquired.

Total consideration paid for Sumner-Ray was $336,000. The purchase price
included cash of $168,000 and a note to the seller for $168,000, which included
an interest component at a stated rate of 8% per year. The note has been
discounted using the prescribed rate, and the resulting principal amount of
$149,180 is included in the accompanying combined balance sheets. The assets
acquired have been recorded at their estimated fair value as of the acquisition
date, with the remaining acquisition costs of approximately $300,000 being
recorded as goodwill.

The acquisition of Sumner-Ray did not have a significant impact on the
Company's operating results.

3. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- JUNE 30,
1994 1995 1996
---------- ---------- --------
<S> <C> <C> <C>
Building and improvements....................... $ 483,136 $ 502,130 $ --
Office equipment................................ 346,530 386,411 411,253
Computer equipment.............................. 204,268 300,265 337,639
Vehicles........................................ 25,105 27,561 27,561
Leasehold improvements.......................... -- -- 17,274
Land............................................ 13,000 13,000 --
---------- ---------- --------
1,072,039 1,229,367 793,727
Less accumulated depreciation and
amortization.................................. 591,445 729,575 498,415
---------- ---------- --------
$ 480,594 $ 499,792 $295,312
========== ========== ========
</TABLE>

Depreciation and amortization expense related to property and equipment for
the years ended December 31, 1993, 1994 and 1995 totaled $75,368, $107,601 and
$136,135, respectively. Depreciation and amortization expense for the six months
ended June 30, 1995 and 1996 totaled $69,690 (unaudited) and $67,474,
respectively.

F-55
<PAGE> 120

THE MAXWELL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

4. INVESTMENTS:

The Company has classified all investments as available-for-sale.
Accordingly, these investments have been recorded at market value.

The carrying value and market value of available-for-sale investment
securities were as follows:

<TABLE>
<CAPTION>
GROSS GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
December 31, 1994:
Equity securities......................... $ 180,826 $ -- $ -- $180,826
United States government obligations...... 28,679 -- -- 28,679
-------- ------- ------- --------
$ 209,505 $ -- $ -- $209,505
======== ======= ======= ========
December 31, 1995:
Equity securities......................... $ 201,379 $ 38,551 $ -- $239,930
United States government obligations...... 28,679 4,745 -- 33,424
-------- ------- ------- --------
$ 230,058 $ 43,296 $ -- $273,354
======== ======= ======= ========
</TABLE>

The United States government obligations held as of December 31, 1994 and
1995 represent only one issue which matures in 2003.

Losses totaling $102,536 and $12,500 in 1993 and 1994, respectively, were
recognized related to one security whose impairment of value was deemed to be
other than temporary. There were no sales of securities during 1994. Proceeds
from the sale of available-for-sale securities totaled $98,119 for the year
ended December 1995, including realization of a gross gain of $2,146. The gain
and losses are reflected in other income (expense) in the accompanying combined
statements of income and were determined using each security's specifically
identified cost.

All investments were distributed to the stockholders in March 1996. The
related unrealized holding gain was removed in connection with this dividend.

5. INTANGIBLE ASSETS:

Intangible assets, net of amortization, at June 30, 1996 consisted
primarily of the goodwill related to the acquisition of Sumner-Ray, as discussed
in Note 2.

Amortization expense related to intangible assets totaled $5,034 for the
six months ended June 30, 1996. 6. LONG-TERM DEBT:

Long-term debt as of June 30, 1996 consisted of a promissory note payable
to the previous owner of Sumner-Ray which is due in annual installments of
$84,000, including interest at approximately 8%, payable on February 23, 1997
and 1998. The obligation is secured by a lien and security interest in certain
assets of the Company. Scheduled principal maturities of this obligation are
$71,618 in 1997 and $77,562 in 1998.

On May 17, 1996, the Company entered into a debt agreement with State Bank
& Trust, N.A. which provided for a $1.75 million term loan. The loan is secured
by the Company's accounts receivable and guaranteed by the Company's
stockholders. Accrued interest is due and payable monthly beginning June 1, 1996
at a rate of 8.25%. The outstanding principal balance plus unpaid accrued
interest is due November 1, 1996. The proceeds from this loan were used to
partially fund the cash dividend discussed in Note 14.

F-56
<PAGE> 121

THE MAXWELL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

7. INCOME TAXES:

8. WORKERS' COMPENSATION:

Effective July 1, 1994, the Company began self-insuring certain workers'
compensation claims in the state of Oklahoma and is regulated by the Oklahoma
Workers' Compensation Insurance Commission. The Company has purchased insurance
for workers' compensation claims which exceed $250,000. The Company maintains a
letter of credit with a bank to cover any potential unpaid claims. At June 30,
1996, this letter of credit was in the amount of $450,000. Workers' compensation
expense totaled $485,151, $918,961 and $1,089,901 for the years ended December
31, 1993, 1994 and 1995, respectively, and $532,462 (unaudited) for the six
months ended June 30, 1995. A credit to workers' compensation expense totaling
$51,682 was recorded for the six months ended June 30, 1996 due to a reduction
in the actuarially determined reserves required which was primarily the result
of using the Company's own claim development experience versus industry
development factors which had been used in previous actuarial valuations.

9. EMPLOYEE BENEFIT PLANS:

Prior to 1995, employees participated in a profit sharing plan to which the
Company made discretionary contributions. In 1993 and 1994, the Company made
contributions totaling $250,000 and $190,000, respectively. The Company elected
not to make a contribution in 1995. Effective January 1, 1996, the Company added
a defined contribution benefit plan to the existing profit sharing plan. This
new plan, which operates pursuant to an Internal Revenue Code Section 401(k)
arrangement, allows employees to contribute on a tax deferred basis up to 10% of
their annual wages. The Company makes a matching contribution equal to 50% of
the employees' contributions up to a maximum of 3% of the respective employees'
annual wages. The Company may also contribute additional amounts for profit
sharing at its discretion. Total matching contributions to be made by the
Company to the plan for the six months ended June 30, 1996 were $26,359. No
discretionary contributions were made during the six months ended June 30, 1996.

On January 1, 1993, the Company established a self-insured plan to offer
health and dental insurance benefits to certain of its employees. Employees may
also purchase coverage for family members. Pursuant to this plan, the Company
pays for the approved claims costs of eligible participants subject to certain
individual and family deductibles and co-payments, as defined. Both the Company
and the participants make contributions to the plan based upon premiums which
are established by a third party administrator and the Company's benefits
committee. The Company maintained insurance for annual claims for individuals
which exceeded $10,000, $15,000, $25,000 and $25,000 at December 31, 1993, 1994,
1995 and June 30, 1996, respectively. Expenses related to this plan for the
years ended December 31, 1993, 1994 and 1995 were $190,357, $184,605 and
$188,066, respectively. Expenses related to this plan for the six months ended
June 30, 1995 and 1996 were $146,501 (unaudited) and $129,406, respectively.

F-57
<PAGE> 122

THE MAXWELL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

10. RELATED PARTY TRANSACTIONS:

The Company rents a duplex from certain stockholders which houses
foreign-trained physical and occupational therapists. Rent expense related to
the duplex amounted to $16,800 for each of the years ended December 31, 1993,
1994 and 1995. Rent expense totaled $8,400 (unaudited) and $8,500 for the six
months ended June 30, 1995 and 1996, respectively. These rent payments are not
subject to a formal agreement and, therefore, have not been considered in the
disclosure included in Note 12.

11. COMMITMENTS AND CONTINGENCIES:

The Company has employment agreements with certain executive officers and
management personnel that provide for annual salaries, cost-of-living
adjustments and additional compensation in the form of performance based
bonuses. Certain agreements include a covenant against competition with the
Company, which extends for a period of time after termination. These agreements
generally continue until terminated by the employee or the Company.

One employment agreement provides for the purchase of up to 398 shares of
Square One stock from the existing stockholders subject to the satisfaction of
certain performance measures of Square One. As of June 30, 1996, Square One's
performance had exceeded the threshold required for the employee to purchase 100
shares; however, this option had not been exercised.

The Company pays dividends to its stockholders in amounts sufficient to
cover their estimated tax payments attributable to the respective share of the
Company's net income which will be included in their individual tax returns. The
Company plans to continue this practice in the future as long as it maintains
its S Corporation status.

The Company is a party to certain lawsuits and claims primarily involving
workers' compensation claims and other employee related matters. Management
believes, based in part on consultation from legal counsel, that the ultimate
outcome of these matters will not have a materially adverse effect on the
Company's financial position, liquidity or results of operations.

12. NONCANCELABLE OPERATING LEASES:

The Company leases equipment, vehicles and office space as well as
apartments for certain foreign-trained therapists under noncancelable operating
leases. Annual future minimum payments during each of the next five years
required under such leases are as follows:

<TABLE>
<CAPTION>
YEARS ENDING
---------------------------
DECEMBER 31, JUNE 30,
------------ --------
<S> <C> <C>
1996............................... $224,093 $ --
1997............................... 67,545 186,877
1998............................... 52,132 58,087
1999............................... 43,643 47,039
2000............................... 43,643 43,643
-------- --------
$431,056 $335,646
======== ========
</TABLE>

Rent expense totaled $75,472, $123,099 and $134,231 for the years ended
December 31, 1993, 1994 and 1995, respectively. Rent expense for the six months
ended June 30, 1995 and 1996 was $32,747 (unaudited) and $66,778, respectively.

F-58
<PAGE> 123

THE MAXWELL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

13. SIGNIFICANT CUSTOMERS:

The Company's sales to customers which individually account for 10% or more
of service revenues were as follows:

<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
-------------------- -------------------
1993 1994 1995 1995 1996
---- ---- ---- ----------- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Customer 1....................................... 21% 14% 10% -- --
Customer 2....................................... -- 14% 12% 16% 13%
Customer 3....................................... -- -- -- -- 11%
</TABLE>

14. PENDING BUSINESS COMBINATION:

In June 1996, the owners of the Company entered into a definitive agreement
to merge with StaffMark, Inc. ("StaffMark") in conjunction with StaffMark's
initial public offering. In conjunction with this proposed merger, the Company
transferred certain assets to the stockholders consisting of the building in
which the Company is headquartered, which had an aggregate carrying value of
$220,815 as of April 1996. StaffMark plans to lease the real property
distributed, as discussed above, from the owners at a market lease rate. In
addition, the Company plans to make cash distributions equal to the Company's S
Corporation Accumulated Adjustment Account as of the merger date. During 1996,
the Company distributed cash of approximately $2.6 million, which represented
the Company's estimated S Corporation Accumulated Adjustment Account at June 30,
1996.

In conjunction with the proposed merger discussed above, the owners will
enter into employment agreements which provide for a set base salary,
participation in future incentive bonus plans, certain other benefits and a
covenant not to compete following termination of such person's employment.

The Company has advanced $31,250 to StaffMark to fund organizational and
other costs related to the planned merger and StaffMark's initial public
offering.

15. PRO FORMA ADJUSTMENTS TO FINANCIAL STATEMENT PRESENTATION
(UNAUDITED):

In conjunction with the planned merger with StaffMark as discussed in Note
14, the Company will change from an S Corporation to a C Corporation for federal
and state income tax reporting purposes, which will require the Company to
recognize the tax consequences of operations in its statements of income. The
supplemental pro forma information included in the accompanying statements of
income reflect the estimated impact of recognizing income tax expense as if the
Company had been a C Corporation for tax reporting purposes during the twelve
months and six months ended December 31, 1995 and June 30, 1996, respectively.

F-59
<PAGE> 124

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To HRA, Inc.:

We have audited the accompanying balance sheets of HRA, Inc. (the
"Company"), a Tennessee corporation, as of September 30, 1994 and 1995 and June
30, 1996, and the related statements of income (loss), stockholders' equity and
cash flows for each of the three years ended September 30, 1995, and the nine
months ended June 30, 1996. 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 HRA, Inc. as of September
30, 1994 and 1995 and June 30, 1996, and the results of its operations and its
cash flows for each of the three years ended September 30, 1995 and the nine
months ended June 30, 1996, in conformity with generally accepted accounting
principles.

ARTHUR ANDERSEN LLP

Memphis, Tennessee,
July 26, 1996.

F-60
<PAGE> 125

HRA, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------- JUNE 30,
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............................ $ 577,214 $ 367,978 $ 505,810
Restricted cash...................................... 60,083 50,251 --
Accounts receivable, net of allowance for doubtful
accounts of $26,000............................... 1,684,052 1,998,724 2,783,617
Advances to stockholders............................. -- -- 340,089
Prepaid expenses and other........................... 12,616 467,002 775,335
Income taxes receivable.............................. -- 25,125 --
Deferred income taxes................................ 33,100 160,000 226,800
---------- ---------- ----------
Total current assets......................... 2,367,065 3,069,080 4,631,651
PROPERTY AND EQUIPMENT, net............................ 70,261 144,179 195,952
INTANGIBLE ASSETS, net................................. -- 37,156 165,635
OTHER ASSETS:
Deferred income taxes................................ 79,700 65,000 56,600
Advance to StaffMark, Inc............................ -- -- 31,250
Other................................................ 400 21,071 1,423
---------- ---------- ----------
Total other assets........................... 80,100 86,071 89,273
---------- ---------- ----------
$2,517,426.. $3,336,486 $5,082,511
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Borrowings under accounts receivable financing
agreement......................................... $ 600,830 $ 502,512 $ --
Line of credit....................................... -- -- 1,020,000
Current portion of deferred compensation
arrangements...................................... 97,898 43,699 110,709
Outstanding checks................................... -- 166,761 261,240
Accounts payable..................................... 118,906 193,096 196,024
Payroll and related liabilities...................... 493,033 621,317 710,282
Reserve for workers' compensation claims............. 475,712 1,390,351 1,787,641
Income taxes payable................................. 228,217 -- 189,648
Accrued expenses..................................... 72,084 138,416 125,149
Current portion of note payable to a stockholder..... 155,295 -- --
---------- ---------- ----------
Total current liabilities.................... 2,241,975 3,056,152 4,400,693
DEFERRED COMPENSATION ARRANGEMENTS, less current
portion.............................................. 97,824 127,332 264,937
NOTE PAYABLE TO A STOCKHOLDER.......................... -- 122,000 116,000
COMMITMENTS AND CONTINGENCIES
(Notes 10, 11 and 13)
STOCKHOLDERS' EQUITY:
Common stock, no par value, 1,000 shares authorized,
790 shares issued and outstanding................. 12,600 12,600 12,600
Retained earnings.................................... 165,027 18,402 288,281
---------- ---------- ----------
Total stockholders' equity................... 177,627 31,002 300,881
---------- ---------- ----------
$2,517,426 $3,336,486 $5,082,511
========== ========== ==========
</TABLE>

The accompanying notes are an integral
part of these balance sheets.

F-61
<PAGE> 126

HRA, INC.

STATEMENTS OF INCOME (LOSS)

<TABLE>
<CAPTION>
FISCAL YEARS NINE MONTHS ENDED JUNE 30,
----------------------------------------- --------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SERVICE REVENUES............ $13,333,022 $16,453,375 $18,306,542 $13,173,951 $16,882,905
COST OF SERVICES............ 10,985,142 13,367,561 14,939,279 10,745,155 13,550,821
----------- ----------- ----------- ----------- -----------
Gross profit...... 2,347,880 3,085,814 3,367,263 2,428,796 3,332,084
OPERATING EXPENSES:
Selling, general and
administrative......... 2,107,544 2,381,168 3,438,436 2,384,437 2,985,392
Depreciation and
amortization........... 33,773 45,783 65,691 33,832 67,900
----------- ----------- ----------- ----------- -----------
Operating income
(loss).......... 206,563 658,863 (136,864) 10,527 278,792
Interest expense.......... (84,448) (100,828) (107,364) (69,942) (78,401)
Interest and other, net... 6,192 16,466 13,443 6,241 243,861
----------- ----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
PROVISION (BENEFIT) FOR
INCOME TAXES.............. 128,307 574,501 (230,785) (53,174) 444,252
PROVISION (BENEFIT) FOR
INCOME TAXES.............. 43,250 221,100 (84,160) (17,907) 174,373
----------- ----------- ----------- ----------- -----------
Net income
(loss).......... $ 85,057 $ 353,401 $ (146,625) $ (35,267) $ 269,879
=========== =========== =========== =========== ===========
</TABLE>

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

F-62
<PAGE> 127

HRA, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK RETAINED
------------------ EARNINGS
SHARES AMOUNT (DEFICIT) TOTAL
------ ------- --------- ---------
<S> <C> <C> <C> <C>
BALANCE, September 30, 1992....................... 500 $ 1,000 $(273,431) $(272,431)
Net income...................................... -- -- 85,057 85,057
--- ------- --------- ---------
BALANCE, September 30, 1993....................... 500 1,000 (188,374) (187,374)
Issuance of Common Stock........................ 290 11,600 -- 11,600
Net income...................................... -- -- 353,401 353,401
--- ------- --------- ---------
BALANCE, September 30, 1994....................... 790 12,600 165,027 177,627
Net loss........................................ -- -- (146,625) (146,625)
--- ------- --------- ---------
BALANCE, September 30, 1995....................... 790 12,600 18,402 31,002
Net income...................................... -- -- 269,879 269,879
--- ------- --------- ---------
BALANCE, June 30, 1996............................ 790 $12,600 $ 288,281 $ 300,881
=== ======= ========= =========
</TABLE>

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

F-63
<PAGE> 128

HRA, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEARS JUNE 30,
--------------------------------- ------------------------
1993 1994 1995 1995 1996
--------- --------- --------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)....................................... $ 85,057 $ 353,401 $(146,625) $ (35,267) $ 269,879
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization......................... 33,773 45,783 65,691 33,832 67,900
Provision for bad debts............................... 45,480 4,498 2,041 1,194 25,422
Change in deferred income taxes....................... (5,700) (10,200) (112,200) (84,150) (58,400)
Change in operating assets and liabilities:
Accounts receivable................................. (231,286) (421,143) (316,713) (202,085) (810,315)
Income taxes receivable............................. -- -- (25,125) -- 25,125
Prepaid expenses and other.......................... (15,147) 2,531 (454,386) (408,180) (308,333)
Other assets........................................ 9,583 17 (20,671) (1,023) 19,648
Outstanding checks.................................. -- -- 166,761 161,573 94,479
Accounts payable.................................... (50,994) 51,940 49,190 (30,036) (2,328)
Payroll and related liabilities..................... (117,269) (30,697) 128,284 11,762 88,965
Reserve for workers' compensation claims............ 285,837 (68,655) 914,639 751,652 397,290
Accrued expenses.................................... 30,053 (21,755) 66,332 27,666 (13,267)
Income taxes payable................................ 31,508 192,487 (228,217) (156,010) 189,648
--------- --------- --------- --------- ----------
Net cash provided by (used in) operating
activities..................................... 100,895 98,207 89,001 70,928 (14,287)
--------- --------- --------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.................................... (50,834) (40,096) (135,765) (132,600) (103,259)
Advance to StaffMark, Inc. ............................. -- -- -- -- (31,250)
Other................................................... 10,000 -- (16,000) -- --
--------- --------- --------- --------- ----------
Net cash used in investing activities............ (40,834) (40,096) (151,765) (132,600) (134,509)
--------- --------- --------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (increase) decrease in restricted cash.............. -- (60,083) 9,832 22,807 50,251
Increase in deferred compensation arrangements.......... -- 21,559 -- -- 135,596
Payments on deferred compensation arrangements.......... (24,996) -- (24,691) (19,659) (70,618)
Net borrowings (payments) under an accounts receivable
financing agreement................................... 500,000 100,830 (98,318) (228,075) (502,512)
Net borrowings under a revolving line of credit......... -- -- -- -- 1,020,000
Principal payments on note payable to a stockholder..... (140,154) -- (33,295) (27,000) (6,000)
Advances to stockholders................................ -- -- -- (25,988) (340,089)
Proceeds from issuance of common stock.................. -- 11,600 -- -- --
Other................................................... (7,299) (5,749) -- -- --
--------- --------- --------- --------- ----------
Net cash provided by (used in) financing
activities..................................... 327,551 68,157 (146,472) (277,915) 286,628
--------- --------- --------- --------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...... 387,612 126,268 (209,236) (339,587) 137,832
CASH AND CASH EQUIVALENTS, beginning of period............ 63,334 450,946 577,214 577,214 367,978
--------- --------- --------- --------- ----------
CASH AND CASH EQUIVALENTS, end of period.................. $ 450,946 $ 577,214 $ 367,978 $ 237,627 $ 505,810
========= ========= ========= ========= ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid........................................... $ 65,444 $ 77,737 $ 106,467 $ 60,768 $ 76,866
========= ========= ========= ========= ==========
Taxes paid.............................................. $ 20,742 $ 41,813 $ 267,622 $ 206,298 $ 18,000
========= ========= ========= ========= ==========
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
</TABLE>

During fiscal year 1995, the Company incurred a liability totaling $41,000
for the purchase of a consulting and noncompete agreement.

During the nine month period ended June 30, 1996, the Company recorded a
deferred compensation arrangement liability for the purchase of a noncompete
agreement with a former stockholder totaling $139,637.

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

F-64
<PAGE> 129

HRA, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

HRA, Inc. (the "Company") was incorporated on November 20, 1991, in the
state of Tennessee and provides temporary personnel services throughout central
Tennessee. Headquartered in Nashville, Tennessee, the Company does business
under the name of Human Resources and operates staffing offices in the following
Tennessee locations: Clarksville, Columbia, Franklin, Gallatin, Lebanon,
Lewisburg, Murfreesboro, Nashville, Pulaski, Portland, Smyrna, Springfield and
Tullahoma.

The majority of the Company's sales are derived from customers within a
100-mile radius of Nashville, Tennessee. The Company extends trade credit to its
customers which are represented by various industries. There are no individual
customers that account for more than 10% of service revenues in any of the
fiscal years or nine month interim periods presented.

Fiscal Periods --

The Company's fiscal year ends on September 30. The fiscal years 1993, 1994
and 1995 each included 52 weeks. The nine month interim periods included in the
accompanying financial statements each included 39 weeks.

Interim Financial Statements --

The accompanying interim financial statements for the nine months ended
June 30, 1995 have not been audited by independent accountants. However, they
have been prepared in conformity with the accounting principles stated in the
audited financial statements for the three years in the period ended September
30, 1995 and for the nine months ended June 30, 1996, and include all
adjustments (which were of a normal, recurring nature) which, in the opinion of
management, are necessary to present fairly the financial position of the
Company and the results of operations and cash flows for each of the periods
presented. The operating results for the interim periods presented are not
necessarily indicative of results for the full year.

Use of Estimates --

Revenue Recognition --

Service revenues are recognized as income at the time staffing services are
provided.

Cash and Cash Equivalents --

At September 30, 1994 and 1995, the Company had set aside cash reserves of
$60,083 and $50,251 as collateral on accounts receivable financed with recourse
(Note 4).

F-65
<PAGE> 130

HRA, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Accounts Receivable --

The Company maintains allowances for potential losses which management
believes are adequate to absorb losses related to the realization of the amounts
recorded in the accompanying balance sheets.

Property and Equipment --

Property and equipment are recorded at cost and are depreciated on
accelerated methods over the estimated useful lives of the assets. Leasehold
improvements are amortized on a straight-line basis over the shorter of the
economic lives or the terms of the lease. Estimates of useful lives by asset
classification are as follows:

<TABLE>
<S> <C>
Office equipment................................................. 5-7 years
Computer equipment............................................... 5 years
Computer software................................................ 5 years
Leasehold improvements........................................... 5 years
</TABLE>

Expenditures for renewals and betterments are capitalized, while repairs
and maintenance costs are expensed as incurred.

Intangible Assets --

The Company amortizes its intangible assets over the lives of the
respective arrangements (Note 3). The Company regularly evaluates whether events
and circumstances have occurred which may indicate the carrying amount of
intangible assets may warrant revision or may not be recoverable. When factors
indicate that certain intangible assets should be evaluated for possible
impairment, the Company uses an estimate of the future undiscounted net cash
flows of the related assets over their remaining lives in measuring whether the
assets are recoverable. As of June 30, 1996, the Company's intangible assets
were considered fully recoverable.

Self-Insurance Reserves --

During fiscal year 1995, the Company began self-insuring certain risks
related to workers' compensation claims. Additionally, during each of the fiscal
years ended September 30, and for the nine months ended June 30, 1996, the
Company was substantially self-insured for employee health care costs. The
estimated costs of existing and future claims related to workers' compensation
claims and employee health care are accrued as incidents occur based upon
historical loss development trends and may be subsequently revised based on
developments relating to such claims. The Company engaged the services of a
third party actuary to assist with the development of cost estimates for
workers' compensation claims.

Income Taxes --

Deferred income taxes are provided for the effect of temporary differences
between the tax bases of assets and liabilities and their reported amounts in
the financial statements. The Company uses the liability method to account for
income taxes, which requires deferred taxes to be recorded at the statutory rate
expected to be in effect when the taxes are paid.

Fair Value of Financial Instruments --

The Company's financial instruments principally represent cash and cash
equivalents, a note payable to a stockholder and bank borrowing arrangements
secured by accounts receivable. The carrying value of cash and cash equivalents
approximates fair value due to its short-term nature. The carrying value of the
note payable to stockholder and the Company's borrowing arrangements secured by
accounts receivable, including the

F-66
<PAGE> 131

HRA, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Company's line of credit, approximate fair value based upon management's
assessment of interest rates currently available to the Company.

2. PROPERTY AND EQUIPMENT:

Components of property and equipment are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------- JUNE 30,
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Office equipment.................................. $ 38,689 $ 65,237 $108,564
Computer equipment................................ 80,222 141,200 163,957
Computer software................................. 34,959 76,715 88,984
Leasehold improvements............................ 11,993 17,569 42,475
-------- -------- --------
165,863 300,721 403,980
Less accumulated depreciation and amortization.... 95,602 156,542 208,028
-------- -------- --------
$ 70,261 $144,179 $195,952
======== ======== ========
</TABLE>

Depreciation and amortization expense related to property and equipment
totaled $33,773, $45,783 and $61,847 for the years ended September 30, 1993,
1994 and 1995, respectively. Depreciation and amortization expense related to
property and equipment totaled $33,832 (unaudited) and $51,486 for the nine
months ended June 30, 1995 and 1996, respectively.

3. INTANGIBLE ASSETS:

During fiscal year 1995, the Company entered into a Consulting and
Noncompetition Agreement with an individual operating a temporary personnel
agency in Lebanon, Tennessee. The agreement, as amended, called for an initial
payment of $41,000 and contingent consideration up to $67,000, based upon
certain performance events. Contingent consideration payments during fiscal year
1995 and the nine months ended June 30, 1996 totaled approximately $1,700 and
$5,300, respectively. The Company is amortizing this arrangement over the
48-month term of the agreement.

<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1995 1996
------------- --------
<S> <C> <C>
Consulting and noncompetition agreement................... $41,000 $ 41,000
Noncompete agreement with a former stockholder (Note
10)..................................................... -- 139,637
Other..................................................... -- 5,256
------- --------
41,000 185,893
Less accumulated amortization............................. 3,844 20,258
------- --------
$37,156 $165,635
======= ========
</TABLE>

Amortization expense totaled $3,844 in fiscal year 1995 and $16,414 for the
nine months ended June 30, 1996.

4. BORROWINGS UNDER ACCOUNTS RECEIVABLE FINANCING ARRANGEMENT:

During fiscal year 1994, the Company entered into a "Purchase of Accounts"
agreement with SouthTrust Bank (the "Bank") whereby the Bank agreed to purchase
up to $750,000 of the Company's trade accounts receivable on a revolving basis.
The agreement gave the Company the option to repurchase these receivables from
the Bank at any time and gave the Bank full recourse to the Company for any
accounts receivable which

F-67
<PAGE> 132

HRA, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

were not collected. Accordingly, this arrangement has been reflected as a
financing transaction in the accompanying financial statements.

As of September 30, 1994 and 1995, the receivables financed pursuant to
this agreement totaled $600,830 and $502,512, respectively. The agreement
required the Company to pay a service charge equal to 1.50% of the face amount
of each account financed by the Bank. Service charges were $9,132 and $7,538 for
the fiscal years ended 1994 and 1995 and have been reflected in interest expense
in the accompanying statements of income. In addition, the Company was required
to maintain a cash reserve account at the Bank in an amount equal to at least
10% of the receivables financed and meet certain other restrictive covenants.

5. LINE OF CREDIT:

In November 1995, the Company replaced its "Purchase of Accounts" bank
agreement (Note 4) with a revolving line of credit with the Bank. Under the
revolving line of credit, the Company may borrow an amount equal to 80% of its
outstanding Eligible Accounts Receivable, as defined, not to exceed an aggregate
borrowing of $1,500,000.

Borrowings are collateralized by the Company's accounts receivable and are
guaranteed by the Company's stockholders. Interest is payable monthly on
outstanding borrowings at the Bank's base rate plus 1.25% (weighted average rate
of 9.31% during the nine months ended June 30, 1996). Under the terms of the
line of credit agreement, the Company has certain dividend restrictions and is
required, among other things, to maintain certain financial ratios. As of June
30, 1996, the Company was not in compliance with the tangible net worth ratio
requirement. However, the lender has agreed to forbear from enforcing such
events of noncompliance and default through maturity.

As of June 30, 1996, the Company had borrowed $1,020,000 under this line of
credit and principally used the proceeds to repurchase previously sold accounts
receivable.

As discussed in Note 15, the line of credit was amended on July 11, 1996.
The amendment allows the Company to borrow an amount equal to 85% of its
outstanding Eligible Accounts Receivable, as defined, not to exceed an aggregate
borrowing of $2,000,000, and also extends the maturity date from November 20,
1996 to January 20, 1997. An additional provision requires that $160,000 of the
amount available under the line be held in reserve until certain indebtedness of
the Company is paid in full or is subordinated to the security interest of the
Bank.

6. NOTE PAYABLE TO A STOCKHOLDER:

As of September 30, 1994 and 1995, the Company had a note payable to a
former stockholder for $155,295 and $122,000, respectively. The note was due on
demand and bore interest at 8.75%. The note was secured by the Company's
accounts receivable not previously pledged. For the years ended September 30,
1993, 1994 and 1995, interest expense on this note totaled $22,860, $18,636 and
$12,100, respectively. For the nine months ended June 30, 1995 and 1996,
interest expense on this note totaled $9,075 (unaudited) and $7,069,
respectively.

In connection with the purchase of this stockholder's common stock in the
Company by two of the remaining stockholders (Note 10), this note was amended
whereby, beginning in December 1995, interest payments will be made monthly at a
rate of 9.75%. The note is unsecured and requires principal payments beginning
in December 1997.

F-68
<PAGE> 133

HRA, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

As of June 30, 1996, the Company owed $116,000 pursuant to this amended
note agreement. Annual maturities pursuant to this note are as follows:

<TABLE>
<CAPTION>
YEARS ENDING YEARS ENDING
SEPTEMBER 30, JUNE 30,
------------- ------------
<S> <C> <C>
1996............................... $ -- $ --
1997............................... -- --
1998............................... 35,753 25,027
1999............................... 57,917 53,413
2000............................... 20,301 32,486
Thereafter......................... 2,029 5,074
-------- --------
$ 116,000 $116,000
======== ========
</TABLE>

7. INCOME TAXES:

Components of the provision for income taxes were as follows:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEARS JUNE 30,
------------------------------- -----------------------
1993 1994 1995 1995 1996
------- -------- -------- ----------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current:
Federal........................ $39,550 $194,600 $ 10,180 $ 55,644 $195,973
State.......................... 9,400 36,700 4,100 10,599 36,800
Deferred......................... (5,700) (10,200) (98,440) (84,150) (58,400)
------- -------- -------- -------- --------
$43,250 $221,100 $(84,160) $ (17,907) $174,373
======= ======== ======== ======== ========
</TABLE>

A reconciliation of taxes at the statutory federal income tax rate to the
Company's effective income tax rate for the years ended September 30 follows:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEARS JUNE 30,
-------------------------------- -----------------------
1993 1994 1995 1995 1996
-------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Taxes at statutory U.S. income
tax rate...................... $ 43,624 $201,075 $(80,775) $ (18,611) $155,488
Increase (decrease) resulting
from:
Tax penalties................. 4,281 846 -- -- --
State income taxes, net of
federal benefit............ 6,204 23,855 2,666 1,840 23,920
Effect of graduated federal
income tax rate............ (13,112) (7,672) (9,933) (3,236) --
Meals and entertainment and
other...................... 2,253 2,996 3,882 2,100 (5,035)
------- -------- -------- -------- --------
$ 43,250 $221,100 $(84,160) $ (17,907) $174,373
======= ======== ======== ======== ========
</TABLE>

F-69
<PAGE> 134

HRA, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Deferred income taxes result from differences in the timing of recognition
of revenues and expenses for financial reporting and income tax purposes. The
components of the Company's net deferred income tax assets are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------- JUNE 30,
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Compensation agreements............................. $ 76,600 $ 65,000 $ 89,800
Vacation and workers' compensation reserves......... 36,200 160,000 193,600
-------- -------- --------
$112,800 $225,000 $283,400
======== ======== ========
</TABLE>

The deferred income tax assets recorded in the accompanying balance sheets
represent potential future income tax benefits. These future income tax benefits
are expected to be realized through the reduction of income taxes otherwise
payable when reversals of temporary differences occur between the financial
reporting and income tax basis of the Company's assets and liabilities.

8. WORKERS' COMPENSATION:

During fiscal year 1995, the Company began self-insuring certain risks
related to workers' compensation claims and is regulated by the Workers'
Compensation Insurance Commission in the state of Tennessee. The Company has
purchased insurance for claims which exceed $250,000 per employee. To satisfy
unpaid claims, the Company deposits amounts with a third party administrator. At
the Company's option, it may withdraw its deposits upon notification to its
third party administrator. Included in prepaid expenses and other in the
accompanying balance sheets are deposits to fund workers' compensation claims
totaling $451,617 and $684,615 as of September 30, 1995 and June 30, 1996,
respectively. Workers' compensation expense totaled $527,077, $664,468 and
$1,270,271 for the fiscal years ended September 30, 1993, 1994 and 1995,
respectively. For the nine months ended June 30, 1995 and 1996, workers'
compensation expense totaled $950,334 (unaudited) and $937,126, respectively.

9. RELATED PARTY TRANSACTIONS:

Stockholder Transaction --

During November 1995, two of the Company's stockholders purchased the
entire common stock interest in the Company (approximately 32%) from another
stockholder. In conjunction with this transaction, the Company acted as
guarantor on the notes payable issued by the acquiring stockholders for the
stock in the amount of $150,000. Separately, the Company entered into a
severance arrangement and noncompete agreement through November 2003 with this
former stockholder (Note 10).

Advances to Stockholders --

In conjunction with the stockholder transaction described above and other
matters, the Company advanced $250,000 to two of its stockholders during
November 1995. An additional $42,800 was advanced to the two stockholders
subsequent to November 1995.

The Company has paid $47,289 for consulting and other professional services
related to the Company's participation in the merger transaction discussed in
Note 14. These costs are to be repaid by the stockholders of the Company and
have been reflected as advances to stockholders in the accompanying balance
sheet as of June 30, 1996.

F-70
<PAGE> 135

HRA, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Other --

In November 1995, the Company settled a controversy concerning an option
held by certain parties to acquire 30% of the common stock of the Company.
Pursuant to the Settlement Agreement and Release, the rights under the option
were transferred to two of the Company's existing stockholders for $90,000,
which was paid by the Company. This payment was expensed in the nine months
ended June 30, 1996.

Included in selling, general and administrative expenses are advisor and/or
director fees paid or payable to the stockholders of the Company totaling
$120,000, $69,000 and $94,000 for the years ended September 30, 1993, 1994 and
1995, respectively. No such fees were accruable for the nine months ended June
30, 1995 and 1996.

10. COMMITMENTS AND CONTINGENCIES:

The Company has deferred compensation arrangements with various consultants
and/or employees of the Company, some of which are no longer providing services
to the Company.

In November 1991, the Company entered into an arrangement with a consultant
for services rendered in connection with the formation of the Company. The
arrangements called for weekly payments of $1,000 for 312 weeks. The Company
expensed the discounted value of the obligation in fiscal year 1992 and
reflected a deferred compensation liability at that time. In fiscal year 1994,
the Company discontinued payments under this arrangement. In December 1994, the
consultant and the Company entered into an arbitration agreement and the Company
has resumed its payments under this agreement.

On November 28, 1995, the Company entered into severance and noncompete
agreements with a former stockholder in connection with the purchase of such
stockholder's common stock in the Company by two of the remaining stockholders
(Note 9). Pursuant to these agreements, the Company was to pay the former
stockholder, beginning on December 15, 1995, as follows:

- $30,000 as bonus for fiscal year 1995 to be paid in $2,500 monthly
installments.

- $150,000 as a severance arrangement to be paid in monthly installments of
$5,690 through November 15, 1996, $5,647 through November 15, 1997 and
$1,163 through November 15, 1998.

- $236,518 as a noncompete agreement to be paid in graduating monthly
payments through November 15, 2003.

With respect to these arrangements, the Company expensed the bonus payment
in fiscal year 1995. The discounted value of the severance agreement (8.75%
discount rate) was expensed in the nine months ended June 30, 1996, with a
related liability established in the accompanying balance sheet. The discounted
value of the noncompete agreement (8.75% discount rate) was recorded as an
intangible asset (Note 3) and a related liability was established in the
accompanying balance sheet.

The following summarizes the Company's obligations under these deferred
compensation arrangements:

<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------- JUNE 30,
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Consulting arrangement............................. $195,722 $171,031 $134,436
Severance agreement with a former stockholder...... -- -- 101,961
Noncompete agreement with a former stockholder..... -- -- 139,249
-------- -------- --------
195,722 171,031 375,646
Less current portion............................... 97,898 43,699 110,709
-------- -------- --------
$ 97,824 $127,332 $264,937
======== ======== ========
</TABLE>

F-71
<PAGE> 136

HRA, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Annual maturities pursuant to the consulting arrangement are as follows:

<TABLE>
<CAPTION>
YEARS ENDING YEARS ENDING
SEPTEMBER 30, JUNE 30,
------------- ------------
<S> <C> <C>
1996............................... $ 22,050 $ --
1997............................... 111,955 110,709
1998............................... 61,079 73,310
1999............................... 35,402 37,818
2000............................... 5,911 14,560
Thereafter......................... 139,249 139,249
-------- --------
$ 375,646 $375,646
======== ========
</TABLE>

11. NONCANCELABLE OPERATING LEASES:

The Company leases office locations and certain equipment under
noncancelable operating lease agreements expiring at various times through April
30, 2003. Future minimum payments required under operating leases that have an
initial or remaining noncancelable lease term in excess of one year at June 30,
1996, are as follows:

YEARS ENDING YEARS
SEPTEMBER 30, ENDING JUNE 30,
------------- -------------
<S> <C> <C>
1996............................... $ 49,603 $ -
1997............................... 148,377 173,977
1998............................... 55,153 67,622
1999............................... 38,056 37,810
2000............................... 38,805 38,551
Thereafter......................... 65,072 76,811
-------- --------
$ 395,066 $394,771
======== ========
</TABLE>

Rent expense totaled $156,224, $143,430 and $194,096 for fiscal years 1993,
1994 and 1995, respectively. For the nine months ended June 30, 1995 and 1996,
rent expense totaled $151,386 (unaudited) and $194,424, respectively.

12. SAVINGS AND RETIREMENT PLAN:

During fiscal year 1995, the Company made available to all permanent
employees with one year of service a savings and retirement plan. The plan, at
the Company's option, may be terminated at any time and allows participants to
defer a portion of their after tax salary and receive a matching employer
contribution of up to 2% of the participants' annual salary based on years of
service. Matching contributions are made in January of the following fiscal year
for participants who remain employed by the Company. Matching contributions of
approximately $8,000 were made during fiscal year 1995. The plan also allows the
Company to contribute additional amounts at the discretion of management. Any
such amounts contributed are to be allocated equally among all eligible
participants. Management authorized discretionary contributions of $24,000 and
$7,700 for fiscal year 1995 and the nine months ended June 30, 1996,
respectively. Contributions deposited into the plan are held by an unrelated
third party and are registered in the name of the participants.

F-72
<PAGE> 137

HRA, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

13. LITIGATION:

The Company is involved in a lawsuit with its former workers' compensation
insurance carrier, in which the Company is disputing the amount of insurance
premiums owed in fiscal years 1993 and 1994 and a portion of fiscal year 1995.
Subsequent to September 30, 1995, a judgment was rendered against the Company
for approximately $718,000, which is inclusive of the disputed payments plus
accrued interest. The Company has filed an appeal of this judgment and is
negotiating a settlement. The Company reserved for these disputed amounts in the
fiscal years in which they arose. Accordingly, management anticipates that the
ultimate resolution of this matter will not have a materially adverse affect on
the financial position or results of operations of the Company.

In April 1996, the Company settled a dispute with a professional firm that
had previously represented them in certain actions related to workers'
compensation insurance and received cash of approximately $245,000, which is
included in other income for the nine months ended June 30, 1996.

The Company is subject to other legal proceedings and claims which arise in
the ordinary course of its business. In the opinion of management, the aggregate
liability, if any, with respect to these proceedings will not materially
adversely affect the financial position or results of operations of the Company.

14. PENDING BUSINESS COMBINATION:

In June 1996, the owners of the Company entered into a definitive agreement
to merge with StaffMark, Inc. ("StaffMark") in conjunction with StaffMark's
anticipated initial public offering. Prior to or coincident with this proposed
merger, the Company's leased automobiles will be transferred to the respective
stockholders.

The Company has advanced $31,250 to StaffMark to fund organizational and
other costs related to the planned merger and StaffMark's initial public
offering.

15. SUBSEQUENT EVENT:

On July 11, 1996, the Company completed the purchase of the assets and
intellectual property of Dorothy Johnson's Career Consultants, Inc. ("Career
Consultants"). Career Consultants provides permanent placement services on a fee
basis to companies primarily in the Nashville, Tennessee area. The purchase
price was $850,000 and included a payment for assets and a non-compete agreement
with the principal stockholder of Career Consultants. The purchase was financed
with borrowings under the Company's line of credit (Note 5), which was extended
in contemplation of this transaction. The acquisition will be accounted for as a
purchase business combination. A preliminary allocation of the related purchase
price has not been made at this time. The operations of Career Consultants were
not significant to the Company's historical operating results.

F-73
<PAGE> 138

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To First Choice Staffing, Inc.:

We have audited the accompanying balance sheets of First Choice Staffing,
Inc. (a South Carolina corporation) as of December 31, 1994 and 1995, and June
30, 1996, and the related statements of income, stockholders' equity and cash
flows for each of the three fiscal years in the period ended December 31, 1995,
and the six months ended June 30, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with 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 to 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 financial statements referred to above present fairly,
in all material respects, the financial position of First Choice Staffing, Inc.
as of December 31, 1994 and 1995, and June 30, 1996, and the results of its
operations and its cash flows for each of the three fiscal years in the period
ended December 31, 1995, and the six month period ended June 30, 1996, in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Raleigh, North Carolina,
July 26, 1996.

F-74
<PAGE> 139

FIRST CHOICE STAFFING, INC.

BALANCE SHEETS

ASSETS
<TABLE>
<CAPTION>
FISCAL YEARS JUNE 30, 1996
------------------------ -------------------------
1994 1995 ACTUAL PRO FORMA
---------- ---------- ---------- -----------
(UNAUDITED)
(NOTE 10)
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.................. $ 194,111 $ 268,440 $ 12,028 $ 12,028
Accounts receivable, net................... 1,078,340 1,145,532 1,671,794 1,671,794
Prepaid expenses and other................. 71,100 72,171 38,972 38,972
---------- ---------- ---------- ----------
Total current assets............... 1,343,551 1,486,143 1,722,794 1,722,794
---------- ---------- ---------- ----------
PROPERTY AND EQUIPMENT, net.................. 196,110 327,240 350,838 350,838
---------- ---------- ---------- ----------
OTHER ASSETS:
Investment in captive insurance pool....... 36,000 36,000 36,000 36,000
Advance to StaffMark, Inc. ................ -- -- 31,250 31,250
Other...................................... -- -- 14,351 14,351
---------- ---------- ---------- ----------
Total other assets................. 36,000 36,000 81,601 81,601
---------- ---------- ---------- ----------
$1,575,661 $1,849,383 $2,155,233 $ 2,155,233
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit............................. $ -- $ 200,000 $ 250,000 $ 250,000
Accounts payable........................... 21,326 65,608 96,540 96,540
Accrued workers' compensation.............. 92,347 46,359 49,963 49,963
Payroll and related benefits............... 630,555 534,047 500,475 500,475
Other accrued expenses..................... 7,000 5,735 -- --
Note payable to stockholder................ 250,000 180,000 140,000 140,000
---------- ---------- ---------- ----------
Total current liabilities.......... 1,001,228 1,031,749 1,036,978 1,036,978
---------- ---------- ---------- ----------
LONG-TERM DEBT, less current maturities...... -- -- -- 790,000
---------- ---------- ---------- ----------
COMMITMENTS AND CONTINGENCIES (Notes 6, 8 and
9)
STOCKHOLDERS' EQUITY:
Common stock, $1 par value, 100,000 shares
authorized, 10,000 shares issued and
outstanding............................. 10,000 10,000 10,000 10,000
Retained earnings.......................... 564,433 807,634 1,108,255 318,255
---------- ---------- ---------- ----------
Total stockholders' equity......... 574,433 817,634 1,118,255 328,255
---------- ---------- ---------- ----------
$1,575,661 $1,849,383 $2,155,233 $ 2,155,233
========== ========== ========== ==========
</TABLE>

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

F-75
<PAGE> 140

FIRST CHOICE STAFFING, INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS -------------------------
----------------------------------------- JUNE 25, JUNE 30,
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SERVICE REVENUES.............. $10,807,801 $13,007,484 $13,703,404 $ 6,640,485 $7,884,470
COST OF SERVICES.............. 8,825,086 10,573,111 11,149,085 5,403,659 6,385,847
----------- ----------- ----------- ---------- ----------
Gross profit........ 1,982,715 2,434,373 2,554,319 1,236,826 1,498,623
OPERATING EXPENSES:
Selling, general and
administrative........... 1,361,834 2,485,029 2,258,780 1,027,890 1,137,700
Depreciation................ 34,570 34,357 32,923 16,452 46,535
----------- ----------- ----------- ---------- ----------
Operating income
(loss)............ 586,311 (85,013) 262,616 192,484 314,388
OTHER INCOME (EXPENSE):
Interest expense............ (71) (26,109) (19,415) (11,227) (13,767)
Other, net.................. (2,427) 2,256 -- -- --
----------- ----------- ----------- ---------- ----------
INCOME (LOSS) BEFORE PROVISION
(BENEFIT) FOR INCOME
TAXES....................... 583,813 (108,866) 243,201 181,257 300,621
PROVISION (BENEFIT) FOR INCOME
TAXES....................... 232,787 (168,251) -- -- --
----------- ----------- ----------- ---------- ----------
Net income.......... $ 351,026 $ 59,385 $ 243,201 $ 181,257 $ 300,621
=========== =========== =========== ========== ==========
PRO FORMA DATA (Unaudited)
(Note 10):
Historical income before
income taxes............. $ 243,201 $ 300,621
Less pro forma provision for
income taxes........... 94,848 117,242
----------- ----------
PRO FORMA NET INCOME $ 148,353 $ 183,379
=========== ==========
</TABLE>

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

F-76
<PAGE> 141

FIRST CHOICE STAFFING, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
----------------- RETAINED
SHARES AMOUNT EARNINGS TOTAL
------ ------- ---------- ----------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1992......................... 10,000 $10,000 $ 154,022 $ 164,022
Net income....................................... -- -- 351,026 351,026
------ ------- ---------- ----------
BALANCE, December 31, 1993......................... 10,000 10,000 505,048 515,048
Net income....................................... -- -- 59,385 59,385
------ ------- ---------- ----------
BALANCE, December 31, 1994......................... 10,000 10,000 564,433 574,433
Net income....................................... -- -- 243,201 243,201
------ ------- ---------- ----------
BALANCE, December 31, 1995......................... 10,000 10,000 807,634 817,634
Net income....................................... -- -- 300,621 300,621
------ ------- ---------- ----------
BALANCE, June 30, 1996............................. 10,000 $10,000 $1,108,255 $1,118,255
====== ======= ========== ==========
</TABLE>

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

F-77
<PAGE> 142

FIRST CHOICE STAFFING, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS ------------------------
----------------------------------- JUNE 25, JUNE 30,
1993 1994 1995 1995 1996
--------- --------- --------- ----------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................... $ 351,026 $ 59,385 $ 243,201 $ 181,257 $ 300,621
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation................................. 34,570 34,357 32,923 16,452 46,535
Deferred income taxes........................ (3,908) 11,256 --
Change in operating assets and liabilities:
Accounts receivable, net................... (311,121) (149,482) (67,192) 89,585 (526,262)
Prepaid expenses and other................. (32,022) (15,485) (1,071) 39,345 33,199
Other assets............................... (158,104) -- -- -- (14,351)
Accounts payable........................... 12,587 (2,923) 44,282 8,736 30,932
Accrued workers' compensation.............. 68,247 10,867 (45,988) (42,160) 3,604
Payroll and related liabilities............ 189,670 259,929 (96,508) (54,964) (33,572)
Accrued income taxes....................... 54,275 (153,072) -- -- --
Other accrued expenses..................... 3,158 (9,256) (1,265) (7,000) (5,735)
--------- --------- --------- -------- ---------
Net cash provided by (used in) operating
activities............................ 208,378 45,576 108,382 231,251 (165,029)
--------- --------- --------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................ (53,582) (120,441) (164,053) (69,622) (70,133)
Advance to StaffMark, Inc....................... -- -- -- -- (31,250)
--------- --------- --------- -------- ---------
Net cash used in investing activities... (53,582) (120,441) (164,053) (69,622) (101,383)
--------- --------- --------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (payments on) line of credit...... (191,038) -- 200,000 -- 50,000
Proceeds from note payable to stockholder....... 9,349 250,000 -- -- --
Payments on note payable to stockholder......... -- (9,349) (70,000) -- (40,000)
--------- --------- --------- -------- ---------
Net cash provided by (used in) financing
activities............................ (181,689) 240,651 130,000 -- 10,000
--------- --------- --------- -------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS..................................... (26,893) 165,786 74,329 161,629 (256,412)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.... 55,218 28,325 194,111 194,111 268,440
--------- --------- --------- -------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD.......... $ 28,325 $ 194,111 $ 268,440 $ 355,740 $ 12,028
========= ========= ========= ======== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid................................... $ 71 $ 26,109 $ 19,415 $ 6,285 $ 13,991
========= ========= ========= ======== =========
Taxes paid (refunded)........................... $ 189,769 $ (26,393) $ -- $ -- $ --
========= ========= ========= ======== =========
</TABLE>

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

F-78
<PAGE> 143

FIRST CHOICE STAFFING, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

First Choice Staffing, Inc. (the "Company"), a South Carolina corporation,
provides temporary personnel services primarily for industrial and clerical
needs in the greater Charlotte, North Carolina, metropolitan region. The
business was initially founded and incorporated in 1986 as a Dunhill Temporary
Systems franchise. In 1989, the founders bought out the Dunhill franchise
contract and formed First Choice Temporary Staffing, Inc. In 1993, the Company
changed its name to First Choice Staffing, Inc.

Reorganization --

Prior to reorganization on April 1, 1994, the Company was a wholly owned
subsidiary of Gregory Personnel, Inc. ("Gregory Personnel"). Gregory Personnel
was formed as a holding company in connection with the acquisition by one 50%
stockholder of the other 50% stockholder's interest in the Company in 1990.
Gregory Personnel had no operations and had assets consisting primarily of a
noncompete agreement arising from the acquisition of the former 50%
stockholder's interest in the Company. The noncompete agreement was amortized
over three years. On April 1, 1994, Gregory Personnel was merged downstream with
the Company, leaving the Company as the surviving entity.

Basis of Presentation --

The accompanying financial statements include the accounts of Gregory
Personnel for the period prior to the merger effective April 1, 1994. Due to the
change in control of the Company occurring upon the acquisition of the former
50% stockholder's interest in 1990, this acquisition was accounted for as a
purchase resulting in the recording of certain intangible assets. See above for
further discussion.

Fiscal Periods --

For presentation purposes, the accompanying financial statements have been
prepared by the Company on a calendar year basis. However, the Company's fiscal
year actually ends on the last Sunday in December. The interim financial
information as of June 30, 1996, and for the six month periods ended June 25,
1995 (unaudited), and June 30, 1996, correspond to the Company's fiscal quarters
which ended on the last Sunday in June.

Interim Financial Statements --

The accompanying interim financial statements and related disclosures for
the six month period ended June 25, 1995 have not been audited by independent
accountants. However, the interim financial statements have been prepared in
conformity with the accounting principles stated in the audited financial
statements of the three years in the period ended December 31, 1995 and for the
six months ended June 30, 1996, and include all adjustments (which were of a
normal, recurring nature) which, in the opinion of management, are necessary to
present fairly the financial position of the Company and the results of
operations and cash flows for the interim periods. The operating results for all
interim periods presented are not necessarily indicative of results for the full
year.

Revenue Recognition --

Service revenues are recognized as income at the time staffing services are
provided to the customer.

F-79
<PAGE> 144

FIRST CHOICE STAFFING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

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, liabilities, revenues
and expenses and disclosures of contingent assets and liabilities. The estimates
and assumptions used in the accompanying financial statements are based upon
management's evaluation of the relevant facts and circumstances as of the date
of the financial statements. Actual results may differ from the estimates and
assumptions used in preparing the accompanying financial statements.

Cash and Cash Equivalents --

Accounts Receivable --

The Company maintains allowances for potential losses which management
believes are adequate to absorb losses to be incurred in realizing the amounts
recorded in the accompanying financial statements. The Company has recorded an
allowance for doubtful accounts of $25,000 at December 31, 1994, December 31,
1995 and June 30, 1996. Included in accounts receivable in the accompanying
balance sheets are unbilled amounts of $188,778, $172,834 and $371,360 at
December 31, 1994, December 31, 1995 and June 30, 1996, respectively.

Property and Equipment --

Property and equipment are recorded at cost and are depreciated on a
straight-line basis over the estimated useful lives of the assets. Leasehold
improvements are amortized on a straight-line basis over the shorter of the
estimated economic lives or the terms of the lease. The estimated useful lives
of the Company's assets, by asset classification, are as follows:

<TABLE>
<S> <C>
Office equipment.................................................... 7 years
Computer equipment.................................................. 5 years
Vehicles............................................................ 5 years
Computer software................................................... 3 years
Leasehold improvements.............................................. 7 years
</TABLE>

Additions that extend the lives of the assets are capitalized while repairs
and maintenance costs are expensed as incurred. When property and equipment is
retired, the cost of the property and equipment and the related accumulated
depreciation is removed from the balance sheet and any resultant gain or loss is
recorded.

Other Assets --

Other assets contain an investment in a captive workers' compensation
insurance pool of which the Company is a member, an advance to StaffMark, Inc.
(as described in Note 8) and certain expenses and payments made relating to the
acquisition of Strategic Sourcing, Inc. (SSI). The investment is accounted for
by the Company under the cost method.

Fair Value of Financial Instruments --

The Company's financial instruments include cash and cash equivalents, note
payable to stockholder and its other debt obligations. Management believes that
these instruments bear interest at rates which approximate prevailing market
rates for instruments with similar characteristics and, accordingly, that the
carrying values for those instruments are reasonable estimates of fair value.

F-80
<PAGE> 145

FIRST CHOICE STAFFING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Concentration of Credit Risk --

Credit risk with respect to accounts receivable is dispensed due to the
nature of the business, the large number of customers and the diversity of
industries serviced. The Company performs credit evaluations of all its
customers.

Income Taxes --

Prior to April 1, 1994, the Company was a C Corporation and, accordingly,
was subject to federal and state income taxes. The Company accounted for income
taxes in accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," which recognizes deferred tax assets and
liabilities for future tax consequences attributed to differences between the
financial statement and income tax basis of assets and liabilities and operating
loss carryforwards.

In connection with the reorganization in April 1994, the Company elected S
Corporation status for federal and state income tax reporting purposes.
Accordingly, no provision for income taxes has been recorded for periods
subsequent to this change in tax status as such tax liabilities arising from the
date of election as an S Corporation are liabilities of the stockholders of the
Company. Also in connection with the April 1994 reorganization, the Company
changed its tax year-end from March 31 to December 31.

The Company's tax returns are subject to examination by federal and state
taxing authorities. If such examinations result in a change in the Company's
reported income or loss, the taxable income or loss reported by the individual
stockholders could also change.

2. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
FISCAL YEAR
-------------------- JUNE 30,
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Office equipment..................................... $117,938 $171,842 $190,774
Computer equipment................................... 123,966 153,405 192,906
Vehicles............................................. 16,301 26,501 26,501
Computer software.................................... 33,531 45,775 52,620
Leasehold improvements............................... 56,009 83,248 88,103
-------- -------- --------
347,745 480,771 550,904
Less accumulated depreciation........................ 151,635 153,531 200,066
-------- -------- --------
$196,110 $327,240 $350,838
======== ======== ========
</TABLE>

3. LINE OF CREDIT:

The Company has a revolving line of credit with a bank. Maximum borrowings
under the line are equal to the lesser of $500,000 or 80% of the Company's
eligible accounts receivable, as defined within the line of credit agreement.
The line is secured by the Company's accounts receivable and interest is payable
monthly at prime (8.25% at June 30, 1996), with principal due June 17, 1997. The
weighted average interest rate was approximately 8.29% for the six months ended
June 30, 1996. Amounts outstanding under the line were $0, $200,000 and $250,000
as of December 31, 1994, December 31, 1995 and June 30, 1996, respectively.

The line of credit is secured by a personal guaranty of the majority
stockholder. In addition, the line of credit is subject to certain financial
ratios and restrictions on incurring additional debt. The Company was in
compliance with these covenants as of June 30, 1996. The Company intends to
renew this line of credit upon

F-81
<PAGE> 146

FIRST CHOICE STAFFING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

its annual maturity date. The Company had approximately $250,000 available under
its line of credit at June 30, 1996.

4. NOTE PAYABLE TO STOCKHOLDER:

The Company has an unsecured note payable to the majority stockholder with
interest payable semiannually in June and December at 8% and principal due on
demand.

5. INCOME TAXES:

Components of the tax provision (benefit) for the periods prior to the S
Corporation election, effective April 1, 1994, are shown below:

<TABLE>
<CAPTION>
FISCAL YEARS
----------------------
1993 1994
-------- ---------
<S> <C> <C>
Provision for (benefit from) income taxes --
Federal:
Current.................................................. $188,194 $(127,554)
Deferred................................................. (3,607) (8,197)
-------- ---------
Total federal....................................... 184,587 (135,751)
-------- ---------
State:
Current..................................................... 48,500 (32,800)
Deferred.................................................... (300) 300
-------- ---------
Total state......................................... 48,200 (32,500)
-------- ---------
$232,787 $(168,251)
======== =========
</TABLE>

The income tax provision (benefit) for the periods prior to the S
Corporation election, effective April 1, 1994, differs from the amount computed
by applying the federal statutory rate of 34% to income before taxes due to the
following:

<TABLE>
<CAPTION>
FISCAL YEARS
----------------------
1993 1994
-------- ---------
<S> <C> <C>
Income tax provision computed at the federal statutory rate... $199,321 $ (37,781)
State taxes, net of federal tax benefit....................... 30,953 (586)
Effect of permanent differences............................... 3,621 4,143
Elimination of net deferred tax liabilities upon S Corporation
election.................................................... -- 3,827
Taxable income earned after S Corporation election, not
subject to taxation......................................... -- (137,854)
Other......................................................... (1,108) --
-------- ---------
Provision (benefit) for income taxes........................ $232,787 $(168,251)
======== =========
</TABLE>

F-82
<PAGE> 147

FIRST CHOICE STAFFING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. COMMITMENTS AND CONTINGENCIES:

Noncancelable Operating Leases --

The Company leases office space under noncancelable operating leases.
Approximate future minimum payments required under operating leases that have an
initial or remaining noncancelable lease term in excess of one year at December
31, 1995 and June 30, 1996, including noncancelable operating leases assumed in
connection with the subsequent acquisition of SSI (Note 9), are as follows:

<TABLE>
<CAPTION>
YEARS ENDING
-------------------------
DECEMBER 31, JUNE 30,
------------ --------
<S> <C> <C>
1996................................. $111,000 $ --
1997................................. 101,000 109,000
1998................................. 86,000 93,000
1999................................. 68,000 86,000
2000................................. 43,000 52,000
Thereafter........................... 78,000 95,000
-------- --------
$487,000 $435,000
======== ========
</TABLE>

Rental expense totaled $61,000, $82,000 and $103,000 for fiscal years 1993,
1994 and 1995, respectively, and $40,000 (unaudited) and $53,000 for the six
month periods ended June 25, 1995 and June 30, 1996, respectively.

401(k) Plan --

In 1995, the Company adopted a 401(k) Savings Plan for its employees in
which the Company matches 50% of the employee's contributions up to 3% of the
employee's salary. The Company's contribution expense was $18,000 for 1995 and
$4,000 (unaudited) and $10,000 for the six month periods ended June 25, 1995 and
June 30, 1996, respectively.

7. SIGNIFICANT CUSTOMERS:

The Company had one customer which represented 12%, 13%, 12%, 13% and 12%
of service revenues for the years ended December 31, 1993, 1994 and 1995, and
the six month periods ended June 25, 1995 (unaudited) and June 30, 1996,
respectively. Another customer represented 11% of service revenues for the year
ended December 31, 1993. No other customer accounted for more than 10% of
service revenues for those periods.

8. PENDING BUSINESS COMBINATION:

In June 1996, the stockholders of the Company entered into a definitive
agreement to merge the Company with StaffMark, Inc. ("StaffMark") in conjunction
with StaffMark's anticipated initial public offering. In April 1996, the Company
advanced $31,250 to StaffMark to fund organizational and other costs related to
the planned merger and StaffMark's initial public offering.

In conjunction with this merger, the Company plans to make a cash
distribution to the majority stockholder representing the Company's S
Corporation Accumulated Adjustment Account as of the merger date. The balance of
the Company's S Corporation Accumulated Adjustment Account at June 30, 1996, was
approximately $790,000. In addition, prior to or coincident with the merger, the
Company intends to repay the note payable to stockholder. The Company expects to
incur additional debt as a primary means of funding the repayment of the note
payable to stockholder and distribution of the balance of the S Corporation
Accumulated Adjustment Account.

F-83
<PAGE> 148

FIRST CHOICE STAFFING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

In conjunction with the merger discussed above, the majority stockholder
will enter into an employment agreement which provides for a set base salary,
participation in future incentive bonus plans, certain other benefits and a
covenant not to compete if and when the stockholder's employment is terminated.

9. SUBSEQUENT ACQUISITION:

On July 1, 1996, the Company acquired certain of the operating assets of
SSI, a provider of permanent and temporary placement services to companies in
the market for information technology professionals. SSI was incorporated in May
1993 and is located in Charlotte, North Carolina. The total purchase price of
$700,000 and noncompete agreement with the seller of $50,000 were financed
through borrowings from a bank and execution of a promissory note payable to the
seller. All financing related to this acquisition is secured by the personal
guaranty of the majority stockholder. The acquisition will be accounted for
using the purchase method of accounting. Based on the preliminary purchase price
allocation, fixed assets acquired will be recorded at historical, depreciated
cost, which approximated fair value as of the acquisition date, and the
remaining purchase price of approximately $680,000 will be recorded as goodwill
and amortized on a straight-line basis over its estimated economic life of 30
years.

10. PRO FORMA ADJUSTMENTS TO FINANCIAL STATEMENT PRESENTATION
(UNAUDITED):

In conjunction with the planned merger with StaffMark as discussed in Note
8, the Company will change from an S Corporation to a C Corporation for federal
and state income tax reporting purposes, which will require the Company to
recognize the tax consequences of operations in its statements of income. The
supplemental pro forma information included in the accompanying statements of
income reflect the estimated impact of recognizing income tax expense as if the
Company had been a C Corporation for tax reporting purposes during the twelve
months and six months ended December 31, 1995 and June 30, 1996, respectively.

As discussed in Note 8, the Company intends to make distributions equal to
the Company's S Corporation Accumulated Adjustment Account as of the merger
date. The supplemental pro forma information included in the accompanying
balance sheet reflects the estimated impact of recording these distributions as
if such distributions had occurred as of June 30, 1996. The pro forma
adjustments are based on the assumption that the distributions will be funded
with additional borrowings.

F-84
<PAGE> 149

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Blethen Group:

We have audited the accompanying combined balance sheets of the companies
identified in Note 1 to the financial statements ("The Blethen Group"), as of
January 1, 1995, December 31, 1995 and June 30, 1996, and the related combined
statements of income (loss), stockholders' equity and cash flows for each of the
three fiscal years in the period ended December 31, 1995 and for the six months
ended June 30, 1996. 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 Blethen Group as of
January 1, 1995, December 31, 1995 and June 30, 1996, and the results of their
operations and their cash flows for each of the three fiscal years in the period
ended December 31, 1995, and for the six months ended June 30, 1996, in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Raleigh, North Carolina,
July 26, 1996.

F-85
<PAGE> 150

THE BLETHEN GROUP

COMBINED BALANCE SHEETS

ASSETS
<TABLE>
<CAPTION>
JUNE 30, 1996
JANUARY 1, DECEMBER 31, -------------------------
1995 1995 ACTUAL PRO FORMA
---------- ------------ ---------- -----------
(UNAUDITED)
(NOTE 9)
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................. $ 31,921 $ 44,644 $ 119,312 $ 119,312
Accounts receivable....................... 1,136,081 1,377,799 1,683,071 1,683,071
Deferred tax asset........................ 5,500 11,000 8,000 8,000
Prepaid expenses and other................ 16,809 14,510 15,551 15,551
---------- ---------- ---------- ----------
Total current assets.............. 1,190,311 1,447,953 1,825,934 1,825,934
PROPERTY AND EQUIPMENT, net................. 393,330 307,286 278,481 278,481
OTHER ASSETS:
Due from stockholders..................... 185,236 194,163 250,752 250,752
Deferred tax asset........................ 24,100 20,760 -- --
Advance to StaffMark, Inc................. -- -- 31,250 31,250
Other..................................... 11,750 12,232 12,184 12,184
---------- ---------- ---------- ----------
Total other assets................ 221,086 227,155 294,186 294,186
---------- ---------- ---------- ----------
$1,804,727 $1,982,394 $2,398,601 $ 2,398,601
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Lines of credit........................... $ 764,645 $ 971,436 $1,052,767 $ 1,052,767
Accounts payable.......................... 220,801 105,648 64,444 64,444
Outstanding checks........................ -- 25,329 -- --
Payroll and related liabilities........... 295,472 301,258 504,570 504,570
Current maturities of long-term debt...... 25,341 10,151 10,494 10,494
Current maturities of capital lease
obligations............................ 82,708 47,148 -- --
Current maturities of notes payable to
related parties........................ 83,308 62,813 82,467 82,467
Income taxes payable...................... 15,783 82,583 78,811 78,811
Accrued interest and other................ 16,001 55,043 42,898 42,898
---------- ---------- ---------- ----------
Total current liabilities......... 1,504,059 1,661,409 1,836,451 1,836,451
LONG-TERM DEBT, less current maturities..... 35,604 24,922 19,092 289,092
CAPITAL LEASE OBLIGATIONS, less current
maturities................................ 67,452 22,475 -- --
NOTES PAYABLE TO RELATED PARTIES, less
current maturities........................ 49,037 45,271 46,882 46,882
DEFERRED TAX LIABILITY...................... -- -- 10,000 10,000
COMMITMENTS AND CONTINGENCIES (Notes 5, 6, 7
and 8)
STOCKHOLDERS' EQUITY:
Common stock.............................. 8,399 8,399 8,399 8,399
Additional paid-in capital................ 8,940 8,940 8,940 8,940
Retained earnings......................... 131,236 210,978 468,837 198,837
---------- ---------- ---------- ----------
Total stockholders' equity........ 148,575 228,317 486,176 216,176
---------- ---------- ---------- ----------
$1,804,727 $1,982,394 $2,398,601 $ 2,398,601
========== ========== ========== ==========
</TABLE>

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

F-86
<PAGE> 151

THE BLETHEN GROUP

COMBINED STATEMENTS OF INCOME (LOSS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS ------------------------
--------------------------------------- JULY 2, JUNE 30,
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SERVICE REVENUES................ $11,197,726 $11,966,633 $13,380,157 $ 6,460,825 $7,721,134
COST OF SERVICES................ 8,131,773 8,806,124 9,917,548 4,897,262 5,918,388
------------ ------------ ------------ ----------- -----------
Gross profit.......... 3,065,953 3,160,509 3,462,609 1,563,563 1,802,746
OPERATING EXPENSES:
Selling, general and
administrative............. 3,042,816 2,713,376 2,931,881 1,325,851 1,302,768
Depreciation and
amortization............... 134,968 122,963 111,437 54,192 55,626
------------ ------------ ------------ ----------- -----------
Operating income
(loss).............. (111,831) 324,170 419,291 183,520 444,352
OTHER INCOME (EXPENSE):
Interest expense.............. (134,815) (137,448) (140,800) (68,723) (82,628)
Other, net.................... 19,467 2,917 10,884 (3,471) 1,161
------------ ------------ ------------ ----------- -----------
INCOME (LOSS) BEFORE PROVISION
(BENEFIT) FOR INCOME TAXES.... (227,179) 189,639 289,375 111,326 362,885
PROVISION (BENEFIT) FOR INCOME
TAXES......................... (136,263) 49,000 81,000 37,000 60,159
------------ ------------ ------------ ----------- -----------
Net income (loss)..... $ (90,916) $ 140,639 $ 208,375 $ 74,326 $ 302,726
============ ============ ============ =========== ===========
PRO FORMA DATA
(Unaudited) (Note 9):
Historical income before
income taxes............... $ 289,375 $ 362,885
Less pro forma provision for
income taxes............... 112,856 141,525
------------ -----------
PRO FORMA NET INCOME............ $ 176,519 $ 221,360
============ ===========
</TABLE>

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

F-87
<PAGE> 152

THE BLETHEN GROUP

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------ ---------- --------- ---------
<S> <C> <C> <C> <C>
BALANCE, January 4, 1993.......................... $8,543 $ 32,265 $ 239,861 $ 280,669
Net loss........................................ -- -- (90,916) (90,916)
Dividends....................................... -- -- (57,343) (57,343)
------ -------- --------- ---------
BALANCE, January 2, 1994.......................... 8,543 32,265 91,602 132,410
Net income...................................... -- -- 140,639 140,639
Dividends....................................... -- -- (99,474) (99,474)
Repurchase and retirement of common stock....... (144 ) (23,325) (1,531) (25,000)
------ -------- --------- ---------
BALANCE, January 1, 1995.......................... 8,399 8,940 131,236 148,575
Net income...................................... -- -- 208,375 208,375
Dividends....................................... -- -- (128,633) (128,633)
------ -------- --------- ---------
BALANCE, December 31, 1995........................ 8,399 8,940 210,978 228,317
Net income...................................... -- -- 302,726 302,726
Dividends....................................... -- -- (44,867) (44,867)
------ -------- --------- ---------
BALANCE, June 30, 1996............................ $8,399 $ 8,940 $ 468,837 $ 486,176
====== ======== ========= =========
</TABLE>

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

F-88
<PAGE> 153

THE BLETHEN GROUP

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS ------------------------
----------------------------------- JULY 2, JUNE 30,
1993 1994 1995 1995 1996
--------- --------- --------- ----------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).............................. $ (90,916) $ 140,639 $ 208,375 $ 74,326 $ 302,726
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization............... 134,968 122,963 111,437 54,192 55,626
Provision for (benefit from) deferred income
taxes..................................... (136,263) 29,898 (2,160) (900) 33,760
Change in operating assets and liabilities:
Accounts receivable....................... (17,767) (54,870) (241,718) (318,847) (305,272)
Prepaid expenses and other................ (14,096) 30,971 2,299 (8,669) (1,041)
Other assets.............................. 21,491 5,769 (482) -- 48
Accounts payable.......................... 180,570 (97,532) (115,153) 244,187 (41,204)
Outstanding checks........................ -- -- 25,329 -- (25,329)
Payroll and related liabilities........... (75,190) 65,663 5,786 (6,123) 203,312
Income taxes payable (receivable)......... (13,711) 29,494 66,800 38,657 (3,772)
Accrued interest and other................ 77,477 (55,306) 39,042 15,497 (12,145)
--------- --------- --------- --------- ---------
Net cash provided by operating
activities........................... 66,563 217,689 99,555 92,320 206,709
--------- --------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures........................... (130,178) (72,119) (25,393) -- (26,821)
Advance to StaffMark, Inc...................... -- -- -- -- (31,250)
--------- --------- --------- --------- ---------
Net cash used in investing
activities........................... (130,178) (72,119) (25,393) -- (58,071)
--------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from lines of credit.............. 53,773 10,681 206,791 225,613 81,331
Proceeds from issuance of long-term debt....... 12,851 54,172 -- -- --
Payments on long-term debt..................... (28,243) (10,282) (25,872) (2,907) (5,487)
Payments on capital lease obligations.......... (16,213) (113,042) (80,537) (41,943) (69,623)
Change in notes payable to related parties..... 34,314 73,031 (24,261) (87,074) 21,265
Cash distributions to stockholders............. (57,343) (99,474) (128,633) (62,890) (44,867)
Change in due from stockholders................ 837 (44,099) (8,927) 32,791 (56,589)
--------- --------- --------- --------- ---------
Net cash provided by (used in)
financing activities................. (24) (129,013) (61,439) 63,590 (73,970)
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS.................................... (63,639) 16,557 12,723 155,910 74,668
CASH AND CASH EQUIVALENTS, beginning of period... 79,003 15,364 31,921 31,921 44,644
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, end of period......... $ 15,364 $ 31,921 $ 44,644 $ 187,831 $ 119,312
========= ========= ========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid.................................. $ 97,062 $ 169,227 $ 141,324 $ 68,723 $ 80,541
========= ========= ========= ========= =========
Taxes paid..................................... $ -- $ 66 $ 41,476 $ -- $ 33,009
========= ========= ========= ========= =========
Noncash transactions:
Repurchase of common stock through a note
payable................................... $ -- $ 25,000 $ -- $ -- $ --
========= ========= ========= ========= =========
Purchase of property and equipment through
capital leases............................ $ 45,975 $ -- $ -- $ -- $ --
========= ========= ========= ========= =========
</TABLE>

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

F-89
<PAGE> 154

THE BLETHEN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

The Blethen Group's (the "Company") primary business purpose is to provide
temporary personnel services. The Company's administrative headquarters are in
Burlington, North Carolina, and as of June 30, 1996, the Company operated
staffing offices in Burlington, Henderson, Durham, West End, Research Triangle
Park and Winston-Salem, North Carolina.

The accompanying combined financial statements include the accounts of the
following separate entities which comprise The Blethen Group:

<TABLE>
<CAPTION>
FORM OF
DATE OF CORPORATION
INCORPORATION FOR INCOME
ENTITY IN NORTH CAROLINA TAX PURPOSES SERVICE TYPE
- -------------------------------- ------------------ -------------- ------------------------------
<S> <C> <C> <C>
Blethen Temporaries, Inc. ...... October 6, 1981 S Corporation Clerical and light industrial
Dixon Enterprises of Burlington, February 7, 1992 C Corporation
Inc. ......................... Clerical and light industrial
DP Pros of Burlington, Inc. .... June 6, 1985 C Corporation Information technology and
clinical
Personnel Placement, Inc. ...... October 6, 1981 C Corporation Permanent placement
TRASEC Corp. ................... February 7, 1992 C Corporation Clerical and light industrial
Jaeger Personnel Services, December 20, 1985 S Corporation
Ltd. ......................... Clerical and light industrial
</TABLE>

Basis of Presentation --

The accompanying financial statements are presented on a combined basis as
the entities comprising the Company are under common ownership and/or common
management. Furthermore, Blethen Temporaries, Inc. has an option to purchase all
outstanding shares of common stock of Dixon Enterprises of Burlington, Inc. and
TRASEC Corp. for an amount not to exceed $5,000. All significant intercompany
transactions have been eliminated.

Fiscal Periods --

The Company's fiscal year ends on the Sunday closest to December 31. Fiscal
year 1993 refers to the year ended January 2, 1994, fiscal year 1994 refers to
the year ended January 1, 1995, and fiscal year 1995 refers to the year ended
December 31, 1995. The fiscal years 1993, 1994 and 1995 each included 52 weeks.
The unaudited 1995 and audited 1996 interim periods end on the Sunday closest to
the end of the interim period. Each of the interim periods included in the
accompanying combined financial statements includes 26 weeks.

Interim Financial Statements --

The accompanying interim combined financial statements and related
disclosures for the six months ended July 2, 1995, have not been audited by
independent accountants. However, the combined financial statements for all
interim periods have been prepared in conformity with the accounting principles
stated in the audited combined financial statements for the three years in the
period ended December 31, 1995 and for the six months ended June 30, 1996, and
include all adjustments (which were of a normal, recurring nature) which, in the
opinion of management, are necessary to present fairly the financial position of
the Company and the combined results of operations and cash flows for each of
the periods presented. The operating results for the interim periods presented
are not necessarily indicative of results for the full year.

F-90
<PAGE> 155

THE BLETHEN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Revenue Recognition --

Service revenues and permanent placement fee revenues are recognized as
income at the time staffing services are provided or the permanent employee is
placed with the customer.

In addition to the services described above, the Company, through a
licensing agreement (Note 6), employs and pays individuals to perform services
for the licensees' customers, invoice customers, maintain professional liability
insurance and support the training, office administration, systems and marketing
needs of the licensee. All revenues generated by the licensee, therefore, belong
to the Company and are included in the Company's revenues and expenses. The
Company is primarily liable for operating expenses.

Use of Estimates --

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in the accompanying combined financial statements are based
upon management's evaluation of the relevant facts and circumstances as of the
date of the combined financial statements. Actual results may differ from the
estimates and assumptions used in preparing the accompanying combined financial
statements.

Cash and Cash Equivalents --

Accounts Receivable --

The Company provides, if necessary, allowances which management believes
are adequate to absorb losses to be incurred in realizing the amounts recorded
in the accompanying combined financial statements. Management believes all
accounts are collectible, and accordingly, has not recorded an allowance as of
January 1, 1995, December 31, 1995 and June 30, 1996. Included in accounts
receivable in the accompanying combined balance sheets are unbilled amounts of
$143,515, $149,665 and $394,098 at January 1, 1995, December 31, 1995 and June
30, 1996, respectively. All unbilled amounts are normally billed in the
following month.

Credit risk with respect to accounts receivable is dispersed due to the
nature of the business, the large number of customers and the diversity of
industries serviced.

Property and Equipment --

<TABLE>
<S> <C>
Office equipment............................................. 5 to 7 years
Computer equipment and software.............................. 5 years
Vehicles..................................................... 5 years
Leasehold improvements....................................... 5 to 15 years
</TABLE>

F-91
<PAGE> 156

THE BLETHEN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

the related accumulated depreciation or amortization are removed from the
balance sheet and any resultant gain or loss is recorded.

Fair Value of Financial Instruments --

The Company's financial instruments include cash, related party notes
payable, due from stockholders and debt obligations. Management believes that
these instruments bear interest at rates which approximate prevailing market
rates for instruments with similar characteristics, and accordingly, the
carrying values for these instruments are reasonable estimates of fair value.

Income Taxes --

Effective January 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"). Under this new statement, deferred income taxes are provided based on the
estimated future tax effects of differences between the financial statement
carrying amounts and the tax bases of existing assets and liabilities. The
adoption of SFAS 109 did not have a material effect on the Company's financial
position or results of operations.

Blethen Temporaries, Inc. and Jaeger Personnel Services, Ltd. have elected
to be taxed as S Corporations for federal and state income tax reporting
purposes. Accordingly, no income tax expense (benefit) has been recorded in the
accompanying combined financial statements related to these entities as such
taxes are liabilities of the respective stockholders. These entities' tax
returns are subject to examination by federal and state taxing authorities. If
such examinations result in a change to their reported income or loss, the
taxable income or loss reported by the respective stockholders could also
change.

2. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, JUNE 30,
1995 1995 1996
---------- ------------ --------
<S> <C> <C> <C>
Office equipment................................... $ 421,890 $428,610 $440,613
Computer equipment and software.................... 336,166 352,528 367,346
Vehicles........................................... 65,118 65,118 65,118
Leasehold improvements............................. 109,926 109,926 109,926
-------- -------- --------
933,100 956,182 983,003
Less accumulated depreciation and amortization..... 539,770 648,896 704,522
-------- -------- --------
$ 393,330 $307,286 $278,481
======== ======== ========
</TABLE>

F-92
<PAGE> 157

THE BLETHEN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

3. DEBT:

Long-term debt consisted of the following:

<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, JUNE 30,
1995 1995 1996
---------- ------------ --------
<S> <C> <C> <C>
Note payable to Chase Auto Financial. Principal and
interest payable monthly. Interest payable at a
fixed rate of 7.75%. Secured by a vehicle........ $ 35,172 $ 28,514 $ 25,261
Unsecured note payable to NationsBank of North
Carolina, N.A. Interest payable monthly at a
variable rate which ranged from 9.25% to 10.00%
and averaged 9.83% during 1995. Principal was
repaid in 1995................................... 15,900 -- --
Unsecured note payable to NationsBank of North
Carolina, N.A. Principal and interest are payable
in monthly installments of $320. Interest rate is
variable and ranged from 9.25% to 9.5% and
averaged 9.29% during the first six months of
1996............................................. 9,873 6,559 4,325
------- ------- -------
60,945 35,073 29,586
Less current maturities.......................... 25,341 10,151 10,494
------- ------- -------
$ 35,604 $ 24,922 $ 19,092
======= ======= =======
</TABLE>

The Company has two revolving lines of credit with Lighthouse Financial
Corp. that allow for maximum borrowings equal to the lesser of $800,000 and
$750,000 or 85% of the applicable Company's eligible accounts receivable, as
defined. Interest is payable monthly at a variable rate which ranged from 10.75%
to 11.00% and averaged 10.79% during the six months ended June 30, 1996. The
lines of credit are renewed annually and are currently due April 6, 1997. They
are secured by the assets of the Company and guaranteed by the majority
stockholder. Principal and interest on the lines of credit are repaid by
collection of accounts receivable under a lockbox arrangement. Accordingly, such
lines are classified as current liabilities. At June 30, 1996, approximately
$27,914 of cash held by the Company was subject to this arrangement. Under the
terms of both lines of credit, the Company is required to maintain certain
financial ratios, including working capital in excess of $125,000 and monthly
positive cash flow, among other things. As of June 30, 1996, the Company did not
comply with certain of these ratios, as well as certain other negative
covenants. However, Lighthouse Financial Corp. has agreed to forbear from
enforcing such events of noncompliance and default. Balances outstanding under
these lines were $764,645, $971,436 and $1,052,767 as of January 1, 1995,
December 31, 1995 and June 30, 1996, respectively.

Annual maturities of debt are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
---------------------------
DECEMBER 31, JUNE 30,
------------ ----------
<S> <C> <C>
1996............................... $ 981,587 $ --
1997............................... 10,262 1,063,261
1998............................... 7,773 8,140
1999............................... 6,887 8,027
2000............................... -- 2,925
2001............................... -- --
---------- ----------
$1,006,509 $1,082,353
========== ==========
</TABLE>

F-93
<PAGE> 158

THE BLETHEN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

4. INCOME TAXES:

Provision (benefit) for income taxes consisted of the following components:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS -----------------------
------------------------------- JULY 2, JUNE 30,
1993 1994 1995 1995 1996
--------- ------- ------- ----------- --------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Current:
Federal......................... $ -- $19,102 $69,160 $32,000 $ 23,240
State........................... -- -- 14,000 5,900 3,159
--------- ------- ------- ------- -------
-- 19,102 83,160 37,900 26,399
--------- ------- ------- ------- -------
Deferred:
Federal......................... (109,263) 23,898 (1,660) (900) 29,260
State........................... (27,000) 6,000 (500) -- 4,500
--------- ------- ------- ------- -------
(136,263) 29,898 (2,160) (900) 33,760
--------- ------- ------- ------- -------
Total................... $(136,263) $49,000 $81,000 $37,000 $ 60,159
========= ======= ======= ======= =======
</TABLE>

Provision (benefit) for income taxes differs from the amount computed by
applying the federal statutory tax rate to pretax income due to the following:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS -----------------------
--------------------------------- JULY 2, JUNE 30,
1993 1994 1995 1995 1996
--------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Provision (benefit) for income
taxes computed at the federal
statutory rate................. $ (77,000) $ 64,000 $ 98,000 $38,000 $123,000
State taxes, net of federal tax
benefit........................ (12,000) 10,000 15,000 6,000 19,000
Effect of permanent
differences.................... 1,000 2,000 3,000 1,000 1,000
Income of S Corporations not
subject to taxation............ (43,000) (19,000) (32,000) (7,000) (82,000)
Other............................ (5,263) (8,000) (3,000) (1,000) (841)
--------- -------- -------- ------- --------
Provision (benefit) for income
taxes.......................... $(136,263) $ 49,000 $ 81,000 $37,000 $ 60,159
========= ======== ======== ======= ========
</TABLE>

F-94
<PAGE> 159

THE BLETHEN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred income taxes reflect the impact of "temporary differences" between
the financial and tax bases of assets and liabilities. The temporary differences
which gave rise to deferred tax assets and (liabilities) are as follows:

<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, JUNE 30,
1995 1995 1996
---------- ------------ --------
<S> <C> <C> <C>
Current --
Employee advances treated as compensation...... $ (1,000) $ -- $ --
Workers' compensation accrual.................. 4,000 4,000 4,000
Vacation accrual............................... 2,000 3,000 3,000
Other.......................................... 500 4,000 1,000
------- ------- -------
5,500 11,000 8,000
Long-term --
Net operating losses ("NOLs").................. 78,000 42,000 9,000
Accelerated depreciation for tax purposes...... (30,000) (26,000) (24,000)
Alternative minimum tax and other credits...... 13,000 4,000 5,000
Change in income tax accounting method......... (37,000) -- --
Other.......................................... 100 760 --
------- ------- -------
24,100 20,760 (10,000)
------- ------- -------
Net deferred tax assets (liabilities)............ $ 29,600 $ 31,760 $ (2,000)
======= ======= =======
</TABLE>

The NOL carryforward at June 30, 1996 was approximately $23,000.
Utilization of this carryforward may be limited as a result of the potential
change in ownership that would result in the event of the intended merger
subsequent to year-end (Note 8). However, management believes that the deferred
tax asset related to the NOL carryforward is fully realizable, and therefore no
valuation allowance has been recorded.

5. RELATED PARTY TRANSACTIONS:

Notes Payable to Related Parties --

The Company has an informal note payable to a member of the Boards of
Directors and relative of the majority stockholder. The note is payable in
monthly installments of $711. The note bears interest at an annually adjustable
rate equal to the six month average rate of two year U.S. Treasury notes (5.69%
at June 30, 1996). The outstanding balances as of January 1, 1995, December 31,
1995 and June 30, 1996 were $68,694, $49,038 and $46,882, respectively. Interest
expense related to these notes amounted to approximately $6,000, $5,000 and
$3,000 during fiscal years 1993, 1994 and 1995, respectively, and $1,500 during
the unaudited six month period ended July 2, 1995 and $2,000 during the six
month period ended June 30, 1996.

The Company had a note payable to a former stockholder which originated
through the Company's purchase of the former stockholder's equity interest in DP
Pros of Burlington, Inc. The note did not bear interest and was due in equal
quarterly installments of $4,000. The note was fully repaid in 1995. The
outstanding balance as of January 1, 1995, was $8,000.

The Company has two unsecured notes payable to stockholders, which bear
interest at variable rates ranging between 9.25% and 9.50%. Both notes are due
on demand and aggregate outstanding balances as of January 1, 1995, December 31,
1995 and June 30, 1996, were $52,337, $59,046 and $82,467, respectively.
Interest expense related to these notes amounted to $5,000 and $6,000 during
fiscal years 1994 and 1995, respectively, and $3,000 and $4,000 during the
unaudited six month period ended July 2, 1995 and the six month period ended
June 30, 1996, respectively.

F-95
<PAGE> 160

THE BLETHEN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Stockholder Transactions --

The Company leases office space and a vehicle from the majority stockholder
through informal agreements at a monthly cost of $600 each. In March 1996, the
office lease payments were increased to $1,200 per month. Market rental rates
may differ from these rental payments. Rental expense under the above agreements
totaled $14,400 for each of the fiscal years 1993, 1994 and 1995 and $7,200
(unaudited) and $9,600 for the six month period ended July 2, 1995 and for the
six month period ended June 30, 1996, respectively. Due from stockholders
primarily represents advances to the majority stockholder.

The Company rents its Henderson office facilities from a stockholder under
a month-to-month agreement. Rent expense related to these facilities was
$17,500, $19,000 and $24,000 during the fiscal years 1993, 1994 and 1995,
respectively, and $12,000 during the unaudited six month period ended July 2,
1995 and $13,700 during the six month period ended June 30, 1996.

During 1991 the Company entered into a three year noncompete agreement with
a related party. Pursuant thereto, the individual agreed not to compete, as
defined, with the Company for the term of the agreement, expiring in January
1994, in exchange for $150,000 payable in weekly installments of $962.

6. COMMITMENTS AND CONTINGENCIES:

Distributions to Stockholders --

Blethen Temporaries, Inc. and Jaeger Personnel Services, Ltd. pay dividends
to their stockholders in amounts sufficient to cover, among other things, their
estimated tax payments attributable to each entity's net income which will be
included in their individual tax returns.

Licensing Agreement --

During 1995, the Company entered into an agreement whereby it granted a
license to a third party to open and maintain a branch in West End, North
Carolina, for the purpose of providing temporary personnel services in that
market for an indefinite term. The Company also thereby granted the
non-exclusive right to utilize the Company's trade secrets, methods and
know-how. The Company receives 40% of gross margin, as defined, as payment for
management services. The balance of such gross margin is paid to the licensee.
Amounts expensed under the agreement amounted to $36,515 during fiscal year 1995
and $48,290 during the six month period ended June 30, 1996. Such expense is
included in selling, general and administrative expenses in the accompanying
combined statements of income (loss).

Capital Lease Obligations --

The Company previously leased certain assets (primarily office equipment)
under capital leases. All capital lease obligations were paid in full during the
six month period ended June 30, 1996.

F-96
<PAGE> 161

THE BLETHEN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

7. NONCANCELABLE OPERATING LEASES:

The Company leases office space and a vehicle (Note 5) under noncancelable
operating leases. As discussed in Note 5, certain of these facilities are leased
from related parties. Future minimum payments required under operating leases
that have an initial or remaining noncancelable lease term in excess of one year
are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
-------------------------
DECEMBER 31, JUNE 30,
------------ --------
<S> <C> <C>
1996................................. $ 93,395 $ --
1997................................. 86,317 101,883
1998................................. 88,140 103,677
1999................................. 33,932 80,958
2000................................. -- 13,572
-------- --------
$301,784 $300,090
======== ========
</TABLE>

Rental expense totaled $95,208, $155,230 and $157,121 for fiscal years
1993, 1994 and 1995, respectively, and $75,391 and $77,535 for the unaudited six
month period ended July 2, 1995, and the six month period ended June 30, 1996,
respectively.

8. PENDING BUSINESS COMBINATION:

In June 1996, certain of the stockholders of the Company entered into a
definitive agreement to merge the Company with StaffMark, Inc. ("StaffMark") in
conjunction with StaffMark's anticipated initial public offering. In April 1996,
the Company advanced $31,250 to StaffMark to fund organizational and other costs
related to the planned merger and StaffMark's initial public offering.

9. PRO FORMA ADJUSTMENTS TO FINANCIAL STATEMENT PRESENTATION
(UNAUDITED):

F-97
<PAGE> 162

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To E.P. Enterprises Corporation:

We have audited the accompanying balance sheets of E.P. Enterprises
Corporation (the "Company"), as of December 31, 1994 and July 10, 1995, and the
related statements of income, shareholders' equity (deficit) and cash flows for
the years ended December 31, 1993 and 1994 and for the period from January 1,
1995 through July 10, 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 financial statements referred to above present fairly,
in all material respects, the financial position of E.P. Enterprises Corporation
as of December 31, 1994 and July 10, 1995, and the results of its operations and
its cash flows for the years ended December 31, 1993 and 1994 and for the period
from January 1, 1995 through July 10, 1995, in conformity with generally
accepted accounting principles.

ARTHUR ANDERSEN LLP

Atlanta, Georgia,
May 17, 1996.

F-98
<PAGE> 163

E.P. ENTERPRISES CORPORATION

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, JULY 10,
1994 1995
------------ ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash............................................................. $ -- $ 2,331
Accounts receivable, net of allowance for doubtful accounts of
$10,000....................................................... 1,420,510 1,929,922
Prepaid expenses and other....................................... 58,591 57,723
---------- ----------
Total current assets..................................... 1,479,101 1,989,976
PROPERTY AND EQUIPMENT, net........................................ 124,523 111,561
OTHER ASSETS....................................................... 6,458 5,830
---------- ----------
$1,610,082 $2,107,367
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable................................................. $ 6,476 $ 72,050
Outstanding checks, net.......................................... 145,340 397,142
Payroll and related liabilities.................................. 405,296 660,807
Reserve for workers' compensation claims......................... 81,797 285,000
Current maturities of long-term debt and leases.................. 41,414 1,005,144
Accrued interest and other....................................... 27,759 7,690
---------- ----------
Total current liabilities................................ 708,082 2,427,833
LONG-TERM DEBT AND LEASES, less current maturities................. 10,282 8,769
COMMITMENTS AND CONTINGENCIES (Notes 7, 8 and 9)
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock, $100 par value in 1995 and 1994; authorized and
issued shares of 150 in 1995 and 1994, outstanding shares of
10 in 1995 and 1994........................................... 15,000 15,000
Paid-in capital.................................................. 22,500 22,500
Retained earnings................................................ 1,323,718 102,765
Treasury stock, 140 shares....................................... (469,500) (469,500)
---------- ----------
Total shareholders' equity (deficit)..................... 891,718 (329,235)
---------- ----------
$1,610,082 $2,107,367
========== ==========
</TABLE>

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

F-99
<PAGE> 164

E.P. ENTERPRISES CORPORATION

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE PERIOD
YEARS ENDED DECEMBER 31, FROM
--------------------------- JANUARY 1, 1995
1993 1994 TO JULY 10, 1995
----------- ----------- ----------------
<S> <C> <C> <C>
SERVICE REVENUES................................... $14,211,743 $17,553,687 $ 11,034,812
COST OF SERVICES................................... 10,833,922 13,583,176 8,751,870
----------- ----------- -----------
Gross profit............................. 3,377,821 3,970,511 2,282,942
OPERATING EXPENSES:
Selling, general and administrative.............. 2,308,467 2,338,574 1,330,700
Depreciation and amortization.................... 16,418 23,849 17,331
----------- ----------- -----------
Operating income......................... 1,052,936 1,608,088 934,911
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense................................. (2,025) (2,564) (14,685)
Interest and other income (expense).............. 36,271 (4,230) 33,821
----------- ----------- -----------
Net income............................... $ 1,087,182 $ 1,601,294 $ 954,047
=========== =========== ===========
</TABLE>

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

F-100
<PAGE> 165

E.P. ENTERPRISES CORPORATION

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
COMMON STOCK
----------------- PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK TOTAL
------ ------- ------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1992... 150 $15,000 $22,500 $ 1,165,242 $(469,500) $ 733,242
Net income................. -- -- -- 1,087,182 -- 1,087,182
Dividends.................. -- -- -- (230,000) -- (230,000)
--- ------- ------- ----------- -------- -----------
BALANCE, December 31, 1993... 150 15,000 22,500 2,022,424 (469,500) 1,590,424
Net income................. -- -- -- 1,601,294 -- 1,601,294
Dividends.................. -- -- -- (2,300,000) -- (2,300,000)
--- ------- ------- ----------- -------- -----------
BALANCE, December 31, 1994... 150 15,000 22,500 1,323,718 (469,500) 891,718
Net income................. -- -- -- 954,047 -- 954,047
Dividends.................. -- -- -- (2,175,000) -- (2,175,000)
--- ------- ------- ----------- -------- -----------
BALANCE, July 10, 1995....... 150 $15,000 $22,500 $ 102,765 $(469,500) $ (329,235)
=== ======= ======= =========== ======== ===========
</TABLE>

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

F-101
<PAGE> 166

E.P. ENTERPRISES CORPORATION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE PERIOD
YEARS ENDED DECEMBER 31, FROM
-------------------------- JANUARY 1, 1995
1993 1994 TO JULY 10, 1995
---------- ----------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................ $1,087,182 $ 1,601,294 $ 954,047
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................. 16,418 23,849 17,331
Provision for bad debts........................ 2,420 12,557 --
Net (gain) loss on sale of equipment........... 5,351 230 (31,032)
Change in operating assets and liabilities:
Accounts receivable.......................... (766,117) 196,457 (509,412)
Prepaid expenses and other................... 54,414 23,460 868
Other assets................................. (838) (3,037) 628
Accounts payable............................. (8,750) (5,973) 65,574
Outstanding checks, net...................... -- 145,340 251,802
Payroll and related liabilities.............. 121,995 14,695 255,511
Reserve for workers' compensation claims..... 41,406 31,891 203,203
Accrued interest and other................... (170,597) (29,517) (20,069)
---------- ----------- -----------
Net cash provided by operating
activities.............................. 382,884 2,011,246 1,188,451
---------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.............................. (61,867) (67,893) (13,612)
Proceeds from the sales of property and
equipment...................................... 12,529 -- 40,275
---------- ----------- -----------
Net cash provided by (used in) investing
activities.............................. (49,338) (67,893) 26,663
---------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of short-term debt......... -- -- 800,000
Net borrowings on revolving line of credit........ -- 38,207 164,055
Payments on capital leases........................ -- 13,489 (1,838)
Cash distributions to shareholders................ (230,000) (2,300,000) (2,175,000)
---------- ----------- -----------
Net cash used in financing activities..... (230,000) (2,248,304) (1,212,783)
---------- ----------- -----------
NET INCREASE (DECREASE) IN CASH..................... 103,546 (304,951) 2,331
CASH, beginning of period........................... 201,405 304,951 --
---------- ----------- -----------
CASH, end of period................................. $ 304,951 $ -- $ 2,331
========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid..................................... $ 2,025 $ 2,564 $ 14,685
========== =========== ===========
</TABLE>

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

F-102
<PAGE> 167

E.P. ENTERPRISES CORPORATION

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

E.P. Enterprises Corporation (the "Company"), doing business as Caldwell
Services, Inc., was incorporated in the state of Georgia on December 27, 1973.
The Company's primary business purpose is to provide temporary personnel
services. The Company is headquartered in Atlanta, Georgia, and as of July 10,
1995 operated five staffing offices in the Atlanta area.

On July 10, 1995, Brewer Personnel Services, Inc. ("Brewer") acquired the
stock of the Company. Total consideration paid by Brewer for the Company was
approximately $17.3 million. The purchase price included cash of $11.5 million,
a note for $3.1 million and the assumption of certain liabilities of the
Company. The accompanying balance sheet as of July 10, 1995 has been prepared as
of the date of acquisition and does not reflect the purchase accounting
adjustments which were recorded by Brewer in conjunction with this acquisition.

Revenue Recognition --

Service revenues are recognized as income at the time staffing services are
provided.

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, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in the accompanying financial statements are based upon
management's evaluation of the relevant facts and circumstances as of the date
of the financial statements. However, actual results may differ from the
estimates and assumptions used in preparing the accompanying financial
statements.

Accounts Receivable --

The Company maintains allowances for potential losses which management
believes are adequate to absorb losses to be incurred in realizing the amounts
recorded in the accompanying financial statements. Included in accounts
receivable in the accompanying balance sheets are unbilled amounts of $254,016
and $324,783 at December 31, 1994 and July 10, 1995, respectively.

Property and Equipment --

<TABLE>
<S> <C>
Office equipment.................................................. 5-7 years
Computer equipment................................................ 5 years
Computer software................................................. 3 years
Leasehold improvements............................................ 39 years
</TABLE>

F-103
<PAGE> 168

E.P. ENTERPRISES CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Workers' Compensation --

The Company self-insures certain risks related to workers' compensation
claims. The estimated costs of existing and future claims are accrued as
incidents occur based upon historical loss development trends and may be
subsequently revised based on developments relating to such claims. The Company
engages the services of a third-party actuary to assist with the development of
these cost estimates.

2. PROPERTY AND EQUIPMENT:

Components of property and equipment at December 31, 1994 and July 10, 1995
are as follows:

<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Office equipment............................................... $225,051 $118,787
Computer equipment............................................. 130,685 123,103
Computer software.............................................. 6,891 9,450
Leasehold improvements......................................... 81,194 7,231
-------- --------
443,821 258,571
Less accumulated depreciation and amortization............ 319,298 147,010
-------- --------
$124,523 $111,561
======== ========
</TABLE>

Depreciation and amortization expense related to property and equipment
totaled $16,418, $23,849 and $17,331 for the years ended 1993 and 1994 and the
period ended July 10, 1995, respectively.

3. LONG-TERM DEBT AND LEASES:

At December 31, 1994 and July 10, 1995, long-term debt consisted of the
following:

<TABLE>
<CAPTION>
1994 1995
-------- -----------
<S> <C> <C>
Term loan with Bank South; interest payable monthly at
6.85%; principal due September 23, 1995; secured by the
assets and common stock of the Company. .................. $ -- $ 600,000
Term loan with Bank South; interest payable monthly at
prime; principal due September 23, 1995; secured by the
assets and common stock of the Company. .................. -- 200,000
Line of Credit with Bank South; maximum borrowings equal the
lesser of $800,000 or 85% of the Company's eligible
accounts receivable balance; interest payable monthly at
prime; principal due on demand or by April 30, 1996;
secured by the assets and common stock of the Company. ... 38,207 202,262
Capital lease obligations................................... 13,489 11,651
-------- -----------
51,696 1,013,913
Less current maturities................................ 41,414 1,005,144
-------- -----------
Total long-term debt and leases............................. $ 10,282 $ 8,769
======== ===========
</TABLE>

F-104
<PAGE> 169

E.P. ENTERPRISES CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Annual maturities of long-term debt subsequent to July 10, 1995 are as
follows:

Long-term debt of the Company was repaid concurrent with the sale of the
Company (Note 9).

4. INCOME TAXES:

5. WORKERS' COMPENSATION:

The Company is self-insured for certain workers' compensation claims and is
regulated by the Workers' Compensation Insurance Commission in the state of
Georgia. Workers' compensation expense totaled $101,411, $240,908 and $349,934
for the years ended December 31, 1993 and 1994 and for the period ended July 10,
1995, respectively.

6. RELATED PARTY TRANSACTIONS:

Through July 1995, the Company occupied a building owned by an affiliated
partnership comprised of the Company's shareholders. Expenses related to this
building were $33,000 for both years ended December 31, 1993 and 1994 and
$17,325 for the period ended July 10, 1995.

The Company has hardware and software maintenance support agreements with
related companies. Amounts paid on these contracts were $10,327 and $16,141 for
the years ended December 31, 1993 and 1994, respectively, and $8,160 for the
period ended July 10, 1995.

The Company supplies some of its services to affiliated companies. Service
revenues from these companies were $32,944 and $52,941 for the years ended
December 31, 1993 and 1994, respectively, and $34,396 for the period ended July
10, 1995.

7. COMMITMENTS AND CONTINGENCIES:

The Company has historically paid bonuses to its shareholders in amounts
sufficient to cover their estimated tax payments attributable to the respective
share of the Company's net income included in their individual tax returns.

F-105
<PAGE> 170

E.P. ENTERPRISES CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

8. NONCANCELABLE OPERATING LEASES:

The Company leases branch office space under noncancelable operating
leases. Future minimum payments required under operating leases that have an
initial or remaining noncancelable lease term in excess of one year at July 10,
1995, are as follows:

Rental expense totaled $105,125, $115,945 and $83,399 for the years ended
December 31, 1993 and 1994 and for the period ended July 10, 1995, respectively.

9. LITIGATION:

F-106
<PAGE> 171

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To On Call Employment Services, Inc.:

We have audited the accompanying balance sheets of On Call Employment
Services, Inc. (the "Company"), a Colorado corporation, as of December 31, 1994
and 1995 and February 2, 1996 and the related statements of income,
shareholders' equity (deficit) and cash flows for each of the three years in the
period ended December 31, 1995 and for the period from January 1, 1996 to
February 2, 1996. 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 On Call Employment Services,
Inc. as of December 31, 1994 and 1995 and February 2, 1996, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1995 and for the period from January 1, 1996 to February 2,
1996, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Denver, Colorado,
May 24, 1996.

F-107
<PAGE> 172

ON CALL EMPLOYMENT SERVICES, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ FEBRUARY 2,
1994 1995 1996
---------- ---------- -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 95,313 $ 340,594 $ 4,849
Accounts receivable.................................... 1,678,682 2,068,461 273,067
Prepaid expenses and other............................. 1,071 1,671 8,878
---------- ---------- ---------
Total current assets........................... 1,775,066 2,410,726 286,794
PROPERTY AND EQUIPMENT, net.............................. 65,103 114,537 115,369
---------- ---------- ---------
$1,840,169 $2,525,263 $ 402,163
========== ========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable....................................... $ 68,302 $ 123,653 $ 129,970
Payroll and related liabilities........................ 140,195 183,410 253,601
Reserve for workers' compensation claims............... 30,360 40,815 43,305
Other.................................................. 10,000 11,275 12,000
---------- ---------- ---------
Total current liabilities...................... 248,857 359,153 438,876
COMMITMENTS AND CONTINGENCIES
(Notes 6, 7 and 8)
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock, 1,000,000 shares authorized, issued and
outstanding......................................... 60,000 60,000 60,000
Paid-in capital........................................ 185,000 185,000 185,000
Retained earnings (deficit)............................ 1,346,312 1,921,110 (281,713)
---------- ---------- ---------
Total shareholders' equity (deficit)........... 1,591,312 2,166,110 (36,713)
---------- ---------- ---------
$1,840,169 $2,525,263 $ 402,163
========== ========== =========
</TABLE>

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

F-108
<PAGE> 173

ON CALL EMPLOYMENT SERVICES, INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
JANUARY 1,
YEARS ENDED DECEMBER 31, 1996 TO
----------------------------------------- FEBRUARY 2,
1993 1994 1995 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SERVICE REVENUES.......................... $22,130,961 $10,098,261 $12,497,627 $ 1,127,091
COST OF SERVICES.......................... 18,364,966 8,176,489 10,203,428 945,388
----------- ----------- ----------- ----------
Gross profit.................... 3,765,995 1,921,772 2,294,199 181,703
OPERATING EXPENSES:
Selling, general and administrative..... 1,459,203 1,293,619 1,304,762 116,092
Depreciation and amortization........... 6,372 13,242 24,473 2,525
----------- ----------- ----------- ----------
Operating income................ 2,300,420 614,911 964,964 63,086
OTHER INCOME:
Interest income......................... 19,610 25,605 43,334 4,847
----------- ----------- ----------- ----------
Net income...................... $ 2,320,030 $ 640,516 $ 1,008,298 $ 67,933
=========== =========== =========== ==========
</TABLE>

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

F-109
<PAGE> 174

ON CALL EMPLOYMENT SERVICES, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
COMMON STOCK
-------------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
--------- ------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1992.......... 1,000,000 $60,000 $ -- $ 1,458,724 $ 1,518,724
Net income........................ -- -- -- 2,320,030 2,320,030
Dividends......................... -- -- -- (230,000) (230,000)
--------- ------- -------- ----------- -----------
BALANCE, December 31, 1993.......... 1,000,000 60,000 -- 3,548,754 3,608,754
Net income........................ -- -- -- 640,516 640,516
Contribution from shareholder..... -- -- 185,000 -- 185,000
Dividends......................... -- -- -- (2,842,958) (2,842,958)
--------- ------- -------- ----------- -----------
BALANCE, December 31, 1994.......... 1,000,000 60,000 185,000 1,346,312 1,591,312
Net income........................ -- -- -- 1,008,298 1,008,298
Dividends......................... -- -- -- (433,500) (433,500)
--------- ------- -------- ----------- -----------
BALANCE, December 31, 1995.......... 1,000,000 60,000 185,000 1,921,110 2,166,110
Net income for the period from
January 1, 1996 to
February 2, 1996............... -- -- -- 67,933 67,933
Dividends......................... -- -- -- (2,270,756) (2,270,756)
--------- ------- -------- ----------- -----------
BALANCE, February 2, 1996........... 1,000,000 $60,000 $185,000 $ (281,713) $ (36,713)
========= ======= ======== =========== ===========
</TABLE>

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

F-110
<PAGE> 175

ON CALL EMPLOYMENT SERVICES, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
JANUARY 1,
YEARS ENDED DECEMBER 31, 1996 TO
---------------------------------------- FEBRUARY 2,
1993 1994 1995 1996
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................. $ 2,320,030 $ 640,516 $1,008,298 $ 67,933
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization....................... 6,372 13,242 24,473 2,525
Change in operating assets and liabilities:
Accounts receivable............................... (2,532,313) 2,634,981 (389,779) 581,883
Prepaid expenses and other........................ 465 -- (600) (10,564)
Accounts payable.................................. 52,716 (78,044) 55,351 6,317
Outstanding checks................................ 110,098 (110,098) -- --
Payroll and related liabilities................... 236,744 (302,925) 43,215 70,191
Reserve for workers' compensation claims.......... 7,520 (888) 10,455 2,490
Other............................................. -- -- 1,275 725
----------- ----------- --------- -----------
Net cash provided by operating activities...... 201,632 2,796,784 752,688 721,500
----------- ----------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................................... (26,130) (43,513) (73,907) --
----------- ----------- --------- -----------
Net cash used in investing activities.......... (26,130) (43,513) (73,907) --
----------- ----------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends.............................................. (230,000) (2,842,958) (433,500) (1,057,245)
Contribution by shareholders........................... -- 185,000 -- --
----------- ----------- --------- -----------
Net cash used in financing activities.......... (230,000) (2,657,958) (433,500) (1,057,245)
----------- ----------- --------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..... (54,498) 95,313 245,281 (335,745)
CASH AND CASH EQUIVALENTS, beginning of period........... 54,498 -- 95,313 340,594
----------- ----------- --------- -----------
CASH AND CASH EQUIVALENTS, end of period................. $ -- $ 95,313 $ 340,594 $ 4,849
=========== =========== ========= ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Non-cash transactions:
Distribution of accounts receivable to shareholders
(Note 1).......................................... $ -- $ -- $ -- $ 1,213,511
=========== =========== ========= ===========
</TABLE>

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

F-111
<PAGE> 176

ON CALL EMPLOYMENT SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

On Call Employment Services, Inc. ("On Call" or the "Company") was
incorporated in the state of Colorado. The Company's primary business purpose
was to provide temporary personnel services to companies in northern Colorado,
mainly those which specialize in high tech manufacturing. The Company is
headquartered in Loveland, Colorado and as of February 2, 1996, operated
staffing offices in Loveland, Longmont, Boulder and Greeley, Colorado.

On January 19, 1996, the two shareholders of On Call who aggregately owned
100 percent of the Company entered into an Agreement and Plan of Reorganization
(the "Agreement") with Brewer Personnel Services, Inc. ("Brewer"), an Arkansas
corporation. The Agreement was effective February 2, 1996. Under the terms of
the Agreement, the outstanding shares of the Company prior to the merger
(1,000,000 shares) were converted into i) ten shares of Brewer's common stock at
an exchange rate of one share of Brewer for every 100,000 shares of the Company
and ii) $2.64 million in cash. Brewer was the surviving company of the merger.
The Agreement also specified that cash and certain accounts receivable would be
distributed to the two shareholders prior to the merger. The accompanying
balance sheet as of February 2, 1996 reflects such distributions of cash and
accounts receivable but does not reflect the purchase accounting adjustments
which were recorded by Brewer in conjunction with this acquisition.

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, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in the accompanying financial statements were based upon
management's evaluation of the relevant facts and circumstances as of the date
of the financial statements. Actual results may differ from the estimates and
assumptions used in preparing the accompanying financial statements.

Revenue Recognition --

Service revenues are recognized as income at the time staffing services are
provided.

Cash and Cash Equivalents --

For statements of cash flow purposes, the Company considers cash on deposit
with financial institutions and all highly liquid investments with original
maturities of three months or less to be cash equivalents.

Accounts Receivable --

Included in accounts receivable in the accompanying balance sheets are
unbilled amounts of $159,733, $173,238 and $273,067 at December 31, 1994 and
1995 and February 2, 1996, respectively.

Property and Equipment --

Property and equipment are recorded at cost and are depreciated or
amortized on a straight-line basis over the estimated useful lives of the assets
which are as follows:

<TABLE>
<S> <C>
Office equipment................................................ 5 to 7 years
Computer equipment.............................................. 3 to 5 years
Computer software............................................... 3 to 5 years
</TABLE>

F-112
<PAGE> 177

ON CALL EMPLOYMENT SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Concentration of Credit Risk --

The Company had no significant off-balance sheet concentrations of credit
risk such as foreign exchange contracts, options contracts or other foreign
hedging arrangements. The Company maintained its cash balances with financial
institutions, in the form of demand deposits. The Company performed ongoing
credit evaluations of its customers' financial condition and generally did not
require collateral. Its accounts receivable balances were domestic and were due
from companies located in northern Colorado which were primarily engaged in
businesses related to the high technology manufacturing industry.

2. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- FEBRUARY 2,
1994 1995 1996
-------- -------- -----------
<S> <C> <C> <C>
Office equipment................................ $ 6,412 $ 24,037 $ 24,037
Computer equipment.............................. 75,585 119,867 119,867
Computer software............................... 10,000 22,000 22,000
-------- -------- ---------
91,997 165,904 165,904
Less accumulated depreciation and
amortization............................. 26,894 51,367 50,535
-------- -------- ---------
$ 65,103 $114,537 $ 115,369
======== ======== =========
</TABLE>

Depreciation and amortization expense related to property and equipment
totaled $6,372, $13,242, $24,473 and $2,525 for the years ended December 31,
1993, 1994 and 1995 and the period from January 1, 1996 to February 2, 1996,
respectively.

3. INCOME TAXES:

Prior to February 2, 1996, the Company operated as an S Corporation for
federal and state income tax reporting purposes. Accordingly, no provision for
income taxes has been recorded in the accompanying financial statements as such
taxes were liabilities of the individual shareholders. The Company had
historically made distributions to its shareholders which were used, in part, to
satisfy the income tax liability reported by the shareholders related to the
Company's operations.

4. WORKERS' COMPENSATION:

The Company was insured by certain insurance companies for workers'
compensation claims and was regulated by the Workers' Compensation Insurance
Commission in the state of Colorado. Workers' compensation expense totaled
approximately $218,500, $171,100, $131,800 and $9,300 for the years ended
December 31, 1993, 1994 and 1995, and the period from January 1, 1996 to
February 2, 1996, respectively.

F-113
<PAGE> 178

ON CALL EMPLOYMENT SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. COMMON STOCK:

As of December 31, 1993, 1994 and 1995 and February 2, 1996, the Company
had an authorized capitalization consisting of 1,000,000 shares of common stock,
of which 1,000,000 shares were issued and outstanding and no shares were held as
treasury stock.

6. NONCANCELABLE OPERATING LEASES:

The Company leased office space for its four branch locations in northern
Colorado through noncancelable operating leases. Future minimum annual payments
required during each of the next five years under operating leases that had
initial or remaining noncancelable lease terms of one year or more at February
2, 1996, are as follows:

<TABLE>
<S> <C>
1996.............................................. $ 70,640
1997.............................................. 29,052
1998.............................................. 23,464
1999.............................................. 17,344
2000.............................................. 8,680
Thereafter........................................ 2,920
--------
$152,100
========
</TABLE>

Rent expense totaled approximately $66,900, $78,500, $82,200 and $7,200 for
the years ended December 31, 1993, 1994 and 1995 and the period from January 1,
1996 to February 2, 1996, respectively.

The shareholders committed to the construction of a commercial office
building in Loveland, Colorado which should be completed by October 1996. The
Company plans on moving its Loveland office to this new building once completed.
Brewer has agreed to sublease this office space from the shareholders for a
five-year period.

7. EMPLOYEE BENEFIT PLAN:

The Company had a 401(k) plan under which eligible employees may defer up
to 12% of their compensation. The Company's plan does not allow for matching
employer contributions.

8. CONTINGENCIES:

The Company is subject to various claims and business disputes in the
ordinary course of business. Management does not anticipate that the ultimate
outcome of these issues will have a material impact on the Company's financial
position or results of operations.

9. SIGNIFICANT CUSTOMERS:

The Company's sales to customers which individually account for 10% or more
of service revenues for the years ended December 31, 1993, 1994 and 1995 and the
period from January 1, 1996 to February 2, 1996, were as follows:

<TABLE>
<CAPTION>
JANUARY 1 TO
1993 1994 1995 FEBRUARY 2, 1996
--------------------------- --------------------------- --------------------------- ---------------------------
AMOUNTS PERCENTAGES AMOUNTS PERCENTAGES AMOUNTS PERCENTAGES AMOUNTS PERCENTAGES
------------- ----------- ------------- ----------- ------------- ----------- ------------- -----------
(IN MILLIONS) (IN MILLIONS) (IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Customer 1... $13.3 60% $ 1.6 16% $ 1.5 12% $ 0.2 18%
Customer 2... 3.1 14 2.2 22 3.2 26 0.3 23
Customer 3... -- -- -- -- 1.6 13 0.2 17
</TABLE>

F-114
<PAGE> 179

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Strategic Sourcing, Inc.:

We have audited the accompanying balance sheets of Strategic Sourcing, Inc.
(the "Company") as of December 31, 1994 and 1995, and the related statements of
income (loss), stockholders' equity (deficit) and cash flows for the period from
the date of incorporation (May 25, 1993) to December 31, 1993, and each of the
two years in the period ended December 31, 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.

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 to 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 financial statements referred to above present fairly,
in all material respects, the financial position of Strategic Sourcing, Inc. as
of December 31, 1994 and 1995, and the results of its operations and its cash
flows for the period from the date of incorporation (May 25, 1993) to December
31, 1993, and each of the two years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Raleigh, North Carolina,
July 26, 1996.

F-115
<PAGE> 180

STRATEGIC SOURCING, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash...................................................... $ 26,159 $ 13,281 $ 67,691
Accounts receivable....................................... 92,041 121,217 138,024
Prepaid expenses and other................................ -- 1,675 7,065
-------- -------- --------
Total current assets.............................. 118,200 136,173 212,780
PROPERTY AND EQUIPMENT, net................................. 13,406 21,667 18,945
OTHER ASSETS................................................ 2,435 2,347 1,845
-------- -------- --------
$134,041 $160,187 $ 233,570
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable.......................................... $ 4,038 $ 9,118 $ 9,118
Payroll and related liabilities........................... 26,869 6,325 24,465
Current portion of notes payable to stockholders.......... 55,000 6,145 47,626
Line of credit............................................ -- -- 10,000
-------- -------- --------
Total current liabilities......................... 85,907 21,588 91,209
NOTE PAYABLE TO STOCKHOLDER................................. 69,166 63,021 59,866
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, no par value, 1,000 shares authorized, 600
shares issued and outstanding in 1994, 1995 and 1996... 3,000 3,000 3,000
Retained earnings (deficit)............................... (24,032) 72,578 79,495
-------- -------- --------
Total stockholders' equity (deficit).............. (21,032) 75,578 82,495
-------- -------- --------
$134,041 $160,187 $ 233,570
======== ======== ========
</TABLE>

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

F-116
<PAGE> 181

STRATEGIC SOURCING, INC.

STATEMENTS OF INCOME (LOSS)

<TABLE>
<CAPTION>
PERIOD FROM
MAY 25, YEAR ENDED SIX MONTHS ENDED
1993 TO DECEMBER 31, JUNE 30,
DECEMBER 31, ---------------------- --------------------------
1993 1994 1995 1995 1996
------------ -------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:
Service revenues................ $ 23,932 $608,030 $1,013,332 $ 627,338 $ 384,897
Permanent placement fee
revenues..................... 26,407 85,068 230,166 109,763 64,209
-------- -------- ---------- -------- --------
50,339 693,098 1,243,498 737,101 449,106
COST OF SERVICES.................. 10,236 358,228 612,197 406,632 240,040
-------- -------- ---------- -------- --------
Gross profit............ 40,103 334,870 631,301 330,469 209,066
OPERATING EXPENSES:
Selling, general and
administrative............... 101,920 278,603 414,254 206,675 142,529
Depreciation and amortization... 1,769 3,258 5,015 2,212 2,722
-------- -------- ---------- -------- --------
Operating income
(loss)................ (63,586) 53,009 212,032 121,582 63,815
OTHER INCOME (EXPENSE), net....... (1,356) (12,099) 735 1,691 (433)
-------- -------- ---------- -------- --------
Net income (loss)....... $(64,942) $ 40,910 $ 212,767 $ 123,273 $ 63,382
======== ======== ========== ======== ========
</TABLE>

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

F-117
<PAGE> 182

STRATEGIC SOURCING, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
TOTAL
RETAINED STOCKHOLDERS'
COMMON EARNINGS EQUITY
STOCK (DEFICIT) (DEFICIT)
------ --------- ------------
<S> <C> <C> <C>
Initial capital contribution on May 25, 1993
(date of incorporation)................................. $3,000 $ -- $ 3,000
Net loss................................................ -- (64,942) (64,942)
------ --------- ---------
BALANCE, December 31, 1993................................ 3,000 (64,942) (61,942)
Net income.............................................. -- 40,910 40,910
------ --------- ---------
BALANCE, December 31, 1994................................ 3,000 (24,032) (21,032)
Net income.............................................. -- 212,767 212,767
Dividends............................................... -- (116,157) (116,157)
------ --------- ---------
BALANCE, December 31, 1995................................ 3,000 72,578 75,578
Net income (Unaudited).................................. -- 63,382 63,382
Dividends (Unaudited)................................... -- (56,465) (56,465)
------ --------- ---------
BALANCE, June 30, 1996 (Unaudited)........................ $3,000 $ 79,495 $ 82,495
====== ========= =========
</TABLE>

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

F-118
<PAGE> 183

STRATEGIC SOURCING, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
MAY 25, YEAR ENDED SIX MONTHS ENDED
1993, TO DECEMBER 31, JUNE 31,
DECEMBER 31, ------------------- -------------------------
1993 1994 1995 1995 1996
------------ -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)..................... $(64,942) $ 40,910 $212,767 $ 123,273 $ 63,382
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization...... 1,769 3,258 5,015 2,212 2,722
Change in operating assets and
liabilities:
Accounts receivable.............. (32,230) (59,811) (29,176) 2,815 (16,807)
Prepaid expenses and other....... -- -- (1,675) -- (5,390)
Other assets..................... (1,072) (1,363) 88 -- 502
Accounts payable................. 5,911 (1,873) 5,080 3,380 --
Payroll and related
liabilities................... 2,099 24,770 (20,544) 12,425 18,140
--------- --------- ---------- --------- ---------
Net cash provided by (used in)
operating activities........ (88,465) 5,891 171,555 144,105 62,549
--------- --------- ---------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.................. (17,691) (742) (13,276) (7,370) --
--------- --------- ---------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common
stock.............................. 3,000 -- -- -- --
Proceeds from (payments on) line of
credit............................. 50,000 (50,000) -- -- 10,000
Proceeds from note payable to
stockholder........................ 68,379 55,787 -- -- 38,326
Payments on note payable to
stockholder........................ -- -- (55,000) (29,727) --
Dividends............................. -- -- (116,157) (54,158) (56,465)
--------- --------- ---------- --------- ---------
Net cash provided by (used in)
financing activities........ 121,379 5,787 (171,157) (83,885) (8,139)
--------- --------- ---------- --------- ---------
NET INCREASE (DECREASE) IN CASH......... 15,223 10,936 (12,878) 52,850 54,410
CASH, beginning of period............... -- 15,223 26,159 26,159 13,281
--------- --------- ---------- --------- ---------
CASH, end of period..................... $ 15,223 $ 26,159 $ 13,281 $ 79,009 $ 67,691
========= ========= ========== ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid......................... $ 1,356 $ 2,901 $ -- $ -- $ 1,138
========= ========= ========== ========= =========
</TABLE>

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

F-119
<PAGE> 184

STRATEGIC SOURCING, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

Strategic Sourcing, Inc. (the "Company"), a North Carolina corporation,
provides services related to the placement of information technology
professionals in both permanent and contract positions for companies located
primarily in North Carolina and South Carolina. The business was initially
founded in May 1993 as Strategic Staffing, Inc. and changed its name to
Strategic Sourcing, Inc. in February 1995. Accordingly, the 1993 results of
operations and cash flows included in the accompanying financial statements and
notes thereto reflect activity for the period from May 25, 1993 to December 31,
1993.

Interim Periods --

The accompanying interim financial statements and related disclosures have
not been audited by independent accountants. However, they have been prepared in
conformity with the accounting principles stated in the accompanying audited
financial statements and include all adjustments (which were of a normal,
recurring nature) which, in the opinion of management, are necessary to present
fairly the financial position of the Company and the results of operations and
cash flows for each of the periods presented. The operating results for the
interim periods presented are not necessarily indicative of results for the full
year.

Revenue Recognition --

Service revenues and permanent placement fee revenues are recognized as
income at the time staffing services are provided or the permanent employee is
placed with the customer.

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, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in the accompanying financial statements are based upon
management's evaluation of the relevant facts and circumstances as of the date
of the financial statements. However, actual results may differ from the
estimates and assumptions used in preparing the accompanying financial
statements.

Accounts Receivable --

The Company performs credit evaluations of potential customers prior to
entering into contracts. The Company provides, if necessary, allowances for
potential losses which management believes are adequate to absorb losses to be
incurred in realizing the amounts recorded in the accompanying financial
statements. Management believes all accounts are collectible and accordingly,
has not recorded an allowance as of December 31, 1994 and 1995, and as of June
30, 1996.

Significant Customers --

Revenues from two customers accounted for 52% and 34% of total revenues in
1993. Revenues from four customers accounted for 20%, 18%, 15% and 10% of total
revenues in 1994. Revenues from one customer accounted for 60% of total revenues
in 1995. Revenues from two customers accounted for 70% and 15% of total revenues
for the unaudited six month period ended June 30, 1995. Revenues from four
customers accounted for 48%, 17%, 14% and 11% of total revenues for the
unaudited six month period ended June 30, 1996.

F-120
<PAGE> 185

STRATEGIC SOURCING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Property and Equipment --

Property and equipment are recorded at cost and are depreciated or
amortized on a straight-line basis over the estimated useful lives of the
assets, which are as follows:

<TABLE>
<S> <C>
Office equipment.................................... 5 years
Computer software and equipment..................... 5 years
</TABLE>

2. PROPERTY AND EQUIPMENT:

Components of property and equipment are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1994 1995 1996
------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Office equipment..................................... $12,691 $ 16,797 $ 16,797
Computer software and equipment...................... 5,742 14,912 14,912
------- -------- --------
18,433 31,709 31,709
Less accumulated depreciation and amortization..... (5,027) (10,042) (12,764)
------- -------- --------
$13,406 $ 21,667 $ 18,945
======= ======== ========
</TABLE>

Depreciation and amortization expense related to property and equipment
totaled $1,769, $3,258 and $5,015 for 1993, 1994 and 1995, respectively, and
$2,212 and $2,722 for the unaudited six month periods ended June 30, 1995 and
1996, respectively.

3. LINE OF CREDIT:

In April 1996, the Company entered into a line of credit arrangement with a
bank. Funds available for advance under the line of credit are limited to 80% of
accounts receivable less than 90 days old, up to a maximum borrowing of $50,000.
Advances under the line bear interest at the bank's base rate plus 1%. Advances
under the line of credit are collateralized by a security agreement, providing
the bank a first lien security interest on all assets of the Company, as well as
a personal guaranty from the remaining stockholder. At June 30, 1996, the amount
outstanding under the line was $10,000. In July 1996, the amount outstanding was
repaid and the line was dissolved.

F-121
<PAGE> 186

STRATEGIC SOURCING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. NOTES PAYABLE TO STOCKHOLDERS:

The Company had borrowings from a stockholder under an informal arrangement
of $124,166 and $69,166 as of December 31, 1994 and 1995, respectively. The
borrowings did not accrue interest during 1993 or 1995. During 1994, the Company
agreed to accrue interest of $9,198 on these borrowings, which was added to the
principal balance. In April 1996, in connection with the change in ownership
described in Note 7, the Company signed a promissory note for $65,229,
representing the net amount due to the former stockholder. The terms of the note
specify an interest rate of 7% and minimum monthly payments of $700,
representing principal and interest, commencing April 15, 1996, until paid in
full, with a final maturity of March 15, 2001. Based on the terms of this note,
the aggregate principal maturities subsequent to December 31, 1995, were as
follows:

<TABLE>
<S> <C>
1996............................................. $ 6,145
1997............................................. 3,214
1998............................................. 3,629
1999............................................. 4,079
2000............................................. 4,567
Thereafter....................................... 47,532
-------
$69,166
=======
</TABLE>

In April 1996, the Company borrowed $45,000 from the remaining stockholder
under an informal arrangement. The borrowing accrued interest at prime plus
1.75% and was repaid in July 1996.

5. INCOME TAXES:

The Company has elected S Corporation status for federal and state income
tax reporting purposes. Accordingly, no provision for income taxes has been
recorded since such tax liabilities are liabilities of the stockholders of the
Company.

6. NONCANCELABLE OPERATING LEASE:

The Company leases office space under a noncancelable operating lease.
Future minimum payments required under this operating lease which has an initial
or remaining noncancelable lease term in excess of one year at December 31,
1995, are as follows:

Rental expense totaled $7,623, $13,062 and $18,075 for 1993, 1994 and 1995,
respectively, and $10,150 and $8,375 for the unaudited six month periods ended
June 30, 1995 and 1996, respectively.

F-122
<PAGE> 187

STRATEGIC SOURCING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. STOCKHOLDER TRANSACTION:

In April 1996, one of the Company's 50% stockholders (the "former
stockholder") transferred 300 shares of common stock of the Company,
representing the former stockholder's entire interest, to the other 50%
stockholder, with both parties entering into a security agreement whereby the
transferred shares are held in escrow until the repayment of the borrowings from
the former stockholder, as discussed in Note 4.

8. SUBSEQUENT EVENT:

On July 1, 1996, the remaining stockholder sold certain of the operating
assets of the Company for $700,000 to First Choice Staffing, Inc. In addition,
the remaining stockholder received $50,000 in conjunction with the execution of
a noncompete agreement.

F-123
<PAGE> 188

The back inside cover of the prospectus includes on the top half of the
page, the StaffMark logo at the top and the logos of each Founding Company their
subsidiaries below the main StaffMark logo and the bottom half of the page shows
the proposed StaffMark home page for the internet, noting that the site is
currently under construction and is coming in November, 1996 to
http://www.staffmark.com. The icons within the home page include Investor
Relations, Regional Opportunities, Training, Professional/Technical Staffing
services, Commercial/Industrial Staffing Services and Medical Technical Staffing
Services.
<PAGE> 189

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

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THOSE SPECIFICALLY OFFERED HEREBY OR OF ANY SECURITIES OFFERED HEREBY
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE AN OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.

UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, 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.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 8
The Company........................... 13
Use of Proceeds....................... 15
Dividend Policy....................... 16
Dilution.............................. 17
Capitalization........................ 18
Selected Financial Data............... 19
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 22
Business.............................. 39
Management............................ 48
Principal Stockholders................ 53
Description of Capital Stock.......... 54
Certain Transactions.................. 56
Shares Eligible for Future Sale....... 59
Underwriting.......................... 60
Legal Matters......................... 61
Experts............................... 61
Additional Information................ 62
Index to Financial Statements......... F-1
</TABLE>

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

5,500,000 SHARES

[STAFF MARK LOGO]

COMMON STOCK

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

PROSPECTUS

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

[J.C. BRADFORD & CO. LOGO]

Stephens Inc.

, 1996

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 190

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table itemizes the expenses of this Offering to be incurred
by the Company in connection with this registration statement, other than
underwriting discounts and commissions. All the amounts shown are estimates
except the SEC registration fee, the NASD filing fee and the Nasdaq National
Market Application Listing Fee.

<TABLE>
<S> <C>
SEC Registration Fee........................................... $ 26,172.00
Nasdaq National Market Application and Listing Fee............. 5,250.00
NASD Filing Fee................................................ 8,090.00
Blue Sky Fees and Expenses..................................... 30,000.00
Accounting Fees and Expenses................................... 1,700,000.00
Legal Fees and Expenses........................................ 401,000.00
Printing and Engraving Costs................................... 250,000.00
Miscellaneous.................................................. 279,488.00
----------
Total........................................................ $ 2,700,000
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company's By-laws provide that the Company shall, to the fullest extent
permitted by Section 145 of the General Corporation Law of the State of
Delaware, as amended from time to time, indemnify all persons whom it may
indemnify pursuant thereto.

Section 145 of the General Corporation Law of the State of Delaware permits
a corporation, under specified circumstances, to indemnify its directors,
officers, employees or agents against expenses (including attorney's fees),
judgments, fines and amounts paid in settlements actually and reasonably
incurred by them in connection with any action, suit or proceeding brought by
third parties by reason of the fact that they were or are directors, officers,
employee or agents acted in good faith and in a manner they reasonably believed
to be in or not opposed to the best interests of the corporation and, with
respect to any criminal action or proceeding, had no reason to believe their
conduct was unlawful. In a derivative action, i.e., one by or in the right of
the corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent that
the court in which the action or suit was brought shall determine upon
application that the defendant directors, officers, employees or agents are
fairly and reasonably entitled to indemnity for such expenses despite such
adjudication of liability.

Article Seven of the Company's Certificates of Incorporation provides that
the Company's directors will not be personally liable to the Company or its
stockholders for monetary damages resulting from breaches of their fiduciary
duty as directors except (a) for any breach of the duty of loyalty to the
Company or its stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) under
Section 174 of the General Corporation Law of the State of Delaware, which makes
directors liable for unlawful dividends or unlawful stock repurchases or
redemptions or (d) for transactions from which directors derive improper
personal benefit.

Section 7 of the Underwriting Agreement filed as Exhibit 1.1 provides that
the Underwriters named therein will indemnify and hold harmless the Company and
each director, officer or controlling person of the Company from and against
certain liabilities, including liabilities under the Securities Act of 1933, as

II-1
<PAGE> 191

amended (the "Securities Act"). Section 8 of such Underwriting Agreement also
provides that such Underwriters will contribute to certain liabilities of such
persons under the Securities Act.

In accordance with Delaware law, the Company intends to enter into
indemnification agreements with its directors, pursuant to which it will agree
to pay certain expenses, including attorneys' fees, judgments, fines and amounts
paid in settlement incurred by such directors in connection with certain
actions, suits or proceedings. These agreements require directors to repay the
amount of any expenses advanced if it shall be determined that they are not
entitled to indemnification.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The following information relates to securities of the Company issued or
sold within the past three years which were not registered under the Securities
Act:

(i) In March 1996, the Company issued 1,000 shares of Common Stock to
the founding stockholders of the Company for $.01 per share and
subsequently declared a 1,355-for-1 stock dividend in June 1996; and

(ii) Simultaneously with the completion of this Offering, the Company
will issue 5,618,249 shares of its Common Stock in connection with the
acquisition of six businesses. See "The Company" and "Business."

Each of these transactions was completed without registration of the
relevant security under the Securities Act in reliance upon the exemptions
provided by Section 4(2) of the Securities Act and the rules and regulations
promulgated thereunder on the basis that such transactions did not involve a
public offering, the purchasers were sophisticated with access to the kind of
information registration would provide and that such purchasers acquired such
securities without a view toward the distribution thereof.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------------------- ----------------------------------------------------------------------
<C> <S> <C>
1.1* -- Form of Underwriting Agreement.
2.1* -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., Brewer Personnel Services Acquisition
Corp., Brewer Personnel Services, Inc. and the Stockholders named
therein.
2.2* -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., Prostaff Personnel Acquisition Corp., Excel
Temporary Staffing Acquisition Corp., Professional Resources
Acquisition Corp., Prostaff Personnel, Inc., Excel Temporary Staffing,
Inc., Professional Resources, Inc., and the Stockholders named
therein.
2.3* -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., Maxwell/Healthcare Acquisition Corp.,
Square One Rehab Acquisition Corp., Maxwell Staffing of Bristow
Acquisition Corp., Maxwell Staffing Acquisition Corp., Technical
Staffing Acquisition Corp., Maxwell/Healthcare, Inc., Square One
Rehab, Inc., Maxwell Staffing of Bristow, Inc., Maxwell Staffing,
Inc., Technical Staffing, Inc. and the Stockholders named therein.
2.4* -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., HRA Acquisition Corp., HRA, Inc., and the
Stockholders named therein.
2.5* -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., First Choice Staffing Acquisition Corp.,
First Choice Staffing, Inc., and the Stockholders named therein.
</TABLE>

II-2
<PAGE> 192

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------------------- ----------------------------------------------------------------------
<C> <S> <C>
2.6* -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., DP Pros of Burlington Acquisition Corp.,
Blethen Temporaries Acquisition Corp., Personnel Placement Acquisition
Corp., Jaeger Personnel Services Acquisition Corp., Dixon Enterprises
of Burlington Acquisition Corp., Trasec Acquisition Corp., DP Pros of
Burlington, Inc., Blethen Temporaries, Inc., Personnel Placement,
Inc., Jaeger Personnel Services, Ltd., Dixon Enterprises of
Burlington, Inc., Trasec Corp., and the Stockholders named therein.
3.1* -- Certificate of Incorporation of the Company.
3.2* -- Certificate of amendment of Certificate of Incorporation.
3.3* -- Amended and Restated By-Laws of the Company, as amended to date.
4.1 -- Form of certificate evidencing ownership of Common Stock of the
Company.
5.1 -- Opinion of Wright, Lindsey & Jennings regarding legality.
10.1* -- StaffMark, Inc. 1996 Stock Option Plan.
10.2* -- Form of Employment Agreement between StaffMark, Inc. and key
employees.
10.3* -- Form of Director Indemnification Agreement
10.4* -- Employment Agreement between StaffMark, Inc. and Terry C. Bellora.
21.1* -- List of subsidiaries of StaffMark, Inc.
23.1 -- Consent of Wright, Lindsey & Jennings (contained in Exhibit 5.1
hereto).
23.2 -- Consents of Arthur Andersen LLP, Independent Public Accountants.
23.3* -- Consent of W. David Bartholomew to serve as a Director.
23.4* -- Consent of Steven E. Schulte to serve as a Director.
23.5* -- Consent of John H. Maxwell, Jr. to serve as a Director.
23.6* -- Consent of Janice Blethen to serve as a Director.
23.7* -- Consent of William T. Gregory to serve as a Director.
23.8* -- Consent of William J. Lynch to serve as a Director.
23.9* -- Consent of R. Clayton McWhorter to serve as a Director.
23.10 -- Consent of Charles A. Sanders, M.D. to serve as a Director.
27.1* -- Financial Data Schedule.
</TABLE>

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

* Previously filed.

(b) Financial Statement Schedules

All schedules are omitted since the required information is not present in
amounts sufficient to require submission of the schedule, or because the
information required is included in the financial statements and notes hereto.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates on such
denominations and registered in such names as required by the Representatives to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In

II-3
<PAGE> 193

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 person 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 whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

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 the form of
prospectus filed by Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of the Registration Statement as
of the time it was declared effective.

2. For the purpose of determining any liability under the Securities Act,
each post-effective 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-4
<PAGE> 194

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Fayetteville, State of Arkansas, on September 19, 1996.

StaffMark, Inc.

By: /s/ CLETE T. BREWER
----------------------------------
Clete T. Brewer
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated. Each person whose signature to this
Registration Statement appears below hereby constitutes and appoints Clete T.
Brewer and Robert H. Janes III, and each of them, as his true and lawful
attorney-in-fact and agent, with full power of substitution, to sign on his or
her behalf individually and in the capacity stated below and to perform any acts
necessary to be done in order to file all amendments and post-effective
amendments to this Registration Statement, and any and all instruments or
documents filed as part of or in connection with this Registration Statement or
the amendments thereto and each of the undersigned does hereby ratify and
confirm all that said attorney-in-fact and agent, or his substitutes, shall do
or cause to be done by virtue hereof.

<TABLE>
<CAPTION>
NAME TITLE DATE
- --------------------------------------------- ----------------------------- -------------------
<S> <C> <C>
/s/ CLETE T. BREWER President, Chief Executive September 19, 1996
- --------------------------------------------- Officer and
Clete T. Brewer Director (Principal

Executive Officer)
/s/ TERRY C. BELLORA Chief Financial Officer September 19, 1996
- --------------------------------------------- (Principal Financial
Terry C. Bellora and Accounting Officer)

/s/ JERRY T. BREWER Chairman of the Board September 19, 1996
- ---------------------------------------------
Jerry T. Brewer
</TABLE>

II-5
<PAGE> 195

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ---------------------------------------------------------------------
<C> <S> <C> <C>
1.1* -- Form of Underwriting Agreement.
2.1* -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., Brewer Personnel Services Acquisition
Corp., Brewer Personnel Services, Inc. and the Stockholders named
therein.
2.2* -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., Prostaff Personnel Acquisition Corp.,
Excel Temporary Staffing Acquisition Corp., Professional Resources
Acquisition Corp., Prostaff Personnel, Inc., Excel Temporary
Staffing, Inc., Professional Resources, Inc., and the Stockholders
named therein.
2.3* -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., Maxwell/Healthcare Acquisition Corp.,
Square One Rehab Acquisition Corp., Maxwell Staffing of Bristow
Acquisition Corp., Maxwell Staffing Acquisition Corp., Technical
Staffing Acquisition Corp., Maxwell/ Healthcare, Inc., Square One
Rehab, Inc., Maxwell Staffing of Bristow, Inc., Maxwell Staffing,
Inc., Technical Staffing, Inc. and the Stockholders named therein.
2.4* -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., HRA Acquisition Corp., HRA, Inc., and the
Stockholders named therein.
2.5* -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., First Choice Staffing Acquisition Corp.,
First Choice Staffing, Inc., and the Stockholders named therein.
2.6* -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., DP Pros of Burlington Acquisition Corp.,
Blethen Temporaries Acquisition Corp., Personnel Placement
Acquisition Corp., Jaeger Personnel Services Acquisition Corp., Dixon
Enterprises of Burlington Acquisition Corp., Trasec Acquisition
Corp., DP Pros of Burlington, Inc., Blethen Temporaries, Inc.,
Personnel Placement, Inc., Jaeger Personnel Services, Ltd., Dixon
Enterprises of Burlington, Inc., Trasec Corp., and the Stockholders
named therein.
3.1* -- Certificate of Incorporation of the Company.
3.2* -- Certificate of amendment of Certificate of Incorporation.
3.3* -- Amended and Restated By-Laws of the Company, as amended to date.
4.1 -- Form of certificate evidencing ownership of Common Stock of the
Company.
5.1 -- Opinion of Wright, Lindsey & Jennings regarding legality.
10.1* -- StaffMark, Inc. 1996 Stock Option Plan.
10.2* -- Form of Employment Agreement between StaffMark, Inc. and key
employees.
10.3* -- Form of Director Indemnification Agreement
10.4* -- Employment Agreement between StaffMark, Inc. and Terry C. Bellora.
21.1* -- List of subsidiaries of StaffMark, Inc.
23.1 -- Consent of Wright, Lindsey & Jennings (contained in Exhibit 5.1
hereto).
23.2 -- Consents of Arthur Andersen LLP, Independent Public Accountants.
23.3* -- Consent of W. David Bartholomew to serve as a Director.
23.4* -- Consent of Steven E. Schulte to serve as a Director.
23.5* -- Consent of John H. Maxwell, Jr. to serve as a Director.
23.6* -- Consent of Janice Blethen to serve as a Director.
23.7* -- Consent of William T. Gregory to serve as a Director.
23.8* -- Consent of William J. Lynch to serve as a Director.
23.9* -- Consent of R. Clayton McWhorter to serve as a Director.
23.10 -- Consent of Charles A. Sanders, M.D. to serve as a Director.
27.1* -- Financial Data Schedule
</TABLE>

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

* Previously filed.

<PAGE> 1

<TABLE>
<S> <C>
COMMON STOCK COMMON STOCK
NUMBER SHARES

SM [STAFFMARK LOGO]

INCORPORATED UNDER THE LAWS SEE REVERSE FOR
OF THE STATE OF DELAWARE CERTAIN DEFINITIONS

CUSIP 852389 10 5
THIS CERTIFIES THAT

is the record holder of

FULLY PAID AND NONASSESSABLE SHARES OF THE COMON STOCK, $.01 PAR VALUE OF
STAFFMARK, INC.
transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of
this Certificate properly endorsed. This Certificate is not valid unless countersigned and registered by the Transfer Agent
and Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.

Dated:

/s/ ROBERT W. JANES III /s/ CLETE T. BREWER
[STAFFMARK, INC. CORPORATE SEAL]
SECRETARY PRESIDENT AND CHIEF EXECUTIVE OFFICER

COUNTERSIGNED AND REGISTERED:
BOATMEN'S TRUST COMPANY
TRANSFER AGENT AND REGISTRAR
BY

AUTHORIZED SIGNATURE

</TABLE>

<PAGE> 2
The Corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative, participating,
optional, or other special rights of each class of stock of the Corporation or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights. Such requests shall be made to the Corporation's
Secretary at the principal office of the Corporation.

The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT -- Custodian
TEN ENT - as tenants by the ------------ -----------
entireties (Cust) (Minor)
JT TEN - as joint tenants with under Uniform Gifts to Minors
right of survivorship Act
and not as tenants -----------------------------
in common (State)
UNIF TRF MIN ACT -- Custodian (until age )
------ ------
(Cust)
under Uniform Transfers
---------
(Minor)
to Minors Act
-------------------
(State)

</TABLE>

Additional abbreviations may also be used though no in the above list.

For Value Received, hereby sell, assign and transfer unto
--------

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]

----------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)

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

Shares
----------------------------------------------------------------------
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
--------------------------------------------------------------------
to transfer the said shares on the books of the within named Corporation
with full power of substitution in the premises.

Dated
---------------------------------

X
-------------------------------------------

X
-------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME(S) AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.

Signature(s) Guaranteed

By
--------------------------------------

THE SIGNATURES SHOULD BE GUARANTEED BY AN ELIGBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERSM SAVINGS AND LOAN ASOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO
S.E.C. RULE 17Ad-15.

<PAGE> 1
EXHIBIT 5.1

[WRIGHT, LINDSEY & JENNINGS LETTERHEAD]

September 19, 1996

StaffMark, Inc.
302 East Millsap Road
Fayetteville, Arkansas 72703

Gentlemen:

In our opinion, the 6,325,000 shares of Class A common stock being
registered under Registration Statement No. 333-7513, when sold, will
constitute legally issued, fully paid, and non-assessable shares of StaffMark,
Inc.

We consent to the inclusion of this opinion in the Registration
Statement and the reference to us under the caption "Legal Matters" in the
Prospectus included in the Registration Statement.

Very truly yours,

WRIGHT, LINDSEY & JENNINGS

<PAGE> 1

EXHIBIT 23.2.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Little Rock, Arkansas,

September 10, 1996.

<PAGE> 2

EXHIBIT 23.2.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Memphis, Tennessee,

September 10, 1996.

<PAGE> 3

EXHIBIT 23.2.3

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Raleigh, North Carolina,

September 10, 1996.

<PAGE> 4

EXHIBIT 23.2.4

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Atlanta, Georgia,

September 10, 1996.

<PAGE> 5

EXHIBIT 23.2.5

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Denver, Colorado,

September 10, 1996.

<PAGE> 1
EXHIBIT 23.10

CONSENT TO SERVE AS DIRECTOR OF STAFFMARK, INC.

I, Charles A. Sanders, M.D., a resident of Durham, North Carolina, having
been designated by the Board of Directors of StaffMark, Inc. (the "Company") as
a nominee to serve on the Board of Directors of the Company, hereby consent to
serve as a director, and shall assume such position upon notice of proper
election; such consent being conditional upon and subject to the closing of the
Company's initial public offering of its common stock, $.01 par value.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this date.

SIGNATURE:

/s/ CHARLES A. SANDERS, M.D.
----------------------------------------
Charles A. Sanders, M.D.

DATE: September 17, 1996
-----------------------------------