US MARKETING SERVICES INC, S-1/A, 1998-08-06

US MARKETING SERVICES INC
S-1/A, 1998-08-06
MANAGEMENT CONSULTING SERVICES

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 1998

REGISTRATION NO. 333-56265
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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

AMENDMENT NO. 1

TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

U.S. MARKETING SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 7389 13-3999835
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)

303 SOUTH BROADWAY
SUITE 140
TARRYTOWN, NEW YORK 10591
(914) 332-4100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

ROBERT G. BROWN
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
U.S. MARKETING SERVICES, INC.
303 SOUTH BROADWAY
SUITE 140
TARRYTOWN, NEW YORK 10591
(914) 332-4100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

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

COPIES TO:
JAMES W. MCKENZIE, JR., ESQ. RICHARD R. PLUMRIDGE, ESQ.
MORGAN, LEWIS & BOCKIUS LLP BROBECK, PHLEGER & HARRISON LLP
2000 ONE LOGAN SQUARE 1633 BROADWAY, 47TH FLOOR
PHILADELPHIA, PENNSYLVANIA 19103 NEW YORK, NEW YORK 10019
(215) 963-5000 (212) 581-1600

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this registration statement becomes effective.
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, 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 this form is a post-effective amendment filed pursuant to Rule 462(d)
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,
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 THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 AUGUST 6, 1998

U.S. MARKETING SERVICES, INC.

COMMON STOCK

All of the shares of Common Stock, par value $0.001 per share (the
"Common Stock"), being offered hereby are being sold by U.S. Marketing
Services, Inc. ("U.S. Marketing," and together with the Founding Companies, as
defined herein, the "Company"). Simultaneously with and as a condition to the
consummation of the offering made by this Prospectus (the "Offering"), U.S.
Marketing will complete, in separate transactions, the acquisitions (the
"Acquisitions") of four marketing service providers (collectively, the
"Founding Companies"). See "The Company." Prior to the Offering, there has been
no public market for the Common Stock. It is currently estimated that the
initial public offering price will be between $ and $ per share. See
"Underwriting" for a discussion of the factors to be considered in determining
the initial public offering price. Application has been made to list the Common
Stock on The Nasdaq National Market under the symbol "USMK."

----------

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.

SEE "RISK FACTORS" BEGINNING ON PAGE 7.

----------

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

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<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO THE
PUBLIC COMMISSIONS(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share.............................. $ $ $
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Total(3)............................... $ $ $
</TABLE>
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(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted to the Underwriters a 30-day option, to purchase up
to an aggregate of additional shares of Common Stock at the price to
public less underwriting discounts and commissions for the purpose of
covering over-allotments, if any. If the Underwriters exercise such option
in full, the total price to public, underwriting discounts and commissions
and proceeds to the Company will be $ , $ and $ , respectively.
See "Underwriting."

----------

The Common Stock is offered by the Underwriters as stated herein, subject to
receipt and acceptance by them and subject to their right to reject any order
in whole or in part. It is expected that delivery of the Common Stock will be
made through the offices of BancAmerica Robertson Stephens, San Francisco,
California on or about , 1998.

BANCAMERICA ROBERTSON STEPHENS

NATIONSBANC MONTGOMERY SECURITIES LLC

SUNTRUST EQUITABLE SECURITIES

The date of this Prospectus is , 1998.
<PAGE>

[INSIDE COVER ART DEPICTING THE PERFORMANCE OF MARKETING SERVICES, AS WELL AS
FRONT-END MERCHANDISING UNITS]

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, SHARES OF THE COMMON STOCK IN THE OPEN MARKET.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>

NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED IN
CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY,
SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR AN
OFFER TO, OR SOLICITATION OF, ANY PERSON IN ANY JURISDICTION WHERE AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.

UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 1
Risk Factors.............................................................. 7
The Company............................................................... 17
Use of Proceeds........................................................... 18
Dividend Policy........................................................... 19
Capitalization............................................................ 19
Dilution.................................................................. 20
Selected Pro Forma Combined Financial Data................................ 21
Selected Financial Data of the Founding Companies......................... 22
Management's Discussion and Analysis of Pro Forma Combined Financial Con-
dition and
Pro Forma Combined Results of Operations................................. 25
Management's Discussion and Analysis of Financial Condition and Results of
Operations of the
Founding Companies....................................................... 28
Business.................................................................. 38
Management................................................................ 47
Certain Relationships and Related Party Transactions...................... 54
Principal Stockholders.................................................... 60
Description of Capital Stock.............................................. 61
Shares Eligible for Future Sale........................................... 63
Underwriting.............................................................. 64
Legal Matters............................................................. 66
Experts................................................................... 66
Additional Information.................................................... 67
Glossary.................................................................. 68
Index to Financial Statements............................................. F-1
</TABLE>

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The Company intends to furnish its stockholders with annual reports
containing audited consolidated financial statements examined by its
independent public accountants. The Company also intends to furnish such
other reports as it may determine or as may be required by applicable law.

ICAST(TM) is a trademark of Certified Marketing Services, Inc.
<PAGE>

PROSPECTUS SUMMARY

This Prospectus contains certain statements of a forward-looking nature
relating to future events or the future financial performance of the Company.
Prospective investors are cautioned that such statements are only predictions
and that actual events or results may differ materially. In evaluating such
statements, prospective investors should specifically consider the various
factors identified in this Prospectus, including the matters set forth under
the caption "Risk Factors," which could cause actual results to differ
materially from those indicated by such forward-looking statements. The
following summary is qualified in its entirety by the more detailed information
and financial statements and notes thereto 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
Acquisitions and (ii) assumes no exercise of the Underwriters' over-allotment
option. Unless otherwise indicated, all references to the "Company" include
U.S. Marketing Services, Inc. and the Founding Companies after the consummation
of the Offering, and references to "U.S. Marketing" mean U.S. Marketing
Services, Inc. prior to the consummation of the Offering. See "Glossary" on
page 68 for the definitions of selected business and industry-specific terms
used throughout this Prospectus.

THE COMPANY

U.S. Marketing was founded in March 1998 to create a leading national
consolidator and integrated provider of outsourced marketing services. The
Company currently provides marketing services to leading entertainment,
consumer goods, food products and retail companies through three operating
divisions: (i) Merchandising (through SPAR Marketing Force, Inc., and Certified
Marketing Services, Inc.), (ii) Point-of-Purchase Display (through Brand
Manufacturing Corp. and its affiliated trucking company, T.C.E. Corporation)
and (iii) Premium Incentive (through MCI Performance Group, Inc.) (the
"Divisions"). The Merchandising Division will provide merchandising services,
including shelf maintenance, display placement, reconfiguring product on store
shelves, replenishing product and placing orders to retailers, manufacturers
and other businesses. The Point-of-Purchase Display Division will produce
front-end merchandising units, which are located at checkout and other high
traffic areas where consumers typically spend a significant amount of time, as
well as custom displays. The Premium Incentive Division will design and
implement performance-determined rewards--most commonly cash, travel or
merchandise--used as motivational tools, as well as manage group travel and
meetings for clients throughout the United States. For the year ended March 31,
1998, the Company had pro forma combined net revenues of $109.2 million, pro
forma combined operating income of $11.2 million and pro forma combined net
income of $5.9 million.

The Company intends to consolidate the sectors of the marketing services
industry that its Divisions currently serve in addition to pursuing
acquisitions in other sectors of this industry, such as ad specialty, direct
marketing, database marketing, sales promotions, information/research, sampling
and demonstrations, each as defined in the Glossary. The Company will seek to
achieve synergies among the Founding Companies and other acquired businesses by
capitalizing on cross-selling opportunities, achieving operating efficiencies
and utilizing technology to enhance its efficiency and ability to provide real-
time data to its clients. See "--Business Strategy--Operating Strategy."

The Company currently operates in all 50 states and serves a broad range of
the nation's leading companies, including Lucky Stores Inc., Jewel Osco
Southwest, Inc., MCI Communications Corporation, Taco Bell Corp., Warner Bros.,
Twentieth Century Fox Film Corp., American Drug Stores, Harris Teeter, Buena
Vista Home Video, Inc. and General Motors Corporation. The Founding Companies
conduct their businesses through approximately 2,300 employees and 15,000
independent contractors, as well as outside service providers.

1
<PAGE>

According to industry sources such as PROMO Magazine, Brand Marketing and
Advertising Age, in 1997, the marketing services industry generated over $100
billion in revenue. The merchandising, point-of-purchase display and premium
incentive sectors accounted for approximately $46.0 billion of this overall
market. Merchandising services represented approximately $13.5 billion of the
market, of which approximately $1.3 billion was outsourced to third-party
retail merchandising businesses. The point-of-purchase display sector generated
over $12.6 billion in revenues and the premium incentive market, which includes
companies that provide merchandise (merchandise fulfillment companies) or
travel (travel fulfillment companies) as rewards in incentive programs,
generated over $20.0 billion in revenues.

BUSINESS STRATEGY

The Company believes, based on industry sources and the collective experience
of the Company's management, that the highly fragmented nature of the marketing
services industry, together with the consolidation of retailers and
manufacturers, is driving the growth and consolidation of the industry. As the
industry continues to grow and consolidate, large retailers and manufacturers
are increasingly outsourcing their marketing needs to third-party providers.
The Company believes that offering marketing services in multiple sectors on a
national basis provides the Company with a competitive advantage. Moreover, the
Company believes that developing and manufacturing a sophisticated technology
infrastructure is key to providing clients with a high level of customer
service. The Company's objective is to become such a national integrated
provider by pursuing both an operating and acquisition-driven strategy, as
described below.

OPERATING STRATEGY

Capitalize on Cross-Selling Opportunities. The Company intends to leverage
its current client relationships by cross-selling its range of services offered
by its various Divisions. For example, the Company believes that its retail
merchandising services can be packaged with the sale of its point-of-purchase
displays to provide clients with an integrated marketing solution. Similarly,
the Company intends to sell its premium incentive services to its merchandising
and point-of-purchase display clients. The Company believes cross-selling
opportunities will increase as the Company acquires businesses in other sectors
of the marketing services industry.

Achieve Operating Efficiencies. The Company intends to achieve operating
efficiencies within its various Divisions. For example, as new businesses are
acquired within the Merchandising Division, the Company believes its existing
field force and technology infrastructure can support additional customers and
revenue. Within the Point-of-Purchase Display Division, the Company will seek
to reduce delivery costs by adding additional manufacturing sites strategically
across the United States and to realize volume purchasing discounts on raw
materials. In the Premium Incentive Division, the Company believes it can
similarly realize volume purchasing advantages with respect to travel and
merchandise fulfillment. At the corporate level, the Company will also seek to
combine certain administrative functions, such as accounting and finance,
insurance, strategic marketing and legal support.

Leverage Divisional Autonomy. The Company plans to conduct its operations on
a decentralized basis whereby management of each Division will be responsible
for its day-to-day operations, sales relationships and the identification of
additional acquisition candidates in their respective sectors. A Company-wide
team of senior management will provide the Divisions with strategic oversight
and guidance with respect to acquisitions, financing, marketing, operations and
cross-selling opportunities. The Company believes that a decentralized
management approach will result in better customer service by allowing
management of each Division the flexibility to implement policies and make
decisions based on the needs of customers. The operational autonomy of the
Divisions will be complimented by equity and other incentive compensation
through which the Company intends to motivate Division managers to focus on
Company-wide performance.

2
<PAGE>

Implement Technology. The Company intends to utilize technology to enhance
its efficiency and ability to provide real-time data to its customers. Industry
sources indicate that customers are increasingly relying on marketing service
providers to supply rapid, value-added information regarding the results of
marketing expenditures on profits and sales. SPAR Marketing Force, Inc. owns
proprietary Internet software technology that allows it to control its field
operations more efficiently, to quantify the benefits of its services to
customers more quickly and to respond to customers' needs and implement
programs more rapidly. The Company believes that this technology is a
competitive advantage, and that the other Founding Companies can utilize
portions of this technology to enhance the services they provide.

ACQUISITION STRATEGY

Acquire Complementary Businesses. The Company intends to acquire businesses
across the United States that offer marketing services in which each of the
Company's three Divisions operates. The Company believes that adding geographic
breadth and increasing its presence within geographic regions will allow it to
service its clients more efficiently and cost effectively. As its customers'
industries continue to consolidate, the Company believes that national coverage
and technology capabilities will become increasingly important.

Acquire Strategic New Businesses. The Company believes that there are
numerous other attractive sectors within the marketing services industry, such
as ad specialty, direct marketing, database marketing, sales promotions,
information/research, sampling and demonstrations. By entering any one or more
of these sectors, the Company may realize additional operating and revenue
synergies across its Divisions, and may leverage existing relationships with
manufacturers, retailers and other businesses to create cross-selling
opportunities.

3
<PAGE>

THE OFFERING

Common Stock Offered by the Company....... shares(1)
Common Stock to be Outstanding After the
Offering.................................. shares(1)(2)
Use of Proceeds........................... To pay the cash portion of the
purchase price and S
corporation distributions for
the Founding Companies, to
repay debt to Jonathan J.
Ledecky, to repay debt of two
of the Founding Companies and
to fund possible acquisitions,
general corporate purposes,
working capital and payment of
the cash portion of the earn-
out consideration in connection
with the Certified Marketing
Services, Inc. and MCI
Performance Group, Inc.
Acquisitions. See "Use of
Proceeds." The Company has
received a letter from BT Alex.
Brown Incorporated confirming
that a $100 million secured
credit facility could be
arranged. If the Company
obtains a credit facility, the
Company may use debt, rather
than proceeds of the Offering,
to fund S corporation
distributions.
Proposed Nasdaq National Market Symbol.... USMK
- ---------------
(1) Assumes the Underwriters' over-allotment option is not exercised. See
"Underwriting."
(2) Does not include: (i) shares which may be issued to the stockholders of
Certified Marketing Services, Inc. pursuant to the earn-out arrangement to
be calculated with reference to Certified Marketing Services, Inc.'s pre-
tax earnings for the fiscal year ending March 31, 1999; (ii) shares of
Common Stock equal to 15.0% of the shares of Common Stock outstanding from
time to time that are reserved for issuance under the Company's 1998 Equity
Compensation Plan, of which options to purchase 1,165,000 shares of Common
Stock will be granted upon the effective date of the registration statement
of which this Prospectus forms a part (the "Registration Statement") at an
exercise price equal to the initial public offering price per share; and
(iii) 500,000 shares of Common Stock reserved for issuance under the
Company's 1998 Employee Stock Purchase Plan. See "Certain Relationships and
Related Party Transactions--The Acquisitions," "Management--1998 Equity
Compensation Plan," "Management--1998 Employee Stock Purchase Plan" and
"Principal Stockholders."

ACQUISITION CONSIDERATION

The aggregate consideration to be paid by U.S. Marketing in the Acquisitions
consists of approximately $58.6 million in cash (assuming an initial public
offering price of $ per share) (the "Cash Consideration," which is
approximately % of the net proceeds of the Offering) and 2,879,063 shares of
Common Stock (the "Stock Consideration," together with the Cash Consideration,
the "Acquisition Consideration"). The Cash Consideration includes $15.1 million
which Jonathan J. Ledecky loaned to U.S. Marketing in connection with the
acquisition of 70.0% of the outstanding common stock of Brand Manufacturing
Corp. and T.C.E. Corporation on May 20, 1998. The amount of the Cash
Consideration is subject to adjustment based on the initial public offering
price. See "Certain Relationships and Related Party Transactions--The
Acquisitions." The Acquisition Consideration was determined by arms-length
negotiations between U.S. Marketing and representatives of each Founding
Company and was based on several factors, including each Founding Company's
adjusted pre-tax earnings for its most recent fiscal year. See "Risk Factors--
Valuations of the Founding Companies" and "Certain Relationships and Related
Party Transactions."

4
<PAGE>

SUMMARY PRO FORMA COMBINED FINANCIAL DATA
(In thousands, except share and per share data)

U.S. Marketing was established in March 1998 and will complete the
acquisition of the Founding Companies simultaneously with and as a condition to
the consummation of this Offering. See "Certain Relationships and Related Party
Transactions." For financial statement presentation purposes, U.S. Marketing
has been identified as the "accounting acquiror." The following unaudited
summary pro forma combined financial data present data for the Company,
adjusted to give effect to (i) the consummation of the Acquisitions, (ii)
certain pro forma adjustments to the historical financial statements described
below and (iii) the consummation of the Offering and the application of the net
proceeds therefrom. The summary pro forma data are not necessarily indicative
of the operating results or financial position that would have been achieved
had the events described above been consummated and should not be construed as
representative of future operating results or financial position.

<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31,1998
-------------
<S> <C>
PRO FORMA STATEMENT OF OPERATIONS DATA (1):
Net revenues..................................................... $109,179
Gross profit..................................................... 42,681
Selling, general and administrative expenses (2)................. 29,423
Goodwill amortization (3)........................................ 2,094
--------
Operating income................................................. 11,164
Interest and other (income) expense, net......................... (125)
--------
Income before income tax provision............................... 11,289
--------
Net income (4)................................................... $ 5,936
========
Net income per share............................................. $
========
Weighted average common shares outstanding (5)...................
========
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1998
--------------------------
PRO FORMA AS
COMBINED ADJUSTED (7)
--------- ------------
<S> <C> <C>
PRO FORMA BALANCE SHEET DATA (6):
Working capital..................................... $(51,151)(8) $
Total assets........................................ 108,859
Total long-term debt................................ 854
Stockholders' equity................................ 33,701
</TABLE>
- ---------------
(1) The pro forma combined statement of operations data assume that the
Acquisitions and the Offering were consummated on April 1, 1997.
(2) The pro forma combined statement of operations data reflect an aggregate of
(i) approximately $5,777 for the year ended March 31, 1998, in pro forma
reductions in salaries, bonuses and benefits to the stockholders of the
Founding Companies to which they have agreed prospectively in the
employment agreements to be entered into upon consummation of the Offering
(the "Compensation Differential") and (ii) an increase of approximately
$725 for the year ended March 31, 1998, of expenses associated with
corporate management, as well as costs associated with being a public
company.
(3) Consists of amortization of the $2,094 of goodwill to be recorded as a
result of the Acquisitions over a 40-year period and computed on the basis
described in the Notes to the Unaudited Pro Forma Combined Financial
Statements.
(4) Assumes that all income is subject to a corporate income tax rate of 40%
and that all goodwill is non-deductible.
(5) Includes (i) 2,879,063 shares to be issued to stockholders of the Founding
Companies, (ii) 4,907,500 shares issued to the founders and initial
investors in U.S. Marketing and (iii) the shares sold in the Offering
to pay the cash portion of the aggregate purchase price for SPAR Marketing
Force, Inc., Certified Marketing Services, Inc., MCI Performance Group,
Inc. and 30.0% of the outstanding Common Stock of Brand Manufacturing Corp.
and T.C.E. Corporation and certain S corporation distributions, to repay
debt to Mr. Ledecky and to pay certain expenses of the Offering. See "Use
of Proceeds."
(6) The pro forma combined balance sheet data assume that the Acquisitions were
consummated on March 31, 1998.
(7) Adjusted to reflect the sale of the shares of Common Stock offered
hereby and the application of the estimated net proceeds therefrom. See
"Use of Proceeds."
(8) Includes $58,611 representing the Cash Consideration. See "Prospectus
Summary--Acquisition Consideration," "Use of Proceeds" and Notes to the
Unaudited Pro Forma Combined Financial Statements.

5
<PAGE>

SUMMARY INDIVIDUAL FOUNDING COMPANY FINANCIAL DATA
(In thousands)

The following table presents certain summary historical statement of
operations data of the Founding Companies for each of their three most recent
fiscal years and the nine-month periods ended March 31, 1997 and 1998 for
Certified Marketing Services, Inc. and the three-month periods ended March 31,
1997 and 1998 for Brand Manufacturing Corp., T.C.E. Corporation and
MCI Performance Group, Inc. The historical statement of operations data
presented below has not been adjusted for the pro forma adjustments reflected
in the Unaudited Pro Forma Combined Financial Statements included elsewhere in
the Prospectus. See "Selected Financial Data of the Founding Companies."

<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31,
-------------------------------
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
SPAR GROUP
Net revenues.................................. $ 14,425 $ 35,574 $ 36,804
Operating income (loss)....................... (284) 343 5,139
Net income (loss)............................. (383) (423) 4,749
</TABLE>

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
FISCAL YEAR ENDED JUNE 30, MARCH 31,
--------------------------------- -------------
1995 1996 1997 1997 1998
---------- ---------- ---------- ------ ------
<S> <C> <C> <C> <C> <C>
CERTIFIED MARKETING SERVICES,
INC.
Net revenues................ $ 4,426 $ 6,911 $ 10,371 $7,594 $8,074
Operating income............ 239 417 879 756 288
Net income.................. 133 245 515 440 158
<CAPTION>
THREE MONTHS
ENDED
FISCAL YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------- -------------
1995 1996 1997 1997 1998
---------- ---------- ---------- ------ ------
<S> <C> <C> <C> <C> <C>
BRAND MANUFACTURING CORP.
Net revenues................ $ 11,254 $ 17,190 $ 17,457 $3,423 $3,895
Operating income............ 772 2,882 1,665 504 580
Net income.................. 629 2,680 1,666 489 582
T.C.E. CORPORATION
Net revenues................ $ 1,354 $ 1,891 $ 2,144 $ 429 $ 512
Operating income............ 77 590 936 166 206
Net income.................. 49 560 893 159 200
MCI PERFORMANCE GROUP, INC.
Net revenues................ $ 25,685 $ 33,361 $ 42,294 $5,289 $5,343
Operating income (loss)..... (159) 439 1,656 1,449 (180)
Net income (loss)........... (209) 443 1,612 1,449 (173)
</TABLE>

6
<PAGE>

RISK FACTORS

In addition to the other information in this Prospectus, the following risk
factors should be considered carefully in evaluating the Company and its
business before purchasing the Common Stock offered hereby. This Prospectus
may contain forward-looking statements which involve risks and uncertainties.
The Company's actual results could differ materially from those anticipated in
these forward-looking statements as a result of certain factors, including
those set forth in the following risk factors and elsewhere in this
Prospectus.

ABSENCE OF COMBINED OPERATING HISTORY

U.S. Marketing was founded in March 1998 and has conducted limited
operations and generated its only revenues to date as a result of U.S.
Marketing's acquisition of 70.0% of the outstanding Common Stock of Brand in
May 1998. U.S. Marketing has entered into definitive agreements to complete
the acquisition of the Founding Companies simultaneously with, and as a
condition to, the closing of the Offering.

The Founding Companies have been operating as separate independent entities
and there can be no assurance that the Company will be able to integrate the
operations of these businesses successfully in the planned divisional
structure or institute the necessary Company-wide and inter-divisional systems
and procedures to manage the combined enterprise profitably. The Company's
management group has been assembled only recently, and there can be no
assurance that the management group will be able to manage the combined entity
successfully or implement the Company's internal growth strategy and
acquisition program effectively. The pro forma financial results of the
Company cover periods when the Founding Companies and U.S. Marketing were not
under common control. Therefore, these results may not be indicative of the
operating results or financial position that would have been achieved had U.S.
Marketing and the Founding Companies been under common control and management
during the periods covered by such pro forma financial results and may not be
indicative of the Company's future business, financial condition and results
of operations.

DIFFICULTY IN INTEGRATING COMPANIES WITH DIFFERENT SERVICES, STRATEGIES,
TECHNOLOGIES AND CLIENTS

Certain of the Founding Companies offer different services, use different
strategies and technologies and target different client segments. These
differences increase the risk inherent in successfully completing such
integration. Further, there can be no assurance that the Company's objective
to become a leading national consolidator and integrated provider of
outsourced marketing services will be successful, or that the Company's
targeted clients will accept the Company as a provider of such services. In
addition, there can be no assurance that the operating results of the Company
will match or exceed the combined individual operating results achieved by the
Founding Companies prior to the Offering. The inability of the Company to
integrate the Founding Companies successfully would have a material adverse
effect on the Company's business, financial condition and results of
operations. See "The Company," "Business--The Divisions and Founding
Companies" and "Management."

INABILITY TO IDENTIFY, ACQUIRE AND INTEGRATE ADDITIONAL MARKETING SERVICES
BUSINESSES

Key components of the Company's growth strategy are the acquisition of
businesses across the United States that offer marketing services in which
each of the Company's three Divisions operates, as well as acquisitions in
numerous other attractive sectors within the marketing services industry. The
successful implementation of this strategy depends upon the Company's ability
to identify suitable acquisition candidates, acquire such companies on
acceptable terms and integrate their operations successfully with those of the
Company. There can be no assurance of the availability of such candidates or,
if such candidates are available, of the Company's ability to identify,
acquire or integrate acquired businesses successfully. In addition, in
pursuing acquisition opportunities, the Company may compete with other
companies with similar growth strategies, which competitors may be larger and
have greater financial and other resources than the Company. Competition for
these acquisition targets could also result in increased prices of acquisition
targets and a diminished pool of companies available for acquisition.

7
<PAGE>

ADVERSE ACCOUNTING, TAX AND OTHER CONSEQUENCES ASSOCIATED WITH FUTURE
ACQUISITIONS

Acquisitions also involve a number of other risks, including adverse effects
on the Company's reported operating results from increases in goodwill
amortization, stock compensation expense and increased compensation expense
resulting from newly hired employees, the diversion of management attention,
potential disputes with the sellers of one or more of the acquired entities
and the possible failure to retain key acquired personnel. The Internal
Revenue Service ("IRS") or appropriate state tax authorities may not
ultimately acquiesce with the Company's intended tax treatment of a
consummated acquisition, which may result in adverse tax consequences to the
parties to the acquisition. Client satisfaction or performance problems with
an acquired firm could also have a material adverse impact on the reputation
of the Company as a whole, and any acquired entity could significantly
underperform relative to the Company's expectations. Due to the foregoing, the
Company's pursuit of an overall acquisition strategy or any individual future
acquisition may have a material adverse effect on the Company's business,
financial condition and results of operations.

UNCERTAINTY OF FINANCING FOR, AND DILUTION RESULTING FROM, FUTURE ACQUISITIONS

A significant portion of the Company's resources may be used for
acquisitions. The timing, size and success of the Company's acquisition
efforts and any associated capital commitments cannot be readily predicted.
The Company currently intends to finance future acquisitions by issuing shares
of its Common Stock, cash or a combination of Common Stock and cash. If the
Common Stock does not maintain a sufficient market value, or if potential
acquisition candidates are otherwise unwilling to accept Common Stock as part
of the consideration for the sale of their businesses, the Company may be
required to utilize more of its cash resources, if available, in order to
initiate and maintain its acquisition program. If the Company does not have
sufficient cash resources, its growth could be limited unless it is able to
obtain additional capital through debt or equity financings. There can be no
assurance that the Company will be able to obtain additional financing it may
need for its acquisition program on terms that the Company deems acceptable.
To the extent the Company uses Common Stock for all or a portion of the
consideration to be paid for future acquisitions, dilution may be experienced
by existing stockholders, including the purchasers of Common Stock in the
Offering. See "--Future Capital Needs and the Uncertainty of Additional
Financing," "Dilution," "Use of Proceeds" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations of the Founding
Companies--Liquidity and Capital Resources."

FAILURE TO IMPLEMENT OPERATING STRATEGY

There are several key elements to the Company's operating strategy,
including capitalizing on cross-selling opportunities, achieving operating
efficiencies at the Company and Division levels, operating on a decentralized
basis and implementing technology. The Company's ability to improve
profitability through this operating strategy will be affected by various
factors, many of which are beyond the Company's control, and the Company's
strategy may not be successful. There can be no assurance that the Company
will be able to cross-sell its services successfully. The Company's ability to
achieve operating efficiencies is affected by various factors, including the
pricing and availability of travel, merchandise and raw materials, as well as
the Company's ability to leverage its corporate overhead over its existing
infrastructure. Moreover, the Company may not be able to realize sufficient
concentration of clients in geographic areas, which would limit the efficiency
and productivity of the Company's labor force, as well as the Company's
ability to reduce variable costs. If the Company does not implement proper
overall business controls, the Company's decentralized operating strategy
could result in inconsistent operating and financial practices at the Founding
Companies and any subsequently acquired businesses. With respect to
technology, the Company may not be able to deploy SPAR Marketing Force, Inc.'s
technology across divisional lines to enhance the services provided by the
other Founding Companies. Moreover, there can be no assurance that products of
technologies developed by others will not render the Company's services
uncompetitive or obsolete. The Company's failure to implement any part of its
operating strategy could materially adversely affect the Company's overall
profitability and thus the Company's business, financial condition and results
of operations. See "Business--Business Strategy."

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<PAGE>

DEPENDENCE ON KEY PERSONNEL

The Company believes that its success will depend to a significant extent
upon the efforts and abilities of Robert G. Brown, its Chairman and Chief
Executive Officer, Dewey K. Shay, its co-founder, President and Chief
Operating Officer, the Company's other executive officers and, due to the
Company's decentralized operating strategy, senior management of the Founding
Companies, particularly with respect to the sales marketing efforts of the
Company. The Company will depend on Mr. Brown primarily with respect to the
implementation of its operating strategy, while the Company's dependence on
Mr. Shay relates primarily to the implementation of its acquisition strategy.
If the Company is not able to rely on Mr. Brown or Mr. Shay to implement its
overall business strategy, or to the extent that the efforts and abilities of
the Company's other executive officers or the senior management of the
Founding Companies may become unavailable to the Company, such events could
have a material adverse effect on the Company's business, financial condition
and results of operations.

INEXPERIENCE IN MANAGING DIVERSIFIED NATIONAL MARKETING SERVICES FIRM

None of the Company's senior management has any prior experience managing a
fully integrated, diversified, national marketing services firm such as the
Company intends to be. Accordingly, there can be no assurance that the
Company's senior management will be able to conduct the Company's operations,
to integrate the operations of the acquired companies effectively, or to hire
and retain personnel with relevant experience. A failure by the Company's
senior management to conduct the Company's operations, to integrate acquired
operations effectively or to hire and to retain experienced personnel could
have a material adverse effect on the Company's business, financial condition,
and results of operations.

MANAGEMENT OF GROWTH

The Company will seek to grow both internally and through acquisitions.
Management expects to expend significant time and effort in evaluating,
completing and integrating acquisitions and opening new facilities. There can
be no assurance that the Company's systems, procedures and controls will be
adequate to support the Company's operations as they expand. Any future growth
also will impose significant additional responsibilities on members of senior
management, including the need to identify, recruit and integrate new senior
level managers and executives. There can be no assurance that such additional
management will be identified and retained by the Company. To the extent that
the Company is unable to manage its growth efficiently and effectively, or is
unable to attract and retain additional qualified management, the Company's
business, financial condition and results of operations could be materially
adversely affected. See "Business--Business Strategy."

CONFLICTS OF INTEREST IN PURSUING CONSOLIDATION OPPORTUNITIES

Dewey K. Shay, who serves as President, Chief Operating Officer and a
Director of the Company, is President and founder of Unison Partners, Inc., a
company formed to pursue strategic consolidation opportunities. Jonathan J.
Ledecky, who serves as a Director of the Company, is a Director of
Consolidation Capital Corporation, a company formed by Mr. Ledecky to pursue
consolidation opportunities. As a director of the Company and, in the case of
Mr. Shay, Unison Partners, Inc., or, in the case of Mr. Ledecky, Consolidation
Capital Corporation, Mr. Shay and Mr. Ledecky each owes a duty of loyalty and
a duty of care to both companies with which he is affiliated. These duties
obligate each such individual to present certain business opportunities to the
company to which he owes the duties before pursuing such opportunities
himself. Mr. Shay and Mr. Ledecky may thus have conflicts of interest in
determining to which of these entities, if any, a particular relevant business
opportunity should be presented. In addition, Mr. Ledecky, who is a director
of both the Company and a number of other public and private companies, may
face similar conflicts of interest between or among his potentially
conflicting duties and obligations. Mr. Shay has entered into a three-year
covenant not to compete with the Company and its affiliates (subject to
certain exceptions) and a two-year employment agreement with U.S. Marketing.

9
<PAGE>

CONFLICTS OF INTEREST REGARDING SERVICES AGREEMENT BETWEEN SPAR AND SMS

Robert G. Brown, the Chairman and Chief Executive Officer, and William H.
Bartels, the President of the Merchandising Division, are the owners and
executive officers of SPAR Marketing Services Inc. ("SMS"). In the fiscal year
ended March 31, 1998, SMS provided independent contractors and field
management services at a total cost of $6.2 million to the Company. Under the
terms of a services agreement between SPAR Marketing Force, Inc. and SMS,
following the Offering, SMS will continue to provide the services of
approximately 2,000 independent contractors and regional and district managers
to the Company. There can be no assurance that Messrs. Brown and Bartels will
not have conflicts of interest with respect to this relationship that would
have a material adverse effect on the Company. See "--Relaxed Party Contingent
Tax Liability," "Certain Relationships and Related Party Transactions" and
Notes to the Combined Financial Statements of the SPAR Group.

BENEFITS TO CO-FOUNDERS

Prior to the Offering, Jonathan J. Ledecky and Dewey K. Shay owned
beneficially a substantial majority of the outstanding shares of Common Stock
of the Company. Following consummation of the Offering, Mr. Ledecky and Mr.
Shay will own % and %, respectively. The aggregate market value of shares of
Common Stock to be beneficially owned by Messrs. Ledecky and Shay immediately
following the Offering will be approximately $ and $ , respectively (based on
an assumed initial public offering price of $ ). Mr. Ledecky's aggregate
purchase price for such shares was $56,000. Mr. Shay's aggregate purchase
price for such shares was $20,000. See "Principal Stockholders."

A portion of the net proceeds of the Offering will be used to repay $15.1
million to Jonathan J. Ledecky, which he loaned to U.S. Marketing in
connection with U.S. Marketing's acquisition of 70.0% of the outstanding
common stock of Brand Manufacturing Corp. and T.C.E. Corporation. Upon the
consummation of the Offering, the Company is required to repay Mr. Ledecky the
principal amount of the loan, with interest at a rate of 7.15625% per annum,
to be adjusted on June 19, 1998 to the prime rate plus 1.0%. The loan from Mr.
Ledecky is secured by a pledge of 70.0% of the outstanding common stock of
Brand Manufacturing Corp. and T.C.E. Corporation owned by U.S. Marketing, the
remaining 30.0% of the common stock of Brand Manufacturing Corp. and T.C.E.
Corporation held by their other stockholders and 1,875,000 shares of U.S.
Marketing owned by Dewey K. Shay.

BENEFITS TO EXECUTIVE OFFICERS AND OTHER EMPLOYEES OF THE COMPANY AND THE
FOUNDING COMPANIES

Certain executive officers of the Company, executive officers of the
Founding Companies and other employees of the Founding Companies who are not
stockholders of the Founding Companies will be granted options to purchase
shares of Common Stock pursuant to the Company's 1998 Equity Compensation Plan
on the effective date of the Registration Statement. The term of each option
is ten years and the exercise price per share of each option is the price of
the Common Stock at the Offering. These options vest ratably over four years
so long as the option holder remains an employee, except for Division
Performance Options, which vest ratably over three years beginning on the
sixth anniversary of the date of the grant, unless their vesting accelerates
based on the achievement of accumulated divisional pretax income goals set
forth in the grant letter. In addition, certain executive officers of the
Companies and the Founding Companies who entered into employment agreements
with the Companies are eligible to participate in an incentive bonus plan as
determined by the Company's Board of Directors, upon the advice and consent of
the Compensation Committee. See "Certain Relationships and Related Party
Transactions--The Acquisitions" and "Management--New Plan Benefits."

POTENTIAL INFLUENCE OF EXISTING STOCKHOLDERS

After the consummation of the Offering, the Company's executive officers,
directors and five-percent stockholders will own beneficially an aggregate of
approximately % of the outstanding shares of Common Stock (approximately %
if the Underwriters' over-allotment option is exercised in full). The
Company's officers, directors and five-percent stockholders if acting together
may be able to control the election of directors and matters requiring the
approval of the stockholders of the Company. This concentration of ownership
may also have the effect of delaying or preventing a change in control of the
Company. See "Principal Stockholders."

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<PAGE>

VALUATIONS OF THE FOUNDING COMPANIES

Valuations of the Founding Companies have not been established by
independent appraisals, but have been determined through negotiations between
U.S. Marketing and representatives of each of the Founding Companies. The
consideration being paid for each of the Founding Companies, including
Founding Companies whose stockholders will become affiliates of the Company
upon consummation of the Offering, is based primarily on the value of each
such Founding Company as a going concern (as measured by several factors
including its adjusted pre-tax earnings for its most recent fiscal year) and
not on the value of the acquired assets. Valuations of the Founding Companies
determined solely by appraisals of the acquired assets would be less than the
consideration being paid by U.S. Marketing for the Founding Companies. The
future performance of the Founding Companies may not be commensurate with the
consideration being paid to acquire the Founding Companies or the price of the
Common Stock offered hereby. See "Certain Relationships and Related Party
Transactions--The Acquisitions."

GOODWILL AMORTIZATION

Approximately $83.8 million, or 77.0%, of the Company's pro forma total
assets as of March 31, 1998 consists of goodwill arising from the acquisitions
of the Founding Companies. Goodwill is an intangible asset that represents the
excess of the aggregate purchase price over the fair value of net assets
acquired. The Company is required to amortize the goodwill from the
Acquisitions over a period of time, with the amount amortized in a particular
period constituting an expense that reduces the Company's net income for that
period. The amount amortized, however, will not give rise to a deduction for
tax purposes. In addition, the Company will be required to amortize the
goodwill, if any, from any future acquisitions. A reduction in net income
resulting from the amortization of goodwill may have an adverse impact upon
the market price of the Company's Common Stock.

FUTURE CAPITAL NEEDS AND THE UNCERTAINTY OF ADDITIONAL FINANCING

The Company currently anticipates that its available cash resources combined
with the net proceeds of this Offering, as well as anticipated funds from
operations, will be sufficient to meet its presently anticipated working
capital and capital expenditure requirements for at least the next 12 months.
Thereafter, the Company may need to raise additional funds. The Company may
need to raise additional funds sooner in order to fund its acquisition
strategy, other expansion or to acquire new technologies. If additional funds
are raised through the issuance of equity securities, the percentage ownership
of the stockholders of the Company will be reduced or such equity securities
may have rights, preferences or privileges senior to those of the holders of
the Company's Common Stock. There can be no assurance that additional
financing will be available when needed on terms favorable to the Company or
at all. If adequate funds are not available or are not available on acceptable
terms, the Company may be unable to pursue its acquisition strategy, develop
or enhance its services, take advantage of future opportunities or respond to
competitive pressures, which could have a material adverse effect on the
Company's business, financial condition and results of operations. See "--
Uncertainty of Financing for, and Dilution Resulting from, Future
Acquisitions," "Dilution" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations of the Founding Companies--
Liquidity and Capital Resources."

BRAND MANUFACTURING CORP. -- NEED FOR MORE CAPACITY

Brand Manufacturing Corp. is at or near the limit of its manufacturing
capacity. To meet the demands of current and potential customers, it may be
necessary for Brand Manufacturing Corp. to hire subcontractors, to make
capital expenditures to expand its existing facilities or to acquire other
manufacturing facilities. Availability of alternative manufacturing facilities
or subcontractors and the capital resources required for such expenditures may
be limited. In addition, expanding existing facilities or acquiring additional
facilities may cause delays and disruptions in the manufacturing process,
which could materially adversely affect existing or potential customer
relations. The Company's inability to address its need for additional
manufacturing capacity could have a material adverse effect on the Company's
business, financial condition and results of operations.

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CONTINGENT LIABILITY FOR EARN-OUT PAYMENTS TO FOUNDING COMPANY OWNERS

The Company may be obligated to make earn-out payments to the former owners
of MCI Performance Group, Inc. and Certified Marketing Services, Inc. based on
the amount of their respective pre-tax earnings for the year ending March 31,
1999, as set forth in the following sentences. The MCI Performance Group, Inc.
earn-out is equal to pretax earnings for the year ending March 31, 1999,
payable 100% in cash. MCI Performance Group, Inc. must meet a $3.5 million
pretax threshold for any earn-out to be paid. The Certified Marketing
Services, Inc. earn-out is equal to pretax earnings for the year ending March
31, 1999 payable 50.0% in common stock at the then current market prices and
50.0% in cash. To the extent that either MCI Performance Group, Inc. or
Certified Marketing Services, Inc. are eligible to receive earn-out payments
as described above, the fulfillment of ensuing cash payment obligations by the
Company could result in an immediate, adverse effect upon the Company's
business, financial condition and results of operations. In the event that
performance by the former owners results in the Company's obligation to issue
shares of its Common Stock, the issuance of such stock would cause existing
investors further dilution. See "--Future Capital Needs and the Uncertainty of
Additional Financing" and "--Dilution to New Investors."

VARIABILITY OF OPERATING RESULTS

The Founding Companies have experienced and the Company may in the future
continue to experience fluctuations in its quarterly operating results.
Factors that may cause the Company's quarterly operating results to vary
include the number of active customer projects, the requirements of customer
projects, the termination of major customer projects, the loss of major
customer, the timing of new engagements and the timing of personnel cost
increases. In particular, the timing of revenues is difficult to forecast for
the motion picture industry customers of SPAR Marketing Force, Inc. and
Certified Marketing Services, Inc. because they can be dependent on the
commercial success of movies or home video releases of particular customers.
In addition, MCI Performance Group, Inc.'s operating results are subject to
fluctuation because it recognizes revenues at the completion of programs but
direct costs for projects are expensed as incurred. Because of this policy,
the timing of the commencement or completion of a project, particularly at or
near the end of any quarter, can cause significant variations in operating
results from quarter to quarter and could result in losses for any particular
period. Due to all of the foregoing factors, there can be no assurance that
the Company's results of operations will not be below the expectations of
investors for any given fiscal period. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations of the Founding
Companies."

INDUSTRY CONSOLIDATION AND CONCENTRATED CLIENT BASE

Many of the Company's clients' industries are consolidating, resulting in a
decrease in the total number of clients, some of which have increased in size
and market share. As a result of this industry consolidation, the number of
available client relationships has declined. Thus, the Company's ability to
maintain existing client relationships and to obtain new client relationships
has become increasingly significant. The Company's ten largest clients
generated approximately 50.6% of the Company's pro forma net revenues for the
year ended March 31, 1998. During this period, no client accounted for greater
than 10.0% of Company's pro forma net revenues, other than MCI Communications
Corporation, which accounted for 15.4% of pro forma net revenues for the year
ended March 31, 1998. Substantially all of the Company's services, other than
those in the Premium Incentive Division, are performed on a purchase order
basis and are not subject to multi-year contracts, thus permitting the
Company's clients to obtain marketing services from other providers without
further obligation to the Company. If the Company has difficulty in collecting
amounts due from any of its large clients, experiences a significant reduction
in business from clients or is unable to attract new clients, such events
could have a material adverse effect on the Company's business, financial
condition and results of operations.

INCREASING INFLUENCE OF RETAILERS ON PRICES AND SERVICES

The substantial majority of the Company's pro forma net revenues in fiscal
1998 was generated from manufacturers, retailers and other companies in the
retail industry. This industry is currently undergoing a consolidation trend
which is resulting in a fewer number of larger retailers with broader
geographic reach and increased market power. As a result of this consolidation
trend, these retailers may have a greater ability to

12
<PAGE>

influence the pricing and types of services offered by the Company. Attempts
by retailers to influence the Company's services could have a material adverse
effect on the Company's business, financial condition and results of
operations.

DEPENDENCE ON TREND TOWARD OUTSOURCING

The Company's business and growth depend in large part on the trend toward
outsourcing of marketing services, which the Company believes has resulted
from consolidation of retailers and manufacturers. See "Business--Industry
Overview." There can be no assurance that this trend in outsourcing will
continue, as companies may elect to perform such services internally. A
significant change in the direction of this trend generally, or a trend in the
retail industry not to use, or to reduce the use of, outsourced marketing
services such as those provided by the Company, would materially adversely
effect the Company's business, financial condition and results of operations.

COMPETITION

As the marketing services industry continues to evolve, additional
competitors with greater resources than the Company may enter the marketing
services industry or particular sectors thereof. The Company also competes
with the internal marketing and merchandising operations of its clients and
prospective clients. The Company's clients may choose to conduct more of their
merchandising services, point-of-purchase display design and creation or
premium incentive programs internally. Furthermore, remaining competitive in
the highly competitive marketing services industry requires that the Company
monitor and respond to trends in all industry sectors. There can be no
assurance that the Company will be able to anticipate and respond successfully
to such trends in a timely manner.

The marketing services industry generally does not require significant
initial capital expenditures and thus the barriers to entry in this industry
are low. If the Company's competitors were to combine and form an integrated
marketing services enterprise, additional companies were to enter into this
market or many existing participants in this industry become more competitive,
the Company's business, financial condition and results of operations could be
materially adversely affected.

LIMITATIONS OF MANAGEMENT IN ENTERING NEW MARKETS

A key element of the Company's growth strategy is the expansion into new
sectors of the marketing services industry, whether by acquisition of existing
companies operating in such sectors or otherwise. These sectors include, but
are not limited to, ad specialty, direct marketing, database marketing, sales
promotions, information/research, sampling and demonstrations. Because the
Company and its management have no experience in these sectors (nor in any
other sectors into which the Company may choose to expand other than those
pursued by the Founding Companies), there can be no assurance that the Company
will be successful in its efforts to expand. In the event that Company
succeeds in expanding into such sectors, the Company may be required to modify
its management significantly, operational practices or pricing. The Company's
business, financial condition and results of operations may be materially
adversely affected if the Company's expansion strategy is unsuccessful.

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POTENTIAL REGULATORY REQUIREMENTS

The Company's acquisition strategy will likely be subject to compliance with
the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), which could adversely affect the pace of the
Company's acquisitions in a Division or its ability to consolidate the
marketing services industry to the extent the Company believes appropriate. In
order to obtain approval of an acquisition under the HSR Act, the Company may
be required to divest a portion of its then-existing operations or those of
the acquisition candidate, which may render a given acquisition
disadvantageous.

EMPLOYMENT TAX AND RELATED LIABILITY

Certain of the Founding Companies have treated, and expect to continue to
treat, a substantial number of merchandising service providers as independent
contractors, not employees. In making the determination that such Founding
Companies are qualified to characterize their merchandising service providers
as independent contractors, the Company, in addition to following industry
precedent, made an independent review of, and analyzed, the applicable
guidelines issued by the IRS. There can be no assurance, however, that the
Company is qualified to treat such merchandising service providers as
independent contractors. In the event that the Company has improperly
classified such merchandising service providers as independent contractors,
the Company would be liable for the payment of federal and state employment
taxes and related employee obligations, such as for those periods in which
such merchandising service providers were incorrectly characterized as
independent contractors. If imposed, such employment tax liability could have
a material adverse effect on the Company's business, financial condition and
results of operations. See "Business."

RELATED PARTY CONTINGENT TAX LIABILITY

SPAR Marketing Force, Inc. contracts with SMS for the services of
independent contractors and field management. Robert G. Brown, the Company's
Chairman and Chief Executive Officer, and William H. Bartels, the President of
the Company's Merchandising Division, are the owners of SMS (the "SMS
Stockholders") and prior to the SPAR Marketing Force, Inc. Acquisition, they
have owned the stock of SPAR Marketing Force, Inc. SMS is a separate
corporation and is not being acquired by U.S. Marketing. SMS is engaged in a
dispute with the IRS concerning the status of SMS's independent contractors
that the IRS has asserted should be classified as employees for federal
employment tax purposes. See "Certain Relationships and Related Party
Transactions--Relationship with SMS." SMS has informed the Company that SMS
estimates that SMS could owe up to $6.6 million in employment taxes, penalties
and interest if the IRS were to prevail in its dispute with SMS and apply that
position to periods prior to the Offering.

As neither U.S. Marketing nor SPAR Marketing Force, Inc. is acquiring SMS,
the Company believes that no liability of SMS will become a direct liability
of U.S. Marketing or its subsidiaries. There is no assurance, however, that
the IRS will not attempt to collect employment taxes from SPAR Marketing
Force, Inc. as a former member of a commonly controlled group with SMS.
Accordingly, if SMS is unable to pay such taxes or otherwise prevail in or
settle its dispute with the IRS, then the IRS might seek to collect all or a
portion of such tax liability from SPAR Marketing Force, Inc. as a result of
SPAR Marketing Force, Inc.'s common control and business relationship with SMS
during the period such liabilities were incurred. The SMS Stockholders have
indemnified the Company and its subsidiaries against such liability. In the
event, however, SMS is unsuccessful in its challenge against the IRS, and the
IRS were to assert successfully that SPAR Marketing Force, Inc. is responsible
for all or a portion of such liability, there is no assurance the Company will
be able to recover from the SMS Stockholders, any amounts the IRS might assert
against the Company. Such result could have a material adverse effect on the
Company's business, financial condition and results of operations.

YEAR 2000

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<PAGE>

such "Year 2000" requirements. Significant uncertainty exists concerning the
potential effects associated with such compliance.

The Company believes that the purchasing patterns of clients and potential
clients may be affected by Year 2000 issues in a variety of ways. Many
companies are expending significant resources to correct or patch their
current software systems for Year 2000 compliance. These expenditures may
result in reduced funds available to purchase services such as those offered
by the Company. Furthermore, payments for deliveries of components of supplies
to the Company may be delayed, incomplete, or otherwise unavailable as a
consequence of Year 2000 problems affecting clients or suppliers. Any of the
foregoing could result in a material adverse effect on the Company's business,
financial condition and results of operations.

ADVERSE CHANGES IN GENERAL ECONOMIC CONDITIONS CAN ADVERSELY AFFECT COMPANY'S
BUSINESS

A substantial majority of the Company's revenues are derived from
manufacturers and retailers which are subject to changes in general economic
conditions. In addition, the Company's success is dependent upon the general
economic conditions in the geographic areas in which a substantial number of
its operations occur. General economic downturns or regional downturns in
markets where the Company has operations, including downturns in the retail
industry, could have an adverse effect on the operating results of one or more
of the Founding Companies and, accordingly, on the Company's business,
financial condition and/or results of operations.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have shares of Common
Stock outstanding, based upon the number of shares outstanding as of ,
1998. The shares sold in the Offering will be freely tradeable without
restriction or further registration under the Securities Act, unless acquired
by an "affiliate" of the Company, as that term is defined in Rule 144
promulgated under the Securities Act ("Rule 144"); shares held by affiliates
will be subject to resale limitations of Rule 144 described below. All of the
remaining 7,786,563 outstanding shares of Common Stock will be available for
resale at various dates beginning days after the date of this Prospectus,
upon expiration of applicable lock-up agreements described below and subject
to compliance with Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act") as the holding provisions of Rule 144 are satisfied. Of
those shares, 2,879,063 may be included in certain registration statements
that may be filed by the Company, in accordance with piggyback registration
rights granted pursuant to the Acquisition Agreements. Additional shares that
may be issued to stockholders of Certified Marketing Services, Inc. pursuant
to the earn-out arrangements (to be calculated with reference to the
performance of those Founding Companies) will also be subject to such
piggyback registration rights. Further, upon consummation of the Offering,
1,165,000 shares of Common Stock will be issuable upon the exercise of stock
options to be granted on the effective date of the registration statement of
which this Prospectus forms a part. The Company intends to file a registration
statement on Form S-8 with respect to the shares of Common Stock issuable upon
exercise of such options, and a "shelf" registration statement with respect to
shares of Common Stock that may be issued in connection with possible future
acquisition transactions, as soon as practicable after the consummation of the
Offering.

Sales of substantial amounts of Common Stock, or the perception that such
sales could occur, could adversely affect prevailing market prices of the
Common Stock. Each of the Company and the directors, executive officers and
certain other stockholders of the Company has agreed that, without the prior
written consent of BancAmerica Robertson Stephens on behalf of the
Underwriters, it will not, during the period ending 180 days after the date of
this Prospectus, (i) offer to sell, contract to sell, or otherwise sell,
dispose of, loan, pledge or grant any rights with respect to any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. See "Underwriting." Furthermore, the
Acquisition Agreements provide

15
<PAGE>

that each of the stockholders of the Founding Companies who received shares of
Common Stock as consideration for their respective interests in the Founding
Companies will not be permitted to transfer ownership of their shares of
Common Stock until: (i) the twelve-month anniversary of the date of the final
Prospectus for the Offering, at which time such stockholders shall be
permitted to transfer ownership of no more than 50.0% of their shares of
Common Stock; (ii) the eighteen-month anniversary of the date of the final
Prospectus for the Offering, at which time such stockholders shall be
permitted to transfer ownership of an additional 25.0% of their shares of
Common Stock; and (iii) the twenty-four month anniversary of the date of the
final Prospectus of the Offering, at which time such stockholders shall be
permitted to transfer ownership of the remainder of their shares of Common
Stock.

NO PRIOR MARKET FOR THE COMMON STOCK; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offering, there has been no public market for the Company's
Common Stock. There can be no assurance that an active public market for the
Common Stock will develop or be sustained after the Offering. The initial
public offering price of the Common Stock will be determined by negotiation
between the Company and the representatives of the Underwriters based on the
factors described under "Underwriting." The price at which the Common Stock
will trade in the public market after the Offering may be less than the
initial public offering price. In addition, the trading price of the Common
Stock could be subject to significant fluctuations in response to activities
of the Company's competitors, variations in quarterly operating results,
changes in market conditions and other events or factors. Moreover, the stock
market in the past has experienced significant price and value fluctuations,
which have not necessarily been related to corporate operating performance.
The volatility of the market could adversely affect the market price of the
Common Stock and the ability of the Company to raise equity in the public
markets. See "Underwriting."

DILUTION TO NEW INVESTORS

After giving effect to the Acquisitions, purchasers of Common Stock in the
Offering will experience immediate and substantial dilution in the pro forma
as adjusted net tangible book value of their shares in the amount of $ per
share. See "Dilution." If the Company issues additional Common Stock in the
future, including shares which may be issued pursuant to Certified Marketing
Services, Inc.'s earn-out arrangement, option grants and future acquisitions,
purchasers of Common Stock in the Offering may experience further dilution in
the net tangible book value per share of the Common Stock.

RESTRICTIONS ON DIVIDENDS

The Company currently intends to retain any earnings or other cash resources
to finance the expansion of its business and for general corporate purposes.
Any payment of future dividends will be at the discretion of the Board of
Directors and will depend upon, among other factors, the Company's earnings,
financial condition, capital requirements, level of indebtedness, contractual
restrictions with respect to the payment of dividends and other considerations
that the Board of Directors deems relevant. See "Dividend Policy."

CERTAIN ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Certificate of Incorporation and Bylaws
and Delaware law may make a change in the control of the Company more
difficult to effect, even if a change in control were in the stockholders'
interest. Pursuant to the Bylaws, stockholders must follow an advance notice
procedure for certain stockholder nominations of candidates for the Board of
Directors and for certain other stockholder business to be conducted at an
annual meeting. Additionally, the Bylaws of the Company have eliminated
stockholder action by majority written consent. In addition, the Company is
subject to the anti-takeover provisions of Section 203 of the Delaware General
Corporation Law, which prohibit the Company from engaging in a "business
combination" with an "interested stockholder" for a period of three years
after the date of the transaction in which the person became an "interested
stockholder," unless the business combination is approved in a prescribed
manner. See "Description of Capital Stock--Certain Provisions of Delaware Law
and the Company's Certificate of Incorporation and Bylaws."

16
<PAGE>

THE COMPANY

U.S. Marketing was founded in March 1998 to create a leading national
consolidator and integrated provider of outsourced marketing services.
Simultaneously with and as a condition to the consummation of the Offering,
U.S. Marketing will complete the acquisition of the four Founding Companies:
(i) SPAR Marketing Force, Inc. (the company resulting from the combination of
four related companies, which together are referred to as "SPAR," or prior to
such combination as the "SPAR Group"); (ii) Certified Marketing Services, Inc.
("Certified"); (iii) Brand Manufacturing Corp. ("Brand Manufacturing") and
T.C.E. Corporation ("TCE," and together with Brand Manufacturing, "Brand");
and (iv) MCI Performance Group, Inc. ("MCI Performance"). For the year ended
March 31, 1998, the Company had pro forma combined revenues of $109.2 million.
A brief description of each Founding Company is set forth below.

SPAR. Founded in 1967, SPAR is a national marketing services company that
provides retail merchandising and marketing services to home video, consumer
goods and food products companies. The services are provided by SPAR's
approximately 1,800 part-time employees, which are supported by approximately
130 full-time office employees, and approximately 2,000 independent
contractors pursuant to SPAR's agreement with SMS. See "Certain Relationships
and Related Party Transactions." The services include in-store merchandising
(increasing the visibility and availability of products on-site), test market
research (testing promotion alternatives, new products and advertising
campaigns, as well as packaging, pricing, and location changes, at store
level), mystery shopping (calling anonymously on retail outlets to check on
distribution or display of a brand and to evaluate products, services, clients
or employees), database management (managing proprietary information to permit
easy access, analysis and manipulation) and data collection (systematically
gathering information for analysis and interpretation).

Brand. Founded in 1956, Brand designs, manufactures and delivers custom in-
store merchandising units and point-of-purchase displays for a wide range of
retail store chains and product manufacturers. For many of its retail store
accounts, Brand also invoices the retailers' suppliers and coordinates the
collection of payments on these invoices. Additionally, Brand provides
shipping and freight services to its customers. Brand employs approximately
160 persons and maintains its headquarters and manufacturing facility in
Brooklyn, New York, as well as a warehousing and distribution facility in
Carteret, New Jersey. Brand's net revenues for the year ended March 31, 1998
were approximately $19.6 million.

MCI Performance. Founded in 1987, MCI Performance specializes in designing
and implementing premium incentives and managing group travel and meetings for
clients throughout the United States. MCI Performance provides a wide variety
of consulting, creative, program administration and travel and merchandise
fulfillment services to companies seeking to motivate employees, salespeople,
dealers, distributors, retailers and consumers toward certain action or
objectives. MCI Performance employs approximately 100 persons and its net
revenues for the year ended March 31, 1998 were approximately $42.3 million.

The Company's corporate offices are located at 303 South Broadway, Suite
140, Tarrytown, New York 10591. The telephone number of its principal
executive offices is (914) 332-4100.

17
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby at an assumed initial public offering price of $ per share,
after deducting underwriting discounts and commissions and estimated offering
expenses payable by the Company, are estimated to be approximately $
million (approximately $ million if the Underwriters' over-allotment
option is exercised in full). The principal uses of such net proceeds to the
Company are described below. The Company has received a letter from BT Alex.
Brown Incorporated confirming that a $100 million secured credit facility
could be arranged. The terms and conditions of any such credit facility,
including the fee arrangements, are subject to mutual agreement. Use of any
such facility would likely be subject to conditions customary to facilities of
this type, including restrictions on other indebtedness, mergers,
acquisitions, dispositions and similar transactions. The Company may not
succeed in obtaining a facility of any size or in negotiating terms
satisfactory to the Company. If the Company obtains a credit facility, the
Company may use debt, rather than proceeds of the Offering, to fund S
Corporation distributions.

The use of proceeds from the Offering will be as follows: (i) approximately
$43.5 million of the net proceeds will be used to pay the cash portion of the
aggregate purchase price for SPAR, Certified, MCI Performance and the
remaining 30.0% of the outstanding common stock of Brand and certain S
corporation distributions at closing of the Acquisitions (assuming an initial
public offering price of $ ); (ii) approximately $15.1 million of the net
proceeds will be used to repay Mr. Ledecky for monies previously loaned to
U.S. Marketing; (iii) approximately $3.7 million will be used to repay debt of
two of the Founding Companies; and (iv) the balance of the net proceeds,
approximately $ million (approximately $ million if the Underwriters'
over-allotment option is exercised in full), will be added to the Company's
working capital and used for possible acquisitions, general corporate
purposes, and the payment of the cash portion of the earn-out consideration in
connection with the Certified and MCI Performance Acquisitions. With the
exception of the Acquisitions, the Company is not currently involved in
negotiations and has no current commitments or agreements with respect to any
acquisitions. No further acquisitions may ever be consummated.

With respect to the discharge of U.S. Marketing's indebtedness to Jonathan
J. Ledecky, Mr. Ledecky loaned U.S. Marketing an aggregate of $15.1 million in
connection with the purchase of 70.0% of the outstanding common stock of
Brand. One million dollars was used to finance an Escrow Agreement between
Brand and U.S. Marketing. These escrowed funds were released May 20, 1998,
from which $931,911 was paid to Brand to fund working capital needs of Brand,
while the remaining funds were returned to Mr. Ledecky. On May 20, 1998, U.S.
Marketing paid the remaining $14.2 million to Brand stockholders for 70.0% of
the outstanding capital stock of Brand. These funds, as well as the funds
provided to Brand to fund working capital needs, are evidenced by a Term Note
dated May 20, 1998. The principal amount of the Note is $15,131,911. Interest
on the Note accrues for the first 30 days after issuance of the Note at
7.15625% per annum and thereafter at a bank's prime rate, plus 1.0%. The
principal amount, together with all interest that has been accrued thereon,
shall be payable at the earlier of the Offering or six months from the date of
the Note. Mr. Ledecky's loan is secured by (i) a pledge from U.S. Marketing of
the stock of Brand it acquired on May 20, 1998, (ii) a pledge from Monte
Weiner and James Gillis of their remaining shares of Brand and (iii) a pledge
of Dewey K. Shay's Common Stock.

The $3.7 million of indebtedness of two of the Founding Companies being
discharged with proceeds of the Offering consists of (i) approximately $2.4
million due under a line of credit and note payable on demand, with interest
payable at the lender's "alternate baserate" plus 2.0% (10.5% at March 31,
1998); (ii) approximately $0.9 million due under a term loan dated October 29,
1996, payable in 48 monthly principal installments of $31,250 with interest at
the lender's fluctuating announced rate plus 1.25% (9.75% at March 31, 1998);
(iii) approximately $0.3 million under a working capital line of credit
bearing interest at the lender's prime rate plus 1.0%; and (iv) approximately
$0.1 million due under a 60-month term loan dated March 15, 1996, payable in
monthly installments of approximately $1,500, which includes interest at 9.25%
per annum.

Pending application of the net proceeds as described above, the Company
intends to invest the net proceeds of the Offering in short-term investment
grade securities.

18
<PAGE>

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. Any payment of future dividends will be at the discretion of the
Board of Directors and will depend upon, among other factors, the Company's
earnings, financial condition, capital requirements, level of indebtedness,
contractual restrictions with respect to the payment of dividends and other
considerations that the Board of Directors deems relevant.

CAPITALIZATION

The following table sets forth the capitalization of the Company at March
31, 1998, on a pro forma combined basis (i) to reflect the consummation of the
Acquisitions and the issuance of shares of Common Stock in connection
therewith and the issuance of shares of U.S. Marketing subsequent to March 31,
1998, and on such pro forma as adjusted basis (ii) to give effect to the sale
of shares of Common Stock offered hereby at an assumed initial public
offering price of $ per share and the application of the estimated net
proceeds therefrom. See "Selected Financial Data of the Founding Companies"
and "Use of Proceeds." This table should be read in conjunction with the
Unaudited Pro Forma Combined Financial Statements and the notes thereto
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1998
-------------------------
PRO FORMA PRO FORMA
COMBINED AS ADJUSTED (1)
--------- ---------------
(In thousands, except
share
and per share data)
<S> <C> <C>
Short-term debt and current portion of long-term
debt................................................ $ 3,393 $ 300
------- --------
Long-term debt and capital lease obligations, less
current portion..................................... 854 235
Stockholders' equity:
Common Stock, $0.001 par value per share;
100,000,000 shares authorized;
7,786,563 shares issued and outstanding on a
pro forma combined basis;
shares issued and outstanding on a pro forma
as adjusted basis.............................. 8
Preferred stock, $0.001 par value per share;
10,000,000 shares authorized;
No shares issued and outstanding on a pro forma
combined basis;
No shares issued and outstanding pro forma as
adjusted basis................................. --
Additional paid-in capital.......................... 33,887
Stock subscription receivable....................... (39) (39)
Retained earnings (deficit)......................... (155) (155)
------- --------
Total stockholders' equity......................... 33,701
------- --------
Total capitalization.............................. $34,555 $
======= ========
</TABLE>
- ---------------
(1) Does not include: (i) shares which may be issued to the stockholders of
Certified pursuant to the earn-out arrangement to be calculated with
reference to Certified's pre-tax earnings for the fiscal year ending March
31, 1999; (ii) shares of Common Stock equal to 15.0% of the shares of
Common Stock outstanding from time to time that are reserved for issuance
under the Company's 1998 Equity Compensation Plan, of which options to
purchase 1,165,000 shares of Common Stock will be granted upon the
effective date of the Registration Statement at an exercise price equal to
the initial public offering price per share; and (iii) 500,000 shares of
Common Stock reserved for issuance under the Company's 1998 Employee Stock
Purchase Plan. See "Use of Proceeds" "Certain Relationships and Related
Party Transactions--The Acquisitions," "Management--1998 Equity
Compensation Plan," "Management--1998 Employee Stock Purchase Plan" and
"Principal Stockholders."

19
<PAGE>

DILUTION

After giving effect to the initial capitalization of U.S. Marketing as if
such capitalization had occurred on March 31, 1998, the Company had a pro
forma net tangible book value deficit at March 31, 1998, of $50.071 million,
or a deficit of $6.43 per share of Common Stock. Pro forma net tangible book
value per share is determined by dividing the pro forma net tangible book
value of the Company (tangible assets less liabilities) by the number of
shares of Common Stock outstanding. Adjusting for the Acquisitions and the
sale by the Company of the shares of Common Stock offered hereby at an
assumed initial public offering price of $ per share, and the application of
the estimated net proceeds therefrom as described under "Use of Proceeds," the
pro forma net tangible book value of the Company, as adjusted, at March 31,
1998 would have been $ million, or $ per share. This amount
represents an immediate dilution to new investors of $ per share and an
immediate increase in pro forma as adjusted net tangible book value per share
to existing stockholders of $ per share. The following table illustrates
this per share dilution to new investors:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................. $
Pro forma net tangible book value per share after initial capi-
talization.................................................... $(6.43)
Pro forma increase in net tangible book value per share result-
ing from the Acquisitions, the issuance of shares of Common
Stock of U.S. Marketing subsequent to March 31, 1998 and the
Offering (1)..................................................
------
Pro forma as adjusted net tangible book value per share after the
Acquisitions and the Offering...................................
-----
Pro forma as adjusted dilution to new investors (2).............. $
=====
</TABLE>
- ---------------
(1) The increase in net tangible book value per share consists of a decrease
of $ to the net tangible book value per share resulting from the
Acquisitions and an increase of $ to the net tangible book value per
share resulting from the Offering.
(2) Determined by subtracting the pro forma as adjusted net tangible book
value per share after the Offering from the assumed initial public
offering price per share.

If the Underwriters' over-allotment option is exercised in full, the
increase in pro forma net tangible book value per share attributable to the
initial capitalization, pro forma as adjusted net tangible book value per
share after the Acquisitions and the Offering, and pro forma as adjusted
dilution to new investors would be $( ), $ and $ , respectively.

The following table sets forth at March 31, 1998, after giving effect to the
Acquisitions and the sale of the Common Stock offered by the Company in the
Offering: (i) the number of shares of Common Stock purchased by existing
stockholders from the Company and the total consideration (including the fair
value of the shares of Common Stock issued to the sellers of the Founding
Companies) and the average price per share paid to the Company for such
shares; (ii) the number of shares of Common Stock purchased by new investors
in the Offering from the Company and the total consideration and the price per
share paid by them for such shares; and (iii) the percentage of shares
purchased from the Company by existing stockholders and the new investors and
the percentages of consideration paid to the Company for such shares by
existing stockholders and new investors.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- -------------- ------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C>
Existing stockholders(1).... 7,786,563 % $33,864 % $4.35
New investors...............
--------- ----- ------- -----
Total..................... 100.0% $ 100.0%
========= ===== ======= =====
</TABLE>
- ---------------
(1) Does not include: (i) shares which may be issued to the stockholders of
Certified pursuant to the earn-out arrangement to be calculated with
reference to Certified's pre-tax earnings for the fiscal year ending March
31, 1999; (ii) shares of Common Stock equal to 15.0% of the shares of
Common Stock outstanding from time to time that are reserved for issuance
under the Company's 1998 Equity Compensation Plan, of which options to
purchase 1,165,000 shares of Common Stock will be granted upon the
effective date of the Registration Statement at an exercise price equal to
the initial public offering price per share and; (iii) 500,000 shares of
Common Stock reserved for issuance under the Company's 1998 Employee Stock
Purchase Plan. See "Certain Relationships and Related Party Transactions--
The Acquisitions," "Management--1998 Equity Compensation Plan,"
"Management--1998 Employee Stock Purchase Plan" and "Principal
Stockholders."

20
<PAGE>

SELECTED PRO FORMA COMBINED FINANCIAL DATA
(In thousands, except share and per share data)

U.S. Marketing was established in March 1998 and will complete the
acquisition of the Founding Companies simultaneously with and as a condition
to the consummation of this Offering. See "Certain Relationships and Related
Party Transactions." For financial statement presentation purposes, U.S.
Marketing has been identified as the "accounting acquiror." The following
unaudited selected pro forma combined financial data present data for the
Company, adjusted to give effect to (i) the consummation of the Acquisitions,
(ii) certain pro forma adjustments to the historical financial statements
described below and (iii) the consummation of the Offering and the application
of the net proceeds therefrom. The selected pro forma data are not necessarily
indicative of the operating results or financial position that would have been
achieved had the events described above been consummated and should not be
construed as representative of future operating results or financial position.

<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31,1998
-------------
<S> <C>
PRO FORMA STATEMENT OF OPERATIONS DATA (1):
Net revenues..................................................... $109,179
Cost of revenues................................................. 66,498
--------
Gross profit..................................................... 42,681
Selling, general and administrative expenses (2)................. 29,423
Goodwill amortization (3)........................................ 2,094
--------
Operating income................................................. 11,164
Interest and other (income) expense, net......................... (125)
--------
Income before income tax provision............................... 11,289
--------
Income tax provision............................................. 5,353
--------
Net income (4)................................................... $ 5,936
========
Net income per share............................................. $
========
Weighted average common shares outstanding (5)...................
========
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1998
--------------------------
PRO FORMA AS
COMBINED ADJUSTED (7)
--------- ------------
<S> <C> <C>
PRO FORMA BALANCE SHEET DATA (6):
Working capital..................................... $(51,151)(8) $
Total assets........................................ 108,859
Total long-term debt................................ 854
Stockholders' equity................................ 33,701
</TABLE>
- ---------------
(1) The pro forma combined statement of operations data assume that the
Acquisitions and the Offering were consummated on April 1, 1997.
(2) The pro forma combined statement of operations data reflect an aggregate
of (i) the Compensation Differential of $5,777 and (ii) an increase of
approximately $725 for the year ended March 31, 1998, of expenses
associated with corporate management, as well as costs associated with
being a public company.
(3) Consists of amortization of the $2,094 of goodwill to be recorded as a
result of the Acquisitions over a 40-year period and computed on the basis
described in the Notes to the Unaudited Pro Forma Combined Financial
Statements.
(4) Assumes that all income is subject to a corporate income tax rate of 40%
and that all goodwill is non-deductible.
(5) Includes (i) 2,879,063 shares to be issued to stockholders of the Founding
Companies, (ii) 4,907,500 shares issued to the founders and initial
investors in U.S. Marketing and (iii) shares sold in the Offering to
pay the cash portion of the aggregate purchase price for SPAR, Certified,
MCI Performance and 30.0% of the outstanding Common Stock of Brand and
certain S corporation distributions, to repay debt to Mr. Ledecky and to
pay certain expenses of the Offering. See "Use of Proceeds."
(6) The pro forma combined balance sheet data assume that the Acquisitions
were consummated on March 31, 1998.
(7) Adjusted to reflect the sale of the shares of Common Stock offered
hereby and the application of the estimated net proceeds therefrom. See
"Use of Proceeds."
(8) Includes $58,611 representing the Cash Consideration. See "Prospectus
Summary--Acquisition Consideration," "Use of Proceeds" and Notes to the
Unaudited Pro Forma Combined Financial Statements.

21
<PAGE>

SELECTED FINANCIAL DATA OF THE FOUNDING COMPANIES

The selected financial data of the Founding Companies are derived in part
from the more detailed historical financial statements and notes thereto of
the Founding Companies included elsewhere in this Prospectus. The balance
sheet data as of March 31, 1997 and 1998 and the statement of operations data
for years ended March 31, 1996, 1997 and 1998 for SPAR have been derived from
the audited combined financial statements included elsewhere herein. The
balance sheet data as of June 30, 1996 and 1997 and the statement of
operations data for the years ended June 30, 1996 and 1997 for Certified have
been derived from the audited financial statements included elsewhere herein.
The balance sheet data as of December 31, 1996 and 1997 and the statement of
operations data for the years ended December 31, 1995, 1996 and 1997 for Brand
Manufacturing and TCE have been derived from the audited financial statements
included elsewhere herein. The balance sheet data as of December 31, 1996 and
1997 and the statement of operations data for the years ended December 31,
1996 and 1997 for MCI Performance have been derived from the audited financial
statements included elsewhere herein. The balance sheet data as of March 31,
1994, 1995 and 1996 and the statement of operations data for the years ended
March 31, 1994 and 1995 for SPAR have been derived from unaudited combined
financial statements not included herein. The balance sheet data as of June
30, 1993, 1994 and 1995 and the statement of operations data for the years
ended June 30, 1993, 1994 and 1995 for Certified have been derived from
unaudited financial statements not included herein. The balance sheet data as
of December 31, 1993, 1994 and 1995 and the statement of operations data for
the years ended December 31, 1993 and 1994 for Brand Manufacturing and TCE
have been derived from audited financial statements not included herein. The
balance sheet data as of December 31, 1993, 1994 and 1995 and the statement of
operations data for the years ended December 31, 1993, 1994 and 1995 for MCI
Performance have been derived from unaudited financial statements not included
herein.

The selected individual financial data of Certified for the nine months
ended March 31, 1997 and 1998 have been derived from the unaudited financial
statements included elsewhere herein. Such selected financial data are not
necessarily indicative of the results to be expected for the full year. The
selected individual financial data of MCI Performance, Brand Manufacturing and
TCE as of March 31, 1998 and for the three months ended March 31, 1997 and
1998 have been derived from the unaudited financial statements included
elsewhere herein.

In the opinion of the Company, the unaudited financial statements of the
Founding Companies reflect all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the financial
position and results of operations of the Founding Companies for those periods
in accordance with generally accepted accounting principles. The following
selected financial data of the Founding Companies should be read in
conjunction with the historical financial statements and notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of the Founding Companies" included elsewhere in this Prospectus.
Brand Manufacturing, TCE and MCI Performance have fiscal years ending December
31. SPAR's fiscal year end is March 31, and Certified's fiscal year end is
June 30.

22
<PAGE>

STATEMENT OF OPERATIONS DATA:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31,
-----------------------------------------
1994 1995 1996 1997 1998
------- ------- ------- ------- -------
(In thousands)
<S> <C> <C> <C> <C> <C>
SPAR GROUP
Net revenues........................ $14,144 $18,973 $14,425 $35,574 $36,804
Gross profit........................ 6,399 8,669 6,746 13,820 17,387
Selling, general and administrative
expenses........................... 5,264 7,922 7,030 13,477 12,248
Operating income (loss)............. 1,135 747 (284) 343 5,139
Net income (loss)................... 1,096 678 (383) (423) 4,749
</TABLE>

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
FISCAL YEAR ENDED JUNE 30, MARCH 31,
------------------------------------------ -------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- ------- ------ ------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
CERTIFIED
Net revenues........... $ 3,938 $ 3,496 $ 4,426 $ 6,911 $10,371 $7,594 $8,074
Gross profit........... 2,391 2,159 2,861 4,307 6,498 4,774 5,039
Selling, general and
administrative
expenses.............. 2,267 1,922 2,622 3,890 5,619 4,018 4,751
Operating income....... 124 237 239 417 879 756 288
Net income............. 60 128 133 245 515 440 158
<CAPTION>
THREE MONTHS
ENDED
FISCAL YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------ -------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- ------- ------ ------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
BRAND MANUFACTURING
Net revenues........... $13,857 $ 7,894 $11,254 $17,190 $17,457 $3,423 $3,895
Gross profit........... 3,563 1,159 3,136 6,864 6,645 1,149 1,390
Selling, general and
administrative
expenses.............. 3,117 2,146 2,364 3,982 4,980 645 810
Operating income
(loss)................ 446 (987) 772 2,882 1,665 504 580
Net income (loss)...... 753 (1,113) 629 2,680 1,666 489 582
TCE
Net revenues........... $ 1,722 $ 1,172 $ 1,354 $ 1,891 $ 2,144 $ 429 $ 512
Gross profit........... 1,207 605 748 1,282 1,635 327 369
Selling, general and
administrative
expenses.............. 804 601 671 692 699 161 163
Operating income....... 403 4 77 590 936 166 206
Net income............. 346 18 49 560 893 159 200
MCI PERFORMANCE
Net revenues........... $15,260 $17,449 $25,685 $33,361 $42,294 $5,289 $5,343
Gross profit........... 4,332 4,168 6,683 7,010 11,413 2,463 1,518
Selling, general and
administrative
expenses.............. 4,417 4,770 6,842 6,571 9,757 1,014 1,698
Operating income
(loss)................ (85) (602) (159) 439 1,656 1,449 (180)
Net income (loss)...... (69) (658) (209) 443 1,612 1,449 (173)
</TABLE>

23
<PAGE>

BALANCE SHEET DATA:

<TABLE>
<CAPTION>
MARCH 31,
------------------------------------
1994 1995 1996 1997 1998
------ ------ ------- ------ -------
(In thousands)
<S> <C> <C> <C> <C> <C>
SPAR GROUP
Total assets............................. $4,501 $3,834 $10,129 $8,868 $10,896
Long-term debt........................... 28 604 1,389 937 828
Total stockholders' equity............... 731 512 1,017 935 3,142
</TABLE>

<TABLE>
<CAPTION>
JUNE 30,
----------------------------------------- MARCH 31,
1993 1994 1995 1996 1997 1998
------ ------- ------- ------ ------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
CERTIFIED
Total assets........... $1,019 $ 1,245 $ 1,579 $1,874 $ 2,683 $2,878
Long-term debt......... 85 78 7 53 39 26
Total stockholders'
equity................ 444 572 704 950 1,465 1,622
<CAPTION>
DECEMBER 31,
----------------------------------------- MARCH 31,
1993 1994 1995 1996 1997 1998
------ ------- ------- ------ ------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
BRAND MANUFACTURING
Total assets........... $3,404 $ 2,478 $ 3,522 $5,100 $ 4,998 $6,259
Long-term debt......... 508 913 734 89 -- --
Total stockholders'
equity (deficit)...... 700 (413) 8 2,135 2,107 693
TCE
Total assets........... $ 410 $ 394 $ 352 $ 545 $ 791 $ 416
Long-term debt......... -- 180 316 -- -- --
Total stockholders'
equity................ 189 206 29 540 673 180
MCI PERFORMANCE
Total assets........... $4,233 $ 4,191 $ 6,252 $7,829 $11,921 $9,988
Long-term debt......... -- 70 -- -- 1,220 1,309
Total stockholder's
equity (deficit)...... (702) (1,289) (2,003) (1,560) 52 (121)
</TABLE>

24
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF PRO FORMA COMBINED FINANCIAL CONDITION
AND PRO FORMA COMBINED RESULTS OF OPERATIONS

GENERAL

U.S. Marketing was founded in March 1998 to create a leading national
consolidator and integrated provider of outsourced marketing services to
entertainment, consumer goods, food products and retail companies. The Company
provides marketing services through its three Divisions: (i) Merchandising,
(ii) Point-of-Purchase Display and (iii) Premium Incentive. These services
include, among others, in-store merchandising, mystery shopping, teleservices,
marketing research, program and event planning. The Company also designs,
manufactures and distributes custom front-end merchandising units for a wide
range of retail store chains and product manufacturers.

U.S. Marketing, which has conducted limited operations to date, has entered
into agreements to complete the acquisition of the Founding Companies
simultaneously with the consummation of the Offering (the "Acquisition
Agreements"). The Founding Companies have been operating independently. The
Company intends to integrate these businesses, their operations and their
administrative functions over a period of time. Such integration may present
opportunities to reduce costs through the elimination of duplicate functions
and through economies of scale, and may necessitate additional costs and
expenditures for corporate management and administration, corporate expenses
related to being a public company, systems integration, employee relocation
and severance and facilities expansion. These various costs and possible cost-
savings may make comparison of future operating results with historical
operating results difficult.

The Company derives its revenues from the performance of marketing services
and, to a lesser extent, the sale of front-end merchandising units. Service
revenues, which include merchandising, teleservices, mystery shopping and
theatrical services, accounted for approximately 82.1% of the Company's pro
forma combined net revenues for the year ended March 31, 1998. Revenues from
the sale of front-end merchandising units and other supplies accounted for
approximately 17.9% of the pro forma combined net revenues for the year ended
March 31, 1998.

Service revenues are recognized upon completion of the marketing services or
delivery of the service report, where applicable. Revenues from the sale of
front-end merchandising units are generally recognized upon shipment of
products to customers. Cost of revenues generally includes personnel costs,
including in some cases the cost of independent contractors, and to a lesser
extent the cost of materials and supplies directly used in the completion of
the front-end merchandising units. Selling, general and administrative costs
include employee salaries and benefits, telephone expenses, advertising and
promotional expenses, depreciation and occupancy costs.

The Founding Companies have operated historically as independent, privately-
owned entities, and their results of operations reflect both S and C
corporation tax structures, which have influenced the historical level of
owners' compensation. The selling, general and administrative expenses of the
Founding Companies include compensation to employee-stockholders totaling $6.9
million for the fiscal years ended March 31, 1998. As a result of varying
practices regarding compensation to employee-stockholders among the Founding
Companies, the comparison of operating margins among the Founding Companies
and from period to period in respect of a particular Founding Company may be
difficult. Upon consummation of the Acquisitions, certain employee
stockholders will enter into employment agreements and the aggregate
compensation paid to the stockholders of the Founding Companies will be
reduced. See "Pro Forma Results of Operations of the Founding Companies." This
compensation differential has been reflected in the Unaudited Pro Forma
Combined Statement of Operations.

PRO FORMA RESULTS OF OPERATIONS OF THE FOUNDING COMPANIES

The following table provides the pro forma operating results for the year
ended March 31, 1998 for each of the Founding Companies. U.S. Marketing has
preliminarily analyzed the savings that it expects to realize from reductions
in salaries and certain benefits payable to the owners of the Founding
Companies. To the extent that

25
<PAGE>

the owners of the Founding Companies have agreed prospectively to reductions
in salary, bonuses and benefits, these reductions have been reflected in the
unaudited pro forma combined statement of operations. All of the Founding
Companies except Certified historically have elected to be treated under
subchapter S of the Internal Revenue Code of 1986, as amended, and were not
subject to federal corporate income taxes. For purposes of the unaudited pro
forma combined financial statements presented, federal and state corporate
income taxes have been provided for all Founding Companies as if they had been
taxable as C corporations during the period. Additionally, the Founding
Companies' historical results of operations have been adjusted for other items
directly attributable to the transaction and include the goodwill amortization
recorded in connection with the Acquisitions.

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, 1998
-----------------------------------------------
U.S. MCI
MARKETING SPAR CERTIFIED BRAND PERFORMANCE
--------- ------- --------- ------- -----------
(In thousands)
<S> <C> <C> <C> <C> <C>
PRO FORMA STATEMENT OF OPERA-
TIONS DATA:
Net revenues.................. $ -- $36,804 $10,451 $19,575 $42,349
Cost of revenues.............. -- 19,667 3,938 11,013 31,880
----- ------- ------- ------- -------
Gross profit.................. -- 17,137 6,513 8,562 10,469
Selling, general and adminis-
trative expenses............. 781 12,249 5,709 2,974 7,710
Goodwill amortization......... -- 1,049 134 612 299
----- ------- ------- ------- -------
Operating income (loss)....... $(781) $ 3,839 $ 670 $ 4,976 $ 2,460
===== ======= ======= ======= =======
</TABLE>

PRO FORMA COMBINED QUARTERLY RESULTS OF OPERATIONS

The Founding Companies have in the past experienced quarterly variations in
revenues, operating income (including operating losses), net income (including
net losses) and cash flows. The Company expects to continue to experience such
quarterly fluctuations in operating results (including possible net losses)
due to the factors discussed above, and may also experience quarterly
fluctuations as a result of other factors, including the loss of a major
customer, additional selling, general and administrative expenses to acquire
and support new business and the timing and magnitude of required capital
expenditures. See "Risk Factors--Variability in Operating Results."

The following table sets forth statement of operations data for the four
fiscal quarters for the year ended March 31, 1998. This information, in the
opinion of the Company's management, reflects all the adjustments that the
Company considers necessary for fair representation of this information in
accordance with generally accepted accounting principles. The results for the
quarters are not necessarily indicative of results for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------
JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1997 1997 1997 1998
-------- --------- -------- --------
(In thousands)
<S> <C> <C> <C> <C>
Net revenues............................. $28,892 $25,503 $32,969 $21,815
Cost of revenues......................... 18,725 15,001 20,558 12,214
------- ------- ------- -------
Gross profit............................. 10,167 10,502 12,411 9,601
Selling, general and administrative ex-
penses.................................. 6,983 6,375 9,213 6,852
Goodwill amortization.................... 523 523 524 524
------- ------- ------- -------
Operating income......................... $2,661 $3,604 $2,674 $2,225
======= ======= ======= =======
</TABLE>

26
<PAGE>

The following table sets forth, as a percentage of net revenues, statement
of operations data for the four fiscal quarters for the year ended March 31,
1998.

<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------
JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1997 1997 1997 1998
-------- --------- -------- --------
<S> <C> <C> <C> <C>
Net revenues............................. 100.0% 100.0% 100.0% 100.0%
Cost of revenues......................... 64.8 58.8 62.4 56.0
----- ----- ----- -----
Gross profit............................. 35.2 41.2 37.6 44.0
Selling, general and administrative ex-
penses.................................. 24.2 25.0 27.9 31.4
Goodwill amortization.................... 1.8 2.1 1.6 2.4
----- ----- ----- -----
Operating income......................... 9.2% 14.1% 8.1% 10.2%
===== ===== ===== =====
</TABLE>

27
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF THE FOUNDING COMPANIES

Management's Discussion and Analysis of Financial Condition and Results of
Operations of the Founding Companies and other parts of this Prospectus
contain, in addition to historical information, forward-looking statements
which involve risks and uncertainties. Actual results could differ
significantly from the results discussed in the forward-looking statements.
Factors that could cause or contribute to such differences include, but are
not limited to, those discussed in "Risk Factors."

Each of the Founding Companies, except Certified, has elected to be treated
as a subchapter S corporation for federal tax purposes. As a result, no
Founding Company, except Certified, was subject to federal corporate income
taxes. The selling, general and administrative expenses of the Founding
Companies include compensation to employee-stockholders of the Founding
Companies totaling $6.9 million for the fiscal year ended March 31, 1998. Upon
consummation of the Acquisitions, certain employee-stockholders will enter
into employment agreements and the aggregate compensation paid to stockholders
of the Founding Companies will be reduced. As a result of varying practices
regarding compensation to employee-stockholders among the Founding Companies,
the comparison of operating margins among the Founding Companies and from
period to period in respect to a particular Founding Company may be difficult.

SPAR has historically reported financial results on a March 31 fiscal year
end and Certified has historically reported financial results on a June 30
fiscal year end. Brand Manufacturing, TCE and MCI Performance have
historically reported financial results on a calendar year end. Because U.S.
Marketing will report financial results on a March 31 fiscal year end,
historical information appearing in this Prospectus relating to all Founding
Companies except SPAR may not be comparable to future results of U.S.
Marketing.

SPAR

Founded in 1967, SPAR is a national marketing services company that provides
retail merchandising and other marketing services to home video, consumer
goods and food product companies. SPAR's services include in-store
merchandising, test market research, mystery shopping, database management and
data collection and teleservices. In March 1996, SPAR acquired Marketing
Force, Inc. ("Marketing Force"), a provider of merchandising services
primarily to retailers and home video production companies. Marketing Force
also performs teleservicing and database services, primarily for divisions of
General Motors Corporation.

RESULTS OF OPERATIONS--SPAR

The following table sets forth selected financial data and data as a
percentage of net revenues for the periods indicated.

<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
---------------------------------------------
1996 1997 1998
-------------- ------------- -------------
(In thousands, except percentages)
<S> <C> <C> <C> <C> <C> <C>
Net revenues................... $14,425 100.0% $35,574 100.0% $36,804 100.0%
------- ----- ------- ----- ------- -----
Gross profit................... 6,746 46.8 13,820 38.8 17,387 47.2
Selling, general and adminis-
trative expenses.............. 7,030 48.8 13,477 37.8 12,248 33.2
------- ----- ------- ----- ------- -----
Operating income (loss)........ $ (284) (2.0)% $ 343 1.0% $ 5,139 14.0%
======= ===== ======= ===== ======= =====
</TABLE>

YEAR ENDED MARCH 31, 1998 COMPARED TO YEAR ENDED MARCH 31, 1997--SPAR

Revenues. Net revenues increased to $36.8 million in the year ended March
31, 1998 from $35.6 million in the year ended March 31, 1997, an increase of
$1.2 million, or 3.5%. Net revenues increased slightly as a result of new
merchandising services customers in the home video sector, offset in large
part by SPAR's exit from certain less profitable business lines, such as in
store demonstrations, acquired by SPAR in its 1996 acquisition of Marketing
Force.

28
<PAGE>

Gross Profit. Cost of revenues consists of in-store labor (including travel
expenses) and field management. SPAR's gross profit increased to $17.4 million
in the year ended March 31, 1998 from $13.8 million in the year ended March
31, 1997, an increase of $3.6 million, or 25.8%. Gross margin increased to
47.2% in the year ended March 31, 1998 from 38.8% in the year ended March 31,
1997. The increase in gross margin is primarily the result of management's
focus on achieving the cost savings envisioned in the combination of SPAR and
Marketing Force and the exit from the less profitable business lines described
above.

Selling, General and Administrative. Selling, general and administrative
expenses include corporate overhead, project management, management
information systems, executive compensation, human resources expenses and
finance expenses. Selling, general and administrative expenses decreased to
$12.2 million in the year ended March 31, 1998 from $13.5 million in the year
ended March 31, 1997, a decrease of $1.2 million, or 9.1%. As a percentage of
net revenues, selling, general and administrative expenses decreased to 33.2%
in the year ended March 31, 1998 from 37.8% in the year ended March 31, 1997.
Selling, general and administrative expenses decreased as a percentage of net
revenues due to management's efforts to reduce costs and improve efficiency
through the reduction of certain facilities, including the consolidation of
Marketing Force's teleservices facilities, and the reduction of personnel.

Operating Income. As a result of the factors discussed above, operating
income increased to $5.1 million in the year ended March 31, 1998 from $0.3
million in the year ended March 31, 1997, an increase of $4.8 million, or
1398.3%. As a percentage of net revenues, operating income increased to 14.0%
in the year ended March 31, 1998 from 1.0% in the year ended March 31, 1997.

YEAR ENDED MARCH 31, 1997 COMPARED TO YEAR ENDED MARCH 31, 1996--SPAR

Revenues. Net revenues increased to $35.6 million in the year ended March
31, 1997 from $14.4 million in the year ended March 31, 1996, an increase of
$21.1 million, or 146.6%. This increase was primarily driven by the
acquisition of Marketing Force, which accounted for $21.0 million of net
revenues in the year ended March 31, 1997, an increase of $18.0 million from
the year ended March 31, 1996. The increase was also driven by additional
business from other SPAR merchandising and marketing services clients which
accounted for $14.6 million of net revenues in the year ended March 31, 1997,
an increase of $3.2 million from the year ended March 31, 1996.

Gross Profit. Gross profit increased to $13.8 million in the year ended
March 31, 1997 from $6.7 million in the year ended March 31, 1996, an increase
of $7.1 million, or 104.9%, primarily as a result of increased revenues. Gross
margin decreased to 38.8% in the year ended March 31, 1997 from 46.8% in the
year ended March 31, 1996. The decrease in gross margin is primarily a result
of the acquisition of Marketing Force, which resulted in the temporary
duplication of certain costs such as field management and project management.

Selling, General and Administrative. Selling, general and administrative
expenses increased to $13.5 million in the year ended March 31, 1997 from $7.0
million in the year ended March 31, 1996, an increase of $6.4 million, or
91.7% primarily a result of the acquisition of Marketing Force and increased
personnel costs to support the increase in net revenues. As a percentage of
net revenues, selling, general and administrative expenses decreased to 37.8%
in the year ended March 31, 1997 from 48.8% in the year ended March 31, 1996
primarily as a result of the elimination of administrative personnel and
closure of certain warehousing facilities and offices after the acquisition of
Marketing Force.

Operating Income (Loss). As a result of the factors discussed above,
operating income (loss) increased to $0.3 million in the year ended March 31,
1997 from $(0.3) million in the year ended March 31, 1996, an increase of $0.6
million or 220.8%. As a percentage of net revenues, operating income increased
to 1.0% in the year ended March 31, 1997 from (2.0)% in the year ended March
31, 1996.

CERTIFIED

Founded in 1955, Certified is a national provider of market research, in-
store merchandising and auditing services to movie theater operators, motion
picture distributors, home video and consumer packaged goods

29
<PAGE>

companies and major retail chains through a direct network of over 15,000
independent merchandisers, auditors and mystery shoppers. Certified has
approximately 110 full-time and part-time employees and maintains its
headquarters in New York and a regional office in California.

In January 1997, Certified opened an office in Texas in anticipation of
servicing a major company that was moving to that region in addition to other
opportunities resulting from the geographic expansion of the region.
Subsequently, the Company did not gain the business anticipated from a
potential major client and management of Certified determined that the
regional business could be serviced from its California and New York offices,
thereby reducing the operating expenses of maintaining a separate Texas
office. Consequently, the office was closed in February 1998. Costs associated
with the Texas office were included both in the second half of the fiscal year
ended June 30, 1997 and the nine months ended March 31, 1998.

RESULTS OF OPERATIONS--CERTIFIED

The following table sets forth selected financial data and data as a
percentage of net revenues for the periods indicated.

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30, NINE MONTHS ENDED MARCH 31,
--------------------------- ------------------------------
1996 1997 1997 1998
------------ ------------- -------------- --------------
(In thousands, except percentages)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues............ $6,911 100.0% $10,371 100.0% $ 7,594 100.0% $ 8,074 100.0%
------ ----- ------- ----- ------- ------ ------- ------
Gross profit............ 4,307 62.3 6,498 62.7 4,774 62.9 5,039 62.4
Selling, general and ad-
ministrative expenses.. 3,890 56.3 5,619 54.2 4,018 52.9 4,751 58.8
------ ----- ------- ----- ------- ------ ------- ------
Operating income........ $ 417 6.0% $ 879 8.5% $ 756 10.0% $ 288 3.6%
====== ===== ======= ===== ======= ====== ======= ======
</TABLE>

NINE MONTHS ENDED MARCH 31, 1998 COMPARED TO NINE MONTHS ENDED MARCH 31,
1997--CERTIFIED

Revenues. Net revenues increased to $8.1 million in the nine months ended
March 31, 1998 from $7.6 million in the nine months ended March 31, 1997, an
increase of $0.5 million, or 6.3%. This increase was a result of increased
business derived from several new and existing customers, partially offset by
decreased business from one major customer. Certified has a number of
continuing major customers associated with the motion picture industry.
Revenues from any one of these customers will increase or decrease from year
to year depending on the commercial success of motion pictures or home video
releases of that customer during the year.

Gross Profit. Cost of revenues consists of costs of independent contractors
used to provide certain marketing, merchandising and mystery shopping
services. Gross profit increased to $5.0 million in the nine months ended
March 31, 1998 from $4.8 million in the nine months ended March 31, 1997, an
increase of $0.3 million, or 5.6%, primarily as a result of increased
revenues. Gross margin decreased to 62.4% in the nine months ended March 31,
1998 from 62.9% in the nine months ended March 31, 1997. The decrease in gross
margin is primarily a result of a shift in revenues towards lower margin
retail merchandising services away from higher margin theatrical services.

Selling, General and Administrative. Selling, general and administrative
expenses consist primarily of corporate overhead, executive compensation,
human resources and finance expenses. Selling, general and administrative
expenses increased to $4.8 million in the nine months ended March 31, 1998
from $4.0 million in the nine months ended March 31, 1997, an increase of $0.7
million, or 18.2%. As a percentage of net revenues, selling, general and
administrative expenses increased to 58.8% in the nine months ended March 31,
1998 from 52.9% in the nine months ended March 31, 1997. The increase in
selling, general and administrative expenses was primarily a result of
$693,000 of expenses related to staffing costs, telephone expenses as well as
increased consulting expenses associated with upgrading computer hardware and
software technology. Additionally, during 1998, Certified recorded a lease
termination fee of $40,000 associated with the closing of the Texas office.

Operating Income. Primarily as a result of the costs associated with
maintaining and subsequently closing the Texas office and the technology
upgrade discussed above, operating income decreased to $0.3 million in the
nine months ended March 31, 1998 from $0.8 million in the nine months ended
March 31, 1997, a decrease of $0.5 million, or 61.9%. As a percentage of net
revenues, operating income decreased to 3.6% in the nine months ended March
31, 1998 from 10.0% in the nine months ended March 31, 1997.

30
<PAGE>

YEAR ENDED JUNE 30, 1997 COMPARED TO YEAR ENDED JUNE 30, 1996--CERTIFIED

Revenues. Net revenues increased to $10.4 million in the year ended June 30,
1997 from $6.9 million in the year ended June 30, 1996, an increase of $3.5
million, or 50.1%. This increase was primarily a result of increased business
derived from an existing major customer.

Gross Profit. Gross profit increased to $6.5 million in the year ended June
30, 1997 from $4.3 million in the year ended June 30, 1996, an increase of
$2.2 million, or 50.9%, primarily as a result of increased revenues. Gross
margin was 62.7% in the year ended June 30, 1997, up slightly from 62.3% in
the year ended June 30, 1996.

Selling, General and Administrative. Selling, general and administrative
expenses increased to $5.6 million in the year ended June 30, 1997 from $3.9
million in the year ended June 30, 1996, an increase of $1.7 million, or
44.4%. As a percentage of net revenues, selling, general and administrative
expenses decreased to 54.2% in the year ended June 30, 1997 from 56.3% in the
year ended June 30, 1996 primarily as a result of spreading fixed costs over
the substantial increase in net revenues. The increase in selling, general and
administrative expenses of $1.7 million reflects the costs associated with
opening and operating the Texas regional office, which was closed in February
1998, as well as increases in staffing costs, telephone expenses and postage
and office supplies associated, with the increased business from an existing
major customer.

Operating Income. As a result of the factors discussed above, operating
income increased to $0.9 million in the year ended June 30, 1997 from $0.4
million in the year ended June 30, 1996, an increase of $0.5 million or
110.8%. As a percentage of net revenues, operating income increased to 8.5% in
the year ended June 30, 1997 from 6.0% in the year ended June 30, 1996.

BRAND MANUFACTURING

Founded in 1956, Brand Manufacturing designs and manufactures custom in-
store merchandising units and point-of-purchase displays for a wide range of
retail store chains and product manufacturers. For many of its retail store
clients, Brand Manufacturing also invoices the retailers' suppliers and
coordinates the collection of payments on these invoices.

RESULTS OF OPERATIONS--BRAND MANUFACTURING

The following table sets forth selected financial data and data as a
percentage of net revenues for the periods indicated.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------------------- --------------------------
1995 1996 1997 1997 1998
------------- ------------- ------------- ------------ ------------
(In thousands, except percentages)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues............ $11,254 100.0% $17,190 100.0% $17,457 100.0% $3,423 100.0% $3,895 100.0%
------- ----- ------- ----- ------- ----- ------ ----- ------ -----
Gross profit............ 3,136 27.9 6,864 39.9 6,645 38.1 1,149 33.6 1,390 35.7
Selling, general and
administrative
expenses............... 2,364 21.0 3,982 23.1 4,980 28.6 645 18.9 810 20.8
------- ----- ------- ----- ------- ----- ------ ----- ------ -----
Operating income........ $ 772 6.9% $ 2,882 16.8% $ 1,665 9.5% $ 504 14.7% $ 580 14.9%
======= ===== ======= ===== ======= ===== ====== ===== ====== =====
</TABLE>

THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31,
1997--BRAND MANUFACTURING

Revenues. Net revenues increased to $3.9 million in the three months ended
March 31, 1998 from $3.4 million in the three months ended March 31, 1997, an
increase of $0.5 million, or 13.8%. This increase was primarily a result of
improved marketing efforts by management in an effort to increase market share
and, to a lesser extent, price increases.

31
<PAGE>

Gross Profit. Cost of revenues consists of direct material, labor and
overhead used in the production of the in-store displays. Gross profits
increased to $1.4 million in the three months ended March 31, 1998 from
$1.1 million in the three months ended March 31, 1997, an increase of $0.2
million, or 21.0%. Gross margin increased slightly to 35.7% in the three
months ended March 31, 1998 from 33.6% in the three months ended March 31,
1997. This slight improvement reflects improved efficiency in the
manufacturing process.

Selling, General and Administrative. Selling, general and administrative
expenses consist primarily of corporate overhead, executive compensation,
human resources and financial expenses. Selling, general and administrative
expenses increased to $0.8 million in the three months ended March 31, 1998
from $0.6 million in the three months ended March 31, 1997, an increase of
$0.2 million, or 25.6%. As a percentage of net revenues, selling, general and
administrative expenses increased to 20.8% in the three months ended March 31,
1998 from 18.9% in the three months ended March 31, 1997. This increase in
selling, general and administrative expenses primarily resulted from increased
executive compensation expense to $334,000 in the three months ended March 31,
1998 from $273,000 in the three months ended March 31, 1998, an increase of
22.3%.

Operating Income. As a result of the factors discussed above, operating
income increased to $0.6 million in the three months ended March 31, 1998 from
$0.5 million in the three months ended March 31, 1997, an increase of $0.1
million, or 15.1%. As a percentage of net revenues, operating income increased
to 14.9% in the three months ended March 31, 1998 from 14.7% in the three
months ended March 31, 1997.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996--BRAND
MANUFACTURING

Revenues. Net revenues increased to $17.5 million in the year ended December
31, 1997 from $17.2 million in the year ended December 31, 1996, an increase
of $0.3 million, or 1.6%, due to modest increases in prices and increased
sales volume, offset by the cancellation of a $1.2 million order during
production, which resulted in the loss of revenues from that order and a
disruption in the production cycle for the subsequent order.

Gross Profit. Gross profit decreased to $6.6 million in the year ended
December 31, 1997 from $6.9 million in the year ended December 31, 1996, a
decrease of $0.2 million, or 3.2%. Gross margin decreased to 38.1% in the year
ended December 31, 1997 from 39.9% in the year ended December 31, 1996 due to
lower than anticipated revenue growth resulting from expenses associated with
the production and overhead of a customer order cancelled during production.

Selling, General and Administrative. Selling, general and administrative
expenses increased to $5.0 million in the year ended December 31, 1997 from
$4.0 million in the year ended December 31, 1996, an increase of $1.0 million,
or 25.1%. As a percentage of net revenues, selling, general and administrative
expenses increased to 28.6% in the year ended December 31, 1997 from 23.1% in
the year ended December 31, 1996. This increase in selling, general and
administrative expenses primarily resulted from increased executive
compensation expense to $3.1 million in the year ended December 31, 1997 from
$2.5 million in the year ended December 31, 1996, an increase of 23.7%.

Operating Income. As a result of the factors discussed above, operating
income decreased to $1.7 million in the year ended December 31, 1997 from $2.9
million in the year ended December 31, 1996, a decrease of $1.2 million, or
42.2%. As a percentage of net revenues, operating income decreased to 9.5% in
the year ended December 31, 1997 from 16.8% in the year ended December 31,
1996.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995--BRAND
MANUFACTURING

Revenues. Net revenues increased to $17.2 million in the year ended December
31, 1996 from $11.3 million in the year ended December 31, 1995, an increase
of $5.9 million, or 52.7%. The 1995 net revenues were reduced as a result of
the decision by Brand Manufacturing to replace a single, large customer with
several retail chains. This increase in net revenues for the year ended
December 31, 1996 was primarily a result of improved marketing efforts by
management in an effort to increase market share with retail chains.

32
<PAGE>

Gross Profit. Gross profit increased to $6.9 million in the year ended
December 31, 1996 from $3.1 million in the year ended December 31, 1995, an
increase of $3.7 million, or 118.8%. Gross margin increased to 39.9% in the
year ended December 31, 1996 from 27.9% in the year ended December 31, 1995.
This increase was a result of improved efficiency in the manufacturing
process.

Selling, General and Administrative. Selling, general and administrative
expenses increased to $4.0 million in the year ended December 31, 1996 from
$2.4 million in the year ended December 31, 1995, an increase of $1.6 million,
or 68.4%. As a percentage of net revenues, selling, general and administrative
expenses increased to 23.1% in the year ended December 31, 1996 from 21.0% in
the year ended December 31, 1995. This increase in selling, general and
administrative expenses primarily resulted from increased executive
compensation expense to $2.5 million in the year ended December 31, 1996 from
$1.0 million in the year ended December 31, 1995, an increase of 141.3%.

Operating Income. As a result of the factors discussed above, operating
income increased to $2.9 million in the year ended December 31, 1996 from $0.8
million in the year ended December 31, 1995, an increase of $2.1 million, or
273.3%. As a percentage of net revenues, operating income decreased to 16.8%
in the year ended December 31, 1996 from 6.9% in the year ended December 31,
1995.

TCE

Founded in 1978, TCE is a trucking company exclusively servicing Brand
Manufacturing and Brand Manufacturing's customers. Prior to the Acquisition,
TCE is owned by the same stockholders as Brand, in varying proportions.
Because control of the two companies does not rest with the same individual
stockholder, separate financial statements for the two companies are presented
in this Prospectus.

RESULTS OF OPERATIONS--TCE

The following table sets forth selected financial data and data as a
percentage of net revenues for the periods indicated.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------------- ----------------------
1995 1996 1997 1997 1998
------------ ------------ ------------ ---------- ----------
(In thousands, except percentages)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues............ $1,354 100.0% $1,891 100.0% $2,144 100.0% $429 100.0% $512 100.0%
------ ----- ------ ----- ------ ----- ---- ----- ---- -----
Gross profit............ 748 55.2 1,282 67.8 1,635 76.3 327 76.2 369 72.1
Selling, general and ad-
ministrative
expenses............... 671 49.5 692 36.6 699 32.6 161 37.5 163 31.9
------ ----- ------ ----- ------ ----- ---- ----- ---- -----
Operating income........ $ 77 5.7% $ 590 31.2% $ 936 43.7% $166 38.7% $206 40.2%
====== ===== ====== ===== ====== ===== ==== ===== ==== =====
</TABLE>

THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31,
1997--TCE

Revenues. Net revenues increased to $0.5 million in the three months ended
March 31, 1998 from $0.4 million in the three months ended March 31, 1997, an
increase of $0.1 million, or 19.3%. This increase was a direct result of the
increased sales volume of Brand Manufacturing.

Gross Profit. Cost of revenues consists of direct labor and other trucking
costs. Gross profit increased to $0.4 million in the three months ended March
31, 1998 from $0.3 million in the three months ended March 31, 1997, an
increase of $0.1 million or 12.8%. Gross margin decreased to 72.1% in the
three months ended March 31, 1998 from 76.2% in the three months ended March
31, 1997. This decrease resulted from decreased margins associated with higher
costs for longer transportation routes.

Selling, General and Administrative. Selling, general and administrative
expenses remained constant at $0.2 million in the three months ended March 31,
1998 and 1997. As a percentage of net revenues, selling, general and
administrative expenses decreased to 31.9% in the three months ended March 31,
1998 from 37.5% in the three months ended March 31, 1997, primarily as a
result of spreading fixed costs over increased revenues.

Operating Income. As a result of the factors discussed above, operating
income remained constant at $0.2 million in the three months ended March 31,
1998 and 1997. As a percentage of net revenues, operating income

33
<PAGE>

increased to 40.2% in the three months ended March 31, 1998 from 38.7% in the
three months ended March 31, 1997.

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

Revenues. Net revenues increased to $2.1 million in the year ended December
31, 1997 from $1.9 million in the year ended December 31, 1996, an increase of
$0.3 million, or 13.4%. This increase was primarily a result of increased
sales volume of Brand Manufacturing, TCE's customer, and increased freight
pricing.

Gross Profit. Gross profit increased to $1.6 million in the year ended
December 31, 1997 from $1.3 million in the year ended December 31, 1996, an
increase of $0.4 million, or 27.5%. Gross margin increased to 76.3% in the
year ended December 31, 1997 from 67.8% in the year ended December 31, 1996.
This increase was a result of lower freight costs associated with a higher
percentage of shorter transportation routes in 1997.

Selling, General and Administrative. Selling, general and administrative
expenses remained constant at $0.7 million in the years ended December 31,
1997 and December 31, 1996. As a percentage of net revenues, selling, general
and administrative expenses decreased to 32.6% in the year ended December 31,
1997 from 36.6% in the year ended December 31, 1996, primarily as a result of
spreading fixed costs over increased revenues.

Operating Income. As a result of the factors discussed above, operating
income increased to $0.9 million in the year ended December 31, 1997 from $0.6
million in the year ended December 31, 1996, an increase of $0.3 million, or
58.6%. As a percentage of net revenues, operating income increased to 43.7% in
the year ended December 31, 1997 from 31.2% in the year ended December 31,
1996.

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

Revenues. Net revenues increased to $1.9 million in the year ended December
31, 1996 from $1.4 million in the year ended December 31, 1995, an increase of
$0.5 million, or 39.7%. This increase was primarily a result of increased
sales volume of Brand Manufacturing, TCE's customer.

Gross Profit. Gross profit increased to $1.3 million for the year ended
December 31, 1996 from $0.7 million for the year ended December 31, 1995, an
increase of $0.5 million or 71.4%. As a percentage of net revenues, gross
profit increased to 67.8% in the year ended December 31, 1996 from 55.2% in
the year ended December 31, 1995. This increase was a result of lower freight
costs associated with shorter transportation routes.

Selling, General and Administrative. Selling, general and administrative
expenses remained constant at $0.7 million in the years ended December 31,
1996 and 1995. As a percentage of net revenues, selling, general and
administrative expenses decreased to 36.6% in the year ended December 31, 1996
from 49.5% in the year ended December 31, 1995, primarily as a result of
spreading fixed costs over increased revenues.

Operating Income. As a result of the factors discussed above, operating
income increased to $0.6 million in the year ended December 31, 1996 from $0.1
million in the year ended December 31, 1995, an increase of $0.5 million, or
666.2%. As a percentage of net revenues, operating income increased to 31.2%
in the year ended December 31, 1996 from 5.7% in the year ended December 31,
1995.

MCI PERFORMANCE

Founded in 1987, MCI Performance specializes in designing and implementing
premium incentives and managing group travel and meetings for clients
throughout the United States. MCI Performance employs approximately 100 people
and maintains its headquarters in Carrollton, Texas, as well as two sales
offices in Nashville, Tennessee and Newport Beach, California.

MCI Performance's revenues consist primarily of fees charged for the design
and implementation of its programs. Program revenues and related external
costs are recognized when a project is completed; a project

34
<PAGE>

typically spans a period of six to twelve months. Because an individual
project may comprise a significant portion of MCI Performance's revenues in
any particular quarter, MCI Performance can experience significant variability
in its quarterly revenues. Direct costs primarily include labor incurred for
the design and implementation of programs and materials used in the program.
Because direct costs for projects are expensed as incurred, rather than when
revenues are recognized, MCI Performance's profitability in any particular
quarter can be highly variable.

Program revenues can be subject to fluctuation depending on the type and
timing of completed programs. Although repeat customers are not unusual, MCI
Performance is often limited in its ability to estimate the amount of revenues
it derives from a particular customer as the nature and timing of the
customer's program needs are likely to vary year to year. See "Risk Factors--
Variability of Operating Results."

RESULTS OF OPERATIONS--MCI PERFORMANCE

The following table sets forth selected financial data and data as a
percentage of net revenues for the periods indicated.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
---------------------------- --------------------------------
1996 1997 1997 1998
------------- ------------- --------------- ----------------
(In thousands, except percentages)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues............ $33,361 100.0% $42,294 100.0% $5,289 100.0% $ 5,343 100.0%
------- ----- ------- ----- ------- ------ ------- ------
Gross profit............ 7,010 21.0 11,413 27.0 2,463 46.6 1,518 28.4
Selling, general and ad-
ministrative expenses.. 6,571 19.7 9,757 23.1 1,014 19.2 1,698 31.8
------- ----- ------- ----- ------- ------ ------- ------
Operating income
(loss)................. $ 439 1.3% $ 1,656 3.9% $1,449 27.4% $ (180) (3.4)%
======= ===== ======= ===== ======= ====== ======= ======
</TABLE>

THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31,
1997--MCI PERFORMANCE

Revenues. Net revenues remained comparable at $5.3 million in the three
months ended March 31, 1998 and 1997.

Gross Profit. Cost of revenues consists of direct labor, independent
contractors, food, beverage, entertainment and travel costs. Gross profit
decreased to $1.5 million in the three months ended March 31, 1998 from $2.5
million in the three months ended March 31, 1997, a decrease of $0.9 million,
or 38.4%. Gross margin decreased to 28.4% in the three months ended March 31,
1998 from 46.6% in the three months ended March 31, 1997. Gross margin in 1997
was higher than 1998 primarily due to $735,000 of volume discounts, in the
form of airline override commissions ("discounts"), received pursuant to
arrangements with certain airlines. The discounts are received in the form of
airline tickets or cash, depending on the airline's choice, and are recorded
at fair value. By eliminating the $735,000 of discounts, the gross margin
would be 32.7% for the three months ended March 31, 1997 and 25.2% for the
year ended December 31, 1997.

Selling, General and Administrative. Selling, general and administrative
expenses increased to $1.7 million in the three months ended March 31, 1998
from $1.0 million in the three months ended March 31, 1997, an increase of
$0.7 million, or 67.5%. As a percentage of net revenues, selling, general and
administrative expenses increased to 31.8% in the three months ended March 31,
1998 from 19.2% in the three months ended March 31, 1997. Selling, general and
administrative expenses increased primarily as a result of one-time management
information service costs incurred in connection with the investigation of new
systems for MCI Performance. In addition, MCI Performance experienced an
increase in compensation expenses of $182,000 in the three months ended March
31, 1998 over the prior year period as a result of annual pay raises and
overtime expense associated with the increased number of projects in process
and several management additions.

35
<PAGE>

Operating Income (Loss). As a result of the factors discussed above, there
was an operating loss of $(0.2) million in the three months ended March 31,
1998 as compared to operating income of $1.4 million in the three months ended
March 31, 1997. This represents a decrease of $1.6 million, or 112.4%. As a
percentage of net revenues, operating loss decreased to (3.4)% in the three
months ended March 31, 1998, a decrease from 27.4% in the three months ended
March 31, 1997.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996--MCI
PERFORMANCE

Revenues. Net revenues increased to $42.3 million in the year ended December
31, 1997 from $33.4 million in the year ended December 31, 1996, an increase
of $8.9 million, or 26.8%. The increase in net revenues is due to increased
sales volume and more programs for existing clients.

Gross Profit. Gross profit increased to $11.4 million in the year ended
December 31, 1997 from $7.0 million in the year ended December 31, 1996, an
increase of $4.4 million, or 62.8%, primarily as a result of the increased net
revenues. Gross margin increased to 27.0% in the year ended December 31, 1997
from 21.0% in the year ended December 31, 1996. The increase in gross margin
is due primarily to $735,000 of discounts in the form of airline override
commissions received pursuant to arrangements with certain airlines. The
discounts are received in the form of airline tickets or cash, depending on
the airline's choice, and are recorded at fair value. In addition, during 1997
management sought to service higher margin programs by maintaining increased
selling prices and controlling direct labor costs.

Selling, General and Administrative. Selling, general and administrative
expenses increased to $9.8 million in the year ended December 31, 1997 from
$6.6 million in the year ended December 31, 1996, an increase of $3.2 million,
or 48.5%. As a percentage of net revenues, selling, general and administrative
expenses increased to 23.1% in the year ended December 31, 1997 from 19.7% in
the year ended December 31, 1996. In 1997, MCI Performance recorded
approximately $2.2 million in salary expense related to the sole stockholder
of MCI Performance.

Operating Income. As a result of the factors discussed above, operating
income increased to $1.7 million in the year ended December 31, 1997 from $0.4
million in the year ended December 31, 1996, an increase of $1.2 million or
277.2%. As a percentage of net revenues, operating income increased to 3.9% in
the year ended December 31, 1997 from 1.3% in the year ended December 31,
1996.

LIQUIDITY AND CAPITAL RESOURCES

The Founding Companies' principal sources of liquidity have historically
been cash flows from operating activities and, to a lesser extent, borrowings
from stockholders. Approximately $43.2 million of the proceeds from the
Offering will be used to fund the cash portion of the aggregate purchase price
for SPAR, Certified, MCI Performance and 30% of the outstanding common stock
of Brand and $0.3 million will be used to fund S corporation distributions to
the stockholders of Brand Manufacturing and TCE. As of March 31, 1998, the
Company had pro forma combined cash and cash equivalents of approximately $2.3
million. Although there can be no assurance of its ability to do so, the
Company expects to fund its future cash requirements from funds generated from
operations, from borrowed funds or from other sources.

The Founding Companies' capital expenditures for the year ended March 31,
1998 were approximately $0.7 million. These capital expenditures were
primarily for machinery, office equipment and computers, building additions
and facility upgrades. The Company currently does not have any commitments to
make significant capital expenditures in the next twelve months. The Company
believes that funds generated from operations, together with the proceeds for
the Offering and possible future sources of borrowings will be sufficient to
finance its current operations and planned capital expenditure requirements at
least through 1999. Although the Company is not currently involved in
negotiations and has no current commitments or agreements with respect to any
acquisitions (other than the Acquisitions), to the extent that the Company is
successful in consummating acquisitions, it may be necessary to finance such
acquisitions through the issuance of additional equity securities, incurrence
of indebtedness or a combination of both.

36
<PAGE>

YEAR 2000

Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish dates beginning on or
after January 1, 2000 from dates ending on or prior to December 31, 1999. As a
result, in less than two years, computer systems and/or software used by many
companies may need to be upgraded to comply with such "Year 2000"
requirements. Significant uncertainty exists concerning the potential effects
associated with such compliance. However, the Company's management does not
anticipate that the Year 2000 will have a significant impact on its
information systems or result in a significant commitment of resources to
resolve potential problems associated with this event.

The Company believes that the purchasing patterns of clients and potential
clients may be affected by Year 2000 issues in a variety of ways. Many companies
are expending significant resources to correct or patch their current software
systems for Year 2000 compliance. These expenditures may result in reduced funds
available to purchase services such as those offered by the Company.
Furthermore, payments for deliveries of components of supplies to the Company
may be delayed, incomplete, or otherwise unavailable as a consequence of Year
2000 problems affecting clients or suppliers. Any of the foregoing could result
in a material adverse effect on the Company's business, financial condition and
results of operations.

37
<PAGE>

BUSINESS

OVERVIEW

U.S. Marketing was founded in March 1998 to create a leading national
consolidator and integrated provider of outsourced marketing services. The
Company currently provides marketing services to leading entertainment,
consumer goods, food products and retail companies through three operating
divisions: (i) Merchandising (through SPAR and Certified), (ii) Point-of-
Purchase Display (through Brand) and (iii) Premium Incentive (through MCI
Performance). The Company intends to consolidate the sectors of the marketing
services industry that its Divisions will serve. Additionally, the Company
intends to pursue acquisitions in other sectors of this industry, such as ad
specialty (using free promotional items to stimulate corporate remembrance),
direct marketing (marketing to or soliciting orders from consumers via mail
and telephone), database marketing (direct marketing using lists developed by
marketers with proprietary data), sales promotions (marketing activities to
encourage purchases in support of or in lieu of advertising),
information/research (collecting and reselling data on consumers and consumer
preferences), sampling (distributing free product to consumers to promote
awareness) and demonstrations (live exhibitions, typically in-store, of how a
product works). The Company will seek to achieve synergies among the Founding
Companies and other acquired businesses by capitalizing on cross-selling
opportunities, achieving operating efficiencies and utilizing technology to
enhance its efficiency and ability to provide real-time data to its clients.
See "--Business Strategy--Operating Strategy." For the year ended March 31,
1998, the Company had pro forma combined net revenues of $109.2 million, pro
forma combined operating income of $11.2 million and pro forma combined net
income of $5.9 million.

The Company currently operates in all 50 states and serves a broad range of
the nation's leading companies, including Lucky Stores Inc., Jewel Osco
Southwest, Inc., MCI Communications Corporation, Taco Bell Corp., Warner
Bros., Twentieth Century Fox Film Corp., American Drug Stores, Harris Teeter,
Buena Vista Home Video, Inc. and General Motors Corporation. The Founding
Companies conduct their businesses through approximately 2,300 employees and
15,000 independent contractors, as well as outside service providers.

INDUSTRY OVERVIEW

According to industry sources such as PROMO Magazine, Brand Marketing and
Advertising Age, in 1997, the marketing services industry generated over $100
billion in revenue. The merchandising, point-of-purchase display and premium
incentive sectors accounted for approximately $46.0 billion of this overall
market. Merchandising services represented approximately $13.5 billion of the
market, of which approximately $1.3 billion was outsourced to third-party
retail merchandising businesses. The point-of-purchase display sector
generated over $12.6 billion in revenues and the premium incentive market,
which includes merchandise fulfillment and travel fulfillment companies,
generated over $20.0 billion in revenues.

The Company believes, based on industry sources and the collective
experience of the Company's management, that the highly fragmented nature of
the marketing services industry, together with the consolidation of retailers
and manufacturers, is driving the growth and consolidation of the industry.
This consolidation has created retailers which are larger, have broader
geographic reach, and more centralized procurement and administration
functions than many mid-size retailers. As a result, many retailers and
manufacturers have started to choose third-party marketing service providers
with broader capabilities in order to achieve consistent and simultaneous
execution of certain of their retail marketing strategies across a larger
geographic area and to customize the scope of certain other services performed
on their behalf. In addition, the Company believes that the increasing use of
information technology by retailers and manufacturers for inventory control,
product shelf placement and off-shelf displays, will create demand for third-
party expertise in the selection, deployment and management of such
technologies.

Merchandising. Merchandising services bring added value to retailers,
manufacturers and other businesses. Retail merchandising services enhance
sales by making a product more visible and available to consumers. These
services primarily include shelf maintenance, display placement, reconfiguring
product on store shelves, replenishing product and placing orders and other
services such as test market research, mystery shopping, teleservices,
database management and promotion planning and analysis.

38
<PAGE>

Merchandising services previously undertaken by retailers, manufacturers and
independent brokers have been increasingly outsourced to third parties.
Historically, retailers staffed their stores as needed to ensure inventory
levels, the advantageous display of new items on shelves, and the maintenance
of shelf schematics. Manufacturers deployed their own sales representatives to
ensure that their products were displayed on the shelves and were properly
spaced and positioned. Independent brokers performed similar services on
behalf of the manufacturers they represented. In an effort to improve their
margins, retailers are increasing their reliance on manufacturers and brokers
to perform such services. Initially, manufacturers attempted to satisfy their
needs for merchandising services in retail stores by utilizing their own sales
representatives. Manufacturers discovered that using its own sales
representatives for this purpose was expensive and inefficient, however, and
outsourced their needs for merchandising services to third parties capable of
operating at a lower cost by serving multiple manufacturers simultaneously.

Another significant trend impacting the merchandising segment is the
increasing tendency of consumers to make product purchase decisions once
inside the store. Accordingly, merchandising services and in-store product
promotions have proliferated and diversified. Retailers are continually re-
merchandising and re-modeling entire stores to respond to new product
developments and changes in consumer preferences. The Company estimates that
these activities have doubled in frequency over the last five years, such that
most stores are re-merchandised and re-modeled every two to three years. Both
retailers and manufacturers are seeking third parties to help them meet the
increased demand for these labor-intensive services.

Point-of-Purchase Display. Point-of-purchase displays are located
strategically in retail stores to promote products to the consumer. Point-of-
purchase displays include front end merchandising units located at high
traffic areas where consumers typically spend a significant amount of time,
such as the checkout area, and custom units designed to promote a specific
product or brand.

The Company believes that many of the trends affecting the merchandising
services market are also impacting the point-of-purchase display market. In
particular, the continual re-merchandising and re-modeling of stores drives
the demand for new point-of-purchase displays. Retailers request new displays
to promote new products, to upgrade the appearance of an existing store and to
render the appearance of newly acquired stores consistent with the rest of an
acquiring retail chain. The continual introduction of new products and rapidly
evolving packaging of existing products also drives the need for new displays,
as point-of-purchase displays are designed to handle the specific weight, size
and shape of a particular product.

Premium Incentive. The Company believes that American companies are
increasingly using third party incentive premium providers as a more efficient
and cost effective means to increase the productivity of their employees.
Third party incentive premium providers can offer a turnkey solution
specifically tailored to a company's needs. Additionally, incentive premium
providers are able to capitalize on supplier relationships and to realize
volume discounts, particularly on travel and merchandise.

Premium incentives are performance-determined rewards used to motivate
employees, salespeople, dealers and consumers, as well as to differentiate a
product, service or store. According to the Incentive Federation Survey, only
26.0% of American businesses are using premium incentives to motivate
employees and that the majority of these businesses are large companies (with
over 1,000 employees). The Company anticipates that this market segment will
grow as additional companies realize the value of using incentives to motivate
employees, sales forces and consumers.

The three most commonly used incentives are cash, travel and merchandise.
While consumer promotions, including direct premium offers (using travel or
merchandise in conjunction with a purchase of a product or service),
sweepstakes (promotions that require only chance to win) and self-liquidating
premiums (offering travel or merchandise premiums to consumers at a price that
totally covers the marketer's costs) generate the most attention, most
incentive expenditures are for trade incentives to motivate salespeople to
sell and retailers to buy and display products. Recent trends include the
growth of retail certificates or debit or cash cards in the merchandise
fulfillment sector (the segment of the premium incentive sector concerned with
providing

39
<PAGE>

merchandise as rewards in incentive programs), while the travel fulfillment
sector (the segment of the premium incentive sector concerned with providing
travel as rewards in incentive programs) has seen growth in individual travel
and meetings involving registration services (fee-based services used to
simplify the process of signing up individuals to attend a meeting or
seminar).

Other Marketing Services Sectors. The other marketing services sectors, such
as ad specialty, direct marketing, database marketing, sales promotions,
information/research, sampling and demonstrations, generated over $54.0
billion in revenues in 1997. These sectors are highly fragmented and represent
significant opportunities for consolidation.

BUSINESS STRATEGY

The Company believes, based on industry sources and the collective
experience of the Company's management, that the highly fragmented nature of
the marketing services industry, together with the consolidation of retailers
and manufacturers, is driving the growth and consolidation of the industry. As
the industry continues to grow and consolidate, large retailers and
manufacturers are increasingly outsourcing their marketing needs to third-
party providers. The Company believes that offering marketing services in
multi-use sectors on a national basis provides the Company with a competitive
advantage. Moreover, the Company believes that developing and manufacturing a
sophisticated technology infrastructure is key to providing clients with a
high level of customer service. The Company's objective is to become such a
national integrated provider by pursuing both an operating and acquisition-
driven strategy, as described below.

OPERATING STRATEGY

Capitalize on Cross-Selling Opportunities. The Company intends to leverage
its current client relationships by cross-selling its range of services
offered by its various Divisions. For example, the Company believes that its
retail merchandising services can be packaged with the sale of its point-of-
purchase displays to provide clients with an integrated marketing solution.
Similarly, the Company intends to sell its premium incentive services to its
merchandising and point-of-purchase display clients. The Company believes
cross-selling opportunities will increase as the Company acquires businesses
in other sectors of the marketing services industry.

Achieve Operating Efficiencies. The Company intends to achieve operating
efficiencies within its various Divisions. For example, as new businesses are
acquired within the Merchandising Division, the Company believes its existing
field force and technology infrastructure can support additional customers and
revenue. Within the Point-of-Purchase Display Division, the Company will seek
to reduce delivery costs by adding additional manufacturing sites
strategically across the United States and to realize volume purchasing
discounts on raw materials. In the Premium Incentive Division, the Company
believes it can similarly realize volume purchasing advantages with respect to
travel and merchandise fulfillment. At the corporate level, the Company will
also seek to combine certain administrative functions, such as accounting and
finance, insurance, strategic marketing and legal support.

Leverage Divisional Autonomy. The Company plans to conduct its operations on
a decentralized basis whereby management of each Division will be responsible
for its day-to-day operations, sales relationships and the identification of
additional acquisition candidates in their respective sectors. A Company-wide
team of senior management will provide the Divisions with strategic oversight
and guidance with respect to acquisitions, financing, marketing, operations
and cross-selling opportunities. The Company believes that a decentralized
management approach will result in better customer service by allowing
management of each Division the flexibility to implement policies and make
decisions based on the needs of customers. The operational autonomy of the
Divisions will be complimented by equity and other incentive compensation
through which the Company intends to motivate Division managers to focus on
Company-wide performance.

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Implement Technology. The Company intends to utilize technology to enhance
its efficiency and ability to provide real-time data to its customers.
Industry sources indicate that customers are increasingly relying on marketing
service providers to supply rapid, value-added information regarding the
results of marketing expenditures on profits and sales. SPAR Marketing Force,
Inc. owns proprietary Internet software technology that allows it to control
its field operations more efficiently, to quantify the benefits of its
services to customers more quickly and to respond to customers' needs and
implement programs more rapidly. The Company believes that this technology is
a competitive advantage, and that the other Founding Companies can utilize
portions of this technology to enhance the services they provide.

ACQUISITION STRATEGY

Acquire Complementary Businesses. The Company intends to acquire businesses
across the United States that offer marketing services in which each of the
Company's three Divisions operates. The Company believes that adding
geographic breadth and increasing its presence within geographic regions will
allow it to service its clients more efficiently and cost effectively. As its
customers' industries continue to consolidate, the Company believes that
national coverage and technology capabilities will become increasingly
important.

THE DIVISIONS AND FOUNDING COMPANIES

Merchandising Division

SPAR. Founded in 1967, SPAR is a national marketing services company that
provides retail merchandising and other marketing services to home video,
consumer goods and food products companies, including Warner Bros., General
Motors Corporation, Buena Vista Home Video, Gallant Greeting and The Procter &
Gamble Company. SPAR's services include in-store merchandising, test market
research, mystery shopping, database management and data collection. SPAR also
provides teleservices (using telecommunications and telemarketers for
gathering and soliciting information) within an extensive inbound and outbound
call center. SPAR offers these services directly through a network of in-store
merchandising specialists and teleservices and data entry personnel consisting
of approximately 1,800 part-time employees. In addition, SPAR currently
contracts with SMS to provide the services of approximately 2,000 independent
contractors and four regional and 30 district managers who currently oversee
and deploy the SMS independent contractors and SPAR's part-time employees. See
"Certain Relationships and Related Party Transactions." By using its part-time
employees and contracting with providers of independent contractors, SPAR is
able to assign work on an as needed basis, which enables SPAR to be responsive
to client needs on short notice (without incurring fixed costs) and to cover
approximately 8,000 stores and 30 chains and make 45,000 client calls per
month. This structure provides SPAR with a significant advantage relative to
retailers or smaller brokers who generally cannot optimize an employee's time
over multiple locations and clients. SPAR maintains five offices in the United
States, including its headquarters in Tarrytown, New York, and its
teleservices center in Rochester Hills, Michigan.

SPAR uses in-store merchandising specialists to provide a variety of retail
servicing and merchandising services to clients, including category resets
(reorganizing new or existing products on shelves), reordering, shelf
stocking, placing and maintenance of shelf tags and stocking video displays
plus a full-range of consumer, trade and in-store intelligence (gathering
information on store conditions) on store conditions. Market research
performed by SPAR for its clients includes a full range of consumer, trade and
in-store services including test marketing, reporting on in-store conditions
and mystery shopping. This information is of particular value to SPAR's
clients because it provides them with the data necessary to evaluate their
advertising and promotional efforts.

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SPAR emphasizes the use of information technology, including an interactive
voice response system and a teleservices center, to provide value-added
marketing services to its clients. Recently, SPAR introduced a proprietary
Internet-based system by which its management can coordinate and evaluate on a
real-time basis the services provided through its network of merchandising
specialists and quantify the impact of the services on client sales and
profit. SPAR has tested a field merchandising solution that combines a
wearable personal computer with hands-free voice recognition software, a
heads-up display, bar-code scanner, digital camera and wireless modem to link
to this system. SPAR has tested and is presently rolling out hand-held
computers provided by a major client through which it collects in-store data.

Certified. Founded in 1955, Certified is a national provider of market
research, in-store merchandising and auditing services to movie theater
operators, motion picture distributors, home video and consumer goods
companies and major retail chains including, Twentieth Century Fox Home
Entertainment, Twentieth Century Fox-Theatrical, Warner Bros., Sargay Stein
Rosen & Shapiro and Paramount Pictures. The Company operates through a direct
network of over 15,000 independent merchandisers, auditors and mystery
shoppers. Certified manages this network through four regional managers, who
are responsible for ensuring projects within their respective regions are
completed accurately and timely and who oversee approximately 28 zone
managers, who assign and follow-up on projects within their zones. Certified's
corporate headquarters is located in Kinderhook, New York. Certified also has
a regional office in Northridge, California with field coverage throughout the
United States and Canada.

Certified's market research team designs field survey forms and report
formats with the input of its clients that allow for the efficient collection
of in-store intelligence and the concise reporting of results, including
exception reports which are delivered to Certified's clients within 24 hours
of store visits. Certified monitors the quality of these services through
weekly telephone surveys, in-store quality control audits and quality
assessment interviews between Certified's field controllers and store
management. Certified's in-store merchandising services includes: display sets
(placing products in stores, typically in stand-alone units or at the end of
aisles), category resets, maintenance of plan-o-grams (diagramed
configurations of products as they will occupy a given shelf section), restock
and replenishment; reorder and returns processing; assembly and placement of
point-of-purchase material; national point-of-purchase material handling and
distribution; computerized store floor plans; shelf tag, price and on-pack
sticker application; dedicated field supervisors for specific client store
relationships; and prescheduled, time definite, new product introductions and
project based service. Certified's auditing capabilities include: overt and
covert patron counts and ticket sales surveys; theater compliance audits to
verify screen ads, previews, standees and other theater promotions; street
date violation audits; field piracy work and other customized programs; store
audits to check employee service, price checks, product placement and
promotion, competitive displays, performance and merchandising services; and
inventory audits and product counts at warehouses, distribution centers and
retail locations.

Certified has developed ICAST, an advanced geocoding and mapping system
which enables it to track specific store information, deploy qualified
independent contractors to local sites and monitor field performance by
territory, independent contractor and store. Specifically, ICAST provides
Certified with a comprehensive database containing information for each
independent contractor such as name, address, skill set and performance
history as well as information for each store such as the store's name,
address, owner/manager, hours of operation and size. In addition, ICAST
contains an on-line data warehouse which provides zone managers with data
necessary for efficient scheduling and completion of projects. Certified
believes that this technology enables it to offer efficient service and high
quality field performance.

The Company believes that the fragmented nature of the merchandising
services market provides for significant consolidation opportunities, and will
actively pursue an acquisition strategy in this industry. In particular, the
Company believes that the combination of SPAR and Certified will generate
significant cross-selling opportunities and certain operating efficiencies.
SPAR has previously demonstrated its ability to cut costs after acquiring
related businesses. After it acquired Marketing Force in 1996, SPAR was able
to generate significant economies of scale, establish new relationships with
home video consumer goods and food product companies and enhance its
merchandising service capabilities. The Company will continue to look for
similar acquisitions.

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Point-of-Purchase Display Division

Brand. Founded in 1956, Brand designs, manufactures and delivers custom in-
store merchandising units and point-of-purchase displays for a wide range of
retail store chains and product manufacturers. For many of its retail store
accounts, Brand also invoices the retailers' suppliers and coordinates the
collection of payments on these invoices. Brand's clients have included Lucky
Stores Inc., Jewel Osco Southwest, Inc., Harris Teeter, American Drug Stores
and Supermarkets Group, Ltd. During its 42 years in the industry, Brand has
conceptualized and fabricated dynamic and productive merchandising displays
for a wide range of retail store chains and product manufacturers. As
retailers charge manufacturers fees for rack space on these displays, Brand
can invoice the retailers' suppliers and coordinates the collection of
payments on these invoices with the assistance of custom software program
developed by Brand.

Brand's manufacturing process typically begins when a retail store chain
contacts Brand to design a display for its stores. Brand creates a computer
model of the display based on that retailer's specifications, from which a
prototype is created and presented to the retailer for its examination. The
retailer and Brand then work together to finalize the design of the display
and negotiate a price per display, which usually includes two components: the
cost to produce the unit and Brand's invoicing and collection services after
the displays are shipped to the retailer's stores. Once this price is
determined, the retailer then sells pocket and shelf space on the display
directly to its product suppliers. The retailer then furnishes Brand with a
plan-o-gram that details where specific products will sit on the display.
Based on the information contained in this plan-o-gram, Brand invoices the
product suppliers on the retailer's behalf for the space sold and collects
payments on these invoices. Brand forwards these payments to the retailer
after subtracting the cost of all displays produced for that retailer. For
each retailer, this cycle typically repeats itself every three years.

Brand designs, manufactures and coats each pocket, shelf and other component
of a display unit separately and then assembles these components to create the
finished display. Brand believes that this component oriented process enables
it to produce its displays more quickly and efficiently and with a higher
standard of quality than its competitors, which generally follow a unit-
oriented process. Brand's manufacturing plant in Brooklyn, New York covers
over 100,000 square feet and contains a number of advanced automated
installations such as Brand's custom electrostatic-powder coating center,
which is capable of applying coatings of any color and sheen to customer
displays, and Brand's computer-aided design program, which interfaces with its
production division to ensure product quality control.

Brand distributes its merchandising units and displays through its own
trucking company, TCE. Units are shipped to Brand's customers directly from
the Brooklyn manufacturing plant, as well as from its over 70,000 square feet
of in-process and finished goods storage warehouse space in Carteret, New
Jersey.

The Company believes Brand's manufacturing process is more efficient and
handles a greater capacity than those of its direct competitors and that
increased output will enable it to achieve volume discounts in purchasing
tubing, steel, casters and other supplies. The Company's objective is to
acquire additional manufacturing facilities, as Brand is currently at or near
its manufacturing capacity. See "Risk Factors--Brand Manufacturing--Need for
Additional Capacity." The Company's strategy also includes acquiring and
operating additional distribution centers, which are closer to various
destination points for its front-end merchandising units. While Brand has
primarily focused on the grocery chain front-end merchandising market of the
point-of-purchase display market, the Company believes it can expand its
presence in that market by also targeting discount retailers and chain drug
stores.

Premium Incentive Division

MCI Performance. Founded in 1987, MCI Performance specializes in designing
and implementing premium incentives and managing group travel and meetings for
clients throughout the United States. MCI Performance's diverse base of
clients include such clients as Taco Bell Corp., MCI Communications
Corporation, Triangle Pacific, Source Services and Yamaha. MCI Performance
provides a wide variety of

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consulting, creative, program administration and travel and merchandise
fulfillment services to companies seeking to motivate employees, salespeople,
dealers, distributors, retailers and consumers toward certain action or
objectives. The Company's strategy is to allow companies to outsource the
entire design, implementation and fulfillment of incentive programs in a one-
stop, "umbrella" shopping approach. MCI Performance consults with a client to
design the most effective plan to achieve the client's goals. MCI Performance
then provides services necessary to implement the program, generates detailed
efficiency progress reports and reports on the return on investment upon
completion of the program. MCI Performance also provides meeting and
convention management travel services to clients. MCI Performance employs
approximately 100 people in its Carrollton, Texas headquarters and maintains
additional sales offices in Nashville, Tennessee and Newport Beach,
California.

MCI Performance believes that several important synergies will arise by
consolidating this industry and the Company plans to pursue an aggressive
acquisition strategy. First, smaller performance incentive firms outsource
portions of their business, such as travel or merchandise fulfillment. Because
MCI Performance has the ability to fulfill these items in-house, it eliminates
the need for subcontracting and can enable the Company to achieve higher
margins. Second, as MCI Performance grows, it may obtain additional travel and
merchandise volume discounts from its vendors. Moreover, as incentive programs
are appropriate for any company with a sales force, MCI Performance plans to
cross-sell its services into the clients of the other Founding Companies.

The Company's strategy is to target the large number of middle market
businesses which are not yet using premium incentive programs, but for which
these incentive programs may be appropriate motivational tools. In addition,
by pursuing an acquisition strategy which will allow the Company to create a
fuller set of services for its clients, the Company believes that, over time,
it will be able to compete for larger pieces of business.

MCI Performance's process typically begins when a client requires assistance
in developing a performance improvement program. MCI Performance's senior
consultants work with clients to develop programs to improve productivity by
delivering positive reinforcement in ways that are meaningful to employees and
supportive of business strategy. A wide range of reward options is available,
including cash, travel and merchandise. Most formal compensation programs
deliver cash to plan participants, while premium incentives tend to make
greater use of non-financial rewards. MCI Performance has experience in all
forms of incentives and therefore can provide its clients with the most
appropriate program design. MCI Performance has a full service agency
capability to assist its clients in the writing, designing and printing of the
program elements. Teams of creative directors, copywriters, graphic designers
and print specialists develop campaigns for incentive programs meetings, trade
shows and consumer promotions.

In addition, MCI Performance provides its clients with travel or merchandise
fulfillment alternatives as well as a series of innovative product specific
alternatives. While the majority of MCI Performance's fulfillment is in the
travel area, MCI Performance provides a wide variety of catalog merchandise
awards. Through an informal arrangement with some of the country's largest
mass merchandise retailers, MCI Performance can provide its clients with
programs that offer the flexibility of in-home ordering. MCI Performance also
provides to its clients custom merchandise, special catalogs, retail
certificates and a Local Purchase Option ("LPO"). The LPO allows winning
participants to select and redeem merchandise from a series of participating
merchants.

MCI Performance has developed an award delivery program through the Ultima
Visa Award Card program and Phonovation, a system which utilizes state-of-the-
art techniques in interactive voice response. Clients who utilize the card
program have participant awards posted to their Visa statement. Like an
airline frequent flyer program or a credit card frequency program,
participants can redeem awards from any of over 12 million Visa locations
worldwide. Using toll free telephone numbers, program participants interact
with a computer to reinforce performance, check results or conduct customer or
product satisfaction surveys.

MCI Performance also provides turnkey program administration for its
clients, utilizing technology to administer large, complex programs for its
clients. MCI Performance operates a LAN that enables support staff

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<PAGE>

and program administrators to communicate effectively throughout the United
States in support of a client program. MCI Performance utilizes Oracle
databases to custom design and build information tracking systems for its
clients including input forms and reports. MCI Performance uses American
Airlines' SABRE system, Sabrevision and Worldview to provide its clients with
a wide range of information and reservation alternatives. MCI Performance
believes that its technological resources serve as a competitive advantage.

SALES AND MARKETING

The Company's sales and marketing efforts will be managed day-to-day at the
divisional level with representatives at the corporate level responsible for
coordinating the cross-selling between the Divisions. The following describes
the sales and marketing organizations of each of the Divisions:

Merchandising. SPAR and Certified's sales and marketing strategy is
implemented on national and regional levels to maintain its existing client
base and to develop and identify new client opportunities. Each company's
sales representatives maintain relationships with senior management of
potential and existing customers, while regional representatives manage the
day-to-day relationships with the customer.

Point-of-Purchase Display. Brand employs a two-tiered sales and marketing
strategy. Brand's President is responsible for speaking directly with a
retailer's top executives about its needs for front-end merchandising units.
Once their needs are established, the retailer's mid-level management at the
chain level works with Brand's designers to plan and select the size, shape,
width and color of the units for the retailer. Brand has commissioned agents
that work on a regional basis with brokers on a limited basis.

Premium Incentive. MCI Performance's sales force consists of nine
representatives located across the United States. Each representative calls
upon existing and potential customers and prepares proposals and budgets for
their respective customers. Once a program is approved, MCI Performance will
put together a team to design and execute the program.

FACILITIES

The Company's corporate offices are located in leased space at 303 South
Broadway, Suite 140, Tarrytown, New York 10591. The telephone number of its
principal executive offices is (914) 332-4100.

In addition to its corporate offices, upon consummation of the Acquisitions,
the Company will maintain the following facilities:

<TABLE>
<CAPTION>
FOUNDING COMPANY LOCATION PRINCIPAL USE
- ---------------- -------- -------------
<S> <C> <C>
SPAR Tarrytown, NY Headquarters and Sales Office
Mahwah, NJ Research Office
Cincinnati, OH Research Office
Rochester Hills, MI Regional Office and Teleservices Center
Bloomington, MN Regional Office and Information Technology Office
Certified Kinderhook, NY Headquarters
Northridge, CA Regional Office
Brand Brooklyn, NY Headquarters and Manufacturing Facility
Carteret, NJ Warehousing and Distribution Facility
MCI Performance Carrollton, TX Headquarters
Newport Beach, CA Sales Office
Nashville, TN Sales Office
</TABLE>

The Company believes that all of the facilities of the Founding Companies
are adequate for their respective current and anticipated operations.

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<PAGE>

COMPETITION

The marketing services industry is highly competitive. Competition in each
of the Divisions arises from a number of enterprises which are national in
scope. The Company also competes in each of the Divisions with a large number
of relatively small enterprises with specific client, channel or geographic
coverage, as well as the internal marketing and merchandising operations of
its clients and prospective clients. In the Merchandising Division, the
Company competes with PIA Merchandising Co., Inc., independent brokers and
smaller, regional providers. In the point-of-purchase display sector, the
Company competes with many companies in the United States with wide geographic
dispersion and industry specialization, including MYCO Displays and Graphic
Production, Inc., Chestnut Display Systems, Inc. and Cannon Display. In the
premium incentive sector, the Company competes with Carlson Marketing Group,
Inc., Maritz Inc. and BI Services, each of which has significantly greater
financial and marketing resources than the Company, as well as Exceed
Motivation, Incentive Associates and regional and local suppliers. The Company
believes that it is able to compete effectively in the Merchandising Division
through a national network of employees and other merchandisers, broad service
offerings and information technology capabilities, in the Point-of-Purchase
Display Division through its manufacturing and design capabilities and
existing customer relationships and in the Premium Incentive Division through
its a broad range of products and value-added services and competitive
pricing. See "Risk Factors--Competition."

EMPLOYEES

On a pro forma combined basis as of March 31, 1998, the Company employed
approximately 2,300 people, of whom approximately 500 were full-time employees
and approximately 1,800 were part-time employees. Approximately 270 employees
were engaged in operations and 30 were engaged in sales. In October 1996,
Brand Manufacturing entered into a three year collective bargaining agreement
with Local 810, affiliated with the International Brotherhood of Teamsters
(the "Union"). All of Brand Manufacturing's non-supervisory plant employees
who have met the Union's criteria are considered members of Local 810. The
Company believes that its relations with all of its union and non-union
employees are good.

LEGAL PROCEEDINGS

The Company is, from time to time, a party to litigation or administrative
proceedings that arise in the normal course of its business. The Company does
not have pending any litigation that, separately or in the aggregate, if
adversely determined, would have a material adverse effect on the Company's
business, financial condition or results of operations.

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MANAGEMENT

EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS

The following table sets forth certain information concerning each of the
executive officers, key employees and directors of the Company following the
consummation of the Offering:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Robert G. Brown......... 52 Chairman, Chief Executive Officer and Director
Dewey K. Shay........... 40 President, Chief Operating Officer and Director
William H. Bartels...... 54 President of Merchandising Division, President of
SPAR and Director
James R. Gillis......... 45 President of Point-of-Purchase Display Division
and President of Brand
Gary W. Oakley.......... 55 President of Premium Incentive Division and
Director
Monte Weiner............ 48 Chief Operating Officer of Brand and Director
Mark A. Whitney......... 47 President of MCI Performance
William P. Smith........ 61 President of Certified
Jonathan J. Ledecky..... 40 Director
</TABLE>

Robert G. Brown will become the Chairman, Chief Executive Officer and
Director of the Company upon consummation of the Offering. Mr. Brown has been
the Chairman, President and Chief Executive Officer of the SPAR Group
companies (SPAR/Burgoyne Retail Services, Inc. since 1994, SPAR Marketing,
Inc. since 1993, SPAR, Inc. since 1979 and SPAR Marketing Force, Inc. since he
acquired it with Mr. Bartels in 1996).

Dewey K. Shay founded U.S. Marketing in March 1998 and has since been a
Director, as well as its President, Secretary and Treasurer. Upon consummation
of the Offering, Mr. Shay will also become the Company's Chief Operating
Officer. Mr. Shay is the President and founder of Unison Partners, Inc., which
was formed in May 1997 to pursue strategic consolidation opportunities. Mr.
Shay was the Senior Executive Vice President and Chief Administrative Officer
of Donna Karan International, a designer apparel company, from December 1996
to May 1997. Mr. Shay was an investment banker having worked in both the
Corporate Finance and Mergers and Acquisitions Departments at Morgan Stanley &
Co. Incorporated from August 1986 to December 1996. While in Corporate Finance
at Morgan Stanley from March 1991 to December 1996, Mr. Shay worked primarily
with consumer-oriented companies.

William H. Bartels will become the President of the Company's Merchandising
Division, the President of SPAR and Director of the Company upon consummation
of the Offering. Mr. Bartels has served as the Vice- Chairman, Secretary and
Senior Vice President--Corporate of the SPAR Group companies (SPAR/Burgoyne
Retail Services, Inc. since 1994, SPAR Marketing Inc. since 1993, SPAR, Inc.
since 1979 and SPAR Marketing Force, Inc. since he acquired it with Mr. Brown
in 1996), and has been responsible for SPAR's sales and marketing efforts, as
well as for overseeing joint ventures and acquisitions.

James R. Gillis, the President of Brand since September 1995, will become
the President of the Company's Point-of-Purchase Display Division upon
consummation of the Offering. As President of Brand, Mr. Gillis has been
responsible for negotiating national contracts for Brand's point-of-purchase
displays. Prior to joining Brand, Mr. Gillis was a partner in the Aders-
Wilcox-Gillis Group, which advised supplier companies on industry retailers
worldwide.

Gary W. Oakley will become the President of the Company's Premium Incentive
Division and Director upon consummation of the Offering. For the past three
years, Mr. Oakley has served as a consultant focusing on marketing, promotion
and sales issues for a select number of promotion, financial services and
brokerage companies. In 1980, Mr. Oakley founded the Saugutuck Group, a
national organization engaged in the marketing consulting, travel incentive
and direct response businesses, and served as its Chairman and Chief Executive
Officer until 1995.

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Monte Weiner will become the Chief Operating Officer of Brand and will
become a Director of the Company upon the consummation of the Offering. Mr.
Weiner served as Brand Manufacturing's Chief Operating Officer since 1989 and
Secretary and Treasurer since 1993, as well as the President, Secretary and
Treasurer of TCE since 1987.

Mark A. Whitney will retain the position of President of MCI Performance
upon the consummation of the Offering. Prior to the Offering, Mr. Whitney was
the President and Chief Operating Officer of MCI Performance. Since 1990, Mr.
Whitney has been the President of Meeting Concepts International, Inc., which
provides housing and hotel reservation services for the footware trade show
industry.

William P. Smith will retain the position of President of Certified upon the
consummation of the Offering. Prior to the Offering, Mr. Smith served as Chief
Executive Officer and President of Certified since .

Jonathan J. Ledecky is a co-founder of U.S. Marketing and will become a
Director of the Company upon the consummation of the Offering. Mr. Ledecky
founded U.S. Office Products Company ("USOP") in October 1994 and served as
its Chairman of the Board and Chief Executive Officer from inception through
November 1997 and thereafter as a Director. Since its inception, USOP has
acquired and integrated over 200 companies. Mr. Ledecky also co-founded
UniCapital Corporation, a publicly held consolidator and operator of equipment
leasing and specialty finance businesses, in October 1997 and has since served
as a director. In addition, Mr. Ledecky co-founded U.S.A. Floral Products,
Inc., a publicly held consolidator and operator of floral products
distribution businesses, in April 1997 and has since served as its Non-
Executive Chairman of the Board. In February 1997, Mr. Ledecky founded
Consolidation Capital Corporation, which is presently consolidating the
facilities services management industry, and has since served as its Chairman
and Chief Executive Officer. From 1991 to September 1994, Mr. Ledecky was the
President and Chief Executive Officer of Legacy Dealer Capital Fund, Inc., a
wholly owned subsidiary of Steelcase, Inc., the nation's largest manufacturer
of office furniture products. Mr. Ledecky also is expected to serve as a
director of the companies being spun off from USOP.

Prior to the consummation of the Offering, the Company intends to name its
Chief Financial Officer. Within 60 days of the consummation of the Offering,
the Company intends to nominate and choose two non-affiliated Directors.

COMMITTEES OF THE BOARD OF DIRECTORS

Within 90 days of the consummation of the Offering, the Company's Board of
Directors intends to establish a Compensation Committee. The Compensation
Committee provides a general review of the Company's compensation plans to
ensure that they meet corporate objectives. The Company will nominate and
elect two non-affiliated directors who will be the members of the Compensation
Committee within 60 days of the consummation of the Offering.

Within 90 days of the consummation of the Offering, the Company's Board of
Directors intends to establish an Audit Committee. The responsibilities of the
Audit Committee will include recommending to the Board of Directors the
independent public accountants to be selected to conduct the annual audit of
the books and records of the Company, reviewing the proposed scope of such
audit and approving the audit fees to be paid, reviewing accounting and
financial controls of the Company with the independent public accountants and
the Company's financial and accounting staff and reviewing and approving
transactions between the Company and its directors, officers and affiliates.
The Company will nominate and elect two non-affiliated Directors who will be
the members of the Audit Committee within 90 days of the consummation of the
Offering.

DIRECTOR COMPENSATION

Directors who are not currently receiving compensation as officers,
employees or consultants of the Company are entitled to receive an annual
retainer fee of $25,000, plus reimbursement of expenses for each meeting of
the Board of Directors and each committee meeting that they attend in person.
In addition, non-

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employee directors receive certain formula grants of non-qualified stock
options under the 1998 Equity Compensation Plan that consist of an initial
grant to purchase 25,000 shares upon becoming a director, and thereafter an
annual grant to purchase 5,000 shares on each annual meeting date. See
"Management--1998 Equity Compensation Plan."

EXECUTIVE COMPENSATION

U.S. Marketing was incorporated in March 1998. Effective upon consummation
of the Acquisitions, the Company anticipates that it will, pursuant to
employment agreements, pay compensation based on the following annual salaries
to the executive officers named below (together, the "Named Executive
Officers").

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------
SECURITIES
NAME AND PRINCIPAL POSITION SALARY BONUS (1) UNDERLYING OPTIONS
- --------------------------- ------------ -----------------------------
<S> <C> <C> <C>
Robert G. Brown....................... $ 100,000 -- --
Chairman and Chief Executive Officer
Dewey K. Shay......................... $ 100,000 -- --
President and Chief Operating
Officer
William H. Bartels.................... $ 100,000 -- 200,000(2)
President of Merchandising Division
James R. Gillis....................... $ 250,000 -- 150,000(2)(3)
President of Point-of-Purchase
Display Division
Gary W. Oakley........................ $ 125,000 -- 300,000(2)(3)
President of Premium Incentive
Division
</TABLE>
- ---------------
(1) The Named Executive Officers each may receive an annual bonus based upon
the operating performance of the Company. The terms and amount of the
annual bonus will be determined by the Board of Directors and the
Compensation Committee.
(2) Includes Division Performance Options in the amount of 200,000 to Mr.
Bartels and Mr. Oakley and 125,000 to Mr. Gillis, which were granted
under the 1998 Equity Compensation Plan with an exercise price equal to
the initial public offering price, which will vest ratably over three
years beginning on the sixth anniversary of the date of grant unless
their vesting accelerates based on the achievement of accumulated
divisional pre-tax income goals set forth in the grant letter. See
"Management--New Plan Benefits."

(3) Includes 25,000 nonqualified stock options for Mr. Gillis and 100,000
nonqualified stock options for Mr. Oakley, which were granted under the
1998 Equity Compensation Plan with an exercise price equal to the initial
public offering price, which vest in 25.0% annual installments over four
years commencing on the first anniversary of the date of effectiveness of
the Registration Statement. See "Management--New Plan Benefits."

Prior to the consummation of the Offering, the Company intends to name its
President and Chief Operating Officer and its Chief Financial Officer.

1998 EQUITY COMPENSATION PLAN

The Company's Board of Directors has adopted, and the Company's stockholders
have approved, the Company's 1998 Equity Compensation Plan (the "Equity
Compensation Plan"). The sum of: (i) the number of shares of Common Stock
previously issued or transferred under the Equity Compensation Plan, and (ii)
the number of shares of Common Stock subject to outstanding grants, shall not
exceed 15.0% of the outstanding shares of Common Stock at any time. In no
event, however, shall the foregoing limit be reduced as a result of a
subsequent reduction of the number of outstanding shares of Common Stock. The
maximum number of shares

49
<PAGE>

available for incentive stock options ("ISOs") is equal to 15.0% of the number
of shares of Common Stock outstanding on the effective date of the Equity
Compensation Plan. The number of shares reserved or deliverable under the
Equity Compensation Plan and the annual per-participant limit on the number of
shares as to or with reference to which awards may be granted are subject to
adjustment in the event of stock splits, stock dividends, spinoffs,
recapitalizations, combinations or exchanges of shares, mergers,
reorganizations or consolidations in which the Company is the surviving
corporation, reclassifications or changes in par value, or any other
extraordinary or unusual events affecting the outstanding Common Stock without
the Company's receipt of consideration.

The Company's Compensation Committee will administer the Equity Compensation
Plan and will generally select the individuals who will receive awards and the
terms and conditions of those awards (including exercise prices, vesting and
forfeiture conditions, performance conditions and periods during which awards
will remain outstanding). The Equity Compensation Plan also provides that the
total value of compensation paid to a participant during a performance period
shall not exceed the fair market value of 750,000 shares of Common Stock.

The purpose of the Equity Compensation Plan is to provide executive officers
(including directors who also serve as executive officers), key employees and
certain consultants with additional incentives by enabling such persons to
increase their ownership interests in the Company. Individual awards under the
Equity Compensation Plan may take the form of one or more of: (i) either ISOs
or non-qualified stock options ("NQSOs"); (ii) stock appreciation rights
("SARs"); (iii) restricted and unrestricted stock; and (iv) performance units
("Performance Units"). The amount of compensation paid under a Performance
Unit will be based on performance goals that may relate to the financial
performance of the Company or its operating units, the performance of Common
Stock, individual performance, or such other criteria as the Compensation
Committee deems appropriate.

The Equity Compensation Plan also provides for automatic option grants to
non-employee directors to promote the interests of the Company and its
stockholders by enabling non-employee directors to participate in the long-
term growth and financial success of the Company. Each non-employee director
as of the effective date of the registration statement of which this
Prospectus forms a part, and each individual who is not an employee of the
Company or any subsidiary and who is a member of the Board after that date,
will receive an NQSO to purchase 25,000 shares of Common Stock on the later of
the effective date of the registration statement of which this Prospectus
forms a part or the date of his or her election to the Board (an "Initial
Grant"). Initial Grants will become immediately exercisable in full on the
date of grant. Each non-employee director who is a member of the Board
immediately after the annual meeting of stockholders (the "Annual Meeting
Date") in each year beginning in 1999 will receive an NQSO to purchase 5,000
shares of Common Stock (an "Annual Grant") on each annual meeting date unless
such director is eligible to receive an Initial Grant. Annual Grants will be
immediately exercisable in full. The exercise price of each Initial Award and
each Annual Grant will be the fair market value of the Common Stock on the
date of grant. The term of each Initial Grant and each Annual Grant will be
ten years. Non-employee directors' rights to exercise options will terminate
on the first to occur of (i) the scheduled expiration date of such option or
(ii) one year following the date of termination of service as a director.

Except as otherwise provided by the Compensation Committee, an option may
only be exercised while the grantee is employed by, or providing service to,
the Company. In the event that a grantee ceases to be employed by, or provide
service to, the Company for any reason other than a disability, death, or
termination for cause, any option which is otherwise exercisable by the
grantee will terminate unless exercised within 90 days. If the termination is
on account of disability or death, the option may generally be exercised
within one year after the date on which the grantee suffers disability or
dies. Upon a termination for cause, any option held by the grantee will
terminate and the grantee will automatically forfeit all undelivered shares
upon refund by the Company of the exercise price paid by the grantee for such
shares.

Upon a change of control of the Company (as defined in the Equity
Compensation Plan), all outstanding ISOs, NQSOs and SARs will automatically
accelerate and become fully exercisable, the restrictions and conditions on
all outstanding restricted stock will immediately lapse, and individuals
holding Performance Units

50
<PAGE>

will receive a payment in settlement of such Performance Units. Upon a change
of control where the Company is not the surviving corporation, all outstanding
ISOs, NQSOs and SARs that are not exercised shall be assumed by, or replaced
with comparable options or rights by, the surviving corporation.
Notwithstanding the foregoing, the Compensation Committee may (after giving
individuals an opportunity to exercise their outstanding ISOs, NQSOs and SARs)
terminate any or all unexercised ISOs, NQSOs and SARs, or may require that
individuals surrender their outstanding ISOs, NQSOs and SARs in exchange for
the then fair market value of the individual's unexercised ISOs, NQSOs and
SARs. The Compensation Committee will not have the right to take any actions
that would make the change of control ineligible for desired tax treatment.

The Company generally will be entitled to a tax deduction equal to the
amount of income recognized by a participant through awards under the Equity
Compensation Plan, except that (i) no deduction is permitted in connection
with ISOs if the participant holds the shares acquired upon exercise for the
required holding periods, and (ii) deductions for some awards could be limited
under the $1.0 million deductibility cap of Section 162(m) of the Internal
Revenue Code. This limitation, however, should not apply to awards granted in
compliance with certain requirements under Section 162(m).

The Equity Compensation Plan will remain in effect until terminated by the
Board. The Equity Compensation Plan may be amended by the Board without the
consent of the stockholders of the Company, except that any amendment,
although effective when made, will be subject to stockholder approval 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.

1998 EMPLOYEE STOCK PURCHASE PLAN

The Company's Board of Directors has adopted, and the Company's stockholders
have approved the 1998 Employee Stock Purchase Plan. This plan will permit
eligible employees of the Company and its subsidiaries to purchase shares of
Common Stock at a discount. The eligible class of employees will be determined
by the Board of Directors. Eligible employees who elect to participate will
have amounts withheld through payroll deduction during purchase periods. At
the end of each purchase period, accumulated payroll deductions will be used
to purchase stock at a price equal to 85.0% of the market price. Stock
purchased under the plan will be subject to a six-month holding period. The
Company has reserved 500,000 shares of Common Stock for issuance under this
plan.

The Purchase Plan will remain in effect until terminated by the Board. The
1998 Employee Stock Purchase Plan may be amended by the Board without the
consent of the stockholders of the Company, except that any amendment,
although effective when made, will be subject to stockholder approval 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.

NEW PLAN BENEFITS

Upon the effective date of the registration statement of which this
Prospectus forms a part, it is contemplated that the Company will grant
options to purchase an aggregate of 1,165,000 shares of Common Stock under the
Equity Compensation Plan at an exercise price equal to the initial public
offering price per share. These options include: (i) options to purchase an
aggregate of 650,000 shares that will be granted to executive officers of the
Company; (ii) options to purchase an aggregate of 200,000 shares that will be
granted to other officers of the Founding Companies; and (iii) options to
purchase an aggregate of 315,000 shares that will be granted to other
employees of the Founding Companies. Of the options, 625,000 are non-qualified
stock options ("Division Performance Options") that will vest ratably over
three years beginning on the sixth anniversary of the date of grant, unless
their vesting accelerates based on the achievement of accumulated divisional
pretax income goals set forth in the Division Performance Options grant
letter. The remaining options will vest 25.0% each on the

51
<PAGE>

first four anniversaries of the date of grant. All options expire on the tenth
anniversary of the date of grant. The following table sets forth certain
information with respect to such contemplated option grants.

<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE (1) NUMBER OF UNITS (2)
- ----------------- ---------------- -------------------
<S> <C> <C>
Robert G. Brown........................... -- --
Chairman and Chief Executive Officer
Dewey K. Shay............................. -- --
President and Chief Operating Officer
William H. Bartels........................ Not determinable 200,000
President of Merchandising Division
James R. Gillis........................... Not determinable 150,000
President of Point-of-Purchase Display
Division
Gary W. Oakley............................ Not determinable 300,000
President of Premium Incentive Division
All current executive officers as a
group.................................... Not determinable 650,000
All current directors who are not
executive officers as a group............ -- --
All employees, including all current
officers who are not executive officers,
as a group............................... Not determinable 515,000
</TABLE>
- ---------------
(1) The dollar values of the awards under the Equity Compensation Plan are not
determinable at this time, since the options are expected to be granted at
an exercise price equal to, or calculated with reference to, the initial
public offering price of the Common Stock.
(2) The number of units represents the number of shares of Common Stock
underlying the options expected to be granted.

EMPLOYMENT AGREEMENTS

Upon the consummation of the Offering, the Company will enter into a two-
year Employment Agreement with Robert G. Brown, pursuant to which the Company
will agree to employ Mr. Brown as Chairman and Chief Executive Officer for a
term of two years at an annual base salary of $100,000. The agreement also
will include a general, two-year post-employment non-competition provision and
provides that Mr. Brown will be eligible to participate in an incentive bonus
program as may be determined by the Company's Board of Directors. If Mr. Brown
is terminated without cause, he will be entitled to receive his base salary,
plus group health benefits then in effect, for the longer of one year from the
date of termination or the remainder of the two-year term. Notwithstanding its
general non-competition prohibitions, the agreement permits Mr. Brown to
continue to own, operate and otherwise participate in the activities of
certain marketing-related companies in which Mr. Brown has an existing
ownership interest and which are not being acquired by the Company; provided
that such companies do not directly compete with the in-store merchandising
activities of SPAR.

Upon the consummation of the Offering, the Company will enter into an
Employment Agreement with Dewey K. Shay, pursuant to which the Company will
agree to employ Mr. Shay as the President and Chief Operating Officer for a
term of two years at an annual base salary of $100,000. The agreement will
also include a three-year post-employment non-competition provision in the
marketing services industry and provide that Mr. Shay will be eligible to
participate in an incentive bonus program as may be determined by the
Company's Board of Directors. If Mr. Shay is terminated without cause, he will
be entitled to receive his base salary, plus group health benefits then in
effect, for one year from the date of termination.

In addition, the Acquisition Agreements provide that the Company, either
directly or through its wholly-owned subsidiaries, will enter into employment
agreements with certain of the individuals principally responsible for
management of the Divisions and the Founding Companies. Each of the agreements
described below provides

52
<PAGE>

that the employee (i) will receive a specified base salary, (ii) will be
employed for a two-year period, (iii) agrees not to compete with the Company
for two years following termination of employment and (iv) is eligible to
participate in an incentive bonus program as may be determined by the Board of
Directors of the Company or the Founding Companies. William H. Bartels's
employment agreement with the Company will provide that Mr. Bartels will be
employed by the Company for a two-year period with a base salary of $100,000.
Mr. Bartels's employment agreement provides for certain exceptions to the non-
competition covenants, which are comparable to those contained in Mr. Brown's
employment agreement described above. James R. Gillis's employment agreement
with the Company will provide that Mr. Gillis will be employed by the Company
for a two-year period with a base salary of $250,000. Gary W. Oakley's
employment agreement with the Company will provide that Mr. Oakley will be
employed by the Company for a two-year period with a base salary of $125,000.
Monte Weiner's employment agreement with Brand will provide that Mr. Weiner
will be employed by Brand for a two-year period with a base salary of
$250,000. Mark Whitney's employment agreement with MCI Performance will
provide that Mr. Whitney will be employed by MCI Performance for a two-year
period with a base salary of $200,000. William Smith's employment agreement
with Certified will provide that Mr. Smith will be employed by Certified for a
two-year period with a base salary of $170,000.

53
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Set forth below is a description of certain transactions and relationships
between U.S. Marketing and certain persons who will become officers, directors
and principal stockholders of the Company following the Acquisitions and the
Offering. In addition, set forth below is certain information regarding
transactions and relationships prior to the Acquisitions between certain of
the Founding Companies and their respective officers, directors and principal
stockholders.

ORGANIZATION OF U.S. MARKETING

U.S. Marketing was founded as a holding company to acquire businesses in the
marketing service industry. Prior to the Acquisitions and the Offering, U.S.
Marketing issued 4,907,500 shares of Common Stock for cash to its co-founders
and initial investors. Specifically, U.S. Marketing issued 2,000,000 shares to
Dewey K. Shay, 2,720,000 shares to Jonathan J. Ledecky, 37,500 shares to Jack
Meehan, 50,000 to William J. Allard and 100,000 to Gary Oakley in exchange for
$20,000, $56,000, $375, $2,500 and $100,000, respectively. Mr. Shay made gifts
of 125,000 of such shares and Mr. Ledecky made gifts of 400,000 shares. Mr.
Shay is the co-founder, President, Secretary, Treasurer and a Director of U.S.
Marketing and, upon consummation of the Offering, will become the Chief
Operating Officer of the Company. Mr. Ledecky is U.S. Marketing's co-founder
and a Director. Mr. Meehan is a co-founder of U.S. Marketing. Mr. Allard will
become a Director of U.S. Marketing upon consummation of the Offering. Mr.
Oakley will become the President of the Company's Premium Incentive Division
and a Director upon consummation of the Offering. For information regarding
certain employment arrangements between the Company and certain directors,
officers and key employees, see "Management--Employment Agreements."

THE ACQUISITIONS

Simultaneously with and as a condition to the consummation of the Offering,
U.S. Marketing will acquire in four separate transactions each of the Founding
Companies for an aggregate consideration of $92.3 million (assuming an initial
public offering price of $ ), which consists of: (i) $58.3 million in cash
to be paid to either the Founding Companies or the stockholders of the
Founding Companies, which includes $15.1 million which Jonathan J. Ledecky
loaned to U.S. Marketing in connection with the acquisition of 70.0% of the
outstanding common stock of Brand on May 20, 1998; (ii) $0.3 million in cash
to fund S corporation distributions payable to the stockholders of Brand;
(iii) the $33.7 million value of 2,879,063 million shares of Common Stock to
be issued to the stockholders of the Founding Companies (determined using an
estimated fair value of $11.70 per share, which represents a 10% discount from
the assumed IPO price of $13.00 per share, due to restrictions on the sale and
transferability of the shares). In addition, the Company may pay additional
cash consideration and issue additional shares of Common Stock pursuant to
earn-out arrangements with MCI Performance and Certified. Any such earn-out
payments will be based on the amount of MCI Performance and Certified's
respective pre-tax earnings for the year ending March 31, 1999, and neither is
subject to a maximum (except that MCI Performance must meet a $3.5 million
threshold for any earn-out to be paid). See "Risk Factors--Contingent
Liability for Earn-Out Payments to Founding Company Owners." Following the
consummation of the Acquisitions, the aggregate long-term indebtedness of the
Company will be approximately $0.2 million, which will comprise long-term debt
of the Founding Companies upon the Acquisition. The purchase price for each
Founding Company was determined based on negotiations between U.S. Marketing
and that Founding Company. The factors considered by the parties in
determining the purchase price included, among other factors, historical
operating results (including adjusted pre-tax earnings for the most recent
fiscal year), growth rates and business prospects of the Founding Companies.
With the exception of the consideration to be paid to the stockholders of each
of the Founding Companies, the acquisition of each Founding Company is subject
to substantially the same terms and conditions as those to which the
acquisition of each other Founding Company

54
<PAGE>

is subject. The following table contains information concerning the aggregate
cash to be paid, S corporation distributions to be made and Common Stock to be
issued in connection with the Acquisitions:

<TABLE>
<CAPTION>
VALUE OF SHARES
S CORP. SHARES OF OF TOTAL
FOUNDING COMPANY CASH DISTRIBUTION COMMON STOCK COMMON STOCK CONSIDERATION
- ---------------- ----- ------------ ------------ --------------- -------------
(Dollars in millions)
<S> <C> <C> <C> <C> <C>
SPAR.................... $23.7 $-- 1,825,000 $ $
Certified............... 3.6 -- 280,000
Brand .................. 16.8(1) 0.3 700,000
MCI Performance......... 13.3 -- 74,063
----- ---- --------- ------ ------
Total................. $57.4 $0.3 2,879,063 $ $
</TABLE>
- ---------------
(1) Includes $15.1 million loaned to U.S. Marketing by Mr. Ledecky in
connection with this Acquisition.

If the initial public offering price is greater than $10.00 per share, then
the Cash Consideration will be increased by multiplying it by a fraction, the
numerator of which is the initial public offering price and the denominator of
which is $10.00. If the initial public offering price falls below
approximately $8.00 per share (as more specifically set forth in each
Acquisition Agreement), then the Stock Consideration will be increased so that
the total number of shares issued in each Acquisition has an aggregate value
(based upon the initial public offering price) equal to the value that the
Stock Consideration in such Acquisition would have had if the initial public
offering price had been $10.00 per share. The Acquisition Consideration set
forth in this Prospectus has been calculated assuming an initial public
offering price of $13.00 per share.

The consummation of each Acquisition is contingent upon the consummation of
the Offering (except for the Brand Acquisition) and the satisfaction of
customary closing conditions. The Acquisition Agreements provide that the
stockholders of the Founding Companies will have the right, under
circumstances specified in the Acquisition Agreements, to register the shares
of Common Stock received by the stockholders as a portion of the Acquisition
consideration. See "Description of Capital Stock--Registration Rights" The
Acquisition Agreements provide that options to purchase 315,000 shares of
Common Stock shall be made available to employees who are not stockholders of
the Founding Companies. These options are in addition to the options granted
to executive officers of the Company. See "Management--New Plan Benefits." The
options will have an exercise price per share equal to the initial public
offering price. NQSOs will vest ratably over a four-year period, beginning on
the anniversary of the date of the grant. The Acquisition Agreements further
provide that the stockholders of the Founding Companies will indemnify the
Company from certain liabilities that may arise in connection with the
Acquisitions. A portion of the consideration payable in each Acquisition will
be escrowed, in the case of cash, or pledged, in the case of Common Stock, for
a period of twelve months from the consummation of the Offering, as security
for the sellers' indemnification obligations. Each of the Acquisition
Agreements provides that U.S. Marketing or its wholly-owned subsidiary and
certain key employees of each of the Founding Companies will enter into
employment agreements.

The Acquisition Agreements also provide that each seller who receives shares
of Common Stock as consideration for its respective interest in the Founding
Companies will not be permitted to transfer ownership of its shares of Common
Stock until: (i) the twelve-month anniversary of the date of the final
Prospectus for the Offering, at which time such sellers shall be permitted to
transfer ownership of no more than 50% of their shares of Common Stock; (ii)
the eighteen-month anniversary of the date of the final Prospectus for the
Offering, at which time such sellers shall be permitted to transfer ownership
of an additional 25% of their shares of Common Stock; and (iii) the twenty-
four month anniversary of the date of the final Prospectus for the Offering,
at which time such sellers shall be permitted to transfer ownership of the
remainder of their shares of Common Stock.

SPAR

U.S. Marketing will acquire all of the outstanding stock of SPAR in a
reverse subsidiary merger for: (i) $23.7 million in cash (assuming an initial
public offering price of $ ) and (ii) 1,825,000 shares of Common

55
<PAGE>

Stock. In connection with the SPAR Acquisition, Robert G. Brown, the Chairman
and Chief Executive of SPAR, will become the Chairman, Chief Executive Officer
and Director of the Company and William H. Bartels, the Senior Vice
President--Corporate of SPAR, will become the President of the Company's
Merchandising Division, the President of SPAR and Director. Mr. Brown and Mr.
Bartels will receive $14.5 million and $9.2 million in cash, respectively, and
1,115,258 and 709,742 shares of Common Stock, respectively, for their shares
of capital stock of SPAR. Messrs. Brown and Bartels will each enter into a
two-year employment agreement with the Company, which will include a general
two-year post-employment non-competition provision. However, notwithstanding
such general non-competition prohibitions, the agreements permit Messrs. Brown
and Bartels to continue to own, operate and otherwise participate in the
activities of certain marketing-related companies which they jointly own and
which are not being acquired by the Company; provided that such companies do
not directly compete with the in-store merchandising activities of SPAR. See
"Management--Employment Agreements."

SMS, a company owned by Messrs. Brown and Bartels, has historically provided
the services of approximately 2,000 independent field merchandising
contractors to SPAR. Following the Offering, SMS will make independent field
merchandising contractors available to SPAR pursuant to a services agreement
("SMS Agreement") between SPAR and SMS. For the fiscal year ended March 31,
1998, SPAR incurred expenses of $6.2 million related to independent contractor
and field management services provided by SMS. Pursuant to the terms of the
SMS Agreement, following the Offering, if SPAR utilizes the SMS independent
field merchandising contractors, it will pay SMS the costs for the services of
its field organization plus 4.0%.

A $1,500,000 loan of SMS is secured by certain assets of the SPAR Group and
personal guarantees of Robert G. Brown and William H. Bartels. The interest
rate is equal to Citibank's fluctuating announced rate plus 1.25%. This loan
will be repaid and the liens on the SPAR Group assets will be terminated in
connection with the Offering.

Certified

U.S. Marketing will acquire all of the outstanding stock of Certified in a
reverse subsidiary merger for: (i) $3.6 million in cash (assuming an initial
public offering price of $ ) and (ii) 280,000 shares of Common Stock. In
connection with the Certified Acquisition, William Smith will retain the
position of the President of Certified. Mr. Smith will receive approximately
$2.0 million in cash and 132,160 shares of Common Stock for his shares of
capital stock of Certified. Mr. Smith will enter into a two-year covenant not
to compete with the Company and its affiliates (subject to certain exceptions)
and a two-year employment agreement with Certified.

Mr. Smith controls Kinderhook Equities, Inc., the lessor of Certified's
Kinderhook, New York facility. Annual rent for this facility has remained
constant over Certified's last two fiscal years at approximately $58,000.

Brand

U.S. Marketing will acquire all of the outstanding stock of Brand in a two-
step stock purchase for: (i) $16.8 million in cash (assuming an initial public
offering price of $ ) and (ii) 700,000 shares of Common Stock. In the
first step, which occurred on May 20, 1998, U.S. Marketing acquired 70.0% of
the outstanding stock of Brand for $14.2 million, which U.S. Marketing
borrowed from Jonathan J. Ledecky (who concurrently loaned U.S. Marketing an
additional $0.9 million to fund working capital needs of Brand). Assuming an
initial public offering price of $ , simultaneously with the consummation
of the Offering, U.S. Marketing will purchase all of the remaining outstanding
stock of Brand for: (i) $2.6 million in cash and (ii) 700,000 shares of the
Common Stock.

In connection with the Brand Acquisition, James Gillis will become the
President of the Company's Point-of-Purchase Display Division and President of
Brand of the Company. Mr. Gillis will receive $2.2 million in cash and 240,000
shares of Common Stock for his shares of capital stock of Brand. Mr. Gillis
will enter into a two-year covenant not to compete with the Company and its
affiliates (subject to certain exceptions) and a two-

56
<PAGE>

year employment agreement with the Company. Upon the completion of the first
step of the Brand Acquisition, Mr. Gillis entered into an employment agreement
with Brand, the term of which shall expire upon the execution of Mr. Gillis's
employment agreement with the Company. Mr. Gillis's employment agreement
provides for a base salary of $250,000 per year from and after the date of the
Offering.

Marvin Weiner and Monte Weiner have entered into employment agreements with
Brand. Marvin Weiner will become an officer of Brand, whose duties and
responsibilities will be determined by the President of Brand. Monte Weiner
will become the Chief Operating Officer of Brand and a Director of the
Company. Each agreement has a term of two years and contains a covenant not to
compete with the Company (subject to certain exceptions). Marvin Weiner's
employment agreement provides for a base salary of $100,000 per year and Monte
Weiner's agreement provides for a base salary of $250,000 per year from and
after the date of the Offering.

MCI Performance

U.S. Marketing will acquire substantially all of the assets of MCI
Performance for: (i) $13.3 million in cash and (ii) 74,063 shares of Common
Stock. In connection with the MCI Performance Acquisition, Mark Whitney will
retain the position as the President of MCI Performance. Mr. Whitney will
receive 7,406 shares of Common Stock from John H. Wile, the sole stockholder
of MCI Performance, in recognition of past services prior to the MCI
Performance Acquisition. Mr. Whitney will enter into a two-year covenant not
to compete with the Company and its affiliates (subject to certain exceptions)
and a two-year employment agreement with MCI Performance.

Upon the consummation of the MCI Performance Acquisition, the Company,
through MCI Performance, will enter into a lease with BIMA Place Joint
Venture, an affiliate of John H. Wile, the sole stockholder of MCI Performance
prior to the MCI Performance Acquisition, for 25,000 square feet of office
space located at 2245 Keller Way, Carollton, Texas. The term of the lease
shall be five years and the annual rent shall be triple-net $360,000, plus a
real estate tax escalation in excess of 1997 real estate taxes. The Company
believes that such lease is on terms substantially similar to those that would
be obtained from a third party.

Pursuant to the MCI Performance Acquisition Agreement, after March 31, 1999,
MCI Performance is obligated to offer John H. Wile an opportunity to enter
into a sales commission agreement with MCI Performance on terms and conditions
substantially similar to those offered by MCI Performance to its sales force
in or about April 1998. In addition, in connection with the Acquisition
Agreement, Mr. Wile has signed an agreement not to compete with the Company so
long as the sale commission agreement remains in effect.

Pursuant to the MCI Performance Acquisition Agreement, the predecessor of
MCI Performance and John H. Wile granted MCI Performance a right of first
refusal to purchase the capital stock of MCI Performance Corp. of Northern
California to the extent such right of first refusal does not conflict with
any other agreement concerning, or restrictions on, the transfer of such
stock.

LOAN BY JONATHAN J. LEDECKY

In connection with the Brand Acquisition, Jonathan J. Ledecky loaned U.S.
Marketing an aggregate of $15.1 million. One million dollars was used to
finance an Escrow Agreement between Brand and U.S. Marketing. These escrowed
funds were released May 20, 1998, from which $931,911 was paid to Brand to
fund working capital needs of Brand, while the remaining funds were returned
to Mr. Ledecky. On May 20, 1998, U.S. Marketing paid the remaining $14.2
million to Brand stockholders for 70.0% of the outstanding capital stock
of Brand.

These funds, as well as the funds provided to Brand to fund working capital
needs, are evidenced by a Term Note dated May 20, 1998. The principal amount
of the Note is $15,131,911. Interest on the Note accrues for the first 30 days
after issuance of the Note at 7.15625% per annum and thereafter at the prime
rate announced by Mr. Ledecky's bank, plus 1.0%. The principal amount,
together with all interest that has been accrued thereon,

57
<PAGE>

shall be payable at the earlier of the Offering or six months from the date of
the Note. Mr. Ledecky's loan is secured by (i) a pledge from U.S. Marketing of
the stock of Brand it acquired on May 20, 1998, (ii) a pledge from Monte
Weiner and James Gillis of their remaining shares of Brand and (iii) a pledge
of Dewey K. Shay's Common Stock.

RELATIONSHIP WITH SMS

SPAR, Inc. contracts with SMS for the services of field representatives.
Robert G. Brown, the Company's Chairman and Chief Executive Officer and
William H. Bartels, the President of the Company's Merchandising Division, own
SMS and, prior to the SPAR Acquisition, they also owned SPAR Group. SMS is a
separate corporation that was not acquired by U.S. Marketing.

SMS has provided the Company with the following information: SMS has always
treated its field representatives as independent contractors, and in 1986 SMS
received a favorable determination letter from the IRS that SMS's field
representatives were properly classified as "independent contractors" for
Federal employment tax purposes. In connection with the audit of SMS's tax
returns for 1991 and 1992, the IRS reversed its earlier position and
determined that SMS's field representatives should have been treated as
employees, claiming that SMS owed approximately $2.0 million in federal
employment related taxes and interest. This claimed deficiency assumes that
the field representatives failed to pay any taxes themselves (even though SMS
filed the requisite Form 1099s), as all of the tax payments made by the field
representatives respecting their payments from SMS during such years would be
credited against any such amount that SMS might owe (and such payments are
generally discoverable). If this IRS reversal were to stand and be applied to
the years 1993 through 1998, which have not been audited by the IRS, SMS
estimates that SMS could owe up to $4.6 million in additional employment
taxes, penalties and interest (again assuming that the field representatives
failed to pay any taxes themselves). However, SMS is vigorously contesting
this determination and intends to file suit in federal court to challenge it.
Furthermore, SMS reasonably believes (based on settlement offers and
discussions) that it could settle this matter with little or no payment in
employment taxes, penalties and interest if SMS would agree on a prospective
basis to classify its field representatives as employees. SMS has refused to
settle because it believes that its field representatives satisfy the
applicable tax criteria for treatment as independent contractors for federal
employment tax purposes and that it will ultimately prevail on this issue.

As neither U.S. Marketing nor SPAR is acquiring SMS, the Company believes
that no liability of SMS will become a direct liability of U.S. Marketing or
its subsidiaries. There is no assurance, however, the IRS will not attempt to
collect employment taxes from SPAR as a former member of a commonly controlled
group. Accordingly, if SMS is unable to pay such taxes or otherwise win or
settle its dispute with the IRS, the IRS might seek to collect all or a
portion of such tax liability from SPAR as a result of SPAR's common control
with SMS and business relationship with SMS prior to the SPAR Acquisition
during the period such liabilities were incurred. The SMS Stockholders have
indemnified the Company and its subsidiaries against such liability. In the
event, however, that SMS is unsuccessful in its challenge against the IRS, and
the IRS were to assert successfully that the subsidiaries of the Company are
responsible for all or a portion of such liability, there is no assurance the
Company will be able to recover from the SMS Stockholders any amounts the
Company might be required to pay to the IRS.

As part of its overall business plan, and regardless of the outcome of the
SMS tax litigation described above, the Company intends to seek out
alternative sources to provide in-store merchandising specialists at the
lowest possible cost. With the acquisition of Certified, an additional 15,000
field representatives are available to SPAR. There is no assurance, however,
that the Company will be able to procure elsewhere (through Certified, the
employees of SPAR or otherwise) replacements for the field representatives
currently provided by SMS. To assure that such representatives will be
available from SMS, SPAR has entered into a Service Agreement with SMS
pursuant to which SMS field work will be available to SPAR on a non-exclusive
cost plus 4.0% basis. SPAR charged SMS $5.9 million, $9.3 million and $6.2
million for the years ended March 31, 1996, 1997 and 1998, respectively, for
independent contractor and field management services. Because of their
continuing

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<PAGE>

business relationship, the SMS stockholders and the Company have agreed in the
SPAR Agreement and Plan of Reorganization that for the two years after the
closing, the SMS stockholders may not settle the dispute with the IRS without
the consent of the Company if, as a condition of such settlement, SMS must
prospectively treat the in-store merchandising specialists as employees. For
an additional two years, SMS has agreed not to settle any such dispute without
six months prior notice to the Company. The Company has agreed that it will
not withhold such consent unreasonably if the Company and its subsidiaries
will not be adversely affected. Such a settlement could increase the cost to
the Company of the SMS field representatives because under the terms of the
Service Agreement SMS could pass-through to the Company any additional
operating cost, including that associated with having field representatives
classified as "employees" rather than "independent contractors." If the SMS
in-store merchandising specialists utilized by the Company had to be treated
as employees rather than independent contractors, if SMS passed any associated
additional costs to the Company, and if the Company was unable to procure the
services rendered by these field representatives elsewhere, it is estimated
that the Company would incur additional annual after-tax operating costs of
approximately $ .

59
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of June 8, 1998, based upon 4,907,500 shares
outstanding as of such date and assuming completion of the Acquisitions and
the issuance of 2,879,063 shares therein, and as adjusted to reflect the sale
of the Common Stock being offered hereby, by: (i) each person (or group of
affiliated persons) known by the Company to be the beneficial owner of more
than five percent of the outstanding Common Stock; (ii) each Named Executive
Officer of the Company; (iii) each director of the Company; and (iv) all of
the Company's directors and executive officers as a group. Each stockholder
possesses sole voting and investment power with respect to the shares listed,
unless otherwise noted.

<TABLE>
<CAPTION>
PERCENTAGE OF COMMON STOCK OWNED
--------------------------------------
NAMES AND ADDRESSES NUMBER OF SHARES
OF BENEFICIAL OWNERS OF COMMON STOCK BEFORE THE OFFERING AFTER THE OFFERING
- --------------------- ---------------- ------------------- ------------------
<S> <C> <C> <C>
Robert G. Brown(1)...... 1,115,258 14.3
William H. Bar-
tels(1)(2)............. 709,742 9.1
Dewey K. Shay(1)........ 1,875,000 24.1
Jonathan J. Ledecky(1).. 2,320,000 29.8
James R. Gillis(3)...... 240,000 3.1
Gary W. Oakley(4)....... 100,000 1.3
All directors and execu-
tive officers, as a
group.................. 6,360,000 81.7
</TABLE>
- ---------------
* Less than one percent.
(1) The addresses of such beneficial owner is c/o U.S. Marketing Services,
Inc., 303 South Broadway, Suite 140, Tarrytown, New York 10591.
(2) Does not include 200,000 shares issuable upon the exercise of options to
be granted on the effective date of the registration statement of which
this Prospectus forms a part, which options are not yet exercisable.
(3) Does not include 150,000 shares issuable upon the exercise of options to
be granted on the effective date of the registration statement of which
this Prospectus forms a part, which options are not yet exercisable.
(4) Does not include 300,000 shares issuable upon the exercise of options to
be granted on the effective date of the registration statement of which
this Prospectus forms a part, which options are not yet exercisable.

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<PAGE>

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, par value $0.001 per share and 10,000,000 shares of Preferred
Stock, par value $0.001 per share. The following summary description of the
capital stock of the Company does not purport to be complete and is subject to
the detailed provisions of, and qualified in its entirety by reference to, the
Company's Certificate of Incorporation and Bylaws, copies of which have been
filed as exhibits to the registration statement of which this Prospectus forms
a part, and to the applicable provisions of the General Corporation Law of the
State of Delaware (the "DGCL").

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. Subject to the
rights of any holders of Preferred Stock, holders of Common Stock are entitled
to receive ratably such dividends as may be declared by the Board of Directors
out of funds legally available. See "Dividend Policy." In the event of a
liquidation, dissolution or winding up of the Company, holders of the Common
Stock are entitled to share ratably in the distribution of all assets
remaining after payment of liabilities, subject to the rights of any holders
of preferred stock of the Company. The holders of Common Stock have no
preemptive rights to subscribe for additional shares of the Company and no
right to convert their Common Stock into any other securities. In addition,
there are no redemption or sinking fund provisions applicable to the Common
Stock. All of the outstanding shares of Common Stock are, and the shares of
Common Stock offered hereby will be, fully paid and nonassessable.

PREFERRED STOCK

The Company is authorized to issue up to 10,000,000 shares of Preferred
Stock. The Board of Directors is authorized, subject to any limitations
prescribed by law, without further shareholder approval, to issue such shares
of Preferred Stock in one or more series, with such rights, preferences,
privileges and restrictions, including voting rights, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be established by the Board of Directors at the time of issuance.

The issuance of Preferred Stock by the Board of Directors could adversely
affect the rights of holders of Common Stock. For example, the issuance of
shares of Preferred Stock could result in securities outstanding that would
have preference over the Common Stock with respect to dividends and in
liquidation and that could (upon conversion or otherwise) enjoy all of the
rights of the Common Stock.

The authority possessed by the Board of Directors to issue Preferred Stock
could potentially be used to discourage attempts by third persons to obtain
control of the Company through merger, tender offer, proxy or consent
solicitation or otherwise, by making such attempts more difficult to achieve
or more costly. The Board of Directors may issue Preferred Stock without
stockholder approval and with voting rights that could adversely affect the
voting power of holders of Common Stock. There are no agreements or
understandings for the issuance of Preferred Stock, and the Company has no
plans to issue any shares of Preferred Stock.

CERTAIN PROVISIONS OF DELAWARE LAW AND THE COMPANY'S CERTIFICATE OF
INCORPORATION AND BYLAWS

The Company is subject to the provisions of Section 203 of the DGCL. Section
203 prohibits a publicly-held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
interested stockholder, unless the business combination is approved in a
prescribed manner. A "business combination" includes an acquisition, asset
sale or other transaction resulting in a financial benefit to the interested
stockholder. Subject to certain exceptions, an "interested stockholder" is a
person who, together with affiliates and associates, owns, or within three
years prior to the proposed business combination has owned 15% or more of the
Company's voting stock.

The Bylaws of the Company provide that stockholders must follow an advance
notification procedure for certain stockholder nominations of candidates for
the Board of Directors and for certain other stockholder business to be
conducted at an annual meeting. Additionally, the Bylaws of the Company have
eliminated

61
<PAGE>

stockholder action by majority written consent. These provisions could, under
certain circumstances, operate to delay, defer or prevent a change in control
of the Company.

The Company's Certificate of Incorporation provides that liability of
directors of the Company is eliminated to the fullest extent permitted under
Section 102(b)(7) of the DGCL. As a result, no director of the Company will be
liable to the Company or its stockholders for monetary damages for breach of
his fiduciary duty as a director, except for liability: (i) for any breach of
the director's duty of loyalty to the Company or its stockholders; (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law; (iii) for any willful or negligent payment of an
unlawful dividend, stock purchase or redemption; or (iv) for any transaction
from which the director derived an improper personal benefit.

REGISTRATION RIGHTS

Pursuant to the Acquisition Agreements, the Company granted to the
recipients of Common Stock in the Acquisitions the right to include all or a
portion of the shares of Common Stock held by them in any registration by the
Company under the Securities Act of shares of Common Stock, other than a
registration on Form S-4 or Form S-8 or their then equivalents, and other than
a "shelf" registration of securities for sale by the Company. Such a
registration will be at the expense of the Company, other than underwriting
discounts and commissions, which will be borne by the sellers of the shares.
The Company has also granted such registration rights to Messrs. Shay and
Ledecky on substantially the same terms.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is ChaseMellon
Shareholder Services, L.L.C.

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<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have shares of Common
Stock outstanding, based upon the number of shares outstanding as of March 31,
1998. The shares sold in the Offering will be freely tradeable without
restriction or further registration under the Securities Act, unless acquired
by an "affiliate" of the Company, as that term is defined in Rule 144
promulgated under the Securities Act ("Rule 144"); shares held by affiliates
will be subject to resale limitations of Rule 144 described below. All of the
remaining 7,786,563 outstanding shares of Common Stock will be available for
resale at various dates beginning days after the date of this Prospectus,
upon expiration of applicable lock-up agreements described below and subject
to compliance with Rule 144 under the Securities Act as the holding provisions
of Rule 144 are satisfied. Of those shares, 2,879,063 may be included in
certain registration statements that may be filed by the Company, in
accordance with piggyback registration rights granted pursuant to the
Acquisition Agreements. Additional shares may be issued to stockholders of
Certified pursuant to the earn-out arrangements (to be calculated with
reference to the performance of Certified), such shares will also be subject
to piggyback registration rights. Further, upon consummation of the Offering,
1,165,000 shares of Common Stock will be issuable upon the exercise of
outstanding stock options. The Company intends to file a registration
statement on Form S-8 with respect to the shares of Common Stock issuable upon
exercise of such options, and a "shelf" registration statement with respect to
shares of Common Stock that may be issued in connection with possible future
acquisition transactions, as soon as practicable after the consummation of the
Offering.

In general, under Rule 144 as currently in effect, a stockholder who has
beneficially owned for at least one year shares privately acquired directly or
indirectly from the Company or from an affiliate of the Company, and persons
who are affiliates of the Company who have acquired the shares in registered
transactions, will be entitled to sell within any three-month period a number
of shares that does not exceed the greater of: (i) one percent of the
outstanding shares of Common Stock (approximately shares immediately after
completion of the Offering); or (ii) the average weekly trading volume in the
Common Stock during the four calendar weeks preceding such sale. Sales under
Rule 144 are also subject to certain requirements relating to the manner and
notice of sale and the availability of current public information about the
Company.

Each of the Company and the directors, executive officers, certain other
stockholders of the Company, including the holders of shares of Common Stock
issued or to be issued in the Acquisitions, and certain related persons has
agreed that, without the prior written consent of BancAmerica Robertson
Stephens on behalf of the Underwriters, it will not, during the period ending
180 days after the date of this Prospectus, (i) offer to sell, contract to
sell, or otherwise sell, dispose of, loan, pledge or grant any rights with
respect to any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise.

The Acquisition Agreements also provide that each of the stockholders of the
Founding Companies who received shares of Common Stock as consideration for
their respective interests in the Founding Companies will not be permitted to
transfer ownership of their shares of Common Stock until: (A) the twelve-month
anniversary of the date of the final Prospectus for the Offering, at which
time such stockholders shall be permitted to transfer ownership of no more
than 50.0% of their shares of Common Stock; (B) the eighteen-month anniversary
of the date of the final Prospectus for the Offering, at which time such
stockholders shall be permitted to transfer ownership of an additional 25.0%
of their shares of Common Stock; and (C) the twenty-four month anniversary of
the date of the final Prospectus for the Offering, at which time such
stockholders shall be permitted to transfer ownership of the remainder of
their shares of Common Stock.

Prior to this Offering, there has been no market for the Common Stock. No
predictions can be made with respect to the effect, if any, that public sales
of shares of the Common Stock or the availability of shares for sale will have
on the market price of the Common Stock after the completion of the Offering.
Sales of substantial amounts of Common Stock in the public market following
the Offering, or the perception that such sales may occur, could adversely
affect the market price of the Common Stock or the ability of the Company to
raise capital through sales of its equity securities. See "Risk Factors--No
Prior Market for Common Stock; Possible Volatility of Stock Price."

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<PAGE>

UNDERWRITING

The Underwriters named below, acting through their representatives,
BancAmerica Robertson Stephens, NationsBanc Montgomery Securities LLC and
SunTrust Equitable Securities Corporation (the "Representatives"), have
severally agreed with the Company, subject to the terms and conditions
contained in an Underwriting Agreement, to purchase the number of shares of
Common Stock set forth opposite their respective names below. The Underwriters
are committed to purchase and pay for all such shares if any are purchased.

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- ----------- ----------------
<S> <C>
BancAmerica Robertson Stephens.................................
NationsBanc Montgomery Securities LLC..........................
SunTrust Equitable Securities Corporation......................
------
Total........................................................
======
</TABLE>

The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Common Stock to the public at the public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession of not more than $ per share, of
which $ may be reallowed to other dealers. After the public offering, the
public offering price, concession and reallowance to dealers may be reduced by
the Representatives. No such reduction shall change the amount of proceeds to
be received by the Company as set forth on the cover page of this Prospectus.

The Company has granted to the Underwriters an option, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to
additional shares of Common Stock at the same price per share paid for the
shares that the Underwriters have agreed to purchase. To the extent that the
Underwriters exercise such option, each of the Underwriters will have a firm
commitment to purchase approximately the same percentage of such additional
shares that the number of shares of Common Stock to be purchased by it shown
in the above table represents as a percentage of the shares offered
hereby. If purchased, such additional shares will be sold by the Underwriters
on the same terms as those on which the shares are being sold.

The Underwriting Agreement contains covenants of indemnity between the
Underwriters and the Company against certain civil liabilities, including
liabilities under the Securities Act.

The directors and certain officers of the Company, who hold an aggregate of
shares of Common Stock (including shares issuable upon the exercise or
conversion of outstanding options, and convertible securities), have agreed
with the Underwriters that, for a period of 180 days from the date of this
Prospectus (the "Lock-Up Period"), they will not offer to sell, contract to
sell, or otherwise sell, dispose of, loan, pledge or grant any rights with
respect to any shares of Common Stock, any options or warrants to purchase any
shares of Common Stock, or any securities convertible into or exchangeable for
shares of Common Stock, now owned or hereafter acquired directly by such
holders or with respect to which such holders have or hereafter acquire the
power of disposition (subject to certain exceptions) without the prior written
consent of BancAmerica Robertson Stephens, which may, in its sole discretion
and at any time or from time to time, without notice, release all or any
portion of the shares subject to the lock-up agreements. In addition, the
Company has agreed that during the Lock-Up Period, it will not, without the
prior written consent of BancAmerica Robertson Stephens, issue, sell, contract
to sell or otherwise dispose of any shares of Common Stock, any options or
warrants to purchase any shares of Common Stock or any securities convertible
into, exercisable for or exchangeable for shares of Common Stock (subject to
certain exceptions).

Prior to this offering, there has been no public market for the Common Stock
of the Company. Consequently, the initial public offering price for the Common
Stock offered hereby has been determined through negotiations between the
Company and the Representatives. Among the factors considered in such
negotiations were prevailing market conditions, certain financial information
of the Company, market valuations of other

64
<PAGE>

companies that the Company and the Representatives believe to be comparable to
the Company, estimates of the business potential of the Company, the present
state of the Company's development and other factors deemed relevant.

In connection with this Offering, certain Underwriters and selling group
members (if any) who are qualified market makers on the Nasdaq Stock Market
may engage in passive market making transactions in the Common Stock on The
Nasdaq Stock Market in accordance with Rule 103 of Regulation M under the
Exchange Act during the business day prior to the pricing of this Offering.
Passive market makers must comply with applicable volume and price limitations
and must be identified as such. In general, a passive market maker must
display its bid at a price not in excess of the highest independent bid for
such security; if all independent bids are lowered below the passive market
maker's bid, however, such bid must then be lowered when certain purchase
limits are exceeded.

Certain persons participating in this Offering may overallot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the Common Stock at levels above those which might otherwise prevail in the
open market, including by entering stabilizing bids or effecting syndicate
covering transactions. A stabilizing bid means the placing of any bid or
effecting of any purchase, for the purpose of pegging, fixing or maintaining
the price of the Common Stock. A syndicate covering transaction means the
placing of any bid on behalf of the underwriting syndicate or the effecting of
any purchase to reduce a short position created in connection with this
Offering. Such transactions may be effected on the Nasdaq Stock Market, in the
over-the-counter market or otherwise. Such stabilizing, if commenced, may be
discontinued at any time.

PRICING OF THE OFFERING

Prior to this Offering, there has been no public market for the Common
Stock. The initial public offering price will be determined by negotiations
between the Company and the Representatives. Among the factors to be
considered in determining the initial public offering price will be the future
prospects of the Company and its industry in general, sales, earnings and
certain other financial and operating information of the Company in recent
periods, and the price-earnings ratios, price-sales ratios, market prices of
securities and certain financial and operating information of companies
engaged in activities similar to those of the Company. The estimated initial
public offering price range set forth on the cover page of this Preliminary
Prospectus is subject to change as a result of market conditions and other
factors.

65
<PAGE>

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Morgan, Lewis & Bockius LLP, Philadelphia,
Pennsylvania. Certain legal matters relating to the shares of Common Stock
offered hereby will be passed upon for the Underwriters by Brobeck, Phleger &
Harrison LLP, New York, New York.

EXPERTS

The financial statements of U.S. Marketing Services, Inc. as of March 31,
1998, appearing in this Prospectus and Registration Statement have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon
such report given upon the authority of such firm as experts in auditing and
accounting.

The combined financial statements of SPAR Group as of March 31, 1997 and
1998, and for each of the three years in the period ended March 31, 1998,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report
given upon the authority of such firm as experts in auditing and accounting.

The financial statements of MCI Performance Group, Inc. as of December 31,
1996 and 1997, and for each of the two years in the period ended December 31,
1997, appearing in this Prospectus and Registration Statement have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon
such report given upon the authority of such firm as experts in auditing and
accounting.

The financial statements of Brand Manufacturing Corp. and T.C.E. Corporation
as of December 31, 1997, and for the year then ended, appearing in this
Prospectus and Registration Statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing elsewhere
herein, and are included in reliance upon such report given upon the authority
of such firm as experts in auditing and accounting.

The financial statements of Brand Manufacturing Corp. and T.C.E. Corporation
as of December 31, 1996 and for each of the two years in the period ended
December 31, 1996 appearing in this Prospectus and Registration Statement have
been audited by Lopez Edwards Frank & Co., LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein, and are included in
reliance upon such report given upon the authority of such firm as experts in
auditing and accounting.

The financial statements of Certified Marketing Services, Inc. as of June
30, 1996 and 1997, and for each of the two years in the period ended June 30
1997, appearing in this Prospectus and Registration Statement have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein, and are in included in reliance
upon such report given upon the authority of such firm as experts in auditing
and accounting.

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<PAGE>

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") the Registration Statement under the Securities Act and the
rules and regulations promulgated thereunder, covering the Common Stock
offered hereby. This Prospectus omits certain information contained in the
Registration Statement, and reference is made to the Registration Statement,
and the exhibits and schedules thereto for further information with respect to
the Company and the Common Stock offered hereby. Statements contained in this
Prospectus as to the contents of any contract, agreement or other document
filed as an exhibit to the Registration Statement are not necessarily
complete, and in each instance, reference is made to the exhibit for a more
complete description of the matter involved, each such statement being
qualified in its entirety by such reference. The Registration Statement may be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the regional offices of the Commission maintained at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center,
Suite 1300, New York, New York 10048. Copies of such materials may be obtained
from the Public Reference Section of the Commission, Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, registration statements and certain other filings made with the
Commission through its Electronic Data Gathering, Analysis and Retrieval
("EDGAR") system are publicly available through the Commission's site on the
Internet's World Wide Web, located at http://www.sec.gov. The Registration
Statement, including all exhibits thereto and amendments thereof, has been
filed with the Commission through EDGAR.

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<PAGE>

GLOSSARY

AD SPECIALTY--The use of products as promotional items that are given away for
free to stimulate corporate remembrance, which products are usually imprinted
with the Company's name, address and phone number.

CATEGORY RESETS--Removing existing related products from the shelf and
replacing them with the same or other products in a different placement.

DATABASE MANAGEMENT--The management of proprietary information in a way that
permits easy access, analysis and manipulation.

DATABASE MARKETING--Direct-response marketing that utilizes a list or lists
developed by a marketer with proprietary data.

DATA COLLECTION--The systematic gathering of information for analysis and
interpretation.

DEMONSTRATION--Live exhibitions, typically in-store, of how a product works.

DIRECT MARKETING--Marketing directly to consumers by mail catalog or other
home delivery, or attempting to solicit orders by mail or toll-free
telephone.

DIRECT PREMIUM OFFERS--The use of travel or merchandise awards in conjunction
with the purchase of a product or service (e.g. offering a free putter with
five car rentals).

DISPLAY SETS--The placing of product in stores, typically in stand-alone units
or at the end of aisles.

IN-STORE INTELLIGENCE--Gathering information on store conditions, such as out-
of-stocks, products on display, pricing and number of product facings.

MERCHANDISE FULFILLMENT--The segment of the premium incentive sector concerned
with providing merchandise as rewards in incentive programs.

MERCHANDISING--Service to enhance sales by making a client's products more
visible and available to consumers.

MYSTERY SHOPPING--Anonymous calls in retail outlets by marketer's
representatives to check distribution or display of a brand and to evaluate
products, services, clients or employees.

PLAN-O-GRAM (OR SHELF SET)--The diagramed configuration of products as they
will occupy a given shelf section, which is often developed in conjunction
with a key manufacturer who seeks to maximize space allocated to its own
brands.

POINT-OF-PURCHASE DISPLAY--Displays located strategically throughout retail
stores to attract consumer attention to the product, to convey product
benefits and to promote product sales.

PREMIUM INCENTIVE--Performance determined awards to motivate employees,
salespeople, dealers and consumers, as well as to differentiate a product,
service or store.

RETAIL MERCHANDISING--The process of utilizing outsourced personnel to provide
added value sales-enhancing services to retailers, manufacturers and other
businesses. This includes, but is not limited to, product and display
placement, category resets and product replenishment/ordering.

SAMPLING--Providing free product by mail or in person to consumers to create
awareness and entice the use or consumption of the product.

68
<PAGE>

SELF-LIQUIDATING PREMIUM--The use of travel or merchandise premiums with
consumers at a price which totally covers the marketer's cost of buying and
fulfilling the order.

SWEEPSTAKES--A promotion which requires only chance to win, and no purchase or
skill.

TELESERVICES--The use of telecommunications and telemarketers for gathering
and soliciting information.

TEST MARKETING--Testing promotion alternatives, new products and advertising
campaigns, as well as packaging, pricing and location changes at store level.

TRAVEL FULFILLMENT--The segment of the premium incentive sector concerned with
providing travel as rewards in incentive programs.

69
<PAGE>

U.S. MARKETING SERVICES, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
U.S. MARKETING SERVICES, INC. UNAUDITED PRO FORMA COMBINED FINANCIAL
STATEMENTS
Introduction to Unaudited Pro Forma Combined Financial Statements...... F- 2
Unaudited Pro Forma Combined Balance Sheet............................. F- 3
Unaudited Pro Forma Combined Statement of Operations................... F- 4
Notes to the Unaudited Pro Forma Combined Financial Statements......... F- 5
U.S. MARKETING SERVICES, INC.
Report of Ernst & Young LLP, Independent Auditors...................... F-12
Balance Sheet.......................................................... F-13
Statement of Operations................................................ F-14
Statement of Stockholders' Equity...................................... F-15
Statement of Cash Flows................................................ F-16
Notes to the Financial Statements...................................... F-17
SPAR GROUP
Report of Ernst & Young LLP, Independent Auditors...................... F-21
Combined Balance Sheets................................................ F-22
Combined Statements of Operations...................................... F-23
Combined Statements of Stockholders' Equity............................ F-24
Combined Statements of Cash Flows...................................... F-25
Notes to the Combined Financial Statements............................. F-26
CERTIFIED MARKETING SERVICES, INC.
Report of Ernst & Young LLP, Independent Auditors...................... F-32
Balance Sheets......................................................... F-33
Statements of Operations............................................... F-34
Statements of Stockholders' Equity..................................... F-35
Statements of Cash Flows............................................... F-36
Notes to the Financial Statements...................................... F-37
BRAND MANUFACTURING CORP.
Report of Ernst & Young LLP, Independent Auditors...................... F-42
Report of Lopez Edwards Frank & Co., LLP, Independent Auditors......... F-43
Balance Sheets......................................................... F-44
Statements of Operations............................................... F-45
Statements of Stockholders' Equity..................................... F-46
Statements of Cash Flows............................................... F-47
Notes to the Financial Statements...................................... F-48
T.C.E. CORPORATION
Report of Ernst & Young LLP, Independent Auditors...................... F-53
Report of Lopez Edwards Frank & Co., LLP, Independent Auditors......... F-54
Balance Sheets......................................................... F-55
Statements of Operations............................................... F-56
Statements of Stockholders' Equity..................................... F-57
Statements of Cash Flows............................................... F-58
Notes to the Financial Statements...................................... F-59
MCI PERFORMANCE GROUP, INC.
Report of Ernst & Young LLP, Independent Auditors...................... F-62
Balance Sheets......................................................... F-63
Statements of Operations............................................... F-64
Statements of Stockholder's Equity (Deficit)........................... F-65
Statements of Cash Flows............................................... F-66
Notes to the Financial Statements...................................... F-67
</TABLE>

F-1
<PAGE>

U.S. MARKETING SERVICES, INC.

INTRODUCTION TO UNAUDITED PRO FORMA

COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma combined financial statements give effect
to the acquisitions by U.S. Marketing Securities, Inc. ("U.S. Marketing") of
both the outstanding capital stock of the ("SPAR") SPAR Group, Certified
Marketing Services, Inc. ("Certified"), Brand Manufacturing Corp. ("Brand")
and T.C.E. Corporation ("TCE") and substantially all the assets of MCI
Performance Group, Inc. ("MCI") (the "Founding Companies"). These acquisitions
(the "Acquisitions") will occur simultaneously with the closing of U.S.
Marketing's initial public offering (the "IPO") and will be accounted for
using the purchase method of accounting. U.S. Marketing is deemed to be the
accounting acquiror.

The unaudited pro forma combined balance sheet gives effect to the
Acquisitions and the IPO as if they had occurred on March 31, 1998. The
unaudited pro forma combined statement of operations reflect the operating
results of the Founding Companies for the fiscal year ending March 31, 1998
and gives effect to these transactions as if they had occurred on April 1,
1997. U.S. Marketing, which was incorporated in March 1998, conducted limited
operations during the period prior to March 31, 1998. U.S. Marketing and Spar
have fiscal years ending March 31. Certified has a fiscal year ending June 30.
For purposes of the March 31, 1998 pro forma combined statement of operations,
Certified's operating results for the year ended June 30, 1997 were adjusted
by adding the interim period July 1, 1997 through March 31, 1998 and
subtracting the interim period July 1, 1996 through March 31, 1997. Brand, TCE
and MCI have fiscal years ending December 31. For purposes of the March 31,
1998 pro forma combined statement of operations, operating results for Brand,
TCE and MCI for the year ended December 31, 1997 were adjusted by adding the
interim period January 1, 1998 through March 31, 1998 and subtracting the
interim period January 1, 1997 through March 31, 1997.

U.S. Marketing has preliminarily analyzed the savings that it expects to
realize from reductions in salaries and certain benefits to the owners of the
Founding Companies. To the extent the owners of the Founding Companies have
agreed prospectively to reductions in salary, bonuses, and benefits in
connection with the merger transactions, these reductions have been reflected
in the pro forma combined statement of operations. With respect to other
potential cost savings, U.S. Marketing has not and cannot quantify these
savings until completion of the combination of the Founding Companies.
Additionally, the pro forma combined statement of operations gives effect to
anticipated compensation of U.S. Marketing's new corporate management and
associated costs of being a pubic company.

The pro forma adjustments are based on estimates, available information and
certain assumptions and may be revised as additional information becomes
available. The pro forma financial data do not purport to represent what U.S.
Marketing's financial position or results of operations would actually have
been if such transactions in fact had occurred on those dates and are not
necessarily representative of U.S. Marketing's financial position or results
of operations for any future period. 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 unaudited pro forma
combined financial statements should be read in conjunction with the financial
statements and notes thereto included elsewhere in this Prospectus. See "Risk
Factors" included elsewhere herein.

F-2
<PAGE>

U.S. MARKETING SERVICES, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET

AS OF MARCH 31, 1998
(IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA OFFERING
MERGER ADJUSTMENTS
ADJUSTMENTS PRO FORMA (SEE NOTE AS
USMS SPAR CERTIFIED BRAND TCE MCI (SEE NOTE 3) COMBINED 3) ADJUSTED
---- ------- --------- ------ ---- ------ ------------ --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equiva-
lents................... $ 40 $ 1,919 $ -- $ 316 $123 $2,634 $(2,758) $ 2,274 $17,867 $ 20,141
Accounts receivable,
net..................... -- 8,050 1,852 4,802 -- 965 -- 15,669 -- 15,669
Other receivables....... -- -- -- 120 -- 497 -- 617 -- 617
Inventory............... -- -- -- 521 -- -- -- 521 -- 521
Due from affiliates..... -- 60 -- -- 255 -- (255) 60 -- 60
Prepaid program costs... -- -- -- -- -- 2,621 -- 2,621 -- 2,621
Prepaid expenses and
other current assets ... -- 310 10 105 17 821 -- 1,263 -- 1,263
Deferred financing
costs................... 5 -- -- -- -- -- -- 5 -- 5
Deferred tax asset...... -- -- 123 -- -- -- -- 123 -- 123
---- ------- ------ ------ ---- ------ ------- -------- ------- --------
Total current as-
sets................. 45 10,339 1,985 5,864 395 7,538 (3,013) 23,153 17,867 41,020
Property and equipment,
net..................... -- 227 822 171 16 2,435 (2,036) 1,635 -- 1,635
Goodwill, net........... -- -- -- -- -- -- 83,772 83,772 -- 83,772
Deferred tax asset...... -- -- -- -- -- -- 126 126 -- 126
Other assets............ -- 330 71 224 5 15 (472) 173 -- 173
---- ------- ------ ------ ---- ------ ------- -------- ------- --------
Total assets......... $ 45 $10,896 $2,878 $6,259 $416 $9,988 $78,377 $108,859 $17,867 $126,726
==== ======= ====== ====== ==== ====== ======= ======== ======= ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable........ $-- $ 630 $ 615 $1,436 $220 $3,843 $ -- $ 6,744 $ -- $ 6,744
Accrued expenses........ 30 1,755 254 539 -- 920 (770) 2,728 -- 2,728
Deferred revenue........ -- -- 28 1,285 -- 2,809 (400) 3,722 -- 3,722
Income tax payable...... -- -- 15 -- 16 -- -- 31 -- 31
Line of credit and note
payable................. -- 2,701 317 -- -- -- -- 3,018 (2,718) 300
Note payable to related
parties ................ -- 375 -- 55 -- -- (55) 375 (375) --
Due to
affiliates/stockholders
........................ -- 1,465 -- 2,250 -- 1,227 52,744 57,686 (57,424) 262
---- ------- ------ ------ ---- ------ ------- -------- ------- --------
Total current liabil-
ities ............... 30 6,926 1,229 5,565 236 8,799 51,519 74,304 (60,517) 13,787
Note payable to related
parties, net of current
portion ................ -- 593 -- -- -- -- -- 593 (593) --
Note payable, net of
current portion......... -- 235 26 -- -- 1,309 (1,309) 261 (26) 235
---- ------- ------ ------ ---- ------ ------- -------- ------- --------
Total liabilities.... 30 7,754 1,255 5,565 236 10,108 50,210 75,158 (61,136) 14,022
Stockholders' equity:
Common stock............ 5 -- 7 112 -- 4 (120) 8 6 14
Additional paid-in capi-
tal..................... 105 -- -- -- -- -- 33,782 33,887 78,997 112,884
Stock subscription re-
ceivable................ (39) -- -- -- -- -- -- (39) -- (39)
Retained earnings (defi-
cit).................... (56) 3,142 1,616 1,252 200 (124) (6,185) (155) -- (155)
Less: treasury stock.... -- -- -- (670) (20) -- 690 -- -- --
---- ------- ------ ------ ---- ------ ------- -------- ------- --------
Total stockholders'
equity............... 15 3,142 1,623 694 180 (120) 28,167 33,701 79,003 112,704
---- ------- ------ ------ ---- ------ ------- -------- ------- --------
Total liabilities and
stockholders' equity.... $ 45 $10,896 $2,878 $6,259 $416 $9,988 $78,377 $108,859 $17,867 $126,726
==== ======= ====== ====== ==== ====== ======= ======== ======= ========
</TABLE>

See Notes to the Unaudited Pro Forma Combined Financial Statements.

F-3
<PAGE>

U.S. MARKETING SERVICES, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

YEAR ENDED MARCH 31, 1998
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS PRO FORMA
USMS SPAR CERTIFIED BRAND TCE MCI (SEE NOTE 4) COMBINED
---- ------- --------- ------- ------ ------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues............ $-- $36,804 $10,851 $17,929 $2,227 $42,349 $ (981) $109,179
Cost of revenues........ -- 19,417 4,088 11,044 550 31,880 (481) 66,498
---- ------- ------- ------- ------ ------- ------- --------
Gross profit............ -- 17,387 6,763 6,885 1,677 10,469 (500) 42,681
Selling, general, and
administrative
expenses .............. $ 56 12,248 6,352 5,144 702 10,522 (5,601) 29,423
Goodwill amortization... -- -- -- -- -- -- 2,094 2,094
---- ------- ------- ------- ------ ------- ------- --------
Operating income
(loss)................. (56) 5,139 411 1,741 975 (53) 3,007 11,164
Other (income) expense.. -- 390 21 (97) -- (43) (396) (125)
---- ------- ------- ------- ------ ------- ------- --------
Income before income tax
provision.............. (56) 4,749 390 1,838 975 (10) 3,403 11,289
Income tax provision.... -- -- 157 80 41 -- 5,075 5,353
---- ------- ------- ------- ------ ------- ------- --------
Net income (loss)....... $(56) $ 4,749 $ 233 $ 1,758 $ 934 $ (10) $(1,672) $ 5,936
==== ======= ======= ======= ====== ======= ======= ========
Net income per share.... $
========
Shares used in computing
pro forma net income
per share (1)..........
========
</TABLE>
- ---------------
(1) Includes (i) 2,879,063 shares issued to owners of the Founding Companies,
(ii) 4,907,500 shares issued upon formation of U.S. Marketing, and (iii)
of the shares sold in the IPO necessary to pay the cash
consideration portion of the Acquisitions, to fund the S Corporation
distributions and to pay expenses of this Offering.

See Notes to the Unaudited Pro Forma Combined Financial Statements.

F-4
<PAGE>

U.S. MARKETING SERVICES, INC.

NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 1--GENERAL

U.S. Marketing Services, Inc. ("U.S.. Marketing") was founded in March 1998
to create a national consolidator and integrated provider of outsourced
marketing services to entertainment, consumer goods, food products and retail
companies. U.S. Marketing has conducted limited operations to date and will
acquire the Founding Companies concurrently with and as a condition to the
closing of this IPO.

The historical financial statements reflect the financial position and
results of operations of U.S. Marketing and the Founding Companies and were
derived from U.S. Marketing and the respective Founding Companies' financial
statements as indicated. The unaudited proforma combined financial statements
include the results of operations of the Founding Companies as of and for the
year ended March 31, 1998. The unaudited historical financial statements
included elsewhere herein have been included in accordance with Securities and
Exchange Commission Staff Accounting Bulletin No. 80.

NOTE 2--ACQUISITION OF FOUNDING COMPANIES

Concurrently with and as a condition to the closing of the IPO, U.S.
Marketing will acquire either all of the outstanding capital stock or
substantially all of the assets of the Founding Companies. The acquisitions
will be accounted for using the purchase method of accounting with U.S.
Marketing being treated as the accounting acquiror.

The following table sets forth the consideration to be paid (the "Purchase
Consideration") (a) in cash and (b) in shares of Common Stock to the common
stockholders of each of the Founding Companies, the allocation of the
consideration to the fair values of the net assets acquired and resulting
goodwill. For purposes of computing the estimated purchase price for
accounting purposes, the value of shares is determined using an estimated fair
value of $11.70 per share, which represents a discount of 10% from the assumed
IPO price of $13 per share, due to restrictions on the sale and
transferability of the shares issued. The total Purchase Consideration does
not reflect contingent consideration related to earn out arrangements included
in the definitive agreements for Certified and MCI. These arrangements provide
for the Company to pay additional consideration, which amount is equivalent to
1999 earnings before interest and taxes, payable in cash and shares of U.S.
Marketing common stock, calculated by reference to the average closing price
of the Common Stock for the ten trading days prior to March 31, 1999.

The purchase price has been allocated to the Company's historical assets and
liabilities based on their respective carrying values, as these carrying
values are deemed to represent fair market values of these assets and
liabilities. Additionally, adjustments have been made for S Corporation
distributions to be made subsequent to March 31, 1998, assets not purchased,
debt and other liabilities not assumed and the establishment of a deferred
income tax liability and asset assumed in the transaction for purposes of
determining the excess of the purchase price over the fair value of the net
assets acquired. The allocation of the purchase price is considered
preliminary until such time as the closing of the transaction and consummation
of the Acquisitions. The Company does not anticipate that the final allocation
of purchase price will differ significantly from that presented herein.
Contingent consideration payments, if any, will be accounted for as additional
purchase price.

F-5
<PAGE>

U.S. MARKETING SERVICES, INC.

NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
SHARES OF VALUE NET GOODWILL AND
S CORP COMMON OF TOTAL ASSETS INTANGIBLE
CASH DISTRIBUTIONS STOCK SHARES CONSIDERATION ACQUIRED ASSETS
------- ------------- --------- ------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
SPAR.................... $23,725 $-- 1,825,000 $21,352 $ 45,077 $3,119 $41,958
Certified............... 3,640 -- 280,000 3,276 6,916 1,552 5,364
Brand and TCE(1)........ 16,800 255 700,000 8,190 25,245 770 24,475
MCI..................... 13,259 -- 74,063 866 14,125 2,150 11,975
------- ---- --------- ------- -------- ------ -------
Total................... $57,424 $255 2,879,063 $33,684 $ 91,363 $7,591 $83,772
======= ==== ========= ======= ======== ====== =======
</TABLE>
- ---------------
(1) The acquisitions of Brand and TCE were negotiated as if the two companies
were one company due to common ownership. However, because the ownership
percentages of the stockholders of these two companies are not identical,
the two companies were not considered one company for purposes of
including financial statements in this Prospectus. Net assets acquired for
Brand and TCE are $609 and $161, respectively.

F-6
<PAGE>

U.S. MARKETING SERVICES, INC.
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 3--UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS

The following table summarizes unaudited pro forma combined balance sheet
adjustments.

<TABLE>
<CAPTION>
MERGER ADJUSTMENTS OFFERING ADJUSTMENTS POST-
----------------------------------------------- PRO FORMA ------------------------- MERGER
(a) (b) (c) (d) (e) (f) ADJUSTMENTS (g) (h) (i) ADJUSTMENTS
-------- ------- ---- ------- ------ ----- ----------- ------- ------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash
equivalents...... $ -- $(2,250) $-- $ -- $ (508) $ -- $(2,758) $79,003 $(3,712) $(57,424) $17,867
Due from affili-
ates............. (255) (255) --
-------- ------- ---- ------- ------ ----- ------- ------- ------- -------- -------
-- (2,250) -- -- (763) -- (3,013) 79,003 (3,712) (57,424) 17,867
Property and
equipment, net... (2,036) (2,036) --
Goodwill, net.... (126) 83,898 83,772 --
Deferred tax as-
set.............. 126 126 --
Other assets..... (472) (472) --
-------- ------- ---- ------- ------ ----- ------- ------- ------- -------- -------
Total assets.. $ -- $(2,250) $-- $81,390 $ (763) $ -- $78,377 $79,003 $(3,712) $(57,424) $17,867
======== ======= ==== ======= ====== ===== ======= ======= ======= ======== =======
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Accrued ex-
penses........... $ -- $ -- $-- $ (770) $ -- $ -- $ (770) $ -- $ -- $ -- $ --
Deferred reve-
nues............. (400) (400) --
Line of credit
and note pay-
able............. -- (2,718) (2,718)
Note payable to
related parties.. (55) (55) (375) (375)
Due to
affiliates/stockholders.. 57,424 (1,995) (1,227) (1,458) 52,744 (57,424) (57,424)
-------- ------- ---- ------- ------ ----- ------- ------- ------- -------- -------
Total current
liabilities... 57,424 (1,995) -- (2,397) (1,513) -- 51,519 -- (3,093) (57,424) (60,517)
Note payable to
related parties,
net of current
portion.......... (593) (593)
Note payable, net
of current por-
tion............. (1,309) (1,309) (26) (26)
-------- ------- ---- ------- ------ ----- ------- ------- ------- -------- -------
Total liabili-
ties.......... 57,424 (1,995) -- (3,706) (1,513) -- 50,219 -- (3,712) (57,424) (61,136)
Stockholders' eq-
uity:
Common stock..... (120) (120) 6 6
Additional paid-
in capital....... (57,424) 91,106 100 33,782 78,997 78,997
Retained earnings
(deficit)........ (255) (6,580) 750 (100) (6,185) --
Less: treasury
stock............ 690 690 --
-------- ------- ---- ------- ------ ----- ------- ------- ------- -------- -------
Total stock-
holders' equi-
ty............ (57,424) (255) -- 85,096 750 -- 28,167 79,003 -- -- 79,003
-------- ------- ---- ------- ------ ----- ------- ------- ------- -------- -------
Total liabilities
and stockholders'
equity........... $ -- $(2,250) $-- $81,390 $ (763) $ -- $78,377 $79,003 $(3,712) $(57,424) $17,867
======== ======= ==== ======= ====== ===== ======= ======= ======= ======== =======
</TABLE>

F-7
<PAGE>

U.S. MARKETING SERVICES, INC.

NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(a) Records the liability for the cash portion of the consideration to be paid
to the stockholders of the Founding Companies in connection with the
Acquisitions (See Note 1).

(b) Establishment of a liability for additional S Corporation distributions of
$255 (other than those already accrued at March 31, 1998) to be paid in
connection with the Acquisition with respect to Brand and TCE and to
reflect S Corporation distributions to be paid subsequent to March 31,
1998 of $2,250 for Brand and TCE.

(c) Records the net deferred tax asset attributable to the temporary
differences between the financial reporting and tax basis of assets and
liabilities held in S Corporations consisting of deferred tax assets of
$145 ($73 and $72 at SPAR and Brand, respectively) and a deferred tax
liability of $19 at TCE.

(d) Records the (i) purchase of the Founding Companies by U.S. Marketing,
including consideration of $58,356 in cash, 2,879,063 shares of common
stock with an estimated fair value of $11.70 per share (or $33,685), which
represents a discount of 10% from the assumed initial public offering
price of $13 per share due to restrictions on the sale and transferability
of the shares issued, and agreed upon S Corporation distributions of $255
for a total estimated purchase price of $92,296; (ii) elimination of
certain property and equipment of MCI not purchased of $2,036; (iii)
elimination of unassumed MCI debt related to certain property and
equipment of $1,369; (iv) elimination of an unassumed liability due to a
MCI stockholder of $1,227; (v) elimination of cash surrender values of
officers' life insurance assets, not acquired, of $226 ($156 for Brand and
$70 for Certified); (vi) elimination of treasury stock of $690 ($670 for
Brand and $20 for TCE) and historical equity amounts for all Founding
Companies; (vii) elimination of unassumed liabilities of $710; (viii)
capital contribution by a stockholder of MCI of $750 subsequent to March
31, 1998; and (ix) an adjustment to record amounts at fair values
aggregating to $154. The excess of the purchase price over the fair value
of the net assets acquired is $83,772.

(e) Represents the (i) settlement of certain payables to stockholders
subsequent to March 31, 1998 and prior to combination of $1,203 at SPAR;
(ii) settlement of notes payable to related parties of $55 at Brand; and
(iii) elimination of $255 in intercompany receivables and payables at
Brand and TCE, respectively.

(f) Records the issuance of 100,000 shares of U.S. Marketing Common Stock at a
price of $1 per share to an individual for services performed and valued
at $100.

(g) Records the cash proceeds from the issuance of shares of U.S. Marketing
Common Stock net of estimated offering costs. IPO costs primarily consist
of underwriting discounts and commissions, accounting fees, legal fees and
printing expenses.

(h) Records the repayments of outstanding debt from proceeds of the IPO as
follows:

<TABLE>
<CAPTION>
AS OF
MARCH 31, 1998
--------------
<S> <C>
SPAR (line of credit and note payable)........................ $2,401
Certified (line of credit).................................... 343
------
$2,744
======
SPAR (due to affiliate, current portion)...................... $ 375
======
SPAR (due to affiliate, long-term portion).................... $ 593
======
</TABLE>

(i) Records the use of IPO proceeds to pay the cash portion of the
consideration due to the stockholders of the Founding Companies in
connection with the Mergers ($43,511) and to repay the $15.1 million loan
to a stockholder of U.S. Marketing.

F-8
<PAGE>

U.S. MARKETING SERVICES, INC.

NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE 4--UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS ADJUSTMENTS

The following table summarizes unaudited pro forma combined statement of
operations adjustments.

<TABLE>
<CAPTION>
MERGER ADJUSTMENTS
----------------------------------------------------- PRO FORMA
(a) (b) (c) (d) (e) (f) (g) ADJUSTMENTS
------- ------- ----- ----- ----- ----- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues............ $ -- $ -- $(400) $ -- $(581) $ -- $ -- $ (981)
Cost of revenues........ -- -- 100 -- (581) -- -- (481)
Selling, general, and
administrative ex-
penses ................ (5,777) -- (549) 725 -- -- -- (5,601)
Goodwill amortization... -- 2,094 -- -- -- -- -- 2,094
------- ------- ----- ----- ----- ----- ------- -------
Operating income
(loss)................ 5,777 (2,094) 49 (725) -- -- -- 3,007
Other (income) expense.. -- -- -- -- -- (396) -- (396)
------- ------- ----- ----- ----- ----- ------- -------
Income (loss) before
income tax provision... 5,777 (2,094) 49 (725) -- 396 -- 3,403
Income tax provision.... -- -- -- -- -- -- 5,075 5,075
------- ------- ----- ----- ----- ----- ------- -------
Net income (loss)....... $ 5,777 $(2,094) $ 49 $(725) $ -- $ 396 $(5,075) $(1,672)
======= ======= ===== ===== ===== ===== ======= =======
</TABLE>

F-9
<PAGE>

U.S. MARKETING SERVICES, INC.

NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(a) Reflects the reduction in salaries, bonuses and benefits to the owners of
the Founding Companies as scheduled from the employment agreements that
each of the owners will enter into with U.S. Marketing Services, Inc. upon
consummation of the IPO as follows:

<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31, 1998
--------------
<S> <C>
Certified..................................................... $ 292
Brand and TCE................................................. 2,872
MCI........................................................... 2,613
------
$5,777
======
</TABLE>

Pursuant to the terms of employment agreements to be entered into upon
consummation of the Acquisitions, the owners of the Founding Companies will
be eligible for performance-based bonuses. Bonuses under the employment
agreements will be awarded based upon substantial improvement in the
operating performance of both the Founding Companies and U.S. Marketing.
The bonuses paid historically to the owners of the Founding Companies were
not awarded based upon the same performance criteria and compensation
expense has been reduced accordingly in the pro forma adjustments. Whether
the bonuses that may be awarded under the new employment agreements will be
earned cannot be determined at this time and therefore are not reflected in
the pro forma adjustments. If bonuses are awarded, compensation expense
would increase.

(b) Reflects the amortization of goodwill to be recorded as a result of these
Acquisitions over a 40-year estimated life for goodwill related to SPAR,
Certified, Brand, TCE and MCI.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
MARCH 31, 1998
------------------
<S> <C>
Elimination of MCI depreciation expense related to
property and equipment not purchased and elimination of
MCI expenses related to other unassumed liabilities..... $ 199
Reduction of Certified selling, general and
administrative expenses with respect to the closing of
the Dallas office location, that will not be purchased
by the Company.......................................... 350
-----
$ 549
=====
Reduction of Certified revenues with respect to the clos-
ing of the Dallas office location, that will not be pur-
chased by the Company................................... $ 400
=====
Increase of SPAR cost of revenues in connection with a
contract with SPAR Marketing Services, Inc. (a related
party) to be executed upon consummation of the IPO ..... $ 250
Reduction of Certified cost of revenues with respect to
the closing of the Dallas office location, that will not
be purchased by the Company ............................ (150)
-----
$ 100
=====
</TABLE>

(d) Reflects (i) an increase in expenses associated with U.S. Marketing
management of $475 and, (ii) the estimated costs associated with a public
entity of $250.

(e) Elimination of Brand and TCE intercompany net revenues and cost of
revenues of $581.

F-10
<PAGE>

U.S. MARKETING SERVICES, INC.

NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(f) Reflects the reduction in non-recurring interest expense resulting from
the payment of outstanding debt or debt not assumed by the Company:

<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31, 1998
--------------
<S> <C>
SPAR interest expense at a rate of 9.5% on a $2,401 line of
credit to be repaid with proceeds from the IPO............ $212
SPAR interest expense at a rate of 9.75% on a $968 note
payable to be repaid with proceeds from the IPO........... 74
Certified interest expense at a rate of 9.0% on a $343 line
of credit and note payable to be repaid with proceeds from
the IPO................................................... 15
Brand interest expense at a rate of 9.0% on a $55 note pay-
able to affiliate to be repaid with proceeds from the
IPO....................................................... 11
MCI interest expense at a rate of 8.5% on $1,370 of
unassumed debt related to personal property............... 84
----
$396
====
</TABLE>

(g) Reflects the incremental provision for federal and state income taxes
assuming all entities were subject to federal and state income tax and
relating to the other statements of operations' adjustments and for income
taxes on S Corporation income, assuming a corporate income tax rate of 40%
and the non-deductibility of goodwill.

F-11
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of U.S. Marketing Services, Inc.

We have audited the accompanying balance sheet of U.S. Marketing Services,
Inc. as of March 31, 1998 and the related statements of operations,
stockholders' equity and cash flows for the period from March 25, 1998 (date
of inception) through March 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of U.S. Marketing Services,
Inc. at March 31, 1998 and the results of its operations and its cash flows
for the period from March 25, 1998 (date of inception) through March 31, 1998
in conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

Vienna, Virginia
May 15, 1998

F-12
<PAGE>

U.S. MARKETING SERVICES, INC.

BALANCE SHEET

<TABLE>
<CAPTION>
MARCH 31,
1998
---------
<S> <C>
ASSETS
Cash................................................................. $ 40,375
Deferred offering costs.............................................. 5,000
--------
Total assets......................................................... $ 45,375
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses..................................................... $ 30,000
Stockholders' equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized, no
shares
issued and outstanding............................................ --
Common stock, $0.001 par value; 100,000,000 shares authorized,
4,807,500
shares issued and outstanding..................................... 4,808
Additional paid-in capital......................................... 105,205
Accumulated deficit................................................ (56,138)
Stock subscription receivable...................................... (38,500)
--------
Total stockholders' equity........................................... 15,375
--------
Total liabilities and stockholders' equity........................... $ 45,375
========
</TABLE>

See accompanying notes.

F-13
<PAGE>

U.S. MARKETING SERVICES, INC.

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE PERIOD
MARCH 25, 1998
(DATE OF INCEPTION)
THROUGH
MARCH 31, 1998
-------------------
<S> <C>
Selling, general and administrative expenses................ $ 56,138
--------
Operating loss.............................................. (56,138)
--------
Net loss.................................................... $(56,138)
========
</TABLE>

See accompanying notes.

F-14
<PAGE>

U.S. MARKETING SERVICES, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL STOCK TOTAL
---------------- PAID-IN ACCUMULATED SUBSCRIPTION STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT RECEIVABLE EQUITY
--------- ------ ---------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at March 25,
1998
(date of inception).... -- $ -- $ -- $ -- $ -- $ --
Net loss................ -- -- -- (56,138) -- (56,138)
Issuance of common
stock.................. 4,807,500 4,808 74,067 -- -- 78,875
Expenses paid by stock-
holder on
behalf of Company...... -- -- 31,138 -- -- 31,138
Stock subscription re-
ceivable............... -- -- -- -- (38,500) (38,500)
--------- ------ -------- -------- -------- -------
Balance at March 31,
1998................... 4,807,500 $4,808 $105,205 $(56,138) $(38,500) $15,375
========= ====== ======== ======== ======== =======
</TABLE>

See accompanying notes.

F-15
<PAGE>

U.S. MARKETING SERVICES, INC.

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE PERIOD
MARCH 25, 1998
(DATE OF INCEPTION)
THROUGH
MARCH 31, 1998
-------------------
<S> <C>
OPERATING ACTIVITIES
Net loss.................................................. $(56,138)
Adjustments to reconcile net loss to net cash used in op-
erating activities:
Expenses paid by stockholder on behalf of Company....... 31,138
Changes in operating assets and liabilities:
Deferred offering costs............................... (5,000)
Accrued expenses...................................... 30,000
--------
Net cash used in operating activities..................... --
INVESTING ACTIVITIES...................................... --
FINANCING ACTIVITIES...................................... --
Issuance of Common Stock.................................. 40,375
Net increase in cash...................................... --
Cash at beginning of period............................... --
--------
Cash at end of period..................................... $ 40,375
========
</TABLE>

See accompanying notes.

F-16
<PAGE>

U.S. MARKETING SERVICES, INC.

NOTES TO THE FINANCIAL STATEMENTS

MARCH 31, 1998

1. BUSINESS AND ORGANIZATION

U.S. Marketing Services, Inc., a Delaware corporation ("U.S. Marketing" or
the "Company"), was founded in March 1998 to create a nationwide consolidator
of marketing service companies. U.S. Marketing intends to acquire either the
stock or assets of five U.S. businesses (the "Acquisitions"), upon
consummation of an initial public offering (the "IPO") of its common stock
and, subsequent to the IPO, continue to acquire through merger or purchase,
similar companies to expand its national operations.

U.S. Marketing has conducted activities to date which have related to the
IPO and the Acquisitions. Operating expenses subsequent to inception consist
primarily of the salary and related travel costs of the Company's one
employee, which costs have been expensed. As of March 31, 1998, approximately
$5,000 in legal fees had been incurred in connection with the Offering, and
the Company has capitalized these costs as Deferred Offering Costs. These
costs include legal fees which will be offset against the proceeds of the IPO
at closing. U.S. Marketing is dependent upon the IPO to execute the pending
Acquisitions. There is no assurance that the pending Acquisitions discussed
will be completed or that U.S. Marketing will be able to generate future
operating revenues.

2. STOCKHOLDERS' EQUITY

Common Stock

In connection with the organization and initial capitalization on March 25,
1998, the Company issued 4,807,500 shares of Common Stock ("Common Stock") at
$0.001 per share, which the Company believes approximated the fair market
value of the Company's Common Stock at that date.

On March 30, 1998, a founder and a consultant of the Company were issued
720,000 and 50,000 shares, respectively of the Company's Common Stock at $0.05
per share, which the Company believes approximated the fair market value of
the Company's Common Stock at that date.

On April 21, 1998, the Company issued 100,000 shares of Common Stock at
$1.00 per share to a founder of the Company as a finder fee for services
performed in connection with one of the acquisitions. The Company believes the
purchase price approximated the fair market value of the Company's Common
Stock at that date.

1998 Equity Compensation Plan

The Company's Board of Directors has adopted and the Company's stockholders
have approved the Company's 1998 Equity Compensation Plan (the "Equity
Compensation Plan"). The maximum number of shares of Common Stock that may be
subject to outstanding awards may not be greater than that number of shares
equal to the number which equals the difference between fifteen percent of the
shares outstanding and shares issued pursuant to previous awards under the
Equity Compensation Plan. Awards may be settled in cash, shares, other awards
or other property, as determined by the Compensation Committee of the
Company's Board of Directors (the "Committee").

F-17
<PAGE>

U.S. MARKETING SERVICES, INC.

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

2. STOCKHOLDERS' EQUITY (CONTINUED)

1998 Equity Compensation Plan

The Equity Compensation Plan also provides for automatic option grants to
non-employee directors to promote the interests of the Company and its
stockholders by enabling non-employee directors to participate in the long-
term growth and financial success of the Company. Each non-employee director
as of the effective date of the registration statement of which this
Prospectus forms a part, and each individual who is not an employee of the
Company or any subsidiary and who is a member of the Board after that date,
will receive an non-qualified stock option plan to purchase 25,000 shares of
Common Stock on the later of the effective date of the registration statement
of which this Prospectus forms a part or the date of his or her election to
the Board (an "Initial Award"). Initial Awards will become immediately
exercisable in full on the date of grant. Each non-employee director who is a
member of the Board immediately preceding the annual meeting of stockholders
in each year beginning in 1999 (the "Annual Meeting Date") will receive an
non-qualified stock option plan to purchase 5,000 shares of Common Stock (an
"Annual Award") on the annual meeting date. Annual Awards will be immediately
exercisable in full. The exercise price of each Initial Award and each Annual
Award will be the fair market value of the Common Stock on the date of grant.
The term of each Initial Grant and each Annual Grant will be ten years. All
rights to exercise options will terminate on the first to occur of (i) the
scheduled expiration date of such option or (ii) one year following the date
of termination of service as a director.

The terms of the option awards will be established by the Committee. The
Company intends to file a registration statement on Form S-8 under the
Securities Act registering the issuance of shares upon exercise of options
granted under this Plan. The Company expects to grant stock options to
purchase approximately 850,000 shares of Common Stock at the initial public
offering price upon consummation of the IPO.

Director Compensation

1998 Employee Stock Purchase Plan

The Company's Board of Directors has adopted, and the Company's stockholders
have approved the 1998 Employee Stock Purchase Plan. This plan will permit
eligible employees of the Company and its subsidiaries to purchase shares of
Common Stock at a discount. The eligible class of employees will be determined
by the Board of Directors. Eligible employees who elect to participate will
have amounts withheld through payroll deduction during purchase periods. At
the end of each purchase period, accumulated payroll deductions will be used
to purchase stock at a price equal to 85% of the market price. Stock purchased
under the plan will be subject to a six-month holding period. The Company has
reserved 500,000 shares of Common Stock for issuance under this plan.

3. STOCK-BASED COMPENSATION

Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
for Stock-Based Compensation," allows entities to choose between a new fair
value based method of accounting for employee stock options or similar equity
instruments and the current intrinsic value-based method of accounting
prescribed by Accounting Principles Board Opinion No. 25 ("APB No. 25").
Entities electing to remain with the accounting in APB Opinion No. 25 must
make pro forma disclosures of net income and earnings per share as if the fair
value method of accounting has been applied. The Company will provide pro
forma disclosure of net income and earnings per share, as applicable, in the
notes to future consolidated financial statements.

F-18
<PAGE>

U.S. MARKETING SERVICES, INC.

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

4. COMMITMENTS

Upon the consummation of the IPO, the Company will enter into one- or two-
year employment agreements with certain individuals. Future commitments
pursuant to these employment agreements total $2,690,000.

5. RECENT PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
("SFAS No. 130"), which is required to be adopted for the Company's March 31,
1999 financial statements. SFAS No. 130 establishes new rules for the
reporting and display of comprehensive income and its components in a full set
of general purpose financial statements. Comprehensive income is the total of
net income and all other nonowner changes in equity. The impact of SFAS No.
130 on the Company's March 31, 1999 financial condition and results of
operations is not expected to be material.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS No. 131"), which is required to be
adopted for the Company's March 31, 1999 financial statements. SFAS No. 131
establishes annual and interim reporting standards for a company's operating
segments and related disclosures about products, services, geographic areas
and major customers. The impact of SFAS No. 131 on the Company's March 31,
1999 financial condition and results of operations is not expected to be
material.

6. EVENTS (UNAUDITED) SUBSEQUENT TO THE DATE OF THE AUDITORS' REPORT

U.S. Marketing has signed definitive agreements to either acquire by merger
or purchase assets of five companies ("Founding Companies") to be effective
contemporaneously with the Offering. The companies to be acquired are the SPAR
Group ("SPAR"), Certified Marketing Services, Inc. ("Certified"), Brand
Manufacturing Corp. ("Brand"), T.C.E. Corporation ("TCE"), and MCI Performance
Group, Inc. ("MCI"). The aggregate consideration that will be paid by U.S.
Marketing to acquire the Founding Companies is approximately $58.6 million in
cash (assuming an initial public offering price of $13.00) and 2,879,063
shares of common stock.

On May 20, 1998, U.S. Marketing Services, Inc. ("U.S. Marketing") acquired
70% of the outstanding stock of Brand Manufacturing Corp. ("Brand") and T.C.E.
Corporation ("TCE"), for $15.1 million in cash in the first step of a two-step
stock purchase. The $15.1 million in cash was loaned to U.S. Marketing by a
stockholder of U.S. Marketing and is secured by (i) a pledge of 70% of the
outstanding common stock of Brand and TCE owned by U.S. Marketing, (ii) a
pledge of the remaining 30% of the common stock of Brand and TCE held by their
other stockholders and (iii) a pledge of 1,875,000 shares of U.S. Marketing
owned by a stockholder. Simultaneously with the consummation of the initial
public offering ("IPO") of U.S. Marketing, U.S. Marketing will purchase all of
the remaining outstanding stock of Brand and TCE for: (i) $2.6 million in cash
and (ii) 700,000 shares of U.S. Marketing's Common Stock. Upon consummation of
the IPO, U.S. Marketing will repay the stockholder the $15.1 million loan.

As part of the definitive acquisition agreements with the Founding
Companies, U.S. Marketing will not acquire SPAR Marketing Services Inc.
("SMS"), a related party of SPAR, via common ownership, of SPAR. SMS has been
audited by the Internal Revenue Service ("IRS") with respect to whether
certain field representatives should be classified as independent contractors
or employees for federal tax purposes. If the IRS finds that the field
representatives should be classified as employees, SMS could be liable for
employment taxes and related penalties and interest (the "Taxes"). SMS is
contesting this determination and intends to file suit in federal court. No
liability of SMS will become a direct liability of U.S. Marketing or its
subsidiaries, however, if SMS is unable to pay the Taxes or otherwise win or
settle its dispute with the IRS, then the IRS might

F-19
<PAGE>

U.S. MARKETING SERVICES, INC.

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

seek to collect all or a portion of such tax liability from SPAR. The SMS
Stockholders have indemnified the Company and its subsidiaries against such
liability; however, there is no assurance the Company will be able to recover
such amounts, if paid to the IRS, from the SMS Stockholders.

The following table reflects the consideration to be paid in cash and shares
of common stock, the allocation of the consideration to net assets acquired
and resulting goodwill as of March 31, 1998 assuming an initial public
offering price per share of $13.00.

<TABLE>
<CAPTION>
S CORPORATION SHARES OF VALUE OF TOTAL NET ASSETS
CASH DISTRIBUTIONS COMMON STOCK SHARES CONSIDERATION ACQUIRED GOODWILL
------- ------------- ------------ -------- ------------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
SPAR.................... $23,725 $-- 1,825,000 $21,352 $45,077 $3,119 $41,958
Certified............... 3,640 -- 280,000 3,276 6,916 1,552 5,364
Brand and TCE (1)....... 16,800 255 700,000 8,190 25,245 770 24,475
MCI..................... 13,259 -- 74,063 866 14,125 2,150 11,975
------- ---- --------- ------- ------- ------ -------
Total.................. $57,424 $255 2,879,063 $33,684 $91,363 $7,591 $83,772
======= ==== ========= ======= ======= ====== =======
</TABLE>
- ---------------
(1) The acquisitions of Brand and TCE were negotiated as if the two companies
were one company due to common ownership. However, because the ownership
percentages of the stockholders of these two companies are not identical,
the two companies were not considered one company for purposes of
including financial statements in this Prospectus. Net assets acquired for
Brand and TCE are $609 and $161, respectively.

The total consideration does not reflect contingent consideration which may
be issued pursuant to earn out arrangements included in the definitive
agreements for Certified and MCI. These arrangements provide for the Company
to pay additional consideration of cash and issue additional shares of common
stock, based on pre-tax 1999 earnings of Certified and MCI.

The purchase price will be allocated to the Company's historical assets and
liabilities based on their respective carrying values, as these carrying
values are deemed to represent fair market value of these assets and
liabilities. Additionally, adjustments have been made for S Corporation
distributions to be made subsequent to March 31, 1998, assets not acquired,
debt and other not assumed liabilities and the establishment of a deferred
income tax liability and asset assumed in the transaction for purposes of
determining the excess of the purchase price over the full value of the net
assets acquired. The allocation of the purchase price is considered
preliminary until such time as the closing of the transaction and consummation
of the Acquisitions. The Company does not anticipate that the final allocation
of purchase price will differ significantly from that presented herein.
Contingent consideration payments, if any, will be accounted for as additional
purchase price.

In June 1998, U.S. Marketing plans to file a registration statement on Form
S-1 for the initial public offering of its common stock.

Contemporaneously, with the IPO, the Company is seeking to secure a senior
secured bank facility of $100 million to finance further acquisitions and to
provide for working capital needs. Based upon preliminary discussions, BT
Alex. Brown Incorporated believes that senior secured bank financing in an
amount equal to $100 million could be arranged.

F-20
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of SPAR Group

We have audited the accompanying combined balance sheets of SPAR Group as of
March 31, 1997 and 1998 and the related combined statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended March 31, 1998. These combined financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these combined 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 combined financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the combined
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 combined financial statements referred to above present
fairly, in all material respects, the financial position of SPAR Group at
March 31, 1997 and 1998, and the combined results of its operations and its
cash flows for each of the three years in the period ended March 31, 1998 in
conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

Minneapolis, Minnesota
April 30, 1998

F-21
<PAGE>

SPAR GROUP

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31,
----------------------
1997 1998
---------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash.................................................. $ 519,604 $ 1,919,076
Accounts receivable, less allowance of $321,000 and
$568,000 at
March 31, 1997 and 1998, respectively................ 7,565,421 8,049,491
Prepaid expenses and other current assets............. 98,080 310,277
Due from affiliates................................... 132,181 60,000
---------- -----------
Total current assets................................ 8,315,286 10,338,844
Property and equipment, net............................. 218,470 226,961
Other assets............................................ 334,577 330,124
---------- -----------
Total assets........................................ $8,868,333 $10,895,929
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit........................................ $2,054,962 $ 2,400,990
Accounts payable...................................... 879,255 630,250
Accrued expenses...................................... 2,321,007 1,755,020
Due to affiliates..................................... 618,086 262,271
Deferred revenue...................................... 466,919 --
Distributions payable to stockholders................. -- 1,203,000
Current portion of long-term debt due to affiliate.... 155,959 375,000
Current portion of other long-term debt............... 500,000 300,000
---------- -----------
Total current liabilities........................... 6,996,188 6,926,531
Other long-term debt, less current portion.............. 535,000 235,000
Long-term debt due to affiliate, less current portion... 402,374 592,500
Stockholders' equity.................................... 934,771 3,141,898
---------- -----------
Total liabilities and stockholders' equity.......... $8,868,333 $10,895,929
========== ===========
</TABLE>

See accompanying notes.

F-22
<PAGE>

SPAR GROUP

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
-------------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Net revenues............................ $14,424,502 $35,574,316 $36,804,398
Cost of revenues........................ 7,678,650 21,753,915 19,417,492
----------- ----------- -----------
Gross profit.......................... 6,745,852 13,820,401 17,386,906
Selling, general and administrative ex-
penses................................. 7,029,830 13,476,964 12,248,137
----------- ----------- -----------
Operating income (loss)................. (283,978) 343,437 5,138,769
Other income (expense):
Other income (expense)................ -- (252,746) (36,354)
Interest income....................... 23,085 -- --
Interest expense...................... (122,523) (513,658) (353,363)
----------- ----------- -----------
(99,438) (766,404) (389,717)
----------- ----------- -----------
Net income (loss)....................... $ (383,416) $ (422,967) $ 4,749,052
=========== =========== ===========
Unaudited pro forma information:
Net income (loss) before income tax
provision............................ $ (383,416) $ (422,967) $ 4,749,052
Pro forma income tax provision (bene-
fit)................................. (132,493) (6,350) 1,751,101
----------- ----------- -----------
Pro forma net income (loss) (See Note
2)................................... $ (250,923) $ (416,617) $ 2,997,951
=========== =========== ===========
</TABLE>

See accompanying notes.

F-23
<PAGE>

SPAR GROUP

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY
-------------
<S> <C>
Balance at March 31, 1995......................................... $ 512,472
Net loss........................................................ (383,416)
Net contributions from stockholders............................. 887,678
-----------
Balance at March 31, 1996......................................... 1,016,734
Net loss........................................................ (422,967)
Net contributions from stockholders............................. 341,004
-----------
Balance at March 31, 1997......................................... 934,771
Net income...................................................... 4,749,052
Net distributions to stockholders............................... (2,541,925)
-----------
Balance at March 31, 1998......................................... $ 3,141,898
===========
</TABLE>

See accompanying notes.

F-24
<PAGE>

SPAR GROUP

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
-------------------------------------
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)...................... $ (383,416) $ (422,967) $ 4,749,052
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Loss on disposal of property and
equipment........................... -- 228,533 --
Depreciation......................... 157,121 186,012 151,816
Amortization......................... 33,729 41,455 9,376
Changes in operating assets and lia-
bilities:
Accounts receivable................ 201,315 102,616 (484,070)
Note receivable.................... (253,000) 253,000 --
Prepaid expenses and other current
assets............................ 32,993 (168,451) (217,120)
Due from affiliates................ (429,481) 582,357 72,181
Accounts payable................... 311,306 67,037 (249,005)
Accrued expenses................... 268,667 1,216,401 (565,987)
Due to affiliates.................. 181,237 436,849 (355,815)
Deferred revenue................... 46,020 420,899 (466,919)
----------- ----------- -----------
Net cash provided by operating
activities............................ 166,491 2,943,741 2,643,509
INVESTING ACTIVITIES
Purchases of property and equipment.... (91,217) (104,845) (160,307)
Purchase of business, net of cash
acquired.............................. (4,669,717) -- --
----------- ----------- -----------
Net cash used in investing activities.. (4,760,934) (104,845) (160,307)
FINANCING ACTIVITIES
Net proceeds from (payments of) line of
credit................................ 3,523,734 (2,498,772) 346,028
Net proceeds from (payments of) long-
term debt due
to Spar Marketing Services, Inc. ..... (249,999) (145,835) 409,167
Due to (from) stockholders............. 300,000 -- (1,297,000)
Payments of other long-term debt....... -- (675,000) (500,000)
Distributions to (contributions by)
stockholders.......................... 887,678 341,004 (41,925)
----------- ----------- -----------
Net cash provided by (used in)
financing activities.................. 4,461,413 (2,978,603) (1,083,730)
----------- ----------- -----------
Net (decrease) increase in cash........ (133,030) (139,707) 1,399,472
Cash at beginning of year.............. 792,341 659,311 519,604
----------- ----------- -----------
Cash at end of year.................... $ 659,311 $ 519,604 $ 1,919,076
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Interest paid.......................... $ 122,523 $ 513,658 $ 353,363
=========== =========== ===========
Non-cash transactions:
Distributions payable to stockhold-
ers.................................. $ -- $ -- $ 2,500,000
=========== =========== ===========
</TABLE>

See accompanying notes.

F-25
<PAGE>

SPAR GROUP

NOTES TO THE COMBINED FINANCIAL STATEMENTS

MARCH 31, 1998

1. BUSINESS AND ORGANIZATION

The SPAR Group ("SPAR" or the "Company") is a national marketing services
company that provides retail merchandising and other marketing services to
home video, consumer goods and food products companies. SPAR's services
include in-store merchandising, test market research, mystery shopping,
database management and data collection. SPAR offers these services directly
through a network of in-store merchandising specialists. SPAR also provides
teleservices within an extensive inbound and outbound call center.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The combined financial statements include the following operating companies
owned by the same two stockholders. The companies included in the SPAR Group
are:

Spar, Inc. (formerly Spar/Burgoyne Information Services, Inc.)--provides
merchandising services to manufacturers and distributors, across most
retail trade classes such as mass merchandise, food, drug and home centers.

Spar/Burgoyne Retail Services, Inc.--provides information gathering and
consumer and trade research services and operates nationwide product
retrieval services, performing and conducting consumer and trade surveys.

Spar Marketing Force, Inc.--provides merchandising services to
manufacturers and distributors, across most retail trade classes such as
mass merchandise, food, drug and home centers. Spar Marketing Force, Inc.
also provides services for an international automobile manufacturer.

Spar Marketing, Inc.--provides merchandising services to manufacturers
and distributors, across most retail trade classes such as mass
merchandise, food, drug and home centers.

Revenue Recognition

Revenues are recognized as services are performed in accordance with
contract terms. All operating expenses are charged to operations as incurred.

Agency Funds

Cash balances available for the administration of a customer's bonus program
are deposited in accounts with financial institutions in which the Company
acts as agent for a customer pending payment settlement. These funds are
considered neither an asset nor liability of the Company. The balance of funds
held in agency accounts totaled approximately $612,000 and $997,000 as of
March 31, 1997 and 1998, respectively.

Property and Equipment

Property and equipment, including leasehold improvements, are stated at
cost. Depreciation and amortization is calculated on a straight-line basis
over estimated useful lives of the related assets, which range from five to
seven years. Leasehold improvements are amortized over the shorter of their
estimated useful lives or lease term, using the straight-line method.

Impairment of Long-Lived Assets

F-26
<PAGE>

SPAR GROUP

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Impairment of Long-Lived Assets (continued)

of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets." A loss is recognized for the difference between the
carrying amount and the estimated fair value of the asset. The Company made no
adjustment to the carrying values of the assets during the years ended March
31, 1996, 1997 and 1998.

Fair Value of Financial Instruments

At March 31, 1997 and 1998, the fair value of the Company's cash, accounts
receivable, and accounts payable approximates carrying amounts due to the
short-term maturities of such instruments. The carrying amount of notes
payable and debt approximates fair value since the current effective rates
reflect the market rate for debt with similar terms and remaining maturities.

Concentration of Credit Risk and Other Risks

Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash and accounts
receivable. The Company places its cash with high credit quality financial
institutions and investment grade short-term investments, which limit the
amount of credit exposure.

Three customers approximated 38% and 51% of net revenues for the years ended
March 31, 1997 and 1998, respectively. Additionally, two customers
approximated 37% and 49% of accounts receivable at March 31, 1997 and 1998,
respectively.

At March 31, 1998, the Company maintained approximately $1,900,000 in
accounts with one bank. These balances are in excess of Federal Deposit
Insurance Corporation insurance coverage.

Income Taxes

Historically, the companies in the SPAR Group have elected, by the consent
of their stockholders, to be taxed under the provisions of Subchapter S of the
Internal Revenue Code (the "Code") with the exception of Spar/Burgoyne Retail
Services, Inc. which is taxed as a C corporation. Under the provisions of the
Code, the stockholders of the Subchapter S companies include the Company's
corporate income in their personal income tax returns. Accordingly, these
Subchapter S companies were not subject to federal corporate income tax during
the period for which they were S Corporations. Certain states in which these
subchapter S companies do business do not accept certain provisions under
Subchapter S of the Code and, as a result, income taxes in these states are a
direct responsibility of the Company. Spar/Burgoyne Retail Services, Inc. did
not recognize income tax expense for the year ended March 31, 1996 as the
Company had net operating loss carryforwards to offset any tax liability. In
the years ended March 31, 1997 and 1998, Spar/Burgoyne Retail Services, Inc.
recognized an income tax provision of approximately $52,000 and $12,000,
respectively. This expense is recorded in other expenses.

The unaudited pro forma income tax information included in the statements of
operations is presented in accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," as if the Company had been
subject to federal and state income taxes for all periods presented.

Use of Estimates

The preparation of the combined financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the combined
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

F-27
<PAGE>

SPAR GROUP

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Internal Use Software Development Costs

In March 1998, the AICPA issued SOP 98-1, Accounting For the Costs of
Computer Software Developed For or Obtained For Internal Use, (the "SOP"). The
SOP is effective for the Company beginning on April 1, 1999. The SOP will
require the capitalization of certain costs incurred after the date of
adoption in connection with developing or obtaining software for internal use.
The Company currently expenses such costs as incurred. The Company has not yet
assessed what the impact of the SOP will be on the Company's financial
position or results of operations.

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
MARCH 31,
-----------------
1997 1998
-------- --------
<S> <C> <C>
Computer equipment and programs........................... $320,924 $399,310
Furniture and equipment................................... 38,212 38,212
Leasehold improvements.................................... 30,752 --
-------- --------
389,888 437,522
Less accumulated depreciation............................. 171,418 210,561
-------- --------
$218,470 $226,961
======== ========
</TABLE>

4. LINE OF CREDIT

Spar Marketing Force, Inc. ("SMF") has a line of credit with a bank, whereby
SMF can borrow up to $6,000,000 based on eligible accounts receivable.
Borrowings under the line of credit are due on demand with interest payable at
the bank's "alternate base rate" plus 2.0%, (10.5% at March 31, 1998). The
balance outstanding on the line of credit was $2,054,962 and $2,400,990 at
March 31, 1997 and 1998, respectively. The line of credit is secured by the
assets of SMF.

5. LONG-TERM DEBT DUE TO SPAR MARKETING SERVICES, INC.

The Company's affiliate, Spar Marketing Services, Inc. ("SMS"), had a long-
term loan dated August 1994 with an original balance of $1,000,000 and a line
of credit in the amount of $500,000. SMS refinanced and replaced these loans
with a single facility, long-term loan, on October 29, 1996. The replacement
term loan in the amount of $1,500,000 is due in 48 consecutive monthly
principal installments of $31,250 and interest at the bank's fluctuating
announced rate plus 1.25% (9.75% at March 31, 1998). The Company has borrowed
these same funds from SMS and has agreed to repay the amounts borrowed using
the same terms contained within the loan agreement between the bank and SMS.
The bank loan is secured by the assets of the SPAR Group and personal
guarantees of stockholders.

The minimum principal payments on long-term debt due to SMS are as follows
at March 31, 1998:

F-28
<PAGE>

SPAR GROUP

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)

6. COMMON STOCK

Common stock of the companies included in the SPAR Group at March 31, 1998
is as follows:

<TABLE>
<CAPTION>
SHARES
SHARES ISSUED AND
AUTHORIZED OUTSTANDING PAR VALUE
---------- ----------- ---------
<S> <C> <C> <C>
Spar, Inc.................................. 2,500 72 None
Spar/Burgoyne Retail Services, Inc. ....... 2,500 72 None
Spar Marketing Force, Inc. ................ 2,500 72 None
Spar Marketing, Inc........................ 100 72 None
</TABLE>

7. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases equipment and certain office space in several cities
under non-cancelable operating lease agreements. Certain leases contain
escalation clauses and require the Company to pay its share of any increases
in operating expenses and real estate taxes. Rent expense was approximately
$331,000, $816,000 and $871,000 for the years ended March 31, 1996, 1997 and
1998, respectively. At March 31, 1998, future minimum commitments under non-
cancelable operating lease arrangements are as follows:

Legal Matters

SMS, a related party, has been audited by the Internal Revenue Service with
respect to whether certain field representatives should be classified as
independent contractors or employees for federal employment tax purposes for
the tax years ended December 31, 1991 and 1992. The dispute has worked its way
through the Internal Revenue Service appeals process and SMS intends to file a
petition with the Federal District Court. If it is found that the field
representatives should be classified as employees, SMS could be liable for
employment taxes and related penalties and interest. The outcome of this
dispute and the amount of the contingent liability are not determinable at
this time. If a liability is assessed and SMS is unable to pay, the IRS may
seek to collect all or a portion of the tax liability from the Company due to
its common control and business relationship with SMS. Accordingly, the
Company believes an adequate provision for the contingent liability has been
made in the accompanying combined financial statements as of March 31, 1997
and 1998, respectively. Similar claims have been filed against SMS by certain
states. However, SMS is confident defending its position against these state
claims because of prior success in several states, and SMS will continue to
vigorously defend its position against any future state claims that may arise.
For example, SMS prevailed on a similar claim by the state of California,
which had instituted administrative proceedings against SMS. The
administrative law judge agreed with SMS's classification of field
representatives as independent contractors. The State of California has
declined to file a further appeal and has refunded payments made by SMS under
protest during the appeal process.

The Company is a party to various legal actions and administrative
proceedings arising in the normal course of business. In the opinion of the
Company's management, dispositions of these matters are not anticipated to
have a material adverse effect on the financial position, results of
operations or cash flows of the Company.

8. PROFIT SHARING PLAN

The SPAR Group has a 401(k) Profit Sharing Plan covering substantially all
full-time employees. Employer contributions of approximately $31,200, $31,600
and $37,000 were made to the plan during the years ended March 31, 1996, 1997
and 1998, respectively.

F-29
<PAGE>

SPAR GROUP

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)

9. PHANTOM STOCK PLAN

The SPAR Group has a phantom stock plan covering certain members of
management. Phantom shares are granted at the discretion of the Board of
Directors and vest over four years. The Company has accrued approximately
$150,000 related to the phantom stock plan as of March 31, 1998. All
liabilities under the plan are subordinated to bank debt.

10. ACCRUED EXPENSES

The accrued expenses balance includes approximately $950,000 and $600,000
for salaries and bonus amounts payable at March 31, 1997 and 1998,
respectively.

11. RELATED PARTY TRANSACTIONS

The SPAR Group is affiliated through common ownership with Spar Retail
Services, Inc. (formerly Spar/Servco, Inc.), Spar Marketing Services, Inc.,
Spar/Burgoyne, Inc., Spar Group, Inc., IDS Spar Pty, Ltd. (Aust.), Spar Ltd.,
(U.K.), Garden Island, Inc., Spar Marketing Pty Ltd. (Aust.), Spar/Burgoyne
Information Services, Inc., WR Services, Inc., Spar Services Inc., Infinity
Insurance, Ltd. and Spar Infotech, Inc.

The following transactions occurred between the SPAR Group and the above
affiliates:

<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
--------------------------------
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
Marketing services provided by affili-
ates:
Independent contractor services........ $4,077,621 $6,250,321 $3,232,500
========== ========== ==========
Field management services.............. $1,820,000 $3,002,905 $2,964,246
========== ========== ==========
Services provided to affiliates:
Management services.................... $ 620,000 $ 597,509 $ 576,147
========== ========== ==========
</TABLE>

The Company also received computer consulting services for programming and
software consulting from Spar Infotech, Inc. for which there was no charge to
the Company.

Through the services of Infinity Insurance, Ltd., the Company purchased
insurance coverage for its casualty and property insurance risk, for
approximately $321,000 and $318,000 during the years March 31, 1997 and 1998,
respectively. No services were provided during the year ended March 31, 1996.

<TABLE>
<CAPTION>
MARCH 31,
--------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Balance due from affiliates:
Spar Marketing Services, Inc................... $113,538 $ -- $ 60,000
Spar Group, Inc................................ 600,000 132,181 --
-------- -------- --------
$713,538 $132,181 $ 60,000
======== ======== ========
Balance due to affiliates:
Spar Marketing Services, Inc................... $ -- $576,820 $261,771
Spar/Burgoyne, Inc............................. -- -- 500
Spar Group, Inc................................ 39,500 41,266 --
Spar/Burgoyne Information Services, Inc........ 185,824 -- --
-------- -------- --------
$225,324 $618,086 $262,271
======== ======== ========
</TABLE>

F-30
<PAGE>

SPAR GROUP

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)

12. ACQUISITION

Spar Marketing Force, Inc. was organized in late fiscal 1996 to acquire
substantially all of the assets of Marketing Force, Inc. The March 1, 1996
acquisition has been accounted for by the purchase method of accounting.
Accordingly, the purchase price was allocated to the net assets acquired based
on their estimated fair values. The fair value of tangible assets acquired and
liabilities assumed was approximately $7,950,000 and $2,950,000, respectively.
The purchase price consisted of (a) $5,000,000 in cash, financed through a
revolving bank credit line and security agreement, and (b) a subordinated
promissory note not to exceed $12,000,000 payable to Marketing Force, Inc. and
its affiliate, ADVO, Inc.

The purchase agreement provided for a post closing adjustment to the
purchase price in the event of a deficiency in the closing business values.
The final assessment of net asset values has resulted in a restructuring of
the subordinated promissory note up to $3,000,000 which is payable only in the
event that Spar Marketing Force, Inc. completes a public offering of its
shares prior to the year 2000. The consideration related to the subordinated
promissory note will be recorded as additional purchase price when paid.

13. EVENT (UNAUDITED) SUBSEQUENT TO DATE OF INDEPENDENT AUDITORS' REPORT

In May 1998, the Company entered into a stock purchase agreement with U.S.
Marketing Services, Inc. ("U.S. Marketing"), pursuant to which the Company
will merge with a wholly-owned subsidiary of U.S. Marketing. Prior to the
closing of the stock purchase agreement, the companies in the SPAR Group
(including Spar, Inc., Spar/Burgoyne Retail Services, Inc., Spar Marketing
Force, Inc., and Spar Marketing, Inc.) will be merged into one company, Spar
Marketing Force, Inc. (the "Merged Company"). All the issued and outstanding
shares of the Merged Company will be exchanged for cash and shares of Common
Stock in U.S. Marketing concurrent with the consummation of the initial public
offering ("IPO") of the common stock of U.S. Marketing. It is intended that
U.S. Marketing will not assume the liability related to the subordinated
promissory note of up to $3,000,000 that is payable to Marketing Force, Inc.
and its affiliate, ADVO, Inc. upon a public offering of Spar Marketing Force,
Inc. prior to the year 2000. (See Note 12.) Prior to the IPO of U.S.
Marketing, the selling shareholders of Spar Marketing Force, Inc. have agreed
to pay the $3,000,000 liability. Pursuant to the stock purchase agreement,
U.S. Marketing will be indemnified by the Merged Company's stockholders with
respect to the independent contractor contingent liability discussed in Note
7.

Additionally, upon the sale of the Merged Company, the stockholders of the
Merged Company intend to pay $450,000 to the holders of the phantom stock. The
phantom stock was intended to compensate employees for past services rendered.
The Merged Company will record the additional $300,000 of expense upon
execution of the definitive stock purchase agreement.

The affiliate arrangements as described in Notes 5 and 11 will be amended
upon consummation of the merger discussed above so that all continuing
obligations will be similar to terms and conditions of agreements/arrangements
with unaffiliated third parties.

F-31
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of Certified Marketing Services,
Inc.

We have audited the accompanying balance sheets of Certified Marketing
Services, Inc. as of June 30, 1996 and 1997 and the related statements of
operations, stockholders' equity and cash flows for each of the two years in
the period ended June 30, 1997. 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 Certified Marketing
Services, Inc. at June 30, 1996 and 1997, and the results of its operations
and its cash flows for each of the two years in the period ended June 30, 1997
in conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

Vienna, Virginia
April 30, 1998

F-32
<PAGE>

CERTIFIED MARKETING SERVICES, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30,
--------------------- MARCH 31,
1996 1997 1998
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Accounts receivable........................ $1,362,708 $1,858,586 $1,851,849
Prepaid expenses and other current assets.. 13,070 17,285 10,398
Deferred tax asset......................... -- -- 122,596
---------- ---------- ----------
Total current assets..................... 1,375,778 1,875,871 1,984,843
Property, plant and equipment, net........... 450,515 732,918 821,864
Cash surrender value of officers' life
insurance................................... 45,442 70,061 70,061
Other assets................................. 2,288 4,378 950
---------- ---------- ----------
Total assets............................. $1,874,023 $2,683,228 $2,877,718
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable........................... $ 663,977 $ 813,814 $ 615,047
Accrued expenses........................... 142,101 129,643 253,801
Deferred revenue........................... 15,650 59,050 27,945
Income tax payable......................... 2,983 126,311 15,111
Deferred tax liability..................... 33,632 36,429 --
Note payable--current portion.............. 13,048 14,307 16,095
Line of credit............................. -- -- 301,015
---------- ---------- ----------
Total current liabilities................ 871,391 1,179,554 1,229,014
Note payable, less current portion........... 53,094 38,787 26,269
Stockholders' equity:
Common stock, no par value; 20,000,000
shares authorized, 10,000,000 shares
issued and outstanding.................... 6,670 6,670 6,670
Retained earnings.......................... 942,868 1,458,217 1,615,765
---------- ---------- ----------
Total stockholders' equity............... 949,538 1,464,887 1,622,435
---------- ---------- ----------
Total liabilities and stockholders'
equity.................................. $1,874,023 $2,683,228 $2,877,718
========== ========== ==========
</TABLE>

See accompanying notes.

F-33
<PAGE>

CERTIFIED MARKETING SERVICES, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30, NINE MONTHS ENDED MARCH 31,
----------------------- -----------------------------
1996 1997 1997 1998
---------- ----------- ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net revenues............ $6,910,656 $10,370,735 $ 7,593,941 $ 8,074,332
Cost of revenues........ 2,603,955 3,872,887 2,819,842 3,034,973
---------- ----------- ------------- -------------
Gross profit.......... 4,306,701 6,497,848 4,774,099 5,039,359
Selling, general and
administrative
expenses............... 3,890,057 5,618,784 4,017,770 4,750,893
---------- ----------- ------------- -------------
Operating income........ 416,644 879,064 756,329 288,466
Other income (expense):
Interest income....... 2,640 990 727 646
Interest expense...... (1,718) (8,222) (5,854) (19,592)
---------- ----------- ------------- -------------
922 (7,232) (5,127) (18,946)
Income before income tax
provision.............. 417,566 871,832 751,202 269,520
Income tax provision.. 172,412 356,483 311,584 111,972
---------- ----------- ------------- -------------
Net income.............. $ 245,154 $ 515,349 $ 439,618 $ 157,548
========== =========== ============= =============
</TABLE>

See accompanying notes.

F-34
<PAGE>

CERTIFIED MARKETING SERVICES, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK TOTAL
----------------- RETAINED STOCKHOLDERS'
SHARES AMOUNT EARNINGS EQUITY
---------- ------ ---------- -------------
<S> <C> <C> <C> <C>
Balance at June 30, 1995........... 10,000,000 $6,670 $ 697,714 $ 704,384
Net income....................... -- -- 245,154 245,154
---------- ------ ---------- ----------
Balance at June 30, 1996........... 10,000,000 6,670 942,868 949,538
Net income....................... -- -- 515,349 515,349
---------- ------ ---------- ----------
Balance at June 30, 1997........... 10,000,000 6,670 1,458,217 1,464,887
Net income (unaudited)........... -- -- 157,548 157,548
---------- ------ ---------- ----------
Balance at March 31, 1998
(unaudited)....................... 10,000,000 $6,670 $1,615,765 $1,622,435
========== ====== ========== ==========
</TABLE>

See accompanying notes.

F-35
<PAGE>

CERTIFIED MARKETING SERVICES, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30, NINE MONTHS ENDED MARCH 31,
---------------------- -----------------------------
1996 1997 1997 1998
---------- ---------- ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income.............. $ 245,154 $ 515,349 $ 439,618 $ 157,548
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities
Depreciation and
amortization......... 57,773 95,569 62,230 96,706
Cash surrender value
of officers' life
insurance............ (4,730) (24,619) -- --
Deferred tax asset.... -- -- (80,708) (122,596)
Deferred tax
liability............ (49,477) 2,797 (33,632) (36,429)
Changes in operating
assets and
liabilities:
Accounts
receivable......... (159,174) (495,878) (50,829) 6,737
Prepaid expenses and
other current
assets............. 451 (4,215) (14,298) 6,887
Other assets........ -- (2,090) (3,040) 3,428
Accounts payable.... 73,546 149,837 (110,675) (198,767)
Accrued expenses.... (25,482) (12,458) 71,561 124,158
Deferred revenue.... 109 43,400 15,011 (31,105)
Income tax payable.. (3,524) 123,328 250,066 (111,200)
---------- ---------- ------------- -------------
Net cash provided by
(used in) operating
activities............. 134,646 391,020 545,304 (104,633)
INVESTING ACTIVITIES
Purchases of property,
plant and equipment.... (204,262) (377,972) (357,525) (185,652)
Proceeds from the sale
of property, plant and
equipment.............. 15,015 -- -- --
---------- ---------- ------------- -------------
Net cash used in
investing activities... (189,247) (377,972) (357,525) (185,652)
FINANCING ACTIVITIES
Payment of note payable
and line of credit..... (19,794) (13,048) (9,786) (10,730)
Proceeds from note
payable and line of
credit................. 74,395 -- -- 301,015
---------- ---------- ------------- -------------
Net cash provided by
(used in) financing
activities............. 54,601 (13,048) (9,786) 290,285
---------- ---------- ------------- -------------
Net increase in cash and
cash equivalents....... -- -- 177,993 --
Cash and cash
equivalents at
beginning of period.... -- -- -- --
---------- ---------- ------------- -------------
Cash and cash
equivalents at end of
period................. $ -- $ -- $ 177,993 $ --
========== ========== ============= =============
Supplemental disclosures
of cash flow
information:
Interest paid........... $ 1,718 $ 8,222 $ 5,854 $ 19,952
========== ========== ============= =============
Income taxes paid....... $ 102,187 $ 230,346 $ 145,500 $ 253,500
========== ========== ============= =============
</TABLE>

See accompanying notes.

F-36
<PAGE>

CERTIFIED MARKETING SERVICES, INC.

NOTES TO THE FINANCIAL STATEMENTS

JUNE 30, 1997

1. BUSINESS AND ORGANIZATION

Certified Marketing Services, Inc. (the "Company") was founded in 1955 and
re-incorporated in the state of Washington in 1997. The Company is a national
provider of market research, in-store merchandising and auditing to movie
theater operators, motion picture distributors, home video and consumer
packaged goods companies and major retail chains. The Company operates through
a direct network of independent merchandisers, auditors and mystery shoppers.
The Company's principal place of business is the state of New York.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

The Company recognizes revenues as services are performed and reports are
delivered to the customer. When the Company receives payment prior to
performing the services, the Company records the amount as deferred revenue.

Advertising Costs

Advertising costs are expensed when incurred. Advertising costs for the
years ended June 30, 1996 and 1997 were approximately $13,300 and $8,200,
respectively.

Cash and Cash Equivalents

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

Property, Plant and Equipment

Property, plant and equipment, including leasehold improvements, are stated
at cost. Depreciation is calculated on a straight-line basis over estimated
lives of the related assets.

The estimated useful lives of property, plant and equipment are:

<TABLE>
<S> <C>
Building..................................................... 30 years
Leasehold improvements....................................... 30 years
Furniture and equipment...................................... 5 to 7 years
Automobiles.................................................. 5 years
</TABLE>

Impairment of Long-Lived Assets

The Company reviews the recoverability of long-lived assets, whenever events
or changes in circumstances indicate that the carrying amounts may not be
recoverable, in accordance with criteria established by Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets." A loss is recognized for the difference between the carrying amount
and the estimated fair value of the asset. The Company made no adjustment to
the carrying values of the assets during the years ended June 30, 1996 and
1997.

Fair Value of Financial Instruments

At June 30, 1996 and 1997, the fair value of the Company's accounts
receivable and accounts payable approximates carrying amounts due to the
short-term maturities of such instruments. The carrying amount of

F-37
<PAGE>

CERTIFIED MARKETING SERVICES, INC.

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value of Financial Instruments (continued)

the note payable with a bank approximates fair value since the current
effective interest rate reflects the market rate for debt with similar terms
and remaining maturities.

Concentration of Credit Risk

For the years ended June 30, 1996 and 1997, the Company derived 60% and 54%,
respectively, of its net revenues from one to two motion picture industry
customers. Additionally, 56% and 72% of accounts receivable at June 30, 1996
and 1997, respectively, were derived from two motion picture industry
customers.

Income Taxes

The Company provides for income taxes in accordance with the liability
method.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Unaudited Interim Statements

The financial statements as of March 31, 1998 and for the nine months ended
March 31, 1997 and 1998 have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions of Regulation S-X. In the opinion of management, all adjustments
(consisting of all normal recurring adjustments and accruals) necessary for a
fair presentation have been included. The operating results for the interim
period are not necessarily indicative of the results that may be expected for
the year ending June 30, 1998.

3. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
JUNE 30,
-------------------
1996 1997
-------- ----------
<S> <C> <C>
Building................................................ $270,531 $ 270,531
Leasehold improvements.................................. 28,686 28,686
Furniture and equipment................................. 460,159 838,131
Automobiles............................................. 13,254 13,254
-------- ----------
772,630 1,150,602
Less accumulated depreciation........................... 322,115 417,684
-------- ----------
$450,515 $ 732,918
======== ==========
</TABLE>

4. NOTE PAYABLE AND LINE OF CREDIT

As of June 30, 1996 and 1997, note payable consisted of a 60 month term loan
from a bank dated March 15, 1996, in the original amount of approximately
$74,000, collateralized by the Company's computer equipment. The note is
payable in monthly installments of approximately $1,500 which includes
interest at 9.25% per annum.

F-38
<PAGE>

CERTIFIED MARKETING SERVICES, INC.

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

4. NOTE PAYABLE AND LINE OF CREDIT (CONTINUED)

Principal payments on the note payable for each of the fiscal years from
1998 to 2001 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING JUNE 30,
--------------------
<S> <C>
1998............................................................. $14,307
1999............................................................. 15,691
2000............................................................. 17,206
2001............................................................. 5,890
-------
$53,094
=======
</TABLE>

In addition, the Company maintains a $300,000 line of credit with a bank.
Outstanding borrowings bear interest at the bank's prime rate plus 1%. As of
June 30, 1996 and 1997, there were no outstanding borrowings under this line
of credit facility. The line of credit is collateralized by the Company's
accounts receivable. In December 1997, the Company renewed this line of credit
for another year and increased the amount available under the line to
$500,000.

5. RELATED PARTY TRANSACTIONS

The financial statements include rent expense paid for land and rental
office to a corporation controlled by a 47.2% stockholder. Associated rent
expense was approximately $5,000 per month for the years ending June 30, 1996
and 1997.

Additionally, management fee expense of $61,000 and $75,000 for the years
ended June 30, 1996 and 1997, respectively, was paid to the Chairman of the
Company and a relative of certain stockholders.

6. INCOME TAXES

Deferred income taxes reflect timing differences which occur when income and
expense items are reported for financial and tax purposes in different
periods. These differences are predominantly attributable to depreciation
expense.

The Company's deferred tax asset and liability were as follows:

<TABLE>
<CAPTION>
JUNE 30,
------------------
1996 1997
-------- --------
<S> <C> <C>
Accrued expenses........................................ $ 14,569 $ 22,850
-------- --------
Total deferred tax asset................................ 14,569 22,850
Depreciation and amortization........................... (10,819) (31,609)
Accrual to cash adjustment.............................. (37,382) (27,670)
-------- --------
Total deferred tax liability............................ (48,201) (59,279)
-------- --------
Net deferred tax liability.............................. $(33,632) $(36,429)
======== ========
</TABLE>

F-39
<PAGE>

CERTIFIED MARKETING SERVICES, INC.

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

6. INCOME TAXES (CONTINUED)

Income tax provision was comprised of the following:

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
----------------------
1996 1997
---------- ----------
<S> <C> <C>
Current expense...................................... $ 221,889 $ 353,686
Deferred (benefit) expense........................... (49,477) 2,797
---------- ----------
Income tax provision................................. $ 172,412 $ 356,483
========== ==========
</TABLE>

Current income taxes are primarily related to Federal income taxes.

A reconciliation between the amount of reported income taxes and the amount
computed by multiplying the applicable statutory Federal income tax rate was
as follows:

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
---------------------
1996 1997
---------- ----------
<S> <C> <C>
Federal income taxes at statutory rates............... $ 146,148 $ 305,141
Adjustments to Federal income tax resulting from:
State taxes......................................... 25,878 53,505
Other............................................... 386 (2,163)
---------- ----------
Income tax provision.................................. $ 172,412 $ 356,483
========== ==========
</TABLE>

7. 401(K) PLAN

The Company has established a qualified non-elective employer contribution
401(k) plan for all eligible employees. Under the plan agreement, the Company
may make discretionary contributions to the plan allocated among eligible
employees. Company contributions are fully vested after five years of service.
Plan expenses for the years June 30, 1996 and 1997 were $70,000 and $90,000,
respectively.

8. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases equipment and certain office, plant and warehouse space
under non-cancelable operating lease agreements. Certain leases contain
escalation clauses and require the Company to pay its share of any increases
in operating expenses and real estate taxes. Rent expense was approximately
$147,000 and $171,000 for the years ended June 30, 1996 and 1997,
respectively. At June 30, 1997, future minimum commitments under non-
cancelable operating lease arrangements are as follows:

<TABLE>
<S> <C>
1998.............................................................. $158,064
1999.............................................................. 150,724
2000.............................................................. 89,098
2001.............................................................. 29,976
2002 and thereafter............................................... 132,803
--------
$560,665
========
</TABLE>

F-40
<PAGE>

CERTIFIED MARKETING SERVICES, INC.

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

8. COMMITMENTS AND CONTINGENCIES (CONTINUED)

Stock Option Plan

The Company's Board of Directors authorized a Stock Option Plan on June 22,
1997. One million stock options were authorized upon plan inception and one
hundred thirty thousand options were granted to certain members of management
on July 1, 1997. The options were granted at prices ranging from $0.50 to
$0.75 per share and vest over a period of four years. Management believes that
the grant price of the options on the grant date approximates the fair market
value of the underlying common stock.

Legal Matters

9. EVENT (UNAUDITED) SUBSEQUENT TO DATE OF INDEPENDENT AUDITORS' REPORT

In May 1998, the Company entered into a stock purchase agreement with U.S.
Marketing Services, Inc. ("U.S. Marketing"), pursuant to which the Company
will merge with a wholly-owned subsidiary of U.S. Marketing. All the issued
and outstanding shares of the Company will be exchanged for cash and shares of
common stock in U.S. Marketing concurrent with the consummation of the initial
public offering ("IPO") of the common stock of U.S. Marketing. Additionally,
the Company's stockholders will be given additional consideration, which
amount will be equivalent to the Company's pre-tax earnings for the year ended
March 31, 1999 and payable in cash and shares of Common Stock of U.S.
Marketing. The Company's option holders are permitted to either exercise the
options at a purchase price, which exceeds the fair market value of the
Company's common stock, or replace such options with U.S. Marketing options.
The U.S. Marketing options will be granted upon the consummation of the IPO at
the IPO price.

The affiliate arrangements as described in Note 5 will be amended upon
consummation of the merger discussed above so that all continuing obligations
will be similar to terms and conditions of agreements/ arrangements with
unaffiliated third parties.

F-41
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
of Brand Manufacturing Corp.

We have audited the accompanying balance sheet of Brand Manufacturing Corp.
as of December 31, 1997 and the related statements of operations,
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

/s/ Ernst & Young LLP
Vienna, Virginia
April 17, 1998

F-42
<PAGE>

REPORT OF LOPEZ EDWARDS FRANK & CO., LLP, INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
of Brand Manufacturing Corp.

We have audited the accompanying balance sheet of Brand Manufacturing Corp.
as of December 31, 1996 and the related statements of operations,
stockholders' equity and cash flows for each of the two years in the period
ended December 31, 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 audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Brand Manufacturing Corp.
at December 31, 1996, and the results of its operations and its cash flows for
each of the two years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.

/s/ Lopez Edwards Frank & Co., LLP

New York, New York
March 7, 1997

F-43
<PAGE>

BRAND MANUFACTURING CORP.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- MARCH 31,
1996 1997 1998
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................ $2,286,035 $ 864,910 $ 316,179
Accounts receivable...................... 1,917,696 2,876,911 4,801,980
Inventory................................ 433,208 665,078 520,524
Prepaid expenses and other current as-
sets.................................... 38,072 54,619 104,748
Refundable income taxes.................. -- 134,069 120,232
---------- ---------- ----------
Total current assets................... 4,675,011 4,595,587 5,863,663
Property and equipment, net................ 229,247 178,434 171,407
Cash surrender value of officers' life in-
surance................................... 127,764 155,945 155,945
Other assets............................... 68,434 68,434 68,434
---------- ---------- ----------
Total assets........................... $5,100,456 $4,998,400 $6,259,449
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................... $ 781,521 $1,502,125 $1,436,143
Accrued expenses......................... 613,928 584,571 538,970
Due to affiliate......................... 288,254 591,135 254,554
Deferred revenue......................... 1,012,411 124,303 1,285,309
Income tax payable....................... 46,347 -- --
Distributions payable to stockholders.... -- -- 1,995,699
Payable to related party................. 134,400 88,900 55,300
---------- ---------- ----------
Total current liabilities.............. 2,876,861 2,891,034 5,565,975
Payable to related party, less current por-
tion...................................... 88,900 -- --
Stockholders' equity:
Common stock, no par value; 320 shares
authorized, 160 shares issued and out-
standing................................ 111,667 111,667 111,667
Retained earnings........................ 2,693,052 2,665,723 1,251,831
Less: treasury stock, at cost; 60
shares.................................. (670,024) (670,024) (670,024)
---------- ---------- ----------
Total stockholders' equity............. 2,134,695 2,107,366 693,474
---------- ---------- ----------
Total liabilities and stockholders' eq-
uity.................................. $5,100,456 $4,998,400 $6,259,449
========== ========== ==========
</TABLE>

See accompanying notes.

F-44
<PAGE>

BRAND MANUFACTURING CORP.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------------- ------------------------
1995 1996 1997 1997 1998
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues............ $11,253,919 $17,190,014 $17,457,498 $3,422,895 $3,894,705
Cost of revenues........ 8,118,271 10,326,507 10,812,877 2,273,997 2,504,950
----------- ----------- ----------- ---------- ----------
Gross profit.......... 3,135,648 6,863,507 6,644,621 1,148,898 1,389,755
Operating expenses:
Selling, general and
administrative
expenses............. 2,363,681 3,981,084 4,979,592 644,891 809,806
----------- ----------- ----------- ---------- ----------
Operating income........ 771,967 2,882,423 1,665,029 504,007 579,949
Other income (expense):
Other income.......... -- -- 69,133 -- 23,586
Interest income....... -- 17,593 27,780 15,436 8,653
Interest (expense).... (127,427) (58,328) (23,227) (9,013) (2,879)
----------- ----------- ----------- ---------- ----------
(127,427) (40,735) 73,686 6,423 29,360
Income before income tax
provision.............. 644,540 2,841,688 1,738,715 510,430 609,309
Income tax provision.. 15,273 161,366 72,993 21,000 27,502
----------- ----------- ----------- ---------- ----------
Net income.............. $ 629,267 $ 2,680,322 $ 1,665,722 $ 489,430 $ 581,807
=========== =========== =========== ========== ==========
Unaudited pro forma in-
formation:
Net income before in-
come tax
provision............ $ 644,540 $ 2,841,688 $ 1,738,715 $ 510,430 $ 609,309
Pro forma income tax
provision............ 268,588 1,113,174 683,495 200,650 244,090
----------- ----------- ----------- ---------- ----------
Pro forma net income
(see Note 2)......... $ 375,952 $ 1,728,514 $ 1,055,220 $ 309,780 $ 365,219
=========== =========== =========== ========== ==========
</TABLE>

See accompanying notes.

F-45
<PAGE>

BRAND MANUFACTURING CORP.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK TOTAL
--------------- ---------------- RETAINED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT EARNINGS EQUITY
------ -------- ------ --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1994................... 160 $111,667 (60) $(670,024) $ 145,770 $ (412,587)
Net income............ -- -- -- -- 629,267 629,267
Distributions......... -- -- -- -- (208,295) (208,295)
--- -------- --- --------- ----------- -----------
Balance at December 31,
1995................... 160 111,667 (60) (670,024) 566,742 8,385
Net income............ -- -- -- -- 2,680,322 2,680,322
Distributions......... -- -- -- -- (554,012) (554,012)
--- -------- --- --------- ----------- -----------
Balance at December 31,
1996................... 160 111,667 (60) (670,024) 2,693,052 2,134,695
Net income............ -- -- -- -- 1,665,722 1,665,722
Distributions......... -- -- -- -- (1,693,051) (1,693,051)
--- -------- --- --------- ----------- -----------
Balance at December 31,
1997................... 160 111,667 (60) (670,024) 2,665,723 2,107,366
Net income (unau-
dited)............... -- -- -- -- 581,807 581,807
Distributions (unau-
dited)............... -- -- -- -- (1,995,699) (1,995,699)
--- -------- --- --------- ----------- -----------
Balance at March 31,
1998 (unaudited)....... 160 $111,667 (60) $(670,024) $ 1,251,831 $ 693,474
=== ======== === ========= =========== ===========
</TABLE>

See accompanying notes.

F-46
<PAGE>

BRAND MANUFACTURING CORP.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------------ ------------------------
1995 1996 1997 1997 1998
---------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income.............. $ 629,267 $ 2,680,322 $ 1,665,722 $ 489,430 $ 581,807
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities:
Loss on disposal of
property and
equipment............ 4,070 -- 10,340 -- --
Depreciation and
amortization......... 114,660 73,651 60,047 10,626 7,027
Cash surrender value
of officers' life
insurance............ (17,717) 14,232 (32,076) (565) --
Changes in operating
assets and
liabilities:
Accounts
receivable......... (792,943) (731,529) (959,215) (810,318) (1,925,069)
Inventory........... (234,539) 1,038,234 (231,870) (220,152) 144,554
Prepaid expenses and
other current
assets............. 11,905 39,118 (16,547) (12,224) (50,129)
Refundable income
taxes.............. -- -- (134,069) -- 13,837
Other assets........ (26,950) (1,076) -- (23,188) --
Accounts payable.... 1,378,826 (1,191,843) 720,604 (44,162) (65,982)
Accrued expenses.... 132,344 78,008 (29,357) (613,928) (45,601)
Due to affiliate.... (186,522) 152,107 302,881 61,380 (336,581)
Deferred revenue.... -- 1,012,411 (888,108) (1,012,411) 1,161,006
Income tax payable.. -- 46,347 (46,347) (46,347) --
---------- ----------- ----------- ----------- -----------
Net cash provided by
(used in) operating
activities............. 1,012,401 3,209,982 422,005 (2,221,859) (515,131)
INVESTING ACTIVITIES
Purchases of property
and equipment.......... (43,838) (32,980) (33,574) -- --
Proceeds from the sale
of property and
equipment.............. -- -- 14,000 -- --
---------- ----------- ----------- ----------- -----------
Net cash used in
investing activities... (43,838) (32,980) (19,574) -- --
FINANCING ACTIVITIES
Payment of bank loan.... (460,000) -- -- -- --
Payment of note payable
to stockholders........ (190,800) (1,010,950) -- -- --
Proceeds from note
payable to
stockholders........... -- 500,000 -- -- --
Loan from officers' life
insurance.............. -- 4,557 3,895 -- --
Payment of payable to
related party.......... (50,095) (134,400) (134,400) (33,600) (33,600)
Distributions to
stockholders........... (208,295) (554,012) (1,693,051) -- --
---------- ----------- ----------- ----------- -----------
Net cash used in
financing activities... (909,190) (1,194,805) (1,823,556) (33,600) (33,600)
---------- ----------- ----------- ----------- -----------
Net increase (decrease)
in cash and cash
equivalents............ 59,373 1,982,197 (1,421,125) (2,255,459) (548,731)
Cash and cash
equivalents at
beginning of period.... 244,465 303,838 2,286,035 2,286,035 864,910
---------- ----------- ----------- ----------- -----------
Cash and cash
equivalents at end of
period................. $ 303,838 $ 2,286,035 $ 864,910 $ 30,576 $ 316,179
========== =========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW
INFORMATION:
Non-cash transaction:
Distributions payable to
stockholders........... $ -- $ -- $ -- $ -- $ 1,995,699
========== =========== =========== =========== ===========
Interest paid........... $ 127,427 $ 58,328 $ 23,227 $ 9,013 $ 2,879
========== =========== =========== =========== ===========
Income taxes paid....... $ 34,941 $ 118,008 $ 220,683 $ -- $ --
========== =========== =========== =========== ===========
</TABLE>

See accompanying notes.

F-47
<PAGE>

BRAND MANUFACTURING CORP.

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 1997

1. BUSINESS AND ORGANIZATION

Brand Manufacturing Corp. ("Brand" or the "Company"), incorporated in New
York in 1956, designs and manufactures custom in-store merchandising units and
point-of-purchase displays for a wide range of retail store chains and product
manufacturers. For many of its retail store clients, Brand also involves the
retailers' suppliers and coordinates the collection of payments on these
invoices.

The Company is operated under common ownership with T.C.E. Corporation
("TCE"), an affiliated company incorporated in Delaware in 1978. TCE provides
trucking services to the Company's customers and consulting services and
warehousing space to the Company.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

The Company generally recognizes revenues as products are shipped to
customers, assuming that collection of the receivable is probable and the
Company has no significant remaining obligations. When the Company receives
payment in advance of shipment, the Company records the amount as deferred
revenue and recognizes the amount as revenues when the above revenue
recognition criteria have been met.

Advertising Costs

Advertising costs are expensed when incurred. Advertising costs for the
years ended December 31, 1995, 1996 and 1997 were approximately $19,000,
$17,000 and $6,000, respectively.

Cash and Cash Equivalents

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

Inventory

Inventory is stated at the lower of cost (first-in, first-out method) or
market.

Property and Equipment

Impairment of Long-Lived Assets

The Company reviews the recoverability of long-lived assets, whenever events
or changes in circumstances indicate that the carrying amounts may not be
recoverable, in accordance with criteria established by Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets". A loss is recognized for the difference between the carrying amount
and the estimated fair value of the asset. The Company made no adjustment to
the carrying values of the assets during the years ended December 31, 1995,
1996 and 1997.

F-48
<PAGE>

BRAND MANUFACTURING CORP.

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value of Financial Instruments

At December 31, 1996 and 1997, the fair value of the Company's cash and cash
equivalents, accounts receivable, and accounts payable approximates carrying
amounts due to the short-term maturities of such instruments. The carrying
amount of the payable to the related party approximates fair value since the
current effective rate reflects the market rate for debt with similar terms
and remaining maturities.

Concentration of Credit Risk and Other Risks

For accounts receivable, the Company does not require collateral, however
consistent with management's expectations, losses have historically been
minimal due to the Company's diverse customer base. Therefore, the Company
does not maintain an allowance for losses.

Two to three customers approximated 39% and 22% of net revenues for the
years ended December 31, 1996 and 1997, respectively. Additionally, two to
three customers approximated 54% and 62% of accounts receivable at December
31, 1996 and 1997, respectively.

At December 31, 1996 and 1997, the Company maintained approximately
$2,558,000 and $1,008,000, respectively, in an account with a bank that was
not insured by the Federal Deposit Insurance Corporation.

At December 31, 1997, 85% of the Company's labor force was subject to
collective bargaining agreements ("CBA"). The CBA expires in September 1999.

Income Taxes

Historically, the Company has elected, by the consent of its stockholders,
to be taxed under the provisions of Subchapter S of the Internal Revenue Code
(the "Code"). Under the provisions of the Code, the stockholders include the
Company's corporate income in their personal income tax returns. Accordingly,
the Company was not subject to federal corporate income tax during the period
for which it was an S Corporation. Certain states, in which the Company does
business, do not accept certain provisions under Subchapter S of the Code, and
as a result, income taxes in these states are a direct responsibility of the
Company.

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

F-49
<PAGE>

BRAND MANUFACTURING CORP.

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Unaudited Interim Statements

The financial statements as of March 31, 1998 and for the three months ended
March 31, 1997 and 1998 have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions of Regulation S-X. In the opinion of management, all adjustments
(consisting of all normal recurring adjustments and accruals) necessary for a
fair presentation have been included. The operating results for the interim
period are not necessarily indicative of the results that may be expected for
the year ending December 31, 1998.

3. INVENTORY

Inventory consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1996 1997
-------- --------
<S> <C> <C>
Raw materials.............................................. $142,907 $364,467
Work-in-process............................................ 290,301 252,592
Finished goods............................................. -- 48,019
-------- --------
$433,208 $665,078
======== ========
</TABLE>

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1997
--------- ---------
<S> <C> <C>
Automobiles............................................. $ 37,196 $ --
Machinery and equipment................................. 952,244 960,461
Furniture and equipment................................. 269,502 283,179
Leasehold improvements.................................. 98,760 110,440
--------- ---------
1,357,702 1,354,080
Less accumulated depreciation and amortization.......... 1,128,455 1,175,646
--------- ---------
$ 229,247 $ 178,434
========= =========
</TABLE>

5. RELATED PARTY TRANSACTIONS

Due to Affiliate

The Company collects trucking service fees from its customers for trucking
services provided by its affiliated company, TCE. The Company remits the
amounts collected to TCE. TCE also provides consulting and warehousing
services to the Company. Expenses for these services were approximately
$440,100, $575,000 and $571,500 for the years ended December 31, 1995, 1996,
and 1997, respectively. At December 31, 1996 and 1997, the Company owed the
affiliate approximately $288,300 and $591,100, respectively. The due to
affiliate account is settled periodically and is classified as a current
liability. There are no terms of settlement or interest expense associated
with the account.

Payable to Related Party

At December 31, 1996 and 1997, the Company had an amount payable due to a
former stockholder of approximately $223,300 and $88,900, respectively.
Although no formal note exists, the Company effectively pays interest at 9%
per annum and pays principal and interest payable monthly. The balance is
payable on demand.

F-50
<PAGE>

BRAND MANUFACTURING CORP.

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

6. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases equipment and certain office, plant and warehouse space
in New York under non- cancelable operating lease agreements. Certain leases
contain escalation clauses and require the Company to pay its share of any
increases in operating expenses and real estate taxes. Rent expense was
approximately $357,000, $404,000 and $414,000 for the years ended December 31,
1995, 1996 and 1997, respectively. At December 31, 1997, future minimum
commitments under non-cancelable operating lease arrangements are as follows:

Employee Contracts

The Company entered into employment contracts with key employees. At
December 31, 1997, future minimum annual payments for salaries are
approximated as follows:

Collective Bargaining Agreement

In October 1996, the Company entered into a three year collective bargaining
agreement with Local 810, affiliated with the International Brotherhood of
Teamsters (the "Union"). All of the Company's non-supervisory plant employees
who have met the Union's criteria are considered members of Local 810. The
collective bargaining agreement calls for the Company to provide stipulated
amounts per employee to the Union's defined benefit pension fund and health
and welfare fund (the "Plan"). Expenses related to a previously terminated
agreement and the current agreement described above were approximately
$281,000, $336,000 and $429,000 for the years ended December 31, 1995, 1996
and 1997, respectively.

Under the Multiemployer Pension Plan Amendment Act of 1980, an employer is
liable, upon withdrawal from or termination of a multiemployer plan, for its
proportionate share of the plan's unfunded vested benefits liability, if any.
As of December 31, 1997, no such liability existed. Currently, the Company has
no intent of terminating or withdrawing from the Plan.

Legal Matters

F-51
<PAGE>

BRAND MANUFACTURING CORP.

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

7. EVENT (UNAUDITED) SUBSEQUENT TO DATE OF INDEPENDENT AUDITORS' REPORT

On May 20, 1998, U.S. Marketing Services, Inc. ("U.S. Marketing") acquired
70% of the outstanding stock of the Company and its affiliate, TCE, for $15.1
million in cash in the first step of a two-step stock purchase. The $15.1
million in cash was loaned to U.S. Marketing by a stockholder of U.S.
Marketing and is secured by (i) a pledge of 70% of the outstanding Common
Stock of the Company and TCE owned by U.S. Marketing, (ii) a pledge of the
remaining 30% of the Common Stock of the Company and TCE held by their other
stockholders and (iii) a pledge of 1,875,000 shares of U.S. Marketing owned by
a stockholder. Simultaneously with the consummation of the initial public
offering ("IPO") of U.S. Marketing, U.S. Marketing will purchase all of the
remaining outstanding stock of the Company and TCE for: (i) $3 million in cash
and (ii) 700,000 shares of U.S. Marketing's Common Stock. Upon consummation of
the IPO, U.S. Marketing will repay the stockholder the $15.1 million loan.

F-52
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
of T.C.E. Corporation

We have audited the accompanying balance sheet of T.C.E. Corporation as of
December 31, 1997 and the related statements of operations, stockholders'
equity and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of T.C.E. Corporation at
December 31, 1997, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting
principles.

/s/ Ernst & Young LLP

Vienna, Virginia
April 17, 1998

F-53
<PAGE>

REPORT OF LOPEZ EDWARDS FRANK & CO., LLP, INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
of T.C.E. Corporation

We have audited the accompanying balance sheet of T.C.E. Corporation as of
December 31, 1996 and the related statements of operations, stockholders'
equity and cash flows for each of the two years in the period ended December
31, 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 audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of T.C.E. Corporation at
December 31, 1996, and the results of its operations and its cash flows for
each of the two years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.

/s/ Lopez Edwards Frank & Co., LLP

New York, New York
March 7, 1997

F-54
<PAGE>

T.C.E. CORPORATION

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------ MARCH 31,
1996 1997 1998
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................... $216,711 $145,940 $123,056
Due from affiliate........................... 288,254 591,135 254,554
Prepaid expenses and other current assets.... -- 33,140 17,000
-------- -------- --------
Total current assets....................... 504,965 770,215 394,610
Property and equipment, net.................... 34,343 15,671 15,671
Other assets................................... 5,541 5,541 5,541
-------- -------- --------
Total assets............................... $544,849 $791,427 $415,822
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses........ $ 4,365 $ 91,937 $220,384
Income tax payable........................... -- 26,000 15,560
-------- -------- --------
Total current liabilities.................. 4,365 117,937 235,944
Stockholders' equity:
Common stock, no par value; 200 shares
authorized, 150 shares issued and
outstanding................................. 100 100 100
Retained earnings............................ 560,384 693,390 199,778
Less: treasury stock, at cost; 25 shares..... (20,000) (20,000) (20,000)
-------- -------- --------
Total stockholders' equity................. 540,484 673,490 179,878
-------- -------- --------
Total liabilities and stockholders' equi-
ty........................................ $544,849 $791,427 $415,822
======== ======== ========
</TABLE>

See accompanying notes.

F-55
<PAGE>

T.C.E. CORPORATION

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------- -----------------------
1995 1996 1997 1997 1998
---------- ---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues............ $1,353,821 $1,891,327 $2,144,067 $428,813 $511,784
Cost of revenues........ 605,952 609,035 508,661 101,732 142,855
---------- ---------- ---------- -------- --------
Gross profit........... 747,869 1,282,292 1,635,406 327,081 368,929
Operating expenses:
Selling, general and
administrative
expenses............. 670,605 692,472 699,485 160,881 163,385
---------- ---------- ---------- -------- --------
Operating income....... 77,264 589,820 935,921 166,200 205,544
Interest (expense)...... (28,389) (27,168) -- -- --
---------- ---------- ---------- -------- --------
Income before income tax
provision.............. 48,875 562,652 935,921 166,200 205,544
Income tax provision.... 125 2,250 42,514 7,479 5,750
---------- ---------- ---------- -------- --------
Net income.............. $ 48,750 $ 560,402 $ 893,407 $158,721 $199,794
========== ========== ========== ======== ========
Unaudited pro forma in-
formation:
Net income before in-
come tax
provision............ $ 48,875 $ 562,652 935,921 $166,200 $205,544
Pro forma income tax
provision............ 18,854 217,043 361,032 64,120 79,600
---------- ---------- ---------- -------- --------
Pro forma net income
(see Note 2)......... $ 30,021 $ 345,609 $ 574,889 $102,080 $125,944
========== ========== ========== ======== ========
</TABLE>

See accompanying notes.

F-56
<PAGE>

T.C.E. CORPORATION

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK TOTAL
------------- --------------- RETAINED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT EARNINGS EQUITY
------ ------ ------ -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1994................... 150 $100 (25) $(20,000) $ 226,278 $ 206,378
Net income............ -- -- -- -- 48,750 48,750
Distributions......... -- -- -- -- (226,296) (226,296)
--- ---- --- -------- --------- ---------
Balance at December 31,
1995................... 150 100 (25) (20,000) 48,732 28,832
Net income............ -- -- -- -- 560,402 560,402
Distributions......... -- -- -- -- (48,750) (48,750)
--- ---- --- -------- --------- ---------
Balance at December 31,
1996................... 150 100 (25) (20,000) 560,384 540,484
Net income............ -- -- -- -- 893,407 893,407
Distributions......... -- -- -- -- (760,401) (760,401)
--- ---- --- -------- --------- ---------
Balance at December 31,
1997................... 150 100 (25) (20,000) 693,390 673,490
Net income (unau-
dited)............... -- -- -- -- 199,794 199,794
Distributions (unau-
dited)............... -- -- -- -- (693,406) (693,406)
--- ---- --- -------- --------- ---------
Balance March 31, 1998
(unaudited)............ 150 $100 (25) $(20,000) $ 199,778 $ 179,878
=== ==== === ======== ========= =========
</TABLE>

See accompanying notes.

F-57
<PAGE>

T.C.E. CORPORATION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------- -----------------------
1995 1996 1997 1997 1998
--------- --------- --------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income.............. $ 48,750 $ 560,402 $ 893,407 $158,721 $ 199,794
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation.......... -- 21,218 18,672 -- --
Changes in operating
assets and
liabilities:
Due from affiliate.. 186,522 (152,107) (302,881) (61,380) 336,581
Prepaid expenses and
other current
assets............. -- -- (33,140) 5,031 16,140
Accounts payable and
accrued expenses... 67 (3,207) 87,572 (16,854) 128,447
Income tax payable.. -- -- 26,000 -- (10,440)
--------- --------- --------- -------- ---------
Net cash provided by
operating activities... 235,339 426,306 689,630 85,518 670,522
INVESTING ACTIVITIES
Purchases of property
and equipment.......... -- (48,500) -- -- --
--------- --------- --------- -------- ---------
Net cash used in
investing activities... -- (48,500) -- -- --
FINANCING ACTIVITIES
Loan from stockholders.. 135,777 -- -- -- --
Repayment of loan from
stockholders........... -- (315,777) -- -- --
Distributions to
stockholders........... (226,296) (48,750) (760,401) -- (693,406)
--------- --------- --------- -------- ---------
Net cash used in
financing activities... (90,519) (364,527) (760,401) -- (693,406)
--------- --------- --------- -------- ---------
Net increase (decrease)
in cash and cash
equivalents............ 144,820 13,279 (70,771) 85,518 (22,884)
Cash and cash
equivalents at
beginning of period.... 58,612 203,432 216,711 216,711 145,940
--------- --------- --------- -------- ---------
Cash and cash
equivalents at end of
period................. $ 203,432 $ 216,711 $ 145,940 $302,229 $ 123,056
========= ========= ========= ======== =========
Supplemental disclosures
of cash flow
information:
Interest paid........... $ 28,389 $ 27,168 $ -- $ -- $ --
========= ========= ========= ======== =========
Income taxes paid....... $ -- $ -- $ 16,140 $ -- $ --
========= ========= ========= ======== =========
</TABLE>

See accompanying notes.

F-58
<PAGE>

T.C.E. CORPORATION

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 1997

1. BUSINESS AND ORGANIZATION

T.C.E. Corporation ("TCE" or the "Company") is a Delaware corporation
organized in 1978, under Subchapter S of the Internal Revenue Code (the
"Code"), to provide trucking and consulting services, and warehousing space to
primarily one customer, Brand Manufacturing Corp. ("Brand"), a company
affiliated by common ownership and control.

Brand designs and manufactures custom in-store merchandising units and
point-of-purchase displays for a wide range of retail store chains and product
manufacturers. For many of its retail store clients, Brand also invoices' the
retailers' suppliers and coordinates the collection of payments on these
invoices.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

The Company generally recognizes trucking revenues as shipments are
completed assuming that collection of the receivable is probable and the
Company has no significant remaining obligations. Consulting and warehousing
revenues are earned and recognized as services are rendered.

Cash and Cash Equivalents

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

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization is
calculated on a straight-line basis over estimated useful lives of the related
assets, which range from three to seven years.

Impairment of Long-Lived Assets

The Company reviews the recoverability of long-lived assets, whenever events
or changes in circumstances indicate that the carrying amounts may not be
recoverable, in accordance with criteria established by Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets". A loss is recognized for the difference between the carrying amount
and the estimated fair value of the asset. The Company made no adjustment to
the carrying values of the assets during the years ended December 31, 1995,
1996 and 1997.

Fair Value of Financial Instruments

The carrying value of the Company's financial instruments, including cash
and cash equivalents, receivables from the affiliate, and accounts payable,
approximate fair value.

Concentration of Credit Risk and Other Risks

Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash and cash equivalents
and receivables from the affiliate. The Company places its cash and cash
equivalents with high credit quality financial institutions and investment
grade short-term investments, which limit the amount of credit exposure.

For receivables from the affiliate, the Company does not require collateral,
as transactions giving rise to this account only occur with the affiliated
company, Brand. TCE has not recorded any reserves with respect to receivables
from affiliate as it has historically not experienced any credit losses.

F-59
<PAGE>

T.C.E. CORPORATION

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes

Historically, the Company has elected, by the consent of its stockholders,
to be taxed under the provisions of Subchapter S of the Internal Revenue Code
(the "Code"). Under the provisions of the Code, the stockholders include the
Company's corporate income in their personal income tax returns. Accordingly,
the Company was not subject to corporate income tax during the period for
which it was an S Corporation. Certain states, in which the Company does
business, do not accept certain provisions under Subchapter S of the Code, and
as a result, income taxes in these states are a direct responsibility of the
Company.

Use of Estimates

Unaudited Interim Statements

3. DUE FROM AFFILIATE

The Company provides trucking services to customers of Brand, an affiliated
company. Brand collects the trucking service fees from its customers and
remits the amounts to the Company. Additionally, the Company provides
consulting and warehousing services to Brand, for which the Company recorded
revenues of approximately $440,100, $575,000 and $571,500 during the years
ended December 31, 1995, 1996 and 1997, respectively.

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
--------- ---------
<S> <C> <C>
Trucks................................................. $ 207,824 $ 207,824
Furniture and equipment................................ 4,527 4,527
--------- ---------
212,351 212,351
Less accumulated depreciation.......................... (178,008) (196,680)
--------- ---------
$ 34,343 $ 15,671
========= =========
</TABLE>

F-60
<PAGE>

T.C.E. CORPORATION

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

5. COMMITMENTS

The Company rents certain warehouse space in New Jersey under a month-to-
month arrangement. Rent expense was approximately $281,000, $244,000 and
$245,000 for the years ended December 31, 1995, 1996 and 1997, respectively.

6. EVENT (UNAUDITED) SUBSEQUENT TO DATE OF INDEPENDENT AUDITORS' REPORT

On May 20, 1998, U.S. Marketing Services, Inc. ("U.S. Marketing") acquired
70% of the outstanding stock of the Company and its affiliate, Brand, for
$15.1 million in cash in the first step of a two-step stock purchase. The
$15.1 million in cash was loaned to U.S. Marketing by a stockholder of U.S.
Marketing and is secured by (i) a pledge of 70% of the outstanding Common
Stock of the Company and Brand owned by U.S. Marketing, (ii) a pledge of the
remaining 30% of the Common Stock of the Company and Brand held by their other
stockholders and (iii) a pledge of 1,875,000 shares of U.S. Marketing owned by
a stockholder. Simultaneously, with the consummation of the initial public
offering of U.S. Marketing (the "IPO"), U.S. Marketing will purchase all of
the remaining outstanding stock of the Company and Brand for: (i) $3 million
in cash and (ii) 700,000 shares of U.S. Marketing's Common Stock. Upon
consummation of the Offering, U.S. Marketing will repay the stockholder the
$15.1 million loan.

The affiliate arrangements as described in Note 3 will be amended upon
consummation of the merger discussed above so that all continuing obligations
will be similar to terms and conditions of agreements/arrangements with
unaffiliated third parties.

F-61
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Board of Directors and Stockholder
of MCI Performance Group, Inc.

We have audited the accompanying balance sheets of MCI Performance Group,
Inc. as of December 31, 1996 and 1997 and the related statements of
operations, stockholder's equity (deficit) and cash flows for each of the two
years in the period ended December 31, 1997. 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 MCI Performance Group,
Inc. at December 31, 1996 and 1997, and the results of its operations and its
cash flows for each of the two years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

Vienna, Virginia
May 8, 1998

F-62
<PAGE>

MCI PERFORMANCE GROUP, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1996 1997 1998
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............... $ 2,231,278 $ 3,709,298 $2,634,371
Accounts receivable, less allowance of
$116,681 and $162,426 at December 31,
1996 and 1997, respectively............ 1,180,435 3,424,812 964,479
Employee advances....................... 94,260 457,404 496,842
Due from stockholder.................... 816,385 -- --
Prepaid program costs................... 3,112,288 1,064,292 2,621,304
Prepaid expenses and other current as-
sets................................... 152,693 975,595 821,007
----------- ----------- ----------
Total current assets.................. 7,587,339 9,631,401 7,538,003
Property and equipment, net............. 227,242 2,275,717 2,435,292
Other assets............................ 14,296 14,297 14,297
----------- ----------- ----------
Total assets.......................... $ 7,828,877 $11,921,415 $9,987,592
=========== =========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEF-
ICIT)
Current liabilities:
Accounts payable........................ $ 2,372,499 $ 4,772,530 $3,842,241
Accrued expenses and other current lia-
bilities............................... 1,409,925 978,758 920,081
Deferred revenue........................ 5,606,690 4,438,418 2,809,555
Due to stockholder...................... -- 460,269 1,227,282
----------- ----------- ----------
Total current liabilities............. 9,389,114 10,649,975 8,799,159
Long-term debt, less current portion...... -- 1,219,500 1,309,157
Stockholder's equity (deficit):
Common stock, $1 par value; 100,000
shares authorized, 3,500 shares issued
and outstanding........................ 3,500 3,500 3,500
Retained earnings (deficit)............. (1,563,737) 48,440 (124,224)
----------- ----------- ----------
Total stockholder's equity (deficit).. (1,560,237) 51,940 (120,724)
----------- ----------- ----------
Total liabilities and stockholder's
equity (deficit)..................... $ 7,828,877 $11,921,415 $9,987,592
=========== =========== ==========
</TABLE>

See accompanying notes.

F-63
<PAGE>

MCI PERFORMANCE GROUP, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------- -----------------------
1996 1997 1997 1998
------------ ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net revenues................ $ 33,361,277 $ 42,294,074 $5,288,826 $5,343,389
Cost of revenues............ 26,351,322 30,881,284 2,826,277 3,825,224
------------ ------------ ---------- ----------
Gross profit............ 7,009,955 11,412,790 2,462,549 1,518,165
Operating expenses:
Selling, general and ad-
ministrative expenses.... 6,570,962 9,757,239 1,013,572 1,697,881
------------ ------------ ---------- ----------
Operating income
(loss)................. 438,993 1,655,551 1,448,977 (179,716)
Other income (expense):
Interest income (expense),
net...................... 3,899 (43,374) 271 7,052
------------ ------------ ---------- ----------
Net income (loss)........... $ 442,892 $ 1,612,177 $1,449,248 $ (172,664)
============ ============ ========== ==========
Unaudited pro forma informa-
tion:
Net income (loss) before
income tax provision..... $ 442,892 $ 1,612,177 $1,449,248 $ (172,664)
Pro forma income tax pro-
vision (benefit)......... -- -- 193,497 --
------------ ------------ ---------- ----------
Pro forma net income
(loss) (See Note 2)...... $ 442,892 $ 1,612,177 $1,255,751 $ (172,664)
============ ============ ========== ==========
</TABLE>

See accompanying notes.

F-64
<PAGE>

MCI PERFORMANCE GROUP, INC.

STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)

<TABLE>
<CAPTION>
COMMON STOCK RETAINED TOTAL
------------- EARNINGS STOCKHOLDER'S
SHARES AMOUNT (DEFICIT) EQUITY (DEFICIT)
------ ------ ----------- ----------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995......... 3,500 $3,500 $(2,006,629) $(2,003,129)
Net income......................... -- -- 442,892 442,892
----- ------ ----------- -----------
Balance at December 31, 1996......... 3,500 3,500 (1,563,737) (1,560,237)
Net income......................... -- -- 1,612,177 1,612,177
----- ------ ----------- -----------
Balance at December 31, 1997......... 3,500 3,500 48,440 51,940
Net loss (unaudited)..................-- -- (172,664) (172,664)
----- ------ ----------- -----------
Balance at March 31, 1998 (unau-
dited).............................. 3,500 $3,500 $ (124,224) $ (120,724)
===== ====== =========== ===========
</TABLE>

See accompanying notes.

F-65
<PAGE>

MCI PERFORMANCE GROUP, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------- ------------------------
1996 1997 1997 1998
------------ ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)....... $ 442,892 $ 1,612,177 $ 1,449,248 $ (172,664)
Adjustments to reconcile
net income (loss) to
net cash provided by
(used in) operating ac-
tivities:
Depreciation.......... 123,577 155,802 38,051 --
Changes in operating
assets and
liabilities:
Accounts
receivable......... 611,622 (2,244,377) 128,688 2,460,333
Employee advances... 13,158 (363,144) (42,976) (39,438)
Prepaid program
costs.............. (77,588) 2,047,996 (358,301) (1,557,012)
Prepaid expenses and
other current
assets............. 502 (822,903) (744,159) 154,588
Accounts payable.... 732,651 2,400,031 (913,191) (930,289)
Accrued expenses and
other current
liabilities........ 626,481 (431,167) (1,058,187) (31,827)
Due to/from
stockholder........ (1,555,859) 1,276,654 (300,679) 767,013
Deferred revenue.... 575,999 (1,168,272) (292,068) (1,628,863)
------------ ------------ ----------- -----------
Net cash provided by
(used in) operating
activities............. 1,493,435 2,462,797 (2,093,574) (978,159)
INVESTING ACTIVITIES
Purchases of property
and equipment.......... (54,270) (2,204,277) (65,166) (159,575)
------------ ------------ ----------- -----------
Net cash used in
investing activities... (54,270) (2,204,277) (65,166) (159,575)
FINANCING ACTIVITIES
Proceeds from note pay-
able................... -- 1,219,500 58,033 89,657
Payment of note pay-
able................... (58,033) -- -- (26,850)
------------ ------------ ----------- -----------
Net cash (used in)
provided by financing
activities............. (58,033) 1,219,500 58,033 62,807
------------ ------------ ----------- -----------
Net increase (decrease)
in cash and cash
equivalents............ 1,381,132 1,478,020 (2,100,707) (1,074,927)
Cash and cash
equivalents at
beginning of period.... 850,146 2,231,278 2,231,278 3,709,298
------------ ------------ ----------- -----------
Cash and cash
equivalents at end of
period................. $ 2,231,278 $ 3,709,298 $ 130,571 $ 2,634,371
============ ============ =========== ===========
</TABLE>

See accompanying notes.

F-66
<PAGE>

MCI PERFORMANCE GROUP, INC.

NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 1997

1. BUSINESS AND ORGANIZATION

MCI Performance Group, Inc. ("MCI" or the "Company"), incorporated in Texas
in 1987, specializes in designing and implementing premium incentives and
managing meetings and group travel for clients throughout the United States.
MCI provides a wide variety of consulting, creative, program administration
and travel and merchandise fulfillment services to companies seeking to
motivate employees, salespeople, dealers, distributors, retailers and
consumers toward certain action or objectives.

The Company changed its name from MCI Planners, Inc. to MCI Performance
Group, Inc. effective January 30, 1998.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

The Company records revenues at the completion of the program. External
direct costs and cash received in advance of the program are deferred until
the program occurs. The programs are short-term in nature, typically one to
six months in duration from contract signing to event occurrence. Generally, a
non-refundable deposit is received from the customer upon contract execution.
The customer is billed periodically during the program preparation and the
remaining amount owed for services is payable upon the completion of the
program. Costs typically incurred in the months prior to the program are labor
costs to develop the program plan and to make necessary reservations and
deposits for facilities, transportation, and other required entertainment
activities. Reimbursable travel expenditures are netted against reimbursable
receipts and are therefore excluded from the statements of operations.
Revenues may vary significantly, from period to period, depending upon the
type of programs and the timing of when programs are completed. If a client
cancels a program after costs have been expensed, the client is billed for
work performed and expenses incurred through the date of cancellation.

The Company has entered into incentive commission program agreements with
certain airlines which provide for incentive payments ("override") based upon
the Company's achievement of stated targets. The override is payable in cash
or airline tickets, depending on the airline's option, and is recorded as
revenue at the time there is sufficient information, provided by the airline,
to relate actual performance to the targets to determine the amount earned.
Override payable in tickets is recorded at the fair market value of the
tickets received. Override revenue of approximately $440,000 and $1,142,000
was recorded during the years ended December 31, 1996 and 1997, respectively.

Advertising Costs

Advertising costs are expensed as incurred.

Cash Equivalents

The Company considers all highly liquid instruments purchased with
maturities of three months or less to be cash equivalents.

The Company maintains its cash and cash equivalents in bank deposit accounts
which, at times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts.

The Company is required, by the airlines, to maintain a certificate of
deposit to guarantee payment of tickets booked by the Company. At December 31,
1996 and 1997, the Company had placed $77,740 and $80,260, respectively in a
short-term investment account.

Property and Equipment

F-67
<PAGE>

MCI PERFORMANCE GROUP, INC.

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property and Equipment (continued)

from five to seven years. Leasehold improvements are amortized over the
shorter of their estimated useful lives or lease term, using the straight-line
method.

Impairment of Long-Lived Assets

The Company reviews the recoverability of long-lived assets, whenever events
or changes in circumstances indicate that the carrying amounts may not be
recoverable, in accordance with criteria established by Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets". A loss is recognized for the difference between the carrying amount
and the estimated fair value of the asset. The Company made no adjustment to
the carrying values of the assets during the years ended December 31, 1996 and
1997.

Fair Value of Financial Instruments

The Company believes that the carrying amount of its assets and liabilities
reported in the balance sheets approximates fair value.

Concentration of Credit Risk and Other Risks

Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash and cash equivalents
and accounts receivable. The Company places its cash and cash equivalents with
high credit quality financial institutions and investment grade short-term
investments, which limit the amount of credit exposure. For accounts
receivable, the Company does not require collateral; however, the Company
monitors its exposure for credit losses and maintains allowances for
anticipated losses.

The Company may also be exposed to risk of loss with respect to credit card
transactions. The Company's risk relates to returned transactions, merchant
and fraud and transmissions of erroneous information. The Company has not
incurred significant losses for these risks to date.

Two and one customer(s) represented approximately 39% and 53% of net
revenues for the years ended December 31, 1996 and 1997, respectively.

Income Taxes

Historically, the Company has elected, by the consent of its stockholder, to
be taxed under the provisions of Subchapter S of the Internal Revenue Code
(the "Code"). Under the provisions of the Code, the stockholder includes the
Company's corporate income in his personal income tax returns. Accordingly,
the Company was not subject to corporate income tax during period for which it
was an S Corporation.

Use of Estimates

F-68
<PAGE>

MCI PERFORMANCE GROUP, INC.

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Unaudited Interim Statements

3. RELATED PARTY TRANSACTIONS

The Company leases office space from a partnership that is owned by the
Company's stockholder. The total amount of rent expense related to this lease
was $450,000 and $456,000 during 1996 and 1997, respectively.

The Company's due to/from stockholder account is settled periodically and is
classified as a current asset or liability. Employees advances are also
settled periodically and are classified as a current asset. There are no
formal terms of settlement or interest expense associated with these accounts.

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1997
----------- -----------
<S> <C> <C>
Furniture and fixtures............................ $ 332,959 $ 360,202
Equipment......................................... 1,348,407 1,564,595
Property held under capital leases................ 164,916 164,916
Automobiles....................................... 53,564 53,564
Charter yacht..................................... -- 1,960,846
Leasehold improvements............................ 718,582 718,582
----------- -----------
2,618,428 4,822,705
Less accumulated depreciation and amortization.... (2,391,186) (2,546,988)
----------- -----------
$ 227,242 $ 2,275,717
=========== ===========
</TABLE>

5. LEASE COMMITMENTS

Operating Leases

The Company leases certain facilities under non-cancelable operating lease
agreements. Rent expense was approximately $479,000 and $470,000 for the years
ended December 31, 1996 and 1997, respectively. At December 31, 1997, future
minimum commitments under non-cancelable operating lease arrangements are as
follows:

F-69
<PAGE>

MCI PERFORMANCE GROUP, INC.

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

5. LEASE COMMITMENTS (CONTINUED)

Capital Leases

The Company leases certain office and computer equipment under capital
leases expiring in 1996, 1997, and 1998. The assets and liabilities under
capital leases are recorded at the lower of the present value of the minimum
lease payments or the fair market value of the assets. Depreciation of assets
under capital leases is included in depreciation expense for 1996 and 1997.
Included in property and equipment are the following assets held under capital
leases:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1997
-------- --------
<S> <C> <C>
Computer equipment....................................... $164,916 $164,916
Less accumulated depreciation............................ (58,534) (91,517)
-------- --------
$106,382 $ 73,399
======== ========
</TABLE>

6. LONG TERM DEBT

Long-term debt consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1996 1997
---- ----------
<S> <C> <C>
Note payable to bank in monthly installments at 8.5% inter-
est, collateralized by the charter yacht, all unpaid prin-
cipal and interest due 2002............................... $-- $1,261,580
Less current portion....................................... -- (42,080)
---- ----------
Long-term debt, less current portion....................... $-- $1,219,500
==== ==========
</TABLE>

7. EMPLOYEES' SAVINGS PLAN

The Company maintains a 401(k) plan under which the Company may contribute
25% of an employee's eligible contributions up to the first 5% of annual
compensation. Employees become eligible after attaining the age of 20 1/2
years and having been employed by the Company for six months. Employees may
contribute up to 25% of their annual compensation subject to limitations set
forth in the Internal Revenue Code. Employees' contributions vest immediately.
The matching contribution vests 20% after 3 years and in increments of 20%
each additional year.

8. CONTINGENCIES

Legal

The Company is a party to the various legal actions and administrative
proceedings arising in the normal course of business. In the opinion of
Company's management, dispositions of these matters are not anticipated to
have a material adverse effect on the financial position, results of
operations or cash flows of the Company.

9. SUBSEQUENT EVENT

In April 1998, the Company entered into a Business Agreement with one of its
significant customers to plan and coordinate the lodging, transportation,
meals and other services for 11,000 individuals who are scheduled to attend a
program event in March 1999.

F-70
<PAGE>

MCI PERFORMANCE GROUP, INC.

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

10. EVENTS (UNAUDITED) SUBSEQUENT TO DATE OF INDEPENDENT AUDITORS' REPORT

In May 1998, the Company entered into an asset purchase agreement with U.S.
Marketing Services, Inc. ("U.S. Marketing"). Concurrent with the consummation
of the initial public offering ("IPO") of U.S. Marketing, U.S. Marketing will
acquire substantially all of the assets and assume certain liabilities of the
Company in exchange for cash and shares of common stock of U.S. Marketing.
Pursuant to the asset purchase agreement, U.S. Marketing will not acquire the
charter yacht and certain vehicles and will not assume the related debt for
these assets as well as certain other liabilities.

Additionally, pursuant to an agreement entered into previously, the sole
stockholder of the Company will give 10% of the sale proceeds (approximately
$1,400,000) to the President of the Company. The agreement provides for this
payment in recognition of past services by the President and in connection
with President's sharing in the appreciation of the Company. The Company will
record an expense for this amount at the time the definitive asset purchase
agreement is signed.

The affiliate arrangements as described in Note 3 will be amended upon
consummation of the asset purchase discussed above so that all continuing
obligations will be similar to terms and conditions of agreements/
arrangements with unaffiliated third parties.

F-71
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth fees payable to the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc., and other
estimated expenses expected to be incurred in connection with issuance and
distribution of securities being registered. All such fees and expenses shall
be paid by the Company.

<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee................. $29,549
NASD Fee............................................................ 10,500
Nasdaq National Market Listing Fee.................................. *
Printing and Engraving Expenses..................................... *
Accounting Fees and Expenses........................................ *
Legal Fees and Expenses............................................. *
Directors and Officers Insurance.................................... *
Transfer Agent Fees and Expenses.................................... *
Miscellaneous....................................................... *
-------
Total............................................................. $
=======
</TABLE>
- ---------------
* To be filed by amendment

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL")
permits a corporation, in its certificate of incorporation, to limit or
eliminate, subject to certain statutory limitations, the liability of
directors to the corporation or its stockholders for monetary damages for
breaches of fiduciary duty, except for liability (a) for any breach of the
director's duty of loyalty to the corporation 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 DGCL, or (d) for any
transaction from which the director derived an improper personal benefit.
Article 10 of the registrant's Certificate of Incorporation provides that the
personal liability of directors of the registrant is eliminated to the fullest
extent permitted by Section 102(b)(7) of the DGCL.

Under Section 145 of the DGCL, a corporation has the power to indemnify
directors and officers under certain prescribed circumstances and subject to
certain limitations against certain costs and expenses, including attorneys'
fees actually and reasonably incurred in connection with any action, suit or
proceeding, whether civil, criminal, administrative or investigative, to which
any of them is a party by reason of being a director or officer of the
corporation if it is determined that the director or officer acted in
accordance with the applicable standard of conduct set forth in such statutory
provision. Article 7 of the registrant's Bylaws provides that the registrant
will indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding by
reason of the fact that he is or was a director, officer, employee or agent of
the registrant, or is or was serving at the request of the registrant as a
director, officer, employee or agent of another entity, against certain
liabilities, costs and expenses. Article 7 further permits the registrant to
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the registrant, or is or was serving at the request of
the registrant as a director, officer, employee or agent of another entity,
against any liability asserted against such person and incurred by such person
in any such capacity or arising out of his status as such, whether or not the
registrant would have the power to indemnify such person against such
liability under the DGCL. The registrant expects to maintain directors' and
officers' liability insurance.

Under Section 8 of the Underwriting Agreement, the Underwriters are
obligated, under certain circumstances, to indemnify directors and officers of
the registrant against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). Reference is made
to the form of Underwriting Agreement filed as Exhibit 1.01 hereto.

II-1
<PAGE>

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On March 25, 1998, the registrant sold 2,000,000 shares of its common stock
to Dewey K. Shay in an organizational subscription for aggregate cash
consideration of $20,000. The transaction was intended to be exempt from the
registration requirements of the Securities Act by virtue of Section 4(2)
thereof.

On March 25, 1998, the registrant sold 2,000,000 shares of its common stock
to Jonathan Ledecky in an organizational subscription for aggregate cash
consideration of $20,000. The transaction was intended to be exempt from the
registration requirements of the Securities Act by virtue of Section 4(2)
thereof.

On March 25, 1998, the registrant sold 37,500 shares of its common stock to
Jack Meehan in an organizational subscription for aggregate cash consideration
of $375.00. The transaction was intended to be exempt from the registration
requirements of the Securities Act by virtue of Section 4(2) thereof.

On March 30, 1998, the registrant sold 720,000 shares of its common stock to
Jonathan J. Ledecky for aggregate cash consideration of $36,000. The
transaction was intended to be exempt from the registration requirements of
the Securities Act by virtue of Section 4(2) thereof.

On March 30, 1998, the registrant sold 50,000 shares of its common stock to
a consultant for aggregate cash consideration of $2,500. The transaction was
intended to be exempt from the registration requirements of the Securities Act
by virtue of Section 4(2) thereof.

On April 21, 1998, the registrant sold 100,000 shares of its common stock to
Gary W. Oakley at a price equal to $100,000. The transaction was intended to
be exempt from the registration requirements of the Securities Act by virtue
of Section 4(2) thereof.

In addition, the registrant entered into the following agreements: (i)
Agreement and Plan of Reorganization by and among U.S. Marketing Services,
Inc., Retail 1 Acquisition Corp., SPAR/Burgoyne Retail Services, Inc., SPAR,
Inc., SPAR Marketing, Inc., SPAR Marketing Force, Inc. and certain
stockholders, dated as of May 31, 1998; (ii) Stock Acquisition Agreement among
U.S. Marketing Services, Inc., Brand Manufacturing Corp., T.C.E. Corporation,
Marvin Weiner, James Gillis and Monte Weiner, dated as of May 20, 1998, and
Amendment No. 1 thereto dated May 31, 1998; (iii) Agreement and Plan of
Contribution by and among U.S. Marketing Services, Inc., CMS Acquisition
Corp., Certified Marketing Services, Inc. and its stockholders, dated as of
May 31, 1998; and (iv) Asset Purchase Agreement by and among U.S. Marketing
Services, Inc., MPG Acquisition Corp., MCI Performance Group, Inc., and John
H. Wile, dated as of May 22, 1998. Pursuant to these agreements, the
registrant has agreed to issue an aggregate of 2,879,063 shares of its common
stock and to grant to certain employees of the entities that are parties to
such agreement (other than the registrant) options to purchase an aggregate of
1,190,000 shares of its common stock. Each such transaction was intended to be
exempt from registration in reliance upon Section 4(2) of the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following exhibits are filed as part of this registration statement:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.01 Form of Underwriting Agreement.*
2.01 Agreement and Plan of Reorganization by and among U.S. Marketing
Services, Inc., Retail 1 Acquisition Corp., SPAR/Burgoyne Retail
Services, Inc., SPAR, Inc., SPAR Marketing, Inc., SPAR Marketing
Force, Inc. and certain stockholders, dated as of May 31, 1998.*
2.02 Stock Acquisition Agreement among U.S. Marketing Services, Inc., Brand
Manufacturing Corp., T.C.E. Corporation, Marvin Weiner, James Gillis
and Monte Weiner, dated as of May 20, 1998, and Amendment No. 1
thereto dated May 31, 1998.*
2.03 Agreement and Plan of Contribution by and among U.S. Marketing
Services, Inc., CMS Acquisition Corp., Certified Marketing Services,
Inc. and its stockholders, dated as of May 31, 1998.*
2.04 Asset Purchase Agreement by and among U.S. Marketing Services, Inc.,
MPG Acquisition Corp., MCI Performance Group, Inc. and John H. Wile,
dated as of May 22, 1998.*
Amended and Restated Certificate of Incorporation of U.S. Marketing
3.01 Services, Inc.*
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.02 Bylaws of U.S. Marketing Services, Inc.*
Opinion of Morgan, Lewis & Bockius LLP as to the legality of the
5.01 securities being registered.*
10.01 Employment Agreement between U.S. Marketing Services, Inc. and Robert
G. Brown, dated as of , 1998.*
10.02 Employment Agreement between U.S. Marketing Services, Inc. and Dewey
K. Shay, dated as of 1998.*
10.03 Employment Agreement between U.S. Marketing Services, Inc. and William
H. Bartels, dated as of , 1998.*
10.04 Employment Agreement between Brand Manufacturing Corp. and James R.
Gillis, dated as of May 20, 1998.*
10.05 Employment Agreement between U.S. Marketing Services, Inc. and Gary W.
Oakley, dated as of , 1998.*
10.06 Employment Agreement between Brand Manufacturing Corp. and Monte
Weiner, dated as of May 20, 1998.*
10.07 Employment Agreement between MCI Performance Group, Inc. and Mark
Whitney, dated as of , 1998.*
10.08 Employment Agreement between Certified Marketing Services, Inc. and
William Smith, dated as of , 1998.*
10.09 U.S. Marketing Services, Inc. 1998 Equity Compensation Plan.*
10.10 U.S. Marketing Services, Inc. 1998 Employee Stock Purchase Plan.*
10.11 Service Agreement between SPAR Marketing Force, Inc. and SMS, Inc.,
dated as of , 1998.*
Consent of Ernst & Young LLP, Independent Auditors. (U.S. Marketing
23.01 Services, Inc.)**
Consent of Ernst & Young LLP, Independent Auditors. (SPAR Marketing
23.02 Force, Inc.)**
Consent of Ernst & Young LLP, Independent Auditors. (Certified
23.03 Marketing Services, Inc.)**
Consent of Ernst & Young LLP, Independent Auditors. (Brand
23.04 Manufacturing Corp.)**
Consent of Ernst & Young LLP, Independent Auditors. (T.C.E.
23.05 Corporation)**
Consent of Ernst & Young LLP, Independent Auditors. (MCI Performance
23.06 Group, Inc.)**
23.07 Consent of Lopez Edwards Frank & Co., LLP, Independent Auditors.**
Consent of Morgan, Lewis & Bockius LLP (included in opinion filed as
23.08 Exhibit 5.01).*
27.01 Financial Data Schedule.*
99.01 Consent of Person About to Become a Director--Robert G. Brown**
99.02 Consent of Person About to Become a Director--William H. Bartels**
99.03 Consent of Person About to Become a Director--Monte Weiner**
99.04 Consent of Person About to Become a Director--Gary W. Oakley**
</TABLE>
- ---------------
* To be filed by amendment.

** Previously filed.

(b) The following financial statement schedules are filed as part of this
registration statement:

SPAR GROUP

Schedule I--Valuation and Qualifying Accounts and Reserves

MCI PERFORMANCE

Schedule I--Valuation and Qualifying Accounts and Reserves

II-3
<PAGE>

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
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 Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling 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 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, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registrations 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>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK,
STATE OF NEW YORK, ON AUGUST 5, 1998.

U.S. Marketing Services, Inc.

/s/ Dewey K. Shay
By: _________________________________
DEWEY K. SHAY PRESIDENT

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS AMENDMENT NO. 1 TO
THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE DATE

/s/ Dewey K. Shay President, Secretary,
- ------------------------------- Treasurer and Director August 5,
DEWEY K. SHAY (Principal Executive 1998
Officer and Principal
Financial and Accounting
Officer)

Director
* August 5,
1998

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

JONATHAN J. LEDECKY

/s/ Dewey K. Shay

*By ______________________

DEWEY K. SHAY

AS ATTORNEY-IN-FACT

II-5
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
of SPAR Group

We have audited the combined financial statements of SPAR Group as of March
31, 1997 and 1998, and for each of the three years in the period ended March
31, 1998 and have issued our report thereon dated April 30, 1998 (included
elsewhere in this Registration Statement). Our audits also included the
financial statement schedule listed in Item 16(b) of this Registration
Statement. The schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic combined financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.

/s/ Ernst & Young LLP

Minneapolis, Minnesota
April 30, 1998
<PAGE>

SCHEDULE I--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

SPAR GROUP

<TABLE>
<CAPTION>
BALANCE AT
BEGINNING OF BALANCE AT
CLASSIFICATION YEAR ADDITIONS DEDUCTIONS(1) END OF YEAR
-------------- ------------ --------- ------------- -----------
<S> <C> <C> <C> <C>
Allowance for doubtful ac-
counts:
Year ended March 31, 1996.. $132,000 $ 60,000 $ (73,000) $119,000
Year ended March 31, 1997.. 119,000 382,000 (180,000) 321,000
Year ended March 31, 1998.. 321,000 264,000 (17,000) 568,000
</TABLE>
- ---------------
(1) Write off of accounts receivable
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Board of Directors and Stockholder
of MCI Performance Group, Inc.

We have audited the financial statements of MCI Performance Group, Inc. as
of December 31, 1996 and 1997, and for each of the two years in the period
ended December 31, 1997 and have issued our report thereon dated May 8, 1998
(included elsewhere in this Registration Statement). Our audits also included
the financial statement schedule listed in Item 16(b) of this Registration
Statement. The schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

Vienna, Virginia
May 8, 1998
<PAGE>

SCHEDULE I--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

MCI PERFORMANCE GROUP, INC.

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<CAPTION>
BALANCE AT
BEGINNING OF BALANCE AT
CLASSIFICATION PERIOD ADDITIONS DEDUCTIONS END OF PERIOD
-------------- ------------ --------- ---------- -------------
<S> <C> <C> <C> <C>
Allowance for doubtful ac-
counts:
Year ended December 31,
1996........................ $ 48,074 $68,607 $-- $116,681
Year ended December 31,
1997........................ 116,681 45,745 -- 162,426
Three months ended March 31,
1998........................ 162,426 -- -- 162,426
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