TEAM AMERICA CORPORATION, S-1/A, 1996-12-05

TEAM AMERICA CORPORATION
S-1/A, 1996-12-05

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 5, 1996.

REGISTRATION NO. 333-13913
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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

AMENDMENT NO. 4
TO
FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------

TEAM AMERICA CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------

OHIO
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)

7363
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)

31-1209872
(I.R.S. EMPLOYER
IDENTIFICATION NO.)

110 E. WILSON BRIDGE ROAD
WORTHINGTON, OHIO 43085
(614) 848-3995

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

RICHARD C. SCHILG
CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
TEAM AMERICA CORPORATION
110 E. WILSON BRIDGE ROAD
WORTHINGTON, OHIO 43085
(614) 848-3995

(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE

------------------
COPIES TO:

FRED A. SUMMER, ESQ.
SQUIRE, SANDERS & DEMPSEY L.L.P.
41 SOUTH HIGH STREET
COLUMBUS, OHIO 43215
(614) 365-2700

CURTIS A. LOVELAND, ESQ.
PORTER, WRIGHT, MORRIS & ARTHUR
41 SOUTH HIGH STREET
COLUMBUS, OHIO 43215
(614) 227-2000

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE 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, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

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

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

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

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 DECEMBER 5, 1996

PROSPECTUS

1,250,000 SHARES

LOGO

COMMON SHARES
------------------------

All of the 1,250,000 Common Shares (the "Common Shares") offered hereby,
other than shares to cover the over-allotment option, are being sold by TEAM
America Corporation (the "Company"). See "Principal and Selling Shareholders."
Upon completion of this offering (the "Offering"), the directors, executive
officers and existing principal shareholders of the Company and their affiliates
will continue to own approximately 49.7% of the outstanding Common Shares of the
Company (45.5% if the Underwriters' over-allotment option is exercised in full).

Prior to the Offering, there has been no public market for the Common
Shares. It is currently anticipated that the initial public offering price will
be between $11.00 and $13.00 per share. See "Underwriting" for a discussion of
the factors to be considered in determining the initial public offering price.
The Common Shares have been approved for quotation on the Nasdaq National Market
under the symbol "TMAM."
------------------------

SEE "RISK FACTORS" AT PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON SHARES OFFERED
HEREBY.
------------------------

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

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

(1) The Company and the Selling Shareholders have 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 of the Offering payable by the Company estimated
at $425,000.
(3) The Company and certain shareholders of the Company (the "Selling
Shareholders") have granted the Underwriters a 30-day option to purchase up
to an aggregate of 87,500 and 100,000 additional Common Shares,
respectively, on the same terms as set forth above solely to cover
over-allotments, if any. If such option is exercised in full, then the total
Price to Public, Underwriting Discounts and Commissions, and Proceeds to
Company will be $ , $ and $ , respectively, and
the proceeds to the Selling Shareholders will be $ . The Company
will not receive any proceeds from the sale of Common Shares by the Selling
Shareholders. See "Principal and Selling Shareholders" and "Underwriting."
------------------------

The Common Shares are being offered by the several Underwriters named
herein, subject to prior sale, when, as and if accepted by them and subject to
certain conditions. It is expected that certificates for the Common Shares
offered hereby will be available for delivery at the offices of The Ohio
Company, Columbus, Ohio, on or about , 1996.
------------------------

THE OHIO COMPANY RONEY & CO.

, 1996
<PAGE> 3

LOGO

As a result of increasing regulatory burdens and employee lawsuits,
businesses need a partner as opposed to going it alone. Through a partnering
agreement, TEAM America, as a Professional Employer Organization ("PEO"), joins
with its Clients in the employment of its work force. The majority of
responsibilities and administrative duties as an employer are shifted to TEAM
America. As a result, its Clients are free to dedicate their time to growing
their businesses and strengthening their products or services and profit
potential.

- -TEN YEARS IN THE FIELD OF - LARGEST PEO HEADQUARTERED
PROFESSIONAL EMPLOYMENT IN OHIO
PARTNERING
- APPROXIMATELY 3,600
- - 1995 REVENUES OF $75 MILLION EMPLOYEES

- - APPROXIMATELY 240 CLIENTS - A STAFF OF 50 PROFESSIONALS
MANY OF WHICH ARE DEGREED
- - FOCUS ON PROVIDING A BROAD AND CERTIFIED
RANGE OF HUMAN RESOURCE [GRAPHIC MATERIAL
SERVICES TO SMALL AND OMITTED*] - LESS THAN 1% MARKET
MEDIUM SIZED BUSINESSES PENETRATION IN OHIO

- - CLIENTS ARE SELECTED AFTER A
PERFORMANCE OF A RISK
MANAGEMENT ASSESSMENT

The omitted graphic material is a pictorial representation of the basic
relationship among a PEO, client and worksite employee. Such pictorial
representation consists of a triangle with a star located at each of the three
points thereof in which appears one of the following three words: "client",
"PEO" or "Employee." The words "At-Will Employment Agreement" appear in the
center of the triangle and the words "Partnering Agreement" appear above the
line connecting the "Client" star with the "PEO" star.

<TABLE>
<CAPTION>
NET INCOME
REVENUES EXPENSES IN
YEAR IN MILLIONS IN MILLIONS MILLIONS
--------------------------------------- ----------- ----------- ----------
<S> <C> <C> <C>
1993................................... $ 41.25 $ 40.49 $ 0.76
1994................................... 56.07 55.80 0.27
1995................................... 74.92 74.63 0.29
</TABLE>

See "Risk Factors," "Selected Consolidated Financial and Statistical Data,"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

The Company intends to furnish its shareholders with annual reports
containing financial statements audited by the Company's independent accountants
and quarterly reports for the first three quarters of each year containing
unaudited interim financial information.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON SHARES
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements, including notes thereto, appearing
elsewhere in this Prospectus. Unless otherwise indicated, all information
presented in this Prospectus assumes no exercise of the Underwriters'
over-allotment option and has been adjusted to reflect the 184-to-1 split of the
Common Shares prior to the Offering and certain other changes in the Company's
capital stock to be effected immediately prior to the issuance and delivery of
the Common Shares offered hereby. See "Description of Capital Stock." Unless the
context otherwise requires, references in this Prospectus to "TEAM America" and
the "Company" refer to TEAM America Corporation and its consolidated
subsidiaries. This Prospectus contains forward-looking statements which involve
risks and uncertainties. The Company's actual results could differ materially
from the results anticipated in these forward-looking statements as a result of
certain of the factors set forth under "Risk Factors" and elsewhere in this
Prospectus.

THE COMPANY

The Company believes it is the largest professional employer organization
("PEO") headquartered in Ohio and one of the oldest PEOs in the United States,
having been founded in 1986. The Company provides, through "partnering"
agreements, comprehensive and integrated human resource management services to
small and medium-sized businesses, thereby allowing such businesses to outsource
their human resource responsibilities. The Company offers a broad range of
services including human resource administration, regulatory compliance
management, employee benefits administration, risk management services and
employer liability protection, payroll and payroll tax administration, and
placement services. The Company provides such services by establishing an
employment relationship with the worksite employees of its clients,
contractually assuming substantial employer responsibilities with respect to
worksite employees, and instructing its clients regarding employment practices.
While the Company becomes the legal employer for most purposes, the client
remains in operational control of its business. As of September 30, 1996, the
Company provided professional employer services to approximately 240 clients and
approximately 3,600 worksite employees, substantially all of whom were located
in the midwestern United States, principally Ohio.

The Company's services provide substantial benefits to both the client and
its worksite employees. The Company believes its services assist business owners
by (i) permitting the managers of the client to concentrate on the client's core
business as a result of the reduced time and effort that they are required to
spend dealing with complex human resource, legal and regulatory compliance
issues and employee administration, and (ii) managing escalating costs
associated with unemployment, workers' compensation, health insurance coverage,
worksite safety programs and employee-related litigation. The Company also
believes that its worksite employees benefit from their relationship with the
Company by having access to better, more affordable benefits, enhanced benefit
portability, improved worksite safety and employment stability.

The PEO industry is still in its infancy, having begun to evolve in the
early 1980s as the result of the growing demand from small and medium-sized
businesses for an outsourcing solution to the increasing human resource, legal
and regulatory complexities and costs of being an employer. In recent years, the
PEO industry has experienced significant growth as evidenced by industry
estimates that PEO industry gross revenues during the period from 1991 to 1995
increased from $5.0 billion to $13.8 billion, representing an increase of $8.8
billion, or a compound annual growth rate of approximately 29%. Based upon such
estimates, the PEO industry is one of the fastest growing industries within the
domestic service sector. The PEO industry is highly fragmented, with in excess
of 2,000 companies currently providing PEO services, mostly in a single market
or region.

With respect to the Ohio market, according to the U.S. Department of
Commerce, there were approximately 36,400 businesses in Ohio with more than 20
and fewer than 500 employees in 1993. These businesses employed 2.3 million
employees and had aggregate payrolls of approximately $53.3 billion. Based upon
these figures, the Company has achieved a market penetration rate in Ohio of
less than 1.0%.

3
<PAGE> 5

The Company believes that there are further opportunities for growth in the
PEO industry as a result of the increasing trend of businesses to outsource
non-core activities and functions, the low market penetration of the PEO
industry, and the expanding number of small businesses in the United States. The
Company also believes that growing human resource, legal and regulatory
complexities and the need to invest significant capital in service delivery
infrastructures and management information systems should lead to significant
consolidation opportunities in the PEO industry.

GROWTH STRATEGY

The Company intends to further strengthen its position in Ohio and other
midwestern United States markets by pursuing the following business strategies:

- DELIVER HIGH-QUALITY SERVICES AND EXPAND CLIENT BASE. The Company
intends to continue to focus on providing high-quality, value-added services as
a means to differentiate itself from competitors. The Company believes that its
strategy of emphasizing the quality and breadth of its services results in lower
client turnover and more consistent growth and profits than the strategy of
certain PEOs which compete by offering comparatively low-cost coverage or
limited services.

- INCREASE PENETRATION OF EXISTING MARKETS. The Company believes that
additional market penetration in established markets offers significant growth
potential. The Company also believes that increasing its penetration in existing
markets will allow the Company to leverage its current economies of scale,
thereby increasing its cost effectiveness and profit margins.

- EXPAND THROUGH ACQUISITIONS. The Company intends to expand in its
current markets in the midwestern United States and possibly to enter selected
new markets by acquiring established high-quality PEOs in order to provide a
platform for future regional consolidation. The Company has identified certain
fundamental attributes which characterize attractive markets such as (i)
proximity to a major metropolitan area, (ii) regulatory receptivity to PEOs,
(iii) prior successful introduction of the PEO concept, (iv) favorable economic
conditions, and (v) a high concentration of small to medium-sized businesses.

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

RISK FACTORS

An investment in the Common Shares involves certain risks associated with
the PEO industry, the Company's business and its growth strategy, and the nature
of the Common Shares, including, without limitation, the following: (i) the
Company's operations are affected by numerous federal, state and local laws and
regulations relating to labor, tax, insurance and employment matters with
respect to which various interpretive issues concerning the application of such
laws and regulations to PEOs have arisen and remain unsettled, and the
unfavorable resolution of these unsettled issues, the broader application to
PEOs of other existing laws or the enactment of new laws and regulations with
respect to the Company's activities could have a material adverse effect on the
Company's business, financial condition, results of operations and liquidity;
(ii) the conclusions of the Technical Advice Memorandum requested by the
Internal Revenue Service ("IRS") regarding whether or not the Company is the
employer for benefit plan purposes could result in the

4
<PAGE> 6

loss of qualified status of the Company's 401(k) plan and cafeteria plan, which
could materially adversely affect the Company's financial condition and results
of operations; (iii) a significant portion of the Company's revenues will be
subject to economic and regulatory factors specific to Ohio because of the high
concentration of the Company's business in Ohio; (iv) the loss of the services
of certain key individuals could have a material adverse impact on the Company's
business and prospects; (v) the Company and the PEO industry have grown rapidly
over the past several years, but there can be no assurance that the Company will
continue to be able to grow profitably; (vi) the Company may incur losses as a
result of an insolvent client's failure to pay the Company after the Company has
paid direct costs with respect to worksite employees; and (vii) the Company may
be found to be liable for the torts and other illegal acts of its clients and
worksite employees.

For a fuller discussion of these and other risk factors affecting the PEO
industry and the Company and its business, see "Risk Factors."

THE OFFERING

<TABLE>
<S> <C>
Common Shares offered........................ 1,250,000
Common Shares to be outstanding after the
Offering................................... 3,335,088(1)
Use of proceeds.............................. For general corporate purposes, including
capital expenditures and working capital. The
Company may use a portion of the net proceeds
to expand the Company's client base in new or
existing markets through acquisitions of PEOs
as opportunities arise. See "Use of
Proceeds."
Proposed Nasdaq National Market Symbol....... TMAM
</TABLE>

- ---------------
(1) Excludes 350,000 Common Shares reserved for issuance under the Company's
Incentive Stock Plan. See "Management -- Incentive Stock Plan." If the
Underwriters' over-allotment is exercised in full, then the Company will
have 3,422,588 Common Shares outstanding upon consummation of the Offering.
See "Shares Eligible For Future Sale."

5
<PAGE> 7

SUMMARY CONSOLIDATED FINANCIAL AND STATISTICAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND STATISTICAL DATA)

<TABLE>
<CAPTION>
EIGHT MONTH NINE MONTHS ENDED
YEAR ENDED TRANSITION
APRIL 30, PERIOD ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------- DECEMBER 31, --------------------------- -----------------
1991 1992 1992(1) 1993 1994 1995 1995 1996
------- ------- ------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................... $22,386 $30,862 $23,708 $41,252 $56,070 $74,921 $55,020 $69,572
Direct costs:
Salaries and wages........................ 19,239 27,356 19,859 34,555 47,602 63,502 46,451 59,018
Payroll taxes, workers' compensation
premiums, employee benefits and other... 2,002 2,036 2,290 4,018 5,578 7,594 5,860 6,788
------- ------- ------- ------- ------- ------- ------- -------
Gross profit................................ 1,145 1,470 1,559 2,679 2,890 3,825 2,709 3,766
Total operating expenses.................... 1,880 1,724 1,257 2,045 2,401 3,168 2,146 2,977
------- ------- ------- ------- ------- ------- ------- -------
Operating income (loss)..................... (735) (254) 302 634 489 657 563 789
Other income (expenses), net................ (89) 21 (41) (47) (37) (120) (80) (3)
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) before taxes.................. (824) (233) 261 587 452 537 483 786
Net income (loss)........................... $ (824) $ (233) $ 243 $ 759 $ 270 $ 290 $ 261 $ 456
Earnings (loss) per common and common
equivalent shares(2)...................... $(0.68) $(0.20) $0.21 $0.46 $0.14 $0.14 $0.12 $0.22
Weighted average shares outstanding(2)...... 1,207 1,165 1,160 1,669 1,920 2,130 2,141 2,089
STATISTICAL DATA:
Average gross payroll per employee.......... * * * * $18,419 $21,566 $16,076 $17,541
Worksite employees at period end(3)......... * * * 2,421 2,748 3,141 3,031 3,588
Clients at period end(4).................... * * * 144 168 184 172 239
Average number of worksite employees per
client at period end...................... * * * 16.8 16.4 17.1 17.6 15.0
Gross profit margin(5)...................... 5.1% 4.8% 6.6% 6.5% 5.2% 5.1% 4.9% 5.4%
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-------------------------
ACTUAL AS ADJUSTED(6)
------ --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital.......................................................................... $ 104 $ 13,554
Total assets............................................................................. 5,662 19,112
Long-term obligations and redeemable preferred stock..................................... 410 390
Total shareholders' equity............................................................... 666 14,116
</TABLE>

- ---------------
* Data not available for period indicated.

(1) Effective as of May 1, 1992, the Company changed its fiscal year end from
April 30 to December 31.

(2) See Note 2 of the Notes to the Company's Consolidated Financial Statements
included elsewhere in this Prospectus.

(3) Represents the number of active employees as of the last business day of the
period.

(4) Represents the number of active clients as of the last business day of the
period.

(5) For a discussion of gross profit margin, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

(6) Adjusted to reflect the sale of 1,250,000 Common Shares by the Company
pursuant to the Offering (assuming an initial public offering price of
$12.00 per share) and the application of the net proceeds from the Offering
as described in "Use of Proceeds."

6
<PAGE> 8

THE COMPANY

TEAM America Corporation was founded in 1986 and incorporated in Ohio in
1987. The word "TEAM" in the Company's name stands for "Total Employee
Administrative Management." Each subsidiary (or "Team") of the Company employs
worksite employees from a different industry group category, such as services
and commercial, manufacturing or professional. The Company believes that this
organizational structure insulates to some degree the liability exposure of the
Company and its other subsidiaries from claims asserted against a particular
subsidiary, thereby providing the Company's clients with greater security and
cost savings. The Company's corporate headquarters are located at 110 E. Wilson
Bridge Road, Worthington, Ohio 43085, and its telephone number is (614)
848-3995.

RISK FACTORS

Prospective investors should consider carefully the factors set forth
below, as well as the other information provided elsewhere in this Prospectus,
in evaluating an investment in the Common Shares of the Company.

POTENTIAL FOR UNFAVORABLE GOVERNMENT REGULATIONS

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

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

In addition, there can be no assurance that existing laws and regulations
which are not currently applicable to the Company will not be interpreted more
broadly in the future so as to apply to the Company's existing activities or
that new laws and regulations will not be enacted with respect to the Company's
activities,

7
<PAGE> 9

either of which could have a material adverse effect on the Company's business,
financial condition, results of operations and liquidity. See "Industry
Regulation."

RISK OF LOSS OF QUALIFIED STATUS FOR CERTAIN TAX PURPOSES

Representatives of the IRS have publicly stated that the IRS is conducting
a Market Segment Study of the PEO industry, focusing on selected PEOs (not
including the Company), in order to examine the relationships among PEOs,
worksite employees and owners of client companies. The Company has limited
knowledge of the nature, scope and status of the Market Segment Study because it
is not a part thereof and the IRS has not publicly released any information
regarding the study to date. In addition, the Company's 401(k) plan was audited
for the year ended December 31, 1992, and as part of that audit, the IRS
regional office has asked the IRS national office to issue a Technical Advice
Memorandum ("TAM") regarding whether or not the Company is the employer for
benefit plan purposes. The Company has stated its position in a filing with the
IRS that it is the employer for benefit plan purposes. If the IRS concludes that
PEOs are not "employers" of certain worksite employees for purposes of the Code
as a result of either the Market Segment Study or the TAM, then the tax
qualified status of the Company's 401(k) plan could be revoked and its cafeteria
plan may lose its favorable tax status. The loss of qualified status for the
401(k) plan and the cafeteria plan could increase the Company's administrative
expenses, increase client dissatisfaction and adversely affect the ability of
the Company to attract and retain clients and worksite employees, and, thereby,
materially adversely affect the Company's financial condition and results of
operations. The Company is unable to predict the timing or nature of the
findings of the Market Segment Study Group, the timing or conclusions of the
TAM, and the ultimate outcome of such conclusions or findings. The Company is
also unable to predict the impact which the foregoing could have on the
Company's administrative expenses, and whether the Company's resulting liability
exposure, if any, will relate to past or future operations. Accordingly, the
Company is unable to make a meaningful estimate of the amount, if any, of such
liability exposure. See "Industry Regulation -- PEO Services (Employee Benefit
Plans)."

OHIO MARKET CONCENTRATION

Clients in Ohio accounted for approximately 93% of the Company's revenues
for 1995. Accordingly, a significant portion of the Company's revenues will be
subject to economic and regulatory factors specific to such geographic market.
While the Company believes that market expansion into other geographic markets
will eventually lessen or eliminate this risk, there can be no assurance that
the Company will be able to duplicate in other markets the revenue growth and
operating results experienced in its Ohio market. See "Business -- Growth
Strategy."

DEPENDENCE UPON KEY PERSONNEL

The Company is dependent to a substantial extent upon the continuing
efforts and abilities of Richard C. Schilg, the Company's founder, Chairman of
the Board, President and Chief Executive Officer, and Kevin T. Costello, the
Company's Senior Vice President and Chief Operating Officer. At the completion
of the Offering, the Company will enter into employment agreements with Mr.
Schilg and Mr. Costello. See "Management -- Employment Agreements." The loss of
the services of Messrs. Schilg or Costello could have a material adverse effect
upon the Company's financial condition and results of operations. The Company
maintains key-man life insurance policies on the lives of Messrs. Schilg and
Costello. See "Management -- Key-Man Life Insurance."

FAILURE TO MANAGE GROWTH AND RISKS RELATED TO GROWTH THROUGH ACQUISITIONS

The Company intends to continue its internal growth and to pursue an
acquisition strategy. Such growth may place a significant strain on the
Company's management, financial, operating and technical resources. The Company
has limited acquisition experience, and growth through acquisition involves
substantial risks, including the risk of improper valuation of the acquired
business and the risks inherent in integrating such businesses with the
Company's operations. There can be no assurance that suitable acquisition
candidates will be available, that the Company will be able to acquire or
profitably manage such additional companies, or that

8
<PAGE> 10

future acquisitions will produce returns that justify the investment or that are
comparable to the Company's past returns. In addition, the Company may compete
for acquisition and expansion opportunities with companies that have
significantly greater resources than the Company. There can be no assurance that
management skills and systems currently in place will be adequate to implement
the Company's strategy of growth through acquisitions and by increased market
penetration in Ohio and its other existing markets, and the failure to manage
growth effectively, or to implement its strategy, could have a material adverse
effect on the Company's results of operations and financial condition. The
Company has experienced significant internal growth since its inception;
however, there can be no assurance that the Company will be able to sustain its
past growth rate. There also can be no assurance that the PEO industry as a
whole will be able to sustain the growth rate it has experienced in recent
years. See "Business -- Growth Strategy."

RISKS ASSOCIATED WITH EXPANSION INTO ADDITIONAL STATES

The Company operates primarily in Ohio, and to a significantly lesser
extent in Michigan, Illinois, Indiana and Florida. In the event that the Company
determines to offer its services to prospective clients in a state in which the
Company has not previously operated, the Company, in order to operate
effectively in such new state, will have to obtain all necessary regulatory
approvals, achieve acceptance in the local market, and adapt its procedures to
the state's regulatory requirements and local market conditions. The length of
time required to obtain regulatory approval to begin operations will vary from
state to state, and there can be no assurance that the Company will be able to
satisfy licensing requirements or other applicable regulations of any particular
state in which it is not currently operating, that it will be able to provide
the full range of services currently offered in its existing markets, or that it
will be able to operate profitably within the regulatory environment of any
state in which it does obtain regulatory approval. The absence of required
licenses would require the Company to restrict the services it offers. See
"Industry Regulation." Moreover, as the Company expands into additional states,
there can be no assurance that the Company will be able to duplicate in other
markets the revenue growth and operating results experienced in its Ohio market.

RISK OF LOSS FROM CLIENT NONPAYMENT OF DIRECT COSTS

For work performed prior to the termination of a client agreement, the
Company may be obligated, as an employer, to pay the gross salaries and wages of
the client's worksite employees and the related employment taxes and workers'
compensation costs, whether or not the Company's client pays the Company on a
timely basis or at all. To the extent that any client experiences financial
difficulty, or is otherwise unable to meet its obligations as they become due,
the Company's financial condition and results of operations could be adversely
affected. The Company attempts to minimize its credit risk by investigating and
monitoring the credit history and financial strength of its clients and by
generally requiring payments to be made by wire transfer, immediately available
funds or Automated Clearing House ("ACH") transfer. With respect to ACH
transfers, the Company is obligated to pay the client worksite employees if
there are insufficient funds in the client's bank account on the payroll date.
The Company's policy, however, is only to permit clients with a proven credit
history with the Company to pay by ACH transfer. In addition, in the event of
nonpayment by a client, the Company has the ability to terminate immediately its
contract with the client. The Company also protects itself by obtaining
unconditional personal guaranties from the owners of each client and/or a cash
security deposit, bank line of credit or pledge of certificates of deposit. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources." Although the Company
historically has not incurred significant bad debt expense, in each payroll,
period the Company has a nominal number of clients who fail to make timely
payment prior to the Company's delivery of the payroll. The Company's bad debt
expense for the years ended December 31, 1995, 1994 and 1993 was $35,653,
$40,773 and $12,522, respectively, however, there can be no assurance that the
Company's bad debt expense will not increase in the future.

RISK OF LOSS FROM INCREASED WORKERS' COMPENSATION AND UNEMPLOYMENT COSTS

The Company pays premiums into the Ohio Bureau of Workers' Compensation
state fund with respect to its worksite employees located in Ohio and maintains
workers' compensation insurance, generally with a

9
<PAGE> 11

private insurance company, for its worksite employees located outside of Ohio.
The Company's worksite employees currently work in approximately 30 states,
resulting in the payment by the Company of unemployment taxes in such states.
The Company does not generally bill its clients for its actual workers'
compensation and unemployment costs, but rather bills its clients for such costs
at rates which vary by client based upon the client's claims and rate history.
The amount billed is intended (i) to cover payments made by the Company for
insurance premiums and unemployment taxes, the Company's cost of contesting
workers' compensation and unemployment claims, and other related administrative
costs and (ii) to compensate the Company for providing such services.

The Company's workers' compensation and unemployment costs could increase
as a result of many factors, including increases in the rates charged by the
applicable states and private insurance companies and changes in the applicable
laws and regulations. Although the Company believes that historically it has
profited from such services, the Company's results of operations and financial
condition could be materially adversely affected in the event that the Company's
actual workers' compensation and unemployment costs exceed those billed to its
clients. The Company believes that this risk is mitigated by the fact that its
standard client agreement provides that the Company, at its discretion, may
adjust the amount billed to the client to reflect changes in the Company's
direct costs, including, without limitation, statutory increases in employment
taxes and insurance. Any such adjustment which relates to changes in direct
costs is effective as of the date of the changes and all other changes require
thirty days' prior notice. Such a rate increase, however, might result in
increased client dissatisfaction, which could adversely affect the ability of
the Company to attract and retain clients and worksite employees, and, thereby,
materially adversely affect the Company's financial condition and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operation -- Overview."

SHORT TERM NATURE OF CLIENT AGREEMENTS

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

LIABILITIES FOR CLIENT AND EMPLOYEE ACTIONS

A number of legal issues remain unresolved with respect to the relationship
among PEOs, their clients and worksite employees, including questions concerning
the ultimate liability for violations of employment and discrimination laws. See
"Industry Regulation." The Company's client agreement establishes a contractual
division of responsibilities between the Company and each client for various
human resource matters, including compliance with and liability under various
governmental laws and regulations. However, the Company may be subject to
liability for violations of these or other laws despite these contractual
provisions even if it does not participate in such violations. Although such
client agreements generally provide that the client indemnify the Company for
any liability attributable to the client's failure to comply with its
contractual obligations and the requirements imposed by law, the Company may not
be able to collect on such a contractual indemnification claim and thus may be
responsible for satisfying such liabilities. See "Risk Factors -- Risk of Loss
from Client Nonpayment of Direct Costs" and "Business -- Clients." In addition,
worksite employees may be deemed to be agents of the Company, subjecting the
Company to liability for the actions of such worksite employees. The Company
attempts to mitigate this risk by maintaining employment practices liability
insurance; however, there can be no assurance that such insurance will be
available to the Company in the future on satisfactory terms, if at all, or if
available, will be sufficient. See "Risk Factors -- Potential Legal Liability;
Insurance."

POTENTIAL LEGAL LIABILITY; INSURANCE

As an employer, the Company from time to time may be subject in the
ordinary course of its business to a wide variety of employment-related claims
such as claims for injuries, wrongful death, harassment, discrimination, wage
and hours violations and other matters. Although the Company carries $2 million
of general liability insurance and employment practices liability insurance in
the amount of $1 million per occurrence

10
<PAGE> 12

with a $100,000 deductible and 95%/5% coinsurance, there can be no assurance
that any such insurance carried by the Company or its providers will be
sufficient to cover any judgments, settlements or costs relating to any present
or future claims, suits or complaints or that sufficient insurance will be
available to the Company or such providers in the future on satisfactory terms,
if at all. If the insurance carried by the Company or its providers is not
sufficient to cover any judgments, settlements or costs relating to any present
or future claims, suits or complaints, then the Company's business and financial
condition could be materially adversely affected.

COMPETITION AND NEW MARKET ENTRANTS

The PEO industry is highly fragmented, with in excess of 2,000 companies
providing PEO services in 1995 according to the National Association of
Professional Employer Organizations ("NAPEO"). The Company encounters
competition from other PEOs and from single-service and "fee-for-service"
companies such as payroll processing firms, insurance companies and human
resource consultants. The Company may encounter substantial competition from new
market entrants. Some of the Company's current and future competitors may be
significantly larger, have greater name recognition and have greater financial,
marketing and other resources than the Company. There can be no assurance that
the Company will be able to compete effectively against such competitors in the
future. See "Business -- Competition."

MANAGEMENT DISCRETION REGARDING NET PROCEEDS OF THE OFFERING

The Company has not yet allocated a substantial portion of the net proceeds
of the Offering to specific uses. Management will have broad discretion as to
the application of the Offering proceeds. Pending the Company's use of such
proceeds for general corporate purposes and possible acquisitions, the net
proceeds of the Offering will be invested in high-quality, short-term,
interest-bearing, investment-grade debt securities, certificates of deposit or
direct or guaranteed obligations of the United States. It is possible that the
return on such investments will be less than that which would be realized were
the Company immediately to use such funds for other purposes. See "Use of
Proceeds."

CONTROL BY PRINCIPAL SHAREHOLDERS

After the Offering, Richard C. Schilg, the Company's Chairman of the Board,
President and Chief Executive Officer, and Kevin T. Costello, the Company's
Senior Vice President and Chief Operating Officer, will beneficially own an
aggregate of 1,181,464 and 423,200 Common Shares, respectively, together
constituting approximately 48.1% of the outstanding Common Shares (44.0% if the
Underwriters' over-allotment option is exercised in full). Accordingly, such
persons will be in a position to effectively control the management and policies
of the Company in general, and to determine the outcome of any corporate
transaction or other matter submitted to the Company's shareholders for
approval, including the election of directors, mergers, acquisitions,
consolidations or the sale of substantially all of the Company's assets. See
"Principal and Selling Shareholders."

ABSENCE OF PRIOR TRADING MARKET; POTENTIAL VOLATILITY OF STOCK PRICE

Prior to the Offering, there has been no public market for the Common
Shares. Although the Company has applied to have the Common Shares approved for
quotation on the Nasdaq National Market, there can be no assurance that an
active trading market will develop for the Common Shares or, if one does
develop, that it will be maintained. The initial public offering price of the
Common Shares will be negotiated between the Company and the representatives of
the Underwriters and may not be indicative of the market price of the Common
Shares after the Offering. See "Underwriting." The market price of the Common
Shares could be highly volatile, fluctuating in response to factors such as
changes in the economy or the financial markets, variations in the Company's
operating results, failure to achieve earnings consistent with analysts'
estimates, announcements of new services or market expansions by the Company or
its competitors, and developments relating to regulatory or other issues
affecting the PEO industry. In addition, the Nasdaq National Market generally
has experienced and is likely in the future to experience significant price and
volume fluctuations

11
<PAGE> 13

which could adversely affect the market price of the Company's Common Shares
without regard to the Company's operating performance.

QUARTERLY FLUCTUATIONS IN OPERATING RESULTS

Historically, the Company's quarterly operating results have fluctuated
significantly as a result of a number of factors, including the timing and
number of new client agreements and terminations thereof and the timing and
amount of executive bonuses, none of which can be predicted with any degree of
certainty. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Quarterly Results of Operations."

POTENTIAL FOR UNFAVORABLE RESOLUTION OF DISPUTE WITH FLORIDA DEPARTMENT OF
INSURANCE

In July 1996, the Company's Florida subsidiary received an assessment from
the Florida Department of Insurance for workers' compensation premiums in the
amount of $275,000 relating to its involvement in prior years with an insolvent
insurance pool in which the subsidiary participated. The subsidiary is currently
attempting to negotiate a settlement with the Florida authorities for a lesser
amount. As of September 30, 1996, the Company recorded a reserve of $75,000 with
respect to the assessment based upon its discussion with the Florida regulators;
however, there can be no assurance that the Company's actual liability will not
exceed such amount. The Company is not a participant in any other self-insurance
insurance pool and in Ohio is covered by the mandated state workers'
compensation fund. The Company could incur losses, however, in the event of the
insolvency of a private insurance company through which it has obtained workers'
compensation coverage with respect to its worksite employees located in other
states. See "Risk Factors -- Risk of Loss from Increased Workers' Compensation
and Unemployment Costs."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of the Common Shares in the public market
following the Offering could have an adverse effect on prevailing market prices
of the Common Shares. Immediately after the Offering, the 1,250,000 shares
(1,437,500 shares if the Underwriters' over-allotment option is exercised in
full) offered hereby will be freely tradeable without restriction, and 426,328
additional shares will be eligible for sale in the public market pursuant to
Rule 144(k) under the Securities Act. An additional 1,493,160 shares (1,443,160
shares if the Underwriters' over-allotment option is exercised in full) will be
available for sale under Rule 144 (subject to certain volume and other
limitations prescribed by Rule 144 and the lock-up arrangements with the
Underwriters hereinafter described) commencing 90 days after the Offering, and
the balance of 165,600 shares (115,600 shares if the Underwriters'
over-allotment option is exercised in full) will become so eligible in October
1998. However, all of the Company's directors and executive officers who, upon
the completion of the Offering, will beneficially own an aggregate of
approximately 1,658,760 Common Shares (1,558,760 Common Shares if the
Underwriters' over-allotment option is exercised in full), have agreed with the
Underwriters not to sell any of their shares for a period of 180 days from the
date of this Prospectus without the prior consent of the Representatives;
provided, however, that the Company may issue and sell up to 350,000 Common
Shares pursuant to the Incentive Stock Plan in effect on the date of this
Prospectus. See "Shares Eligible For Future Sale."

DIVIDEND POLICY

The Company presently intends to retain its earnings to finance the growth
and development of its business and does not expect to pay any cash dividends in
the foreseeable future. See "Dividend Policy."

ANTI-TAKEOVER EFFECT

Certain provisions of the Company's Amended Articles of Incorporation and
Amended Code of Regulations and of the Ohio Revised Code, together or
separately, could discourage potential acquisition proposals, delay or prevent a
change in control of the Company and limit the price that certain investors
might be willing to pay in the future for the Common shares. Among other things,
these provisions (i) require certain supermajority votes; (ii) establish certain
advance notice procedures for nomination of candidates for

12
<PAGE> 14

election as directors and for shareholders proposals to be considered at
shareholders' meetings; and (iii) divide the Board of Directors into two classes
of directors serving staggered two-year terms.

Pursuant to the Company's Amended Articles of Incorporation, upon the
closing of the Offering, the Board of Directors of the Company will have
authority to issue up to 1,000,000 preferred shares without further shareholder
approval. Such preferred shares could have dividend, liquidation, conversion,
voting and other rights and privileges that are superior or senior to the Common
Shares. Issuance of preferred shares could result in the dilution of the voting
power of the Common Shares, adversely affect holders of the Common Shares in the
event of liquidation of the Company or delay, defer or prevent a change in
control of the Company. In certain circumstances, such issuance could have the
effect of decreasing the market price of the Common Shares.

In addition, Section 1701.831 of the Ohio Revised Code contains provisions
that require shareholder approval of any proposed "control share acquisition" of
any Ohio corporation at any of three ownership thresholds: 20%, 33 1/3% and 50%;
and Chapter 1704 of the Ohio Revised Code contains provisions that restrict
certain business combinations and other transactions between an Ohio corporation
and interested shareholders. See "Description of Capital Stock."

SUBSTANTIAL DILUTION

Purchasers of the Common Shares offered hereby will experience immediate
and substantial dilution in the net tangible book value of their shares. See
"Dilution."

FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING

The Company currently anticipates that its available cash resources
combined with the net proceeds of the Offering and funds from operations will be
sufficient to meet its presently anticipated working capital and capital
expenditures requirements both for the short-term and through at least the end
of 1997. The Company may need to raise additional funds through public or
private debt or equity financing in order to take advantage of unanticipated
opportunities, including more rapid expansion or acquisitions or to respond to
unanticipated competitive pressures. If additional funds are raised through the
issuance of equity securities, then the percentage ownership of the then current
shareholders of the Company may be reduced and such equity securities may have
rights, preferences or privileges senior to those of the holders of the
Company's Common Shares. There can be no assurance that additional financing
will be available on terms favorable to the Company, or at all. If adequate
funds are not available or are not available on acceptable terms, then the
Company may not be able to take advantage of unanticipated opportunities,
develop new or enhanced services or otherwise respond to unanticipated
competitive pressures and the Company's business, operating results and
financial condition could be materially adversely affected. See "Use of
Proceeds" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."

13
<PAGE> 15

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,250,000 Common
Shares being offered by the Company hereby (assuming an offering price of $12.00
per share, and after deducting estimated underwriting discounts and commissions
and offering expenses) are estimated to be approximately $13.5 million ($14.4
million if the Underwriters' over-allotment option is exercised in full).

The Company has no specific plan for the use of the net proceeds of the
Offering and intends to use the net proceeds of the Offering for general
corporate purposes, including capital expenditures and working capital. The
Company may use a portion of the net proceeds to expand the Company's client
base in new or existing markets through acquisitions of PEOs as opportunities
arise. See "Business -- Growth Strategy." The Company does not, however,
currently have any understanding or arrangement regarding any potential
acquisition. Pending such uses, the Company intends to invest the net proceeds
of the Offering in high-quality, short-term, interest-bearing, investment-grade
debt securities, certificates of deposit or direct or guaranteed obligations of
the United States. See "Risk Factors -- Management Discretion Regarding Net
Proceeds of the Offering." The principal reasons for the Offering are to enhance
the Company's financial condition to (i) permit the Company to promptly take
advantage of favorable acquisition opportunities, if any; and (ii) increase its
financial flexibility.

The Company may need additional debt or equity financing beyond the
proceeds provided by the Offering to consummate significant future acquisitions.
Although it is expected that additional financing will be derived from capital
stock or debt issued by the Company in public or private transactions or from
borrowings by the Company, there can be no assurance that financing for future
acquisitions will be available on satisfactory terms. See "Risk
Factors -- Future Capital Needs; Uncertainty of Additional Financing."

The Company will not receive any proceeds from the sale of Common Shares by
the Selling Shareholders. See "Principal and Selling Shareholders."

DIVIDEND POLICY

The Company has never paid any cash dividends to holders of its Common
Shares and does not anticipate paying any cash dividends in the foreseeable
future, but intends instead to retain any future earnings for reinvestment in
its business. Any future determination as to the payment of dividends will be
made at the discretion of the Board of Directors of the Company and will depend
upon the Company's operating results, financial condition, capital requirements,
general business conditions and such other factors as the Board of Directors
deems relevant. See "Risk Factors -- Dividend Policy."

14
<PAGE> 16

CAPITALIZATION

The following table sets forth the capitalization of the Company at
September 30, 1996 on an actual basis after giving effect to the transactions
described under "Description of Capital Stock" and on an adjusted basis after
giving effect to the transactions described under "Description of Capital
Stock," the sale of the 1,250,000 Common Shares offered hereby at an assumed
initial public offering price of $12.00 per share and the application of the net
proceeds therefrom as described under "Use of Proceeds." This table should be
read in conjunction with the Company's Consolidated Financial Statements and the
Notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
----------------------
ACTUAL AS ADJUSTED
------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt........................................................... $ -- $ --
----- -------
Shareholders' equity:
Voting preferred shares, no par value; 500,000 shares authorized, no
shares issued....................................................... -- --
Nonvoting preferred shares, no par value; 500,000 shares authorized, no
shares issued....................................................... -- --
Common shares, without par value;
10,000,000 shares authorized; 2,228,976 shares issued, actual;
3,478,976 shares issued, as adjusted(1)............................. 315 13,765
Retained earnings...................................................... 461 461
Less:
Treasury shares -- at cost; 143,888 shares.......................... (26) (26)
Excess purchase price............................................... (84) (84)
----- -------
Total shareholders' equity..................................... 666 14,116
----- -------
Total capitalization........................................... $ 666 $14,116
===== =======
</TABLE>

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

(1) Excludes 350,000 Common Shares reserved for issuance under the Company's
Incentive Stock Plan. See "Management -- Incentive Stock Plan."

15
<PAGE> 17

DILUTION

At September 30, 1996, the net tangible book value of the Company's Common
Shares was $665,560, or $0.32 per share after giving effect to the 184-to-1
split of the Common Shares prior to the Offering. Net tangible book value per
share is determined by dividing net tangible book value (tangible assets less
liabilities and redeemable preferred shares) by the number of outstanding Common
Shares. After giving effect to the sale of the Common Shares offered hereby at
an assumed public offering price of $12.00 per share and after deducting assumed
underwriting discounts and commissions and estimated offering expenses, the pro
forma net tangible book value per Common Shares would have been $4.23. This
represents an immediate increase in net tangible book value of $3.91 per Common
Share to existing shareholders and an immediate dilution of $7.77 per Common
Share to new investors in the Offering. The following table illustrates this
dilution per share:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share........................ $12.00
Net tangible book value per share before the Offering................ $0.32
Increase in net tangible book value per share attributable to new
investors......................................................... 3.91
-----
Pro forma net tangible book value per share after the Offering......... 4.23
------
Dilution per share to new investors.................................... $ 7.77
======
</TABLE>

If the Underwriters' over-allotment option is exercised in full, the
increase in net tangible book value per share to existing shareholders will be
$4.09 per share and the dilution per share to new investors will be $7.59. See
"Risk Factors -- Substantial Dilution."

Based on the same assumptions utilized in the table set forth above, the
following table summarizes, on a pro forma basis as of September 30, 1996, the
difference between the number of Common Shares purchased from the Company, the
aggregate consideration paid and the average price per Common Share paid by
existing shareholders and by new investors (based upon an assumed initial
offering price of $12.00 per share for new investors):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------ -------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------ ----------- ------ -------------
<S> <C> <C> <C> <C> <C>
Existing Shareholders(1)(2)............... 2,085,088 62.52% $ 288,136 1.88% $ 0.14
New Investors(1).......................... 1,250,000 37.48 15,000,000 98.12 $ 12.00
--------- ------ ----------- ------
Total........................... 3,335,088 100.00% $15,288,136 100.00%
========= ====== =========== ======
</TABLE>

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

(1) If the Underwriters' over-allotment option is exercised in full, then the
number of shares held by existing shareholders will be reduced to 1,985,088
shares, or 58.00% of the total number of Common Shares to be outstanding
after the Offering, and the number of shares held by new investors will
increase to 1,437,500 shares, or 42.00% of the total number of Common
Shares to be outstanding after the Offering. See "Principal and Selling
Shareholders."

(2) Excludes 350,000 Common Shares reserved for issuance under the Company's
Incentive Stock Plan. See "Capitalization" and "Management -- Incentive
Stock Plan."

16
<PAGE> 18

SELECTED CONSOLIDATED FINANCIAL AND STATISTICAL DATA

The following selected historical consolidated financial data for the
Company should be read in conjunction with the Company's Consolidated Financial
Statements, including the Notes thereto, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The statement of
operations data set forth below with respect to the years ended December 31,
1993, 1994, and 1995 and the balance sheet data as of December 31, 1994 and 1995
are derived from, and are qualified by reference to, the audited consolidated
financial statements included elsewhere in this Prospectus. The balance sheet
data as of December 31, 1993 is derived from audited consolidated financial
statements not included herein. The statement of operations data for the years
ended April 30, 1991 and 1992, the eight month transition period ended December
31, 1992 and the nine months ended September 30, 1995 and 1996 and the balance
sheet data as of April 30, 1991 and 1992, December 31, 1992 and September 30,
1996 are unaudited. The unaudited results of operations for the nine months
ended September 30, 1996 are not necessarily indicative of results expected for
the full year.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED APRIL EIGHTH MONTH
30, TRANSITION YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------- PERIOD ENDED --------------------------- -----------------
1991 1992 DECEMBER 31, 1992(1) 1993 1994 1995 1995 1996
------- ------- --------------------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AND STATISTICAL DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues.................... $22,386 $30,862 $23,708 $41,252 $56,070 $74,921 $55,020 $69,572
Direct costs:
Salaries and wages........ 19,239 27,356 19,859 34,555 47,602 63,502 46,451 59,018
Payroll taxes, workers'
compensation premiums,
employee benefits and
other................... 2,002 2,036 2,290 4,018 5,578 7,594 5,860 6,788
------- ------- ------- ------- ------- ------- ------- -------
Gross profit................ 1,145 1,470 1,559 2,679 2,890 3,825 2,709 3,766
Operating expenses:
Administrative salaries,
wages and employment
taxes................... 1,203 983 730 1,284 1,428 2,013 1,397 1,879
Other general and
administrative
expenses................ 562 620 468 646 857 996 640 957
Advertising............... 53 87 26 61 66 117 72 82
Depreciation and
amortization............ 62 34 33 54 50 42 37 59
------- ------- ------- ------- ------- ------- ------- -------
Total operating
expenses......... 1,880 1,724 1,257 2,045 2,401 3,168 2,146 2,977
------- ------- ------- ------- ------- ------- ------- -------
Operating income (loss)..... (735) (254) 302 634 489 657 563 789
Other income (expenses),
net....................... (89) 21 (41) (47) (37) (120) (80) (3)
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) before
taxes..................... (824) (233) 261 587 452 537 483 786
Income tax expense
(benefit)................. -- -- 109 (172) 182 247 222 330
Cumulative effect of change
in accounting............. -- -- 91 -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Net income (loss)........... $ (824) $ (233) $ 243 $ 759 $ 270 $ 290 $ 261 $ 456
======= ======= ======= ======= ======= ======= ======= =======
Earnings (loss) per common
and common equivalent
shares(2)................. $ (0.68) $ (0.20) $ 0.21 $ 0.46 $ 0.14 $ 0.14 $ 0.12 $ 0.22
Weighted average shares
outstanding(2)............ 1,207 1,165 1,160 1,669 1,920 2,130 2,141 2,089
STATISTICAL DATA:
Average gross payroll per
employee.................. * * * * $18,419 $21,566 $16,076 $17,541
Worksite employees at period
end(3).................... * * * 2,421 2,748 3,141 3,031 3,588
Clients at period end(4).... * * * 144 168 184 172 239
Average number of worksite
employees per client at
period end................ * * * 16.8 16.4 17.1 17.6 15.0
Gross profit margin(5)...... 5.1% 4.8% 6.6% 6.5% 5.2% 5.1% 4.9% 5.4%
</TABLE>

(Balance sheet data and footnotes appear on next page)

17
<PAGE> 19

<TABLE>
<CAPTION>
APRIL 30, DECEMBER 31, SEPTEMBER 30,
----------------- ------------------------------------- -----------------
1991 1992 1992 1993 1994 1995 1995 1996
------- ------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit).............. $(1,341) $(1,413) $(1,346) $ (583) $ (263) $ (73) $ (167) $ 104
Total assets........................... 1,175 2,102 1,947 2,663 3,847 4,986 4,192 5,662
Long-term obligations and redeemable
preferred stock...................... 94 187 225 245 329 364 365 410
Total shareholders' equity (deficit)... (1,203) (1,409) (1,163) (405) (105) 212 154 666
</TABLE>

- ---------------
* Data not available for period indicated.

(1) Effective as of May 1, 1992, the Company changed its fiscal year end from
April 30 to December 31.

(2) See Note 2 of the Notes to the Company's Consolidated Financial Statements
included elsewhere in this Prospectus.

(3) Reflects the number of active employees as of the last business day of the
period.

(4) Represents the number of active clients as of the last business day of the
period.

(5) For a discussion of gross profit margin, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

18
<PAGE> 20

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

OVERVIEW

Pursuant to the provisions of its standard client agreement, the Company is
the legal employer of the client's worksite employees for most purposes and has
the right, among others, to hire, supervise, terminate and set the compensation
of such worksite employees. The Company bills its clients on each payroll date
for (i) the actual gross salaries and wages, related employment taxes and
employee benefits of the Company's worksite employees, (ii) actual advertising
costs associated with recruitment, (iii) workers' compensation and unemployment
service fees and (iv) an administrative fee. In addition, each client must pay a
one-time enrollment fee of $50.00 plus $10.00 per worksite employee.

The Company does not bill its clients for its actual workers' compensation
and unemployment costs, but rather bills its clients for such costs at rates
which vary by client based upon the client's claims and rate history. The amount
billed is intended (i) to cover payments made by the Company for insurance
premiums and unemployment taxes, the Company's cost of contesting workers'
compensation and unemployment claims, and other related administrative costs and
(ii) to compensate the Company for providing such services. The Company has an
incentive to minimize its workers' compensation and unemployment costs because
the Company bears the risk that its actual costs will exceed those billed to its
clients, and, conversely, the Company profits in the event that it effectively
manages such costs. The Company believes that this risk is mitigated by the fact
that its standard client agreement provides that the Company, at its discretion,
may from time to time adjust the amount billed to the client to reflect changes
in the Company's direct costs, including without limitation statutory increases
in employment taxes and insurance. Any such adjustments which relates to changes
in direct costs is effective as of the date of the changes and all other changes
require thirty days' prior notice. See "Risk Factors -- Risk of Loss from
Increased Workers' Compensation and Unemployment Costs."

Consistent with PEO industry practice, the Company recognizes all amounts
billed to its clients as revenue because the Company is at risk for the payment
of its direct costs, whether or not the Company's clients pay the Company on a
timely basis or at all. See "Risk Factors -- Risk of Loss From Client Nonpayment
of Direct Costs." The Company also recognizes as revenue and as unbilled
receivables, on an accrual basis, any such amounts which relate to services
performed by worksite employees as of the end of the accounting period which
have not yet been billed to the client because of timing differences between the
day the Company's accounting period ends and its billing dates.

The Company's primary direct costs are salaries and wages of worksite
employees, federal and state employment taxes, workers' compensation premiums,
employee benefits and other associated costs. The Company may significantly
affect its gross profit margin by effectively managing its employment risks,
including workers' compensation and state unemployment costs, as described
below. The Company's risk management of the worksite includes policies and
procedures designed to proactively prevent and control costs of lawsuits, fines,
penalties, judgments, settlements and legal and professional fees. In addition,
the Company controls benefit plan costs by attempting to prevent fraud and
abuse. Other risk management programs of the Company include effectively
processing workers' compensation and unemployment claims and aggressively
contesting any suspicious or improper claims. The Company believes that such
risk management efforts

19
<PAGE> 21

increase the profitability of the Company by reducing the Company's liability
exposure and by increasing the value of the Company's services to its clients.
See "Business -- Client Services."

Workers' compensation costs include administrative costs and insurance
premiums related to the Company's workers' compensation coverage. With respect
to its worksite employees located in Ohio, the Company complies with Ohio
workers' compensation law and pays premiums into the Ohio Bureau of Workers'
Compensation state fund. With respect to its worksite employees located outside
of Ohio, the Company maintains workers' compensation insurance generally with a
private insurance company in accordance with the applicable laws of each state
in which the Company has worksite employees. See "Industry Regulation --
Workers' Compensation." The cost of contesting workers' compensation claims is
borne by the Company and is not passed through directly to the Company's
clients.

Worksite employees of the Company currently reside in approximately 30
states, resulting in the payment by the Company of unemployment taxes in each of
such states. Such taxes are based on rates which vary from state to state.
Employers are generally subject to established minimum rates, however, the
aggregate rates payable by an employer are affected by the employer's claims
history. The Company controls unemployment claims by aggressively contesting
unfounded claims and placing worksite employees with other clients whenever
possible.

The Company's primary operating expenses are administrative personnel
expenses, other general and administrative expenses, and advertising expenses.
Administrative personnel expenses include compensation, fringe benefits and
other personnel expenses related to internal administrative employees. Other
general and administrative expenses include rent, insurance, general office
expenses, legal and accounting fees and other operating expenses.

RESULTS OF OPERATIONS

The following table sets forth for the years ended December 31, 1993, 1994
and 1995 and the nine months ended September 30, 1995 and 1996 certain selected
income statement data expressed as a percentage of revenues:

<TABLE>
<CAPTION>
AS A PERCENT OF REVENUES
---------------------------------------------
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------- ---------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenues........................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Direct costs:
Salaries and wages............................... 83.8 84.9 84.8 84.4 84.8
Payroll taxes, workers' compensation premiums,
employee benefits and other costs............. 9.7 9.9 10.1 10.7 9.8
----- ----- ----- ----- -----
Gross profit....................................... 6.5 5.2 5.1 4.9 5.4
----- ----- ----- ----- -----
Operating expenses:
Administrative salaries, wages and employment
taxes......................................... 3.1 2.6 2.6 2.5 2.7
Other general and administrative................. 1.6 1.5 1.3 1.2 1.4
Advertising...................................... 0.2 0.1 0.2 0.1 0.1
Depreciation and amortization.................... 0.1 0.1 0.1 0.1 0.1
----- ----- ----- ----- -----
Total operating expenses................. 5.0 4.3 4.2 3.9 4.3
----- ----- ----- ----- -----
Operating income................................... 1.5 0.9 0.9 1.0 1.1
Other income (expense), net........................ (0.1) (0.1) (0.2) (0.1) (0.0)
----- ----- ----- ----- -----
Income before taxes................................ 1.4 0.8 0.7 0.9 1.1
Provision for income taxes......................... (0.4) 0.3 0.3 0.4 0.4
----- ----- ----- ----- -----
Net income......................................... 1.8% 0.5% 0.4% 0.5% 0.7%
===== ===== ===== ===== =====
</TABLE>

20
<PAGE> 22

Nine Months Ended September 30, 1996 Compared to Nine Months Ended September
30, 1995

The Company's revenues were $69.6 million for the nine months ended
September 30, 1996, compared to $55.0 million for the nine months ended
September 30, 1995, representing an increase of $14.6 million, or 26.5%. This
increase was primarily due to an increase in the number of clients and worksite
employees. The Company had 239 clients and 3,588 worksite employees at September
30, 1996, compared to 172 clients and 3,031 worksite employees at September 30,
1995, representing an increase of 39.0% in the number of clients and an increase
of 18.4% in the number of worksite employees.

Salaries and wages of worksite employees were $59.0 million for the nine
months ended September 30, 1996, compared to $46.5 million for the nine months
ended September 30, 1995, representing an increase of $12.5 million, or 27.1%.
Payroll taxes, workers' compensation premiums, employee benefits and other
direct costs amounted to $6.8 million for the nine months ended September 30,
1996, compared to $5.9 million for the nine months ended September 30, 1995,
representing an increase of $928,000, or 15.8%. Such expenses as a percentage of
revenues for such nine month periods decreased from 10.7% to 9.8% due primarily
to lower workers' compensation and unemployment expenses.

Gross profit as a percentage of revenues in the nine months ended September
30, 1996 was 5.4%, compared to 4.9% for the nine months ended September 30,
1995, primarily as a result of lower workers' compensation and unemployment
expenses. As part of the Company's risk management system, the Company has
established programs designed to effectively process workers' compensation and
unemployment claims and to aggressively contest any suspicious or improper
claims. See "Business -- Client Services."

Administrative salaries, wages and employment taxes were $1.9 million for
the nine months ended September 30, 1996, compared to $1.4 million for the nine
months ended September 30, 1995, representing an increase of $482,000, or 34.5%.
Approximately $102,000 of such increase was due to the incurrence of $207,000 in
executive officer bonus expense in the nine months ended September 30, 1996,
compared to $105,000 in the nine months ended September 30, 1995. The amount and
timing of such bonuses are subject to determination and approval by the
Company's Board of Directors in its discretion. The remaining portion of the
increase in administrative salaries, wages and employment taxes related
primarily to the hiring of additional administrative personnel as a result of
actual and anticipated increases in the number of clients and worksite
employees. The increase in these costs as a percent of revenues from 2.5% to
2.7% was primarily attributable to the employment of additional personnel in
order to sustain the growth of the Company. Other general and administrative
costs increased to $957,000 from $640,000 primarily due to the general growth of
the Company.

The provision for income taxes decreased as a percentage of income before
taxes to 42.0% for the nine months ended September 30, 1996, compared to 46.0%
for the nine months ended September 30, 1995, due to the effect on the estimated
calculation of greater pre-tax income in 1996.

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

The Company's revenues were $74.9 million for the year ended December 31,
1995, compared to $56.1 million for the year ended December 31, 1994,
representing an increase of $18.8 million, or 33.6%. This increase was primarily
due to an increase in the number of worksite employees. During the year ended
December 31, 1995, the number of clients increased to 184 from 168, or 9.5%.
During the year ended December 31, 1995, the number of worksite employees
increased to 3,141 from 2,748, or 14.3%.

Salaries and wages of worksite employees were $63.5 million for 1995,
compared to $47.6 million for 1994, representing an increase of $15.9 million,
or 33.4%. Payroll taxes, workers' compensation premiums, employee benefits and
other direct costs amounted to $7.6 million in 1995, compared to $5.6 million in
1994, representing an increase of $2.0 million, or 36.1%. Such expenses as a
percentage of revenues for the years ended December 31, 1995 and 1994 were
comparable, at 9.9% and 10.1%, respectively.

Gross profit as a percentage of revenues in 1995 and 1994 was nearly
identical.

Administrative salaries, wages and employment taxes were $2.0 million in
1995, compared to $1.4 million in 1994, representing an increase of $585,000, or
41.0%. This increase was primarily due to the hiring of additional
administrative personnel as a result of actual and anticipated increases in the
number of worksite

21
<PAGE> 23

employees. Other general and administrative costs increased to $996,000 from
$857,000 primarily due to the general growth of the Company.

The provision for income taxes increased as a percentage of income before
taxes to 46.0% in 1995 from 40.2% in 1994 primarily due to the impact of tax
accounting for nondeductible life insurance premiums. See Note 8 of the Notes to
the Company's Consolidated Financial Statements included elsewhere in this
Prospectus.

Year Ended December 31, 1994 Compared to Year Ended December 31, 1993

The Company's revenues were $56.1 million for the year ended December 31,
1994, compared to $41.3 million for the year ended December 31, 1993,
representing an increase of $14.8 million, or 35.9%. This increase was primarily
due to an increase in the number of clients and worksite employees. During the
year ended December 31, 1994, the number of the Company's clients increased to
168 from 144, or 16.7%. During the same period, the number of worksite employees
increased to 2,748 from 2,421, or 13.5%.

Salaries and wages of worksite employees were $47.6 million for 1994,
compared to $34.6 million for 1993, representing an increase of $13.0 million,
or 37.8%. Payroll taxes, workers' compensation premiums, employee benefits and
other direct costs amounted to $5.6 million in 1994, compared to $4.0 million in
1993, representing an increase of $1.6 million, or 38.8%.

Gross profit as a percentage of revenues in 1994 was 5.2%, compared to 6.5%
in 1993. This difference was primarily attributable to a one-time benefit of
approximately $318,000 realized by the Company in 1993 in connection with the
conversion of the Company's health care plan from a self-insured plan to an
insured plan. Such one-time benefit resulted from the assumption by the
insurance carrier of liability for claims incurred but not reported.
Approximately $220,000 of such benefit represented premiums collected in excess
of claims paid and the remaining $98,000 resulted from the write-off of the
year-end 1992 claims reserve which was no longer required after the conversion
to the insured plan.

Administrative salaries, wages and employment taxes were $1.4 million in
1994, compared to $1.3 million in 1993, representing an increase of $144,000, or
11.2%. This increase was primarily due to the hiring of additional
administrative personnel as a result of increases in the number of clients and
worksite employees. The significant reduction in these costs as a percent of
revenues from 3.1% to 2.6% was primarily attributable to the ability of the
Company to accommodate the increase in the number of clients and worksite
employees without proportionately increasing the number of corporate employees.
Other general and administrative costs increased to $857,000 from $646,000
primarily due to the general growth of the Company.

The provision for income taxes as a percentage of income before taxes was
40.2% in 1994. There was an income tax benefit of $172,000 in 1993 due to the
accounting for the benefit of a prior years' net operating loss carryforward.

QUARTERLY RESULTS OF OPERATIONS

The following table presents certain unaudited consolidated quarterly
financial information for the eleven quarters ended September 30, 1996. In the
opinion of the Company's management, this information has been prepared on the
same basis as the audited consolidated financial statements appearing elsewhere
in this Prospectus and includes all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the unaudited quarterly
results set forth herein. The Company expects that it will continue to
experience significant fluctuations in its quarterly operating results. In the
past, these fluctuations have been caused by a variety of factors, including the
timing and number of new client agreements and terminations thereof and the
timing and amount of executive bonuses, none of which can be predicted with any
degree of certainty. The Company's quarterly results have in the past been
subject to fluctuations and, therefore, the operating results for any quarter or
quarters are not necessarily indicative of results for any future period. See
"Risk Factors -- Quarterly Fluctuations in Operating Results."

22
<PAGE> 24

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------------
1994 1995 1996
------------------------------------- ------------------------------------- ---------------------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............ $11,054 $13,106 $15,802 $16,109 $17,451 $18,719 $18,849 $19,902 $21,461 $23,435 $24,676
Direct costs........ 10,497 12,418 14,931 15,335 16,580 17,852 17,879 18,786 20,391 22,052 23,363
Gross profit........ 557 688 871 774 871 867 970 1,116 1,070 1,383 1,313
Income (loss) before
taxes............. 91 164 240 (44) 190 162 132 52 168 334 284
Income tax expense
(benefit)......... 36 66 96 (17) 88 74 60 24 77 154 99
Net income (loss)... 55 98 144 (27) 102 88 72 28 91 180 185
Earnings (loss) per
common and common
equivalent
shares............ $0.03 $0.05 $0.07 $(0.01) $0.05 $0.04 $0.03 $0.01 $0.04 $0.09 $0.09
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 1996 and December 31, 1995 and 1994, the Company had
working capital surplus (deficits) in the amounts of approximately $104,000,
$(73,000) and $(263,000), respectively.

The Company's primary source of liquidity and capital resources has
historically been its internal cash flow from operations. Net cash provided by
operating activities was $761,000, $806,000 and $599,000 for the years ended
December 31, 1995, 1994 and 1993, respectively, and $46,000 and $242,000 for the
nine months ended September 30, 1996 and 1995, respectively. The Company
recognizes as revenue and as unbilled receivables, on an accrual basis, any such
amounts which relate to services performed by worksite employees as of the end
of each accounting period which have not yet been billed to the client because
of timing differences between the day the Company's accounting period ends and
its billing dates. The amount of unbilled receivables, as well as accrued
liabilities and client deposits, have increased with the general growth of the
Company.

For work performed prior to the termination of a client agreement, the
Company may be obligated, as an employer, to pay the gross salaries and wages of
the client's worksite employees and the related employment taxes and workers'
compensation costs, whether or not the Company's client pays the Company on a
timely basis or at all. The Company, however, historically has not incurred
significant bad debt expenses because the Company generally collects from its
clients all revenues with respect to each payroll period in advance of the
Company's payment of the direct costs associated therewith. The Company attempts
to minimize its credit risk by investigating and monitoring the credit history
and financial strength of its clients and by generally requiring payments to be
made by wire transfer, immediately available funds or ACH transfer. With respect
to ACH transfers, the Company is obligated to pay the client's worksite
employees if there are insufficient funds in the client's bank account on the
payroll date. The Company's policy, however, is only to permit clients with a
proven credit history with the Company to pay by ACH transfer. In addition, in
the rare event of nonpayment by a client, the Company has the ability to
terminate immediately its contract with the client. The Company also protects
itself by obtaining unconditional personal guaranties from the owners of each
client and/or a cash security deposit, bank letter of credit or pledge of
certificates of deposit. As of September 30, 1996 and December 31, 1995, the
Company held cash security deposits in the amounts of $464,000 and $427,000,
respectively. See "Risk Factors -- Financial Condition of Clients." Additional
sources of funds to the Company are advance payments of employment taxes and
insurance premiums which the Company holds until they are due and payable to the
respective taxing authorities and insurance providers.

Net cash used in investing activities was $172,000, $92,000 and $55,000 for
the years ended December 31, 1995, 1994 and 1993, respectively, and $363,000 and
$149,000 for the nine months ended September 30, 1996 and September 30, 1995,
respectively. The principal use of cash for investing activities was the
purchase of additional computer equipment and software to support the growth of
the business.

The Company's net cash used in financing activities was $7,000, $17,000 and
$37,000 for the years ended December 31, 1995, 1994 and 1993, respectively, and
$23,000 and $32,000 for the nine months ended

23
<PAGE> 25

September 30, 1996 and September 30, 1995, respectively. From time to time, the
Company has used leasing arrangements. Payments on notes payable for 1996
represented the repayment in full of the Company's loan from a local bank.

Presently, the Company has no material commitments for capital
expenditures. Primary new uses of cash may include acquisitions, the size and
timing of which cannot be predicted. See "Use of Proceeds."

The Company has executed a $500,000 promissory note to a bank which, at the
bank's sole discretion, would allow the Company to obtain loans up to such
amount without negotiating or executing any further agreements. Borrowings under
this credit facility are payable upon demand and bear interest at the bank's
prime rate plus 0.5% (8.75% at September 30, 1996). The credit facility is
unsecured, but has been guaranteed by Richard C. Schilg, Chairman of the Board,
President and Chief Executive Officer of the Company. See "Certain
Transactions -- Certain Business Relationships." As of December 31, 1995 and
September 30, 1996, no borrowings were outstanding under this credit facility.

The Company believes that the net proceeds from the sale of the Common
Shares offered hereby, together with existing cash, cash equivalents and
internally generated funds will be sufficient to meet the Company's presently
anticipated working capital and capital expenditure requirements both for the
short-term and for the foreseeable future. To the extent that the Company needs
additional capital resources, the Company believes that it will have access to
both bank financing and capital leasing for additional facilities and equipment;
however, there can be no assurance that additional financing will be available
on terms favorable to the Company or at all. See "Risk Factors -- Future Capital
Needs; Uncertainty of Additional Financing."

INFLATION

The Company believes the effects of inflation have not had a significant
impact on its results of operations or financial condition.

24
<PAGE> 26

BUSINESS

GENERAL

The Company believes it is the largest PEO headquartered in Ohio and one of
the oldest PEOs in the United States, having been founded in 1986. The Company
provides, through "partnering" agreements, comprehensive and integrated human
resource management services to small and medium-sized businesses, thereby
allowing such businesses to outsource their human resource responsibilities. The
Company offers a broad range of services including human resource
administration, regulatory compliance management, employee benefits
administration, risk management services and employer liability protection,
payroll and payroll tax administration, and placement services. The Company
provides such services by establishing an employment relationship with the
worksite employees of its clients, contractually assuming substantial employer
responsibilities with respect to worksite employees, and instructing its clients
regarding employment practices. While the Company becomes the legal employer for
most purposes, the client remains in operational control of its business. As of
September 30, 1996, the Company provided professional employer services to
approximately 240 clients and approximately 3,600 worksite employees,
substantially all of whom were located in the midwestern United States,
principally Ohio.

INDUSTRY

PEOs are in the business of providing small and medium-sized companies with
an alternative to the expense and burden of maintaining their own in-house,
full-time human resource departments. By entering into an agreement with its
clients whereby the PEO participates with the client in the employment of its
worksite employees, larger PEOs, such as the Company, are able to take advantage
of certain economies of scale in the "business of employment" and to pass those
benefits on to their clients and worksite employees. As a result of such
employment arrangements, the clients of PEOs are able to obtain, at an
economical cost, services and expertise similar to those provided by the human
resource departments of large companies. In addition, PEOs are able to provide
their worksite employees with health care insurance and other employee benefits
to which they might not otherwise have access.

Industry sources estimate that gross revenues for the PEO industry were
$13.8 billion in 1995. According to the U.S. Small Business Administration,
there were approximately 5.1 million businesses in the United States with fewer
than 500 employees in 1992. These businesses collectively employed 49 million
employees and had aggregate payrolls of approximately $1.1 trillion. Such data
suggests that the PEO industry has

25
<PAGE> 27

achieved a market penetration rate of approximately 1.0%. With respect to the
Ohio market, according to the U.S. Department of Commerce, there were
approximately 36,400 businesses in Ohio with more than 20 and fewer than 500
employees in 1993. These businesses employed 2.3 million employees and had
aggregate payrolls of approximately $53.3 billion. Based upon these figures, the
Company has achieved a market penetration rate in Ohio of less than 1.0%. In
certain more mature local and regional markets, however, PEOs have achieved
significantly greater market penetration rates. There is no assurance that the
Company will be able to increase its market penetration rate in Ohio or its
other existing markets. See "Risk Factors -- Failure to Manage Growth and Risks
Related to Growth Through Acquisitions."

GROWTH STRATEGY

The Company intends to further strengthen its position in Ohio and other
midwestern United States markets by pursuing the following business strategies:

- DELIVER HIGH-QUALITY SERVICES AND EXPAND CLIENT BASE. By offering a
broad and increasing range of high-quality services, the Company believes it is
attractive to employers who are seeking a single-source solution to their human
resource needs. The Company intends to continue to focus on providing
high-quality, value-added services as a means to differentiate itself from
competitors. Certain PEOs compete primarily by offering comparatively lower-cost
health and workers' compensation coverage to high risk industries or by
providing principally basic payroll and payroll tax administration with only
limited additional services. In contrast, the Company provides comprehensive and
integrated human resource management to clients who are selected after
performing a risk management assessment. The Company believes that its strategy
of emphasizing the quality and breadth of its services results in lower client
turnover and more consistent growth and profits than the strategy of certain
PEOs which compete by offering comparatively lower-cost coverage or limited
services. See "Business -- Client Services."

- INCREASE PENETRATION OF EXISTING MARKETS. The Company believes that
additional market penetration in established markets offers significant growth
potential. Based upon data obtained from the U.S. Department of Commerce, the
Company believes that it serves less than 1.0% of the total number of businesses
in Ohio having more than 20 and fewer than 500 employees. See
"Business -- Industry." In established markets, the Company's ability to achieve
its growth objectives is enhanced by a larger number of referrals, a higher
client retention rate, a more experienced sales force and greater momentum in
its marketing efforts than in new markets. The Company intends to capitalize on
these advantages and to achieve higher penetration in its existing markets by
hiring additional sales personnel and improving sales productivity. In addition,
the Company intends to increase significantly its advertising and promotional
efforts in order to educate the market place regarding the quality and breadth
of the Company's services and the benefits of "partnering in employment" through
outsourcing the human resource function. The Company believes that increasing
its penetration in existing markets will allow the Company to leverage its
current economies of scale, thereby increasing its cost effectiveness and profit
margins. See "Business -- Sales and Marketing."

- EXPAND THROUGH ACQUISITIONS. The PEO industry is highly fragmented, with
in excess of 2,000 companies providing PEO services in 1995 according to NAPEO.
Accordingly, the Company believes significant opportunities for consolidation
exist in the PEO industry. See "Business -- Industry." The Company believes that
this industry consolidation will be driven by growing human resource, legal and
regulatory complexities, increasing capital requirements, and the significant
economies of scale available to PEOs with a regional concentration of clients.
The Company intends to expand in its current markets in the midwestern United
States and possibly to enter selected new markets by acquiring established
high-quality

26
<PAGE> 28

PEOs in order to provide a platform for future regional consolidation. The
Company has identified certain fundamental attributes which characterize
attractive markets such as (i) proximity to a major metropolitan area, (ii)
regulatory receptivity to PEOs, (iii) prior successful introduction of the PEO
concept, (iv) favorable economic conditions, and (v) a high concentration of
small to medium-sized businesses. See "Risk Factors -- Failure to Manage Growth
and Risks Related to Growth Through Acquisitions."

- TARGET SELECTED CLIENTS IN GROWTH INDUSTRIES. The Company attempts to
target, and tailors its services to meet the needs of, businesses with between
20 and 500 employees in industries which the Company believes have the potential
for significant growth. As of September 30, 1996, the Company's clients had an
average of approximately 15 worksite employees, compared to the 1995
industry-wide average of 16 worksite employees according to a NAPEO survey. The
Company believes that its targeted businesses are likely to (i) desire the wide
range of employee benefits offered by the Company, (ii) recognize the burden of
their human resource administration costs, (iii) experience greater
employment-related regulatory burdens, and (iv) be more financially stable. In
addition, the Company believes that targeting such businesses results in greater
marketing efficiency, lower business turnover due to client business failure,
and less exposure to credit risk. As of September 30, 1996, approximately 19% of
the Company's clients fell within its target market of businesses with 20 to 500
employees. The Company believes that, in the event that it is unable to increase
the portion of its clients which are in its target market, it will not
experience any material adverse consequences, but may not realize the potential
benefits discussed above. See "Business -- Clients."

CLIENT SERVICES

CLIENT SERVICE TEAMS. The Company has two client service directors who
oversee a service staff consisting of eight customer service representatives
("CSRs") and two customer service administrators. A team consisting of a client
service director, a client service representative and a client service
administrator is assigned to each client. The client service team is responsible
for administering the client's personnel and benefits, coordinating the
Company's response to client needs for administrative support and responding to
any questions or problems encountered by the client.

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

CORE ACTIVITIES. The Company provides professional employer services
through six core activities: (i) human resource administration, (ii) regulatory
compliance management, (iii) employee benefits administration, (iv) risk
management services and employer liability protection, (v) payroll and payroll
tax administration, and (vi) placement services.

- HUMAN RESOURCE ADMINISTRATION. The Company, as an employer, provides its
clients with a broad range of human resource services including on-going
supervisory education and training regarding risk management and employment
laws, policies and procedures. In addition, the Company's human resource
department handles sensitive and complicated employment issues such as employee
discipline, termination, sexual harassment, and wage and salary planning and
analysis. The Company is in the process of expanding its human resource services
to assist clients in areas such as employee morale and worksite employee and
on-site

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<PAGE> 29

supervisor training. The Company provides a comprehensive employee handbook to
all worksite employees which includes customized, site-specific materials
concerning each worksite. In addition, the Company maintains extensive files and
records regarding worksite employees for compliance with various state and
federal laws and regulations. This extensive record keeping is designed to
substantially reduce legal actions arising from lack of proper documentation.

- REGULATORY COMPLIANCE MANAGEMENT. The Company, under its standard client
agreement, assumes responsibility for complying with many employment related
regulatory requirements. As an employer, the Company must comply with numerous
federal and state laws, including (i) certain tax, workers' compensation,
unemployment, immigration, civil rights, and wage and hour laws, (ii) the
Americans with Disabilities Act of 1990, (iii) the Family and Medical Leave Act,
(iv) laws administered by the Equal Employment Opportunity Commission, and (v)
employee benefits laws such as ERISA and COBRA. The Company provides bulletin
boards to its clients and maintains them for compliance with required posters
and notices. The Company also assists its clients in their efforts as employers
to comply with and understand certain other laws and responsibilities with
respect to which the Company does not assume liability and responsibility. For
example, while the Company provides significant safety training and risk
management services to its clients, it does not assume responsibility for
compliance with the Occupational Safety and Health Act because the client
controls its worksite facilities and equipment. See "Business -- Clients.

- EMPLOYEE BENEFITS ADMINISTRATION. The Company offers a broad range of
employee benefit programs to its worksite employees. The Company administers
such benefit programs, thereby reducing the administrative responsibilities of
its clients for maintaining complex and tax-qualified employee benefit plans. By
combining its multiple worksite employees, the Company is able to take advantage
of certain economies of scale in the administration and provision of employee
benefits. As a result, the Company is able to offer to its worksite employees
benefit programs which are comparable to those offered by large corporations. In
fact, some programs offered by the Company would not otherwise be available to
the worksite employees of many clients if such clients were the sole employers.
Eligible worksite and corporate staff employees of the Company are entitled to
participate in the Company's employee benefit programs without discrimination.
Such programs include life insurance coverage as well as the Company's cafeteria
plan which offers a choice of different health plans and dental, vision and
prescription card coverage. In addition, the Company permits each qualified
employee to participate in the Company's 401(k) retirement plan and the
Company's dependent care assistance program. Each worksite employee is given (i)
the opportunity to purchase group-discounted, payroll-deducted auto, homeowners
or renters insurance and long-term disability insurance, and (ii) access to
store discount programs, free checking accounts with participating banks, a
prepaid legal services plan, and various other employee benefits. The Company
believes that by offering its worksite employees a broad range of large
corporation style benefit plans and programs it is able to reduce worksite
employee turnover which results in cost savings for the Company and its clients.
The Company performs regulatory compliance and plan administration in accordance
with state and federal benefit laws. See "Industry Regulation."

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

Many of the Company's direct competitors in both the public and private
sector are self-insured for health care, workers' compensation and employment
practices risks. The Company, however, maintains insurance for employment
practices risks, including liability for employment discrimination and wrongful
termination. The Company believes that it historically has been able to achieve
a higher level of client satisfaction and security by being insured for such
risks. The Company also believes that being insured has

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<PAGE> 30

greatly reduced its liability exposure and, consequently, the potential
volatility of its income from operations because it is not required to rely
exclusively on contractual indemnification from its clients, many of whom do not
carry insurance which covers employment practices liability or do not have
sufficient net worth to support their indemnification obligations. The Company
has arranged for a large surplus lines insurance company rated A++ (superior) by
A.M. Best Company to provide to the Company and to its clients, as additional
insureds, employment practices liability insurance; however, there can be no
assurance that such insurance will be available to the Company in the future on
satisfactory terms, if at all, or if available, will be sufficient. See "Risk
Factors -- Potential Legal Liability; Insurance." The Company believes that this
arrangement is better received by clients who are seeking to reduce their
employment liability exposures and also prevents the Company from becoming
involved in adversarial situations with its clients by eliminating the need for
the Company to seek indemnification. The Company continues to study the
possibility of becoming self-insured in the future for selected risks and
believes that significant opportunities to self-insure may arise in the future.

- PAYROLL AND PAYROLL TAX ADMINISTRATION. The Company provides its clients
with comprehensive payroll and payroll tax administration which substantially
eliminates client responsibility for payroll and payroll taxes beyond
verification of payroll information. Unlike traditional payroll service
providers which do not act as employers, the Company, as the employer, assumes
liability and responsibility for the payroll and payroll taxes of its worksite
employees and the obligations of its client to make federal and state
unemployment and workers' compensation filings, FICA deposits, child support
levies and garnishments, and new hire reports. The Company receives all payroll
information, calculates, processes and records all such information, and issues
payroll checks and/or directly deposits the net pay of worksite employees into
their bank accounts. The Company delivers all payroll checks either to the
on-site supervisor of the worksite or directly to the worksite employees. As
part of the Company's strategic plan of expanding its information technology,
the Company is in the process of developing client-based software interfaces to
make it possible for clients to enter and submit payroll information via
computer modems. See "Business -- Information Technology."

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

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<PAGE> 31

CLIENTS

The Company and its clients are each responsible for certain specified
employer-related obligations. While the Company becomes the legal employer for
most purposes, the client remains in operational control of its business. The
Company appoints an on-site supervisor for each client worksite. In many cases,
such on-site supervisor is the manager of the client's business. The Company
requires each on-site supervisor to enter into a standard on-site supervisor
employment agreement with the Company which specifies the on-site supervisor's
duties, responsibilities and limitations of authority. The Company's standard
client agreement likewise delineates the respective responsibilities of the
Company and the client. Such division of applicable responsibilities is
typically as follows:

TEAM AMERICA
- --------------------------------------------------------------------------------
- - Payment of payroll, tax reporting and payment (state and federal withholding,
Federal Insurance Contributions Act ("FICA"), Federal Unemployment Tax Act
("FUTA"), and state unemployment)

- - Workers' compensation compliance, procurement, management and reporting

- - Employee benefit procurement, administration and payment

- - Compliance with Fair Labor Standards Act and Immigration Reform and Control
Act, as well as monitoring changes in other government regulations governing
the employer/employee relationship and updating the client when necessary

- - Implementation of policies and practices relating to the employer/employee
relationship

- - Hiring and firing of employees including on-site supervisors

- - Education and training concerning working conditions and safety
CLIENT
- --------------------------------------------------------------------------------
- - Responsibility for products, services and operations

- - Professional liability or malpractice

- - Compliance with OSHA regulations, state and local government contracting
provisions, professional licensing requirements and fidelity bonding
requirements

- - Compliance with certain requirements under Ohio workers' compensation laws

The Company's average annual administrative fee is approximately $1,000 per
employee. Such fee is computed based upon either a fixed fee per worksite
employee or an established percentage of gross salaries and wages (subject to a
guaranteed minimum fee per worksite employee), which fixed fee or percentage is
negotiated at the time the client agreement is executed. The Company's
administrative fee varies by client based primarily upon the nature and size of
the client's business and the Company's assessment of the costs and risks
associated with the employment of the client's worksite employees. Accordingly,
the Company's administrative fee income will fluctuate based on the number and
gross salaries and wages of worksite employees and the mix of client fee
arrangements and terms. In addition to the items noted above, each client must
pay a one-time enrollment fee of $50.00 plus $10.00 per worksite employee.
Consistent with PEO industry practice, the Company recognizes all amounts billed
to its clients as revenue because the Company is at risk for the payment of its
direct costs, whether or not the Company's clients pay the Company on a timely
basis or at all. See "Risk Factors -- Risk of Loss from Client Nonpayment of
Direct Costs" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Overview."

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<PAGE> 32

At September 30, 1996, the Company served approximately 240 clients and
approximately 3,600 worksite employees resulting in an average of 15 worksite
employees per client. No single client accounted for more than 10% of the
Company's revenues for the nine months ended September 30, 1996 or for the year
ended December 31, 1995. However, approximately 93% of the Company's 1995
revenues were derived from clients in Ohio. See "Risk Factors -- Ohio Market
Concentration." As of September 30, 1996, approximately 19% of the Company's
clients fell within its target market of businesses with 20 to 500 employees and
the remaining 81% of the Company's clients each had less than 20 employees. See
"Business -- Growth Strategy." The Company's client base is broadly distributed
throughout a wide variety of industries. As of September 30, 1996, the Company's
clients were distributed among the industries indicated below as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------------------------
NUMBER OF
INDUSTRY GROUP CLIENTS % OF TOTAL
- --------------------------------------------------------- ----------------- ----------
<S> <C> <C>
Professional............................................. 73 31%
Manufacturing............................................ 46 19
Construction............................................. 30 13
Commercial............................................... 26 11
Transportation........................................... 9 4
Non-profit............................................... 8 3
Agriculture.............................................. 8 3
Services................................................. 6 2
Other.................................................... 33 14
---- ----
Total.......................................... 239 100%
==== ====
</TABLE>

The Company has benefitted from a high level of client retention, resulting
in a significant recurring revenue stream. The infrequent attrition that the
Company has experienced has typically been attributable to a variety of factors,
including (i) sale or acquisition of the client, (ii) termination by the Company
resulting from the client's inability to make timely payments, (iii) client
business failure or downsizing, and (iv) client nonrenewal due to price or
service dissatisfaction. The Company believes that the risk of a client
terminating its relationship with the Company decreases substantially after the
client has been associated with the Company for over one year because of the
client's increased appreciation of the Company's value-added services and the
difficulties associated with a client reassuming the burdens of being the sole
employer. The Company believes that only a small percentage of nonrenewing
clients withdraw due to dissatisfaction with the Company's services or to retain
the services of a competitor.

SALES AND MARKETING

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

The Company's sales and marketing strategy is to achieve higher penetration
in its existing markets by hiring additional sales personnel and increasing
sales productivity. The Company also intends to significantly increase its
advertising and promotional efforts in order to improve awareness of the PEO
industry, the Company and its value-added services. See "Business -- Growth
Strategy." Currently, the Company generates sales leads from two primary
sources, referrals and direct sales efforts. These leads result in initial

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<PAGE> 33

presentations to prospective clients. The Company's sales executives gather
information about the prospective client and its employees, including job
classification, workers' compensation and health insurance claims history,
salary and the desired level of employee benefits. The Company performs a risk
management analysis of each prospective client which involves a review of such
factors as the client's credit history, financial strength and health insurance
and unemployment claims history. Following a review of these factors, a client
proposal is prepared for acceptable clients. Management believes that its
stringent underwriting procedures greatly reduce the controllable costs and
liability exposure of the Company. In addition, the Company believes that the
application of such underwriting guidelines is in part responsible for the
Company's high rate of client retention. See "Business -- Clients."

Once a prospective client accepts the Company's proposal, the new client is
quickly incorporated into the Company's system by a "client service team"
consisting of one of the Company's two client service directors, a CSR and a
client service administrator. The client service team is responsible for
administering the client's personnel and benefits, coordinating the Company's
response to client needs for administrative support and responding to any
questions or problems encountered by the client. See "Business -- Client
Services."

INFORMATION TECHNOLOGY

The Company's primary information processing center is located at its
corporate headquarters. The Company's other offices are connected to the
centralized system through network dial-up services. The Company uses
industry-standard software to process its payroll and other commercially
available software to manage standard business functions such as accounting and
finance.

Since October 1995, the Company has been developing an integrated
information system based on client-server technology using an Oracle(TM)
relational database. The Company's new system will allow clients to enter and
submit payroll data via modem. The new system will also be used to store and
retrieve information regarding all aspects of the Company's business, including
human resource administration, regulatory compliance management, employee
benefits administration, risk management services, payroll and payroll tax
administration, and placement services. The Company's development of such system
is in the parallel testing phase and the Company expects that the new system
will be operational in early 1997. The Company believes that this system will be
capable of being upgraded and expanded to meet the needs of the Company for the
next five years.

COMPETITION

The PEO industry is highly fragmented, with in excess of 2,000 companies
currently providing PEO services, mostly in a single market or region. The
Company's competitors include traditional in-house human resource departments
and other PEOs. The Company also competes with providers of unbundled
employment-related services such as payroll processing firms, human resource
consultants, and workers compensation and unemployment administrators. Certain
of such companies, many of which have greater financial and other resources than
the Company, are seeking to enter the professional employer services market. See
"Risk Factors -- Competition and New Market Entrants." The Company believes that
the primary elements of competition are quality of service, choice and quality
of benefits, reputation and price. The Company believes that service quality,
name recognition, regulatory expertise, financial resources, risk management and
data processing capability distinguish leading PEOs from the rest of the
industry.

The Company believes that barriers to entry into the PEO industry are
increasing as a result of several factors, including the following: (i) the
complexity of the PEO business and the need for expertise in multiple
disciplines; (ii) the need to invest significant capital in service delivery
infrastructures and management information systems; (iii) the requirement for
sophisticated management information systems to track all aspects of business in
a high-growth environment; and (iv) the three to five years of experience
required to establish experience ratings in the key cost areas of workers'
compensation, health insurance and unemployment.

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<PAGE> 34

CORPORATE EMPLOYEES

As of September 30, 1996, the Company had 51 corporate employees, 42 of
whom were located at the Company's headquarters. For information with respect to
the Company's worksite employees, see "Business -- Clients."

FACILITIES

The Company maintains five facilities located in Columbus, Cleveland and
Dayton, Ohio, Indianapolis, Indiana and Orlando, Florida. The Company's
headquarters are located in a suburb of Columbus, Ohio in a leased building that
houses the Company's executive offices and PEO operations for central Ohio
worksite employees. The Company's other offices are used to service its local
PEO operations and are also leased. See Note 5 of the Notes to the Company's
Consolidated Financial Statements included elsewhere in this Prospectus for
information regarding the Company's leases. The Company believes that its
current facilities are adequate for its current needs and that additional
suitable space will be available as required.

LEGAL PROCEEDINGS

In July 1996, the Florida Department of Insurance assessed for retroactive
workers' compensation premiums all members of the insolvent self-insurance
insurance pool of which the Company's subsidiary which operates in Florida was a
part. Such subsidiary's pro rata share of such assessment was $275,000. The
subsidiary is currently attempting to negotiate a settlement with the Florida
authorities for a lesser amount. As of September 30, 1996, the Company recorded
a reserve of $75,000 with respect to the assessment based upon its discussion
with the Florida regulators; however, there can be no assurance that the
Company's actual liability will not exceed such amount. See Note 12 of the Notes
to the Company's Consolidated Financial Statements included elsewhere in this
Prospectus and "Risk Factors -- Potential for Unfavorable Resolution of Dispute
with Florida Department of Insurance."

Except as noted above, the Company is not a party to any pending legal
proceedings other than ordinary course routine litigation incidental to its
business that the Company believes will not have a material adverse effect on
its financial condition or results of operations.

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<PAGE> 35

INDUSTRY REGULATION

OVERVIEW

The Company's professional employer operations are subject to extensive
state and federal regulations that include operating, fiscal, licensing and
certification requirements. Adding complexity to the Company's regulatory
environment are (i) uncertainties resulting from the non-traditional employment
relationships created by PEOs, (ii) variations in state regulatory schemes, and
(iii) the ongoing evolution of regulations regarding health care and workers'
compensation.

Many of the federal and state laws and regulations relating to labor, tax
and employment matters applicable to employers were enacted prior to the
development of non-traditional employment relationships and, accordingly, do not
specifically address the obligations and responsibilities of PEOs. Moreover, the
Company's PEO services are regulated primarily at the state level. Regulatory
requirements regarding the Company's business therefore vary from state to
state, and as the Company enters new states it will be faced with new regulatory
and licensing environments. There can be no assurance that the Company will be
able to satisfy the licensing requirements or other applicable regulations of
any particular state in which it is not currently operating.

The application of many laws to the Company's PEO services will depend on
whether the Company is considered an employer under the relevant statutes and
regulations. The common law test of the employment relationship is generally
used to determine employer status for benefit plan purposes under ERISA, the
Code, the workers' compensation laws of many states and various state
unemployment laws. This common law test involves an examination of approximately
20 factors to ascertain whether an employment relationship exists between a
worker and a purported employer. Substantial weight is typically given to the
question of whether the purported employer has the right to direct and control
the details of an individual's work. Other factors include (i) the right to hire
and fire workers, (ii) whether the workers are involved in distinct occupations
or businesses, (iii) whether the kind of occupation involved is generally
performed by employees or by specialists who are independent contractors, (iv)
whether the purported employer provides the instrumentalities, tools and place
of work, (v) the method of payment, (vi) the length of time of the arrangement,
(vii) the level of skill and/or training required, (viii) whether the work is
part of the regular business of the purported employer, (ix) whether the
principal is in business, and (x) whether the parties believe that they are
establishing a master-servant relationship. By contrast, certain statutes such
as those relating to PEO licensing and federal income tax withholding use
differing or more expansive definitions of employer. In addition, from time to
time, there have been proposals to enact a statutory definition of employer for
other purposes of the Code.

While the Company cannot predict with certainty the development of federal
and state regulations, management will continue to pursue a practice strategy of
educating administrative authorities as to the advantages of PEOs and assisting
in the development of regulation which appropriately accommodates their
legitimate business function.

PEO SERVICES

PEO LICENSING REQUIREMENTS. A critical aspect of the growth of the PEO
industry has been increasing recognition and acceptance of PEOs by state
authorities. As the concept of PEO services became understood by regulatory
authorities, the regulatory environment began to shift from one of hostility and
skepticism to one of regulatory recognition of the industry. During the
mid-to-late 1980s, legitimate industry participants were challenged to overcome
well publicized failures of financially unsound and, in some cases, unscrupulous
operators. Given this environment, the Company and other industry leaders, in
conjunction with NAPEO, worked with relevant government entities to establish a
regulatory framework designed to protect clients and worksite employees and
discourage unscrupulous and financially unsound operators, thereby promoting the
legitimacy and further development of the industry.

While many states do not explicitly regulate PEOs, approximately one-third
of the states (not including Ohio) have enacted laws that have licensing or
registration requirements for PEOs and several additional

34
<PAGE> 36

states, including Ohio, are considering such laws. Such laws vary from state to
state but generally provide for the monitoring of the fiscal responsibility of
PEOs. None of the other midwestern states in which the Company presently
operates or intends to operate regulates PEOs. State regulation assists in
screening insufficiently capitalized PEO operations and, in the Company's view,
has the effect of legitimizing the PEO industry generally by resolving
interpretative issues concerning employee status for specific purposes under
applicable state law. However, because existing regulations are relatively new,
there is limited interpretive or enforcement guidance available. The development
of additional regulations and interpretation of existing regulations can be
expected to evolve over time. The Company has actively supported such regulatory
efforts, including certain proposed legislation in Ohio that would require PEOs
to be registered with the state. Such proposed Ohio legislation would not have a
material adverse effect on the Company's business, financial condition or
results of operations, rather the Company believes that such legislation would
benefit the Company and the PEO industry by recognizing the status of PEOs as
legal employers.

FEDERAL AND STATE EMPLOYMENT TAXES. The Company assumes the sole
responsibility and liability for the payment of federal and state employment
taxes with respect to wages and salaries paid to its employees, including
worksite employees. There are essentially three types of federal employment tax
obligations: (i) income tax withholding requirements, (ii) social security
obligations under FICA, and (iii) unemployment obligations under FUTA. Under
these Code sections, the employer has the obligation to withhold and remit the
employer portion and, where applicable, the employee portion of these taxes. See
"Risk Factors -- Potential For Unfavorable Government Regulations" and "-- Risk
of Loss of Qualified Status for Certain Tax Purposes."

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

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

In addition to the employer/employee relationship issues described above,
pension and profit-sharing plans, including the Company's 401(k) plan, must
satisfy certain other requirements under the Code. These

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<PAGE> 37

other requirements are generally designed to prevent discrimination in favor of
highly compensated employees to the detriment of non-highly compensated
employees with respect to both the availability of, and the benefits, rights and
features offered in, qualified employee benefit plans. The Company applies the
nondiscrimination requirements of the Code to ensure that its 401(k) plan is in
compliance with the requirements of the Code.

Employee pension and welfare benefit plans are also governed by ERISA.
ERISA defines "employer" as "any person acting directly as an employer, or
indirectly in the interest of an employer, in relation to an employee benefit
plan." ERISA defines the term "employee" as "any individual employed by an
employer." The United States Supreme Court has held that the common law test of
employment must be applied to determine whether an individual is an employee or
an independent contractor under ERISA.

A definitive judicial interpretation of "employer" in the context of a PEO
or employee leasing arrangement has not been established. If the Company were
found not to be an employer for ERISA purposes, then its plans would not comply
with ERISA and the level of services the Company could offer may be materially
adversely affected.

WORKERS' COMPENSATION. Workers' compensation is a state mandated,
comprehensive insurance program that requires employers to fund medical
expenses, lost wages and other costs resulting from work-related injuries
illnesses and deaths. In exchange for providing workers' compensation coverage
for employees, employers are not subject to litigation by employees for benefits
in excess of those provided by the relevant state statute. In most states, the
extensive benefits coverage (for both medical cost and lost wages) is provided
through the purchase of commercial insurance from private insurance companies,
participation in state-run insurance funds or employer self-insurance. Workers'
compensation benefits and arrangements vary on a state-by-state basis and are
often highly complex. These laws establish the rights of workers to receive
benefits and to appeal benefit denials.

As a creation of state law, workers' compensation is subject to change by
the state legislature in each state and is influenced by the political processes
in each state. Several states, such as Ohio, have mandated that employers
receive coverage only from state operated funds. Although Ohio maintains such a
"state fund," it does allow employers of a sufficient size and with sufficient
ties to the state to self-insure for workers' compensation purposes. Employers
granted the privilege of self-insurance must be self-funded for at least the
first $50,000 of cost in every claim but may purchase private insurance for
costs in excess of that amount. Ohio also allows its "state fund" employers who
meet certain criteria as a group to band together for risk pooling purposes. In
addition, Ohio provides safety prevention program premium discounts. Although
workers' compensation in Ohio is mandatory and generally shields employers from
common law civil suits, the Ohio General Assembly has created an exception for
so-called "intentional torts." In 1995, the General Assembly enacted a law
imposing a very strict standard for plaintiffs to bring such suits. Similar
legislative efforts in the past, however, were struck down by the Ohio Supreme
Court.

Ohio and certain other states have recently adopted legislation requiring
that all workers' compensation injuries be treated through a managed care
program. Ohio's program takes effect in March 1997. The Company believes that
such program will not significantly impact the operations of the Company because
all Ohio employers will be subject to such new laws and regulations. In
addition, federal health care reform proposals include a proposal that may
require 24-hour health coverage, in which the coverage of traditional
employer-sponsored health plans is combined with workers' compensation coverage
to provide a single insurance plan for health problems, whether or not related
to work. Because workers' compensation benefits are mandated by law and are
subject to extensive regulation, payors and employers do not have the same
flexibility to alter benefits as they have with other health benefit programs.
Finally, because workers' compensation programs vary from state to state, it is
difficult for payors and multi-state employers to adopt uniform policies to
administer, manage and control the costs of benefits.

OTHER EMPLOYER RELATED REQUIREMENTS. As an employer, the Company is
subject to a wide variety of federal and state laws and regulations governing
employer-employee relationships, including the Immigration Reform and Control
Act, the Americans with Disabilities Act of 1990, the Family Medical Leave Act,
the Occupational Safety and Health Act, wage and hour regulations, and
comprehensive state and federal civil

36
<PAGE> 38

rights laws and regulations, including those prohibiting discrimination and
sexual harassment. The definition of employer may be broadly interpreted under
these laws.

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

37
<PAGE> 39

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Richard C. Schilg(1)............... 39 Chairman of the Board, President and Chief
Executive Officer
Kevin T. Costello.................. 47 Senior Vice President, Chief Operating
Officer and Director
Russell R. Garver.................. 41 Vice President and Chief Financial Officer
William W. Johnston(2)............. 50 Secretary and Director
Charles F. Dugan II(2)............. 57 Assistant Secretary and Director
Paul M. Cash(1)(2)................. 48 Director
M. R. Swartz(1).................... 57 Director
</TABLE>

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

(1) Immediately prior to the completion of the Offering, said director will be a
member of the Audit Committee.

(2) Immediately prior to the completion of the Offering, said director will be a
member of the Compensation Committee.

Richard C. Schilg has served as Chairman of the Board of Directors,
President and Chief Executive Officer of the Company since founding the Company
in 1986. From 1982 to 1986, Mr. Schilg served as a Career Agent, Sales Manager
and Director of Development of Mutual Security Life Insurance Company located in
Ft. Wayne, Indiana. Mr. Schilg served as President of the Ohio Association of
Professional Employer Organizations, a state chapter of NAPEO, from March 1995
to September 1996. Mr. Schilg is a Certified Professional Employer Specialist.

Kevin T. Costello has been a Director of the Company since 1992 and has
served as Senior Vice President of Operations and Chief Operating Officer of the
Company since 1993. From 1991 to 1993, Mr. Costello served as Vice President of
Sales and Marketing of the Company.

Russell R. Garver has served as Vice President of Finance and Chief
Financial Officer of the Company since 1994. From 1991 until 1994, Mr. Garver
served as Controller of Watkins Printing Company located in Columbus, Ohio. From
1988 until 1991, Mr. Garver served as Manager of Financial Operations for LCI
International, Inc. headquartered in Dublin, Ohio. Mr. Garver is a Certified
Public Accountant.

William W. Johnston has been a Director of the Company since 1990 and has
served as Secretary of the Company since 1990 and as general counsel to the
Company since 1989. From 1982 to 1990, Mr. Johnston was a partner in the law
firm of Crabbe, Brown, Jones, Potts and Schmidt located in Columbus, Ohio. Mr.
Johnston currently practices law in his own firm located in Worthington, Ohio.
From 1976 to 1982, Mr. Johnston was the Chairman of the Ohio Industrial
Commission.

Charles F. Dugan II has been a Director of the Company since 1994 and has
served as Assistant Secretary of the Company since 1992. Mr. Dugan has served as
counsel to the Company since 1987. From 1970 to 1990, Mr. Dugan was a partner in
the law firm of Vorys, Sater, Seymour and Pease located in Columbus Ohio. Mr.
Dugan currently practices law in his own firm located in Columbus, Ohio.

Paul M. Cash has been a Director of the Company since 1990 and has served
as a human resource consultant to the Company since 1989. Prior to 1989, Mr.
Cash served as Director of Administrative Operations and Personnel Director of
Accuray Corporation (now a part of Combustion Engineering) located in Columbus,
Ohio.

M. R. Swartz has been a Director of the Company since 1991. Mr. Swartz is
the owner and operator of the Dairy Depot restaurant located in Delaware, Ohio.
From 1970 to 1984, Mr. Swartz served as Finance Director for the City of
Delaware, Ohio.

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<PAGE> 40

BOARD OF DIRECTORS

General. The Company's Amended Code of Regulations (which will be adopted
immediately prior to completion of the Offering) provides that initially there
shall be six directors divided into two classes, with regular two-year staggered
terms. Messrs. Johnston, Cash and Swartz will serve as Class I directors and
hold office until the 1997 annual shareholders' meeting, and Messrs. Schilg,
Costello and Dugan will be Class II directors and will hold office until the
1998 annual shareholders' meeting. All officers of the Company serve at the
pleasure of the Board of Directors.

Committees. Immediately prior to the Offering, the Company's Board of
Directors will establish a Compensation Committee and an Audit Committee.

The Compensation Committee will administer the Company's compensation
programs and perform such other duties as may from time to time be determined by
the Board of Directors. The Compensation Committee initially will be comprised
of Messrs. Johnston, Dugan and Cash.

The Audit Committee will review the scope and results of the annual audit
of the Company's consolidated financial statements conducted by the Company's
independent accountants, the scope of other services provided by the Company's
independent accountants, proposed changes in the Company's financial and
accounting standards and principles, and the Company's policies and procedures
with respect to its internal accounting, auditing and financial controls. The
Audit Committee will also examine and consider other matters relating to the
financial affairs and accounting methods of the Company, including selection and
retention of the Company's independent accountants. The Audit Committee
initially will be comprised of Messrs. Schilg, Cash, and Swartz.

Compensation. Directors who are not corporate employees of the Company
will receive $500 for each Board of Directors meeting attended, plus
out-of-pocket expenses incurred in connection with attendance at such meetings.
Immediately following the completion of the Offering, the Company also intends
to grant to each director who is not a corporate employee of the Company options
under the Incentive Stock Plan to purchase 5,000 Common Shares at an exercise
price equal to the initial offering price. See "Management -- Incentive Stock
Plan." Directors who are corporate employees will not receive any separate
compensation for their services as directors.

KEY-MAN LIFE INSURANCE

The Company has obtained and intends to maintain key-man life insurance on
the life of Mr. Schilg in the amount of $2 million and on the life of Mr.
Costello in the amount of $1 million. The Company is the owner, beneficiary and
premium payor of each of such policies. See "Risk Factors -- Dependence Upon Key
Personnel."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Board of Directors of the Company has not previously had a formal
Compensation Committee. Decisions concerning compensation of executive officers
of the Company were made by the Company's Board of Directors, subject to the
provisions of any applicable employment agreements. In the past, a significant
portion of the total compensation of Messrs. Schilg and Costello has been in the
form of year-end bonuses determined based upon the income and revenues of the
Company. Following the consummation of the Offering, the Company will create a
Compensation Committee and will appoint Messrs. Johnston, Dugan and Cash to
serve on it. The Compensation Committee will determine the compensation of the
Company's executive officers, subject to the provisions of any applicable
employment agreements. See "Management -- Employment Agreements."

During the year ended December 31, 1995, Messrs. Johnston and Dugan
received fees for legal services provided to the Company in the amounts of
$85,825 and $26,262, respectively, and Mr. Cash received fees for consulting
services provided to the Company in the amount of $35,022. Following the
completion of the Offering, the Company intends to continue to use the services
of Messrs. Johnston, Dugan and Cash. Each of Messrs. Johnston, Dugan and Cash
have entered into a standard client agreement with the Company pursuant

39
<PAGE> 41

to which each of them is both a client and a worksite employee of the Company.
The Company has provided, and expects to continue to provide, PEO services to
such individuals upon terms and conditions no more favorable to such individuals
than those generally provided to the Company's other clients.

EXECUTIVE COMPENSATION

The following table sets forth the total compensation paid or accrued by
the Company on behalf of the Chief Executive Officer and the only other
executive officer of the Company who received an annual salary and bonus in
excess of $100,000 (hereafter collectively referred to as the "Named Executive
Officers") for services rendered during 1995:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
-----------------------------------
NAME AND PRINCIPAL POSITION YEAR SALARY(2) BONUS(3) OTHER(4)
- ---------------------------------------------------- ---- --------- -------- --------
<S> <C> <C> <C> <C>
Richard C. Schilg................................... 1995 $ 181,010 $158,790 $4,529
Chairman of the Board, President and Chief
Executive Officer
Kevin T. Costello................................... 1995 $ 178,316 $ 98,285 $4,529
Senior Vice President and Chief Operating Officer
</TABLE>

- ---------------
(1) Under rules promulgated by the Commission, since the Company was not a
reporting company during the three immediately preceding fiscal years, only
the information with respect to the most recent completed fiscal year is
noted in the Summary Compensation Table.

(2) Includes commissions in the amounts of $51,010 and $97,716 paid to Mr.
Schilg and Mr. Costello, respectively.

(3) The bonuses of Messrs. Schilg and Costello were determined by the Board of
Directors of the Company based upon the income and revenues of the Company.

(4) Represents health care insurance premiums paid by the Company for the
benefit of the indicated Named Executive Officer.

EMPLOYMENT AGREEMENTS

Richard C. Schilg. At the completion of the Offering, Mr. Schilg will
execute an employment agreement with the Company pursuant to which he will agree
to serve as Chairman of the Board, President and Chief Executive Officer of the
Company for a period of three years and, unless terminated in accordance with
the provisions therein, on the first day of each month that the agreement is in
effect, the remaining term thereof will be automatically extended for one
additional month. Under the terms of the agreement, Mr. Schilg will receive an
annual base salary of $195,000, plus incentive compensation in an amount to be
determined by the Company's Compensation Committee based upon various factors
including the Company's results of operations and financial condition and Mr.
Schilg's performance during the relevant period. In addition to such base salary
and incentive compensation, Mr. Schilg will continue to receive commissions on
sales to clients for which he is responsible pursuant to terms and conditions to
be determined by the Company's Compensation Committee. In the event Mr. Schilg's
employment is terminated for cause, the Company will pay Mr. Schilg the
compensation and benefits due under his employment agreement through the date of
such termination. Mr. Schilg's employment agreement contains certain
non-competition and non-solicitation provisions which prohibit him from
competing with the Company during his employment by the Company and for a period
of one year after termination of his employment.

The Company has agreed to maintain one or more life insurance policies on
the life of Mr. Schilg in an aggregate amount sufficient to pay Mr. Schilg's
widow at least $48,000 per year for 15 years in the event that he dies prior to
his retirement. No such benefit will be paid in the event that Mr. Schilg dies
after his retirement. In addition, upon Mr. Schilg's retirement on or after his
sixty-fifth birthday, the Company will pay him an amount calculated to be equal
to the maximum loan available from such insurance policy which will not cause
the insurance policy to lapse prior to his life expectancy. Thereafter, such
amount shall be recalculated on an annual basis and the Company will pay Mr.
Schilg any increase in such amount.

40
<PAGE> 42

Pursuant to Mr. Schilg's employment agreement, the Company has agreed to
grant to Mr. Schilg the right to purchase 50,000 Common Shares at an exercise
price equal to the initial offering price, subject to vesting 20% per year over
five years. These options will expire ten years after the date of grant and will
be subject to the terms and conditions of the Company's Incentive Stock Plan.
See "Management -- Incentive Stock Plan."

Kevin T. Costello. At the completion of the Offering, Mr. Costello will
execute an employment agreement with the Company pursuant to which he will agree
to serve as Senior Vice President of Operations and Chief Operating Officer of
the Company for a period of three years and, unless terminated in accordance
with the provisions therein, on the first day of each month that the agreement
is in effect, the remaining term thereof will be automatically extended for one
additional month. Under the terms of the agreement, Mr. Costello will receive an
annual base salary of $175,000, plus incentive compensation in an amount to be
determined by the Company's Compensation Committee based upon various factors
including the Company's results of operations and financial condition and Mr.
Costello's performance during the relevant period. In addition to such base
salary and incentive compensation, Mr. Costello will continue to receive
commissions on sales to clients for which he is responsible pursuant to terms
and conditions to be determined by the Company's Compensation Committee. In the
event Mr. Costello's employment is terminated for cause, the Company will pay
Mr. Costello the compensation and benefits due under his employment agreement
through the date of such termination. Mr. Costello's employment agreement
contains certain noncompetition and non-solicitation provisions which prohibit
him from competing with the Company during his employment by the Company and for
a period of one year after termination of his employment.

The Company has agreed to maintain one or more life insurance policies on
the life of Mr. Costello in an aggregate amount sufficient to pay Mr. Costello's
widow at least $24,000 per year for 15 years in the event that he dies prior to
his retirement. No such benefit will be paid in the event that Mr. Costello dies
after his retirement. In addition, upon Mr. Costello's retirement on or after
his sixty-fifth birthday, the Company will pay him an amount calculated to be
equal to the maximum loan available from such insurance policy which will not
cause the insurance policy to lapse prior to his life expectancy. Thereafter,
such amount shall be recalculated on an annual basis and the Company will pay
Mr. Costello any increase in such amount.

Pursuant to Mr. Costello's employment agreement, the Company has agreed to
grant to Mr. Costello the right to purchase 50,000 Common Shares at an exercise
price equal to the initial offering price, subject to vesting 20% per year over
five years. These options will expire ten years after the date of grant and will
be subject to the terms and conditions of the Company's Incentive Stock Plan.
See "Management -- Incentive Stock Plan."

INCENTIVE STOCK PLAN

Prior to the completion of the Offering, the Board of Directors of the
Company will adopt, and the shareholders will approve, the Company's 1996
Incentive Stock Plan (the "Incentive Stock Plan"). The purpose of the Incentive
Stock Plan is to advance the long-term interests of the Company by (i)
motivating executive and other personnel by means of long-term incentive
compensation, (ii) furthering the identity of interests of participants with
those of the shareholders of the Company through the ownership and performance
of the Common Shares of the Company, and (iii) permitting the Company to attract
and retain directors and executive personnel upon whose judgment the successful
conduct of the business of the Company largely depends.

The maximum number of Common Shares with respect to which awards may be
granted under the Incentive Stock Plan will be 350,000 and the maximum number of
Common Shares that may be awarded during any calendar year may not exceed 10% of
the total number of issued and outstanding Common Shares of the Company. The
Common Shares to be issued by the Company under the Incentive Stock Plan will be
made available from authorized but unissued Common Shares or from treasury
shares. The Incentive Stock Plan will contain customary provisions with respect
to adjustments for share splits and similar transactions and the rights of
participants upon mergers and other business combinations. The Incentive Stock
Plan will provide for stock option, stock appreciation rights, restricted stock,
phantom stock and performance awards.

41
<PAGE> 43

No award under the Incentive Stock Plan may be granted after December 31, 2006.
The Incentive Stock Plan may be amended or terminated at any time by the Board
of Directors, except that no amendment may be made without shareholder approval
if the Committee determines that such approval is necessary to comply with any
tax or regulatory requirement, including any approval requirement which is a
prerequisite for exemptive relief from Section 16 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), for which or with which the Committee
determines that it is desirable to qualify or comply.

Immediately following the completion of the Offering, the Company will
grant to each of Mr. Schilg and Mr. Costello options under the Incentive Stock
Plan to purchase 50,000 Common Shares at an exercise price equal to the initial
offering price, subject to vesting 20% per year over five years. The Company
also intends to grant to each director who is not a corporate employee of the
Company options under the Incentive Stock Plan to purchase 5,000 Common Shares
at an exercise price equal to the initial offering price.

CERTAIN TRANSACTIONS

CERTAIN BUSINESS RELATIONSHIPS

William W. Johnston, a Director and the Secretary of the Company, serves as
counsel to the Company. During the fiscal year ended December 31, 1995, Mr.
Johnston received $85,825 in remuneration for providing legal services to the
Company.

Charles F. Dugan II, a Director and the Assistant Secretary of the Company,
serves as counsel to the Company. During the fiscal year ended December 31,
1995, Mr. Dugan received $26,262 in remuneration for providing legal services to
the Company.

Paul M. Cash, a Director of the Company, provides human resources
consulting services to the Company. During the fiscal year ended December 31,
1995, Mr. Cash received $35,022 in remuneration for providing such consulting
services to the Company.

Each of Messrs. Johnston, Dugan and Cash have entered into a standard
client agreement with the Company pursuant to which each of them is both a
client and a worksite employee of the Company. The Company has provided, and
expects to continue to provide, PEO services to such individuals upon terms and
conditions no more favorable to such individuals than those generally provided
to the Company's other clients. See "Management -- Compensation Committee
Interlocks and Insider Participation."

GUARANTY OF COMPANY DEBT

Mr. Schilg has personally guaranteed the Company's performance of its
obligations under its credit facility with a bank. No amounts are currently owed
by the Company under such credit facility. The Company's lender has agreed to
release Mr. Schilg from his guaranty upon completion of the Offering. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

42
<PAGE> 44

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Shares by: (i) each of the Named
Executive Officers and directors, (ii) each other person (or group of persons)
who is known by the Company to own beneficially 5% or more of the Company's
Common Shares, and (iii) all directors and executive officers of the Company as
a group.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING OFFERING(3)
NAME AND ADDRESS --------------------- ---------------------
OF BENEFICIAL OWNER(1)(2) NUMBER PERCENT NUMBER PERCENT
------------------------- --------- ------- --------- -------
<S> <C> <C> <C> <C>
Richard C. Schilg(4)............................... 1,181,464 56.7% 1,181,464 35.4%
Kevin T. Costello(4)............................... 423,200 20.3 423,200 12.7
Charles F. Dugan II................................ 32,200 1.5 32,200 *
Paul M. Cash....................................... 9,936 * 9,936 *
M. R. Swartz....................................... 11,960 * 11,960 *
William W. Johnston................................ 0 0.0 0 0.0
All directors and executive officers as a group
(6 persons)(4)................................... 1,658,760 79.6 1,658,760 49.7
</TABLE>

- ---------------
* Less than 1.0%

(1) The address of each of the executive officers and directors is c/o TEAM
America Corporation, 110 E. Wilson Bridge Road, Worthington, Ohio 43085.

(2) Unless otherwise indicated, the Company believes that the beneficial owner
has sole voting and dispositive power over these shares. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission which generally attribute beneficial ownership of
securities to persons who possess sole or shared voting power and/or
investment power with respect to those shares.

(3) Assumes no exercise of the Underwriters' over-allotment option.

(4) If the Underwriters' over-allotment option is exercised in full, Mr. Schilg
and Mr. Costello each will offer for sale an additional 50,000 Common
Shares. If such over-allotment option is exercised in full, Mr. Schilg will
be the beneficial owner of 1,131,464 shares or 33.1% of the Common Shares
outstanding after the Offering, Mr. Costello will be the beneficial owner of
373,200 shares or 10.9% of the Common Shares after the Offering, and all
directors and executive officers as a group will be the beneficial owners of
1,558,760 shares or 45.5% of the Common Shares outstanding after the
Offering.

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<PAGE> 45

DESCRIPTION OF CAPITAL STOCK

As of the date of this Prospectus and prior to giving effect to the
184-to-1 split of the Common Shares of the Company and the other changes to the
capital stock of the Company contemplated in the following paragraph, the
authorized capital stock of the Company consists of the following: (i) 7,500
Class A Preferred Shares, $100 par value, of which 198 shares are issued and
outstanding (such shares being held of record by four shareholders); (ii) 7,500
Class A Common Shares, without par value, of which 4,713 shares are issued and
outstanding (such shares being held of record by 32 shareholders); and (iii)
7,500 Class B Common Shares, without par value, of which 6,421 shares are issued
and outstanding (such shares being held of record by one shareholder).

Pursuant to the Company's Amended Articles of Incorporation which will be
filed with the Ohio Secretary of State immediately prior to the issuance and
delivery of the Common Shares offered hereby, the following changes to the
Company's capital stock will be made: (a) all issued Class A Common Shares and
Class B Common Shares of the Company will be converted to shares of a single
class of Common Shares and the classes of Class A Common Shares and Class B
Common Shares will be eliminated; (b) the number of authorized Common Shares
will be increased to 10,000,000 and each outstanding Common Share will be split
184-to-1; (c) the 198 issued and outstanding Class A Preferred Shares will be
converted into 36,432 Common Shares; and (d) the class of Class A Preferred
Shares will be eliminated and replaced with two new classes of preferred shares
consisting of 500,000 authorized voting preferred shares and 500,000 authorized
nonvoting preferred shares.

The following statements include a summary of the material provisions of
the Company's Amended Articles of Incorporation and its Amended Code of
Regulations in the form to be adopted by the Company's shareholders and
directors on or immediately prior to the issuance and delivery of the Common
Shares offered hereby, copies of which are filed as exhibits to the Registration
Statement of which this Prospectus is a part (the "Registration Statement").
This summary does not purport to be complete and is qualified in its entirety by
reference to such exhibits.

AUTHORIZED CAPITAL STOCK

Upon the consummation of the Offering, the authorized capital stock of the
Company will consist of 10,000,000 Common Shares, without par value, and
1,000,000 Preferred Shares, without par value, consisting of 500,000 Class A
Voting Preferred Shares (the "Class A Preferred Shares") and 500,000 Class B
Nonvoting Preferred Shares (the "Class B Preferred Shares").

COMMON SHARES

When the Common Shares sold in the Offering are fully paid for, they will
be validly issued, fully paid and nonassessable. Holders of Common Shares are
entitled to one vote per share on all matters that properly come before the
shareholders, including the election of directors. The Common Shares do not have
cumulative voting rights and, therefore, a simple majority of the Common Shares
present and voting at a meeting of shareholders will be able to elect all of the
directors to be elected at such meeting. Holders of Common Shares are entitled
to receive dividends when, as and if declared by the Board of Directors of the
Company out of funds legally available therefor. The Company presently intends
to retain its earnings to finance the future growth and development of its
business and, therefore, does not expect to pay cash dividends in the
foreseeable future. See "Dividend Policy." In the event of the liquidation,
dissolution or winding up of the affairs of the Company, holders of Common
Shares are entitled to receive ratably the net assets of the Company available
for distribution after the Company's creditors are paid. Holders of Common
Shares have no preemptive, redemption or conversion rights.

TRANSFER AGENT

The transfer agent for the Common Shares is National City Bank, Cleveland,
Ohio.

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<PAGE> 46

PREFERRED SHARES

No Preferred Shares are outstanding. The Class A Preferred Shares and the
Class B Preferred Shares are identical except that Class A Preferred Shares have
voting rights and Class B Preferred Shares do not have voting rights. No other
terms of any Preferred Shares have been established. The Board of Directors has
the authority, without shareholder approval, to issue Preferred Shares and to
determine their terms (except voting rights) including the dividend or
distribution rate, the dates of payment of dividends or distributions and the
dates from which they are cumulative, liquidation price, redemption rights and
price, conversion rights and other rights to the extent permitted by law from
time to time. Class A Preferred Shares may be issued with voting or conversion
rights which may adversely affect the voting power of holders of Common Shares.
The issuance of a series or class of Preferred Shares could be used to hinder or
delay a takeover bid for the Company which might have the effect of inhibiting
such bids and decreasing the chance of the shareholders realizing a premium over
market price for their Common Shares as a result of such a takeover bid. The
Company does not have any current plan, arrangement or understanding to issue
any Preferred Shares.

CERTAIN CHARTER PROVISIONS

Certain provisions of the Company's Articles of Incorporation and Code of
Regulations may have the effect of deterring companies or other persons from
making takeover bids for control of the Company or may be used to hinder or
delay a takeover bid thereby decreasing the chance of the shareholders of
realizing a premium over market price for their Common Shares as a result of
such bids. The relevant provisions of the Company's Articles of Incorporation
are (a) a provision that requires the approval of holders of 75% of the
Company's voting shares for certain business combinations involving shareholders
who beneficially own more than 20% of the Company's outstanding shares and (b) a
provision authorizing the Company to purchase its capital shares by action of
the Board of Directors. The relevant provisions of the Code of Regulations are
(i) a provision that divides the Board of Directors into two classes with
staggered two year terms if the size of the Board of Directors is six or more
but less than nine persons, and that will divide the Board into three classes
with staggered terms of three years each if the size of the Board is increased
to nine or more, which may be done by the Board of Directors, (ii) a provision
that prevents shareholders from nominating directors from the floor at the
annual meeting, (iii) a provision that requires a vote of holders of 75% of the
voting shares to remove a director (but only for cause), (iv) a provision that
requires certain amendments to the Code of Regulations to be approved by holders
of 75% of the voting shares if such amendments are not approved by at least
three-fourths of the directors, (v) a provision that restricts the right of
shareholders to call a special meeting of shareholders unless holders of 50% of
the voting shares join in the request for a call, and (vi) a provision that
requires a vote of holders of 75% of the voting shares to change the number of
directors although such number may be changed within the range of 3 to 15 by the
Board of Directors without shareholder approval.

CERTAIN LAWS

The Company is subject to the Ohio Control Share Acquisition Law, which
requires that, subject to certain exemptions, any acquisition of shares having
one-fifth to one-third, one-third to one-half or a majority or more of the
Company's voting power be made only with the prior authorization of the holders
of a majority of the voting shares present at the meeting held to obtain such
authorization and a majority of the holders of shares who are disinterested. The
Company is also subject to Chapter 1704 of the Ohio Revised Code. Under Chapter
1704, the Company may not engage in a Chapter 1704 transaction (a term that
broadly includes mergers, asset and stock sales and other financing
transactions) with an interested shareholder (a person or entity that controls
10% or more of the Company's voting power) for three years after the interested
shareholder became such unless the directors of the Company approved the
transaction or the purchase of shares by the interested shareholder in advance.
The Company will exempt the Selling Shareholders from Chapter 1704. Chapter 1704
transactions between an interested shareholder who has held such shares for
three years and the Company that were not approved by the directors in advance
are subject to additional shareholder approval requirements or fairness
criteria. The provisions of Chapter 1704 may deter or prevent takeover bids that
have not been approved in advance by the directors and may decrease the chances
of shareholders realizing a premium over market price for their Common Shares as
the result of such a takeover bid.

45
<PAGE> 47

SHARES ELIGIBLE FOR FUTURE SALE

GENERAL

Upon consummation of the Offering, the Company will have 3,335,088 Common
Shares outstanding (3,422,588 Common Shares if the Underwriters' over-allotment
option is exercised in full), of which the 1,250,000 shares (1,437,500 shares if
the Underwriters' over-allotment option is exercised in full) offered hereby
will be freely tradeable without restriction or further registration under the
Securities Act, except for any shares purchased by an "affiliate" of the Company
(in general, a person who has a control relationship with the Company), which
shares will be subject to the resale limitations, described below, or Rule 144
promulgated under the Securities Act. The remaining 2,085,088 shares (1,985,088
shares if the Underwriters' over-allotment option is exercised in full) are
deemed to be "restricted securities," as that term is defined under Rule 144, in
that such shares were issued and sold by the Company in private transactions not
involving a public offering and, as such, may only be sold pursuant to an
effective registration under the Securities Act, in compliance with the
exemption provisions of Rule 144 or pursuant to another exemption under the
Securities Act. An aggregate of 426,328 shares of such restricted securities may
be eligible for sale in the public market immediately after the Offering
pursuant to Rule 144(k) under the Securities Act (none of these shares are
subject to the lock-up arrangements with the Underwriters described in the
following paragraph). An additional 1,493,160 shares (1,443,160 shares if the
Underwriters' over-allotment option is exercised in full) of such restricted
shares will be eligible for sale under Rule 144 (subject to certain recurring
three-month volume limitations prescribed by Rule 144 and the lock-up
arrangements with the Underwriters described in the following paragraph)
commencing 90 days after the Offering, and the balance of 165,600 shares
(115,600 shares if the Underwriters' over-allotment option is exercised in full)
will become so eligible in October 1998. See "Risk Factors -- Shares Eligible
for Future Sale."

All of the directors and executive officers of the Company, beneficially
holding in the aggregate 1,658,760 Common Shares (1,558,760 Common Shares if the
Underwriters' over-allotment option is exercised in full) upon consummation of
the Offering, have agreed with the Underwriters not to sell or otherwise dispose
of any of those Common Shares for a period of 180 days after the date of this
Prospectus without the written consent of the Representatives; provided,
however, that the Company may issue and sell up to 350,000 Common Shares
pursuant to the Incentive Stock Plan in effect on the date of this Prospectus.
The Representatives may, in their sole discretion and at any time without
notice, release all or any portion of the securities subject to the Lock-up
Agreements.

In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or persons whose shares are aggregated with an affiliate), who has
owned restricted Common Shares beneficially for at least two years is entitled
to sell, within any three-month period, a number of shares that does not exceed
the greater of 1% of the total number of outstanding shares of the same class
or, if the common stock is quoted on Nasdaq National Market, the average weekly
trading volume during the four calendar weeks preceding the sale. A person who
has not been an affiliate of the company for at least three months immediately
preceding the sale and who has beneficially owned Common Shares for at least
three years is entitled to sell such shares under Rule 144 without regard to any
of the limitations described above. The Securities and Exchange Commission (the
"Commission") is currently considering a proposal to reduce the Rule 144 holding
period for restricted securities to one year.

The Company intends to file a registration statement under the Securities
Act to register Common Shares reserved for issuance under the Incentive Stock
Plan, thereby permitting the resale of such shares by non-affiliates in the
public market without restriction under the Securities Act. The Company has
reserved up to 350,000 Common Shares for issuance under the Incentive Stock
Plan. See "Management -- Incentive Stock Plan."

No prediction can be made as to the effect, if any, that public sales of
Common Shares or the availability of such shares for sale will have on the
market prices of the Common Shares prevailing from time to time. Nevertheless,
the possibility that substantial amounts of Common Shares may be sold in the
public market may adversely affect prevailing market prices for the Common
Shares and could impair the Company's ability in the future to raise additional
capital through the sale of its equity securities.

46
<PAGE> 48

UNDERWRITING

Subject to the terms and conditions contained in the Underwriting
Agreement, each of the underwriters named below (the "Underwriters") has
severally agreed to purchase, and the Company and the Selling Shareholders have
agreed to sell to such Underwriter, the respective number of Common Shares set
forth opposite the name of such Underwriter:

<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
------------ ---------
<S> <C>
The Ohio Company..........................................................
Roney & Co................................................................

---------
Total........................................................... 1,250,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Common Shares offered hereby
are subject to approval of certain legal matters by their counsel and to certain
other conditions. The Underwriters are obligated to take and pay for all Common
Shares offered hereby (other than those covered by the over-allotment option
described below) if any such shares are purchased.

The Underwriters, for whom The Ohio Company and Roney & Co. are acting as
Representatives (the "Representatives"), propose to offer part of the Common
Shares directly to the public at the public offering price set forth on the
cover page of this Prospectus and part of the shares to certain dealers at a
price which represents a concession not in excess of $ per share under
the public offering price. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per share to certain other
dealers. After the Offering, the offering price and other selling terms may be
changed. The Representatives of the Underwriters have advised the Company that
the Underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.

The Company, Richard C. Schilg and Kevin T. Costello have granted to the
Underwriters an option, exercisable for 30 days from the date of this
Prospectus, to purchase up to an aggregate of 87,500, 50,000 and 50,000
additional Common Shares, respectively, at the public offering price set forth
on the cover page of this Prospectus minus the underwriting discounts and
commissions. The Underwriters may exercise such option solely for the purpose of
covering over-allotments, if any, in connection with the sale of the shares
offered hereby. To the extent such option is exercised, each Underwriter will be
obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares as the number of shares set forth opposite
such Underwriter's name in the preceding table bears to the total number of
shares in such table. In the event that the Underwriters exercise less than
their full over-allotment option, the number of shares to be sold pursuant
thereto shall be allocated first, to the Selling Shareholders on an equal basis,
and second, to the Company to the extent that the number of shares to be sold
exceeds 100,000.

The Company and all of its directors and executive officers, who
beneficially hold an aggregate of 1,658,760 Common Shares (1,558,760 Common
Shares if the Underwriters' over-allotment option is exercised in full), have
agreed that, for a period of 180 days following the date of this Prospectus,
they will not, without the prior written consent of the Representatives, offer,
sell, contract to sell, or otherwise dispose of any Common Shares of the Company
(other than shares offered pursuant to this Prospectus) or any securities
convertible into, or exercisable or exchangeable for Common Shares of the
Company; provided, however, that the Company may issue and sell up to 350,000
Common Shares pursuant to the Incentive Stock Plan in effect on the date of this
Prospectus.

47
<PAGE> 49

Prior to the Offering, there has not been any public market for the Common
Shares of the Company. Consequently, the initial public offering price for the
Common Shares included in the Offering will be determined by negotiations
between the Company and the Representatives. Among the factors to be considered
in determining such price are the history of and prospects for the Company's
business and the industry in which it competes, an assessment of the Company's
management and the present state of the Company's development, the past and
present revenues and earnings of the Company, the prospects for the growth of
the Company's revenues and earnings, the current state of the economy in the
United States and the current level of economic activity in the industry in
which the Company competes and in related or comparable industries, and
currently prevailing conditions in the securities markets, including current
market valuations of publicly traded companies that are comparable to the
Company.

The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including certain liabilities under
the Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof.

The Underwriters have reserved for sale, at the initial public offering
price, up to 75,000 of the Common Shares offered hereby for employees of the
Company and certain other individuals who have expressed an interest in
purchasing such Common Shares in the Offering. The number of shares available
for sale to the general public will be reduced to the extent such persons
purchase such reserved shares. Any reserved shares not so purchased will be
offered by the Underwriters to the general public on the same basis as the other
shares offered hereby.

LEGAL MATTERS

Squire, Sanders & Dempsey L.L.P. has rendered an opinion as to the validity
of the Common Shares offered hereby. Certain legal matters relating to the
Offering will be passed upon for the Underwriters by Porter, Wright, Morris &
Arthur.

EXPERTS

The consolidated financial statements of the Company and its subsidiaries
for each of the three years in the period ended December 31, 1995 included in
this Prospectus and in the Registration Statement have been audited by Arthur
Andersen LLP, independent public accountants, as set forth in their report
thereon, which appears elsewhere herein and in the Registration Statement. The
financial statements have been included in reliance upon the report of such firm
and upon their authority as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission in
Washington, D.C. a Registration Statement on Form S-1 under the Securities Act
with respect to the Common Shares offered in the Offering. This Prospectus does
not contain all of the information set forth in the Registration Statement and
the Exhibits and schedules thereto, certain items of which are omitted in
accordance with the rules and regulations of the Commission. Statements
contained in this Prospectus concerning the provisions or contents of any
contract or other document referred to herein are not necessarily complete. With
respect to each such contract, agreement, or document filed as an exhibit to the
Registration Statement, reference is made to such exhibit for a more complete
description, and each such statement is deemed to be qualified in all respects
by such reference.

The Registration Statement and the exhibits and schedules thereto filed
with the Commission may be inspected, without charge, at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
located at Seven World Trade Center, 13th Floor, New York, New York 10048, and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.

48
<PAGE> 50

Such materials may also be accessed electronically by means of the Commission's
home page on the Internet at http:\\www.sec.gov.

Upon completion of the Offering, the Company will be subject to the
information requirements of the Exchange Act, and, in accordance therewith, will
file reports, proxy and information statements and other information with the
Commission. Such reports, proxy and information statements and other information
can be inspected and copied at the addresses, and may be accessed electronically
at the Uniform Resource Locator, set forth above.

Statements contained in this Prospectus as to the contents of any
agreement, contract or other document are not necessarily complete, and in each
instance reference is made to the copy of such agreement, contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.

49
<PAGE> 51

[THIS PAGE LEFT INTENTIONALLY BLANK]
<PAGE> 52

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Independent Public Accountants.............................................. F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995 and September 30, 1996... F-3
Consolidated Statements of Income for the Years Ended December 31, 1993, 1994 and 1995
and the nine months ended September 30, 1995 and 1996............................... F-5
Consolidated Statement of Changes in Shareholders' Equity (Deficit) for the Years
Ended December 31, 1993, 1994 and 1995 and the nine months ended September 30, 1995
and 1996............................................................................ F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and
1995 and the nine months ended September 30, 1995 and 1996.......................... F-7
Notes to Consolidated Financial Statements............................................ F-9
</TABLE>

F-1
<PAGE> 53

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
TEAM America Corporation and Subsidiaries:

We have audited the accompanying consolidated balance sheets of TEAM
AMERICA CORPORATION (an Ohio corporation) and subsidiaries as of December 31,
1994 and 1995, and the related consolidated statements of income, changes in
shareholders' equity (deficit) and cash flows for each of the three years in the
period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures 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 TEAM America Corporation and
subsidiaries as of December 31, 1994 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Columbus, Ohio,
August 30, 1996 (except with respect
to the matters discussed in Note 13 as to
which the date is December 4, 1996).

F-2
<PAGE> 54

TEAM AMERICA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 1994 AND 1995 AND SEPTEMBER 30, 1996

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- SEPTEMBER 30,
1994 1995 1996
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................................... $1,356,989 $1,938,253 $1,598,108
Accounts receivable:
Trade, net of allowance for doubtful accounts of $5,406,
$3,266 and $0, respectively.............................. 162,030 239,603 289,911
Related parties............................................ 48,268 38,041 41,200
Employee advances.......................................... 110,725 53,637 113,243
Unbilled revenues.......................................... 1,591,933 1,968,760 2,583,652
---------- ---------- ----------
Total receivables..................................... 1,912,956 2,300,041 3,028,006
Prepaid expenses............................................. 75,113 95,912 60,915
Deferred income tax assets................................... 15,000 23,000 23,000
---------- ---------- ----------
Total current assets.................................. 3,360,058 4,357,206 4,710,029
---------- ---------- ----------
PROPERTY AND EQUIPMENT, net of accumulated depreciation and
amortization................................................. 184,481 261,025 464,185
---------- ---------- ----------
OTHER ASSETS:
Notes receivable............................................. -- 11,000 3,783
Cash surrender value of life insurance policies.............. 157,785 188,224 266,067
Mandated benefit/security deposits........................... 59,907 83,429 109,499
Deferred income tax assets................................... 57,000 49,000 49,000
Other assets................................................. 28,175 35,785 59,153
---------- ---------- ----------
Total other assets.................................... 302,867 367,438 487,502
---------- ---------- ----------
Total assets.......................................... $3,847,406 $4,985,669 $5,661,716
========== ========== ==========
</TABLE>

(Continued on next page)

F-3
<PAGE> 55

TEAM AMERICA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS -- (CONTINUED)

AS OF DECEMBER 31, 1994 AND 1995 AND SEPTEMBER 30, 1996

<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
------------------------- SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996 1996
---------- ---------- ------------- -------------
(UNAUDITED) (UNAUDITED)
NOTE 13
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<S> <C> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable.............................................. $ 60,614 $ 46,081 $ 32,723
Accrued compensation.......................................... 1,495,604 1,586,366 2,333,054
Payroll taxes payable......................................... 834,325 1,233,319 805,596
Workers' compensation premium payable......................... 838,990 915,350 695,645
Federal and state income taxes payable........................ 30,628 182,211 166,471
Accrued expenses.............................................. 10,051 16,903 94,920
Client deposits............................................... 304,428 427,152 463,505
Note payable.................................................. 26,000 14,000 --
Capital lease obligation, current portion..................... 22,853 9,155 13,870
---------- ---------- ----------
Total current liabilities.............................. 3,623,493 4,430,537 4,605,784
CAPITAL LEASE OBLIGATION, net of current position............... 20,616 11,461 --
DEFERRED RENT................................................... 150,711 143,418 124,305
DEFERRED COMPENSATION LIABILITIES............................... 157,785 188,224 266,067
---------- ---------- ----------
Total liabilities...................................... 3,952,605 4,773,640 4,996,156
---------- ---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, $100,000 par value:
Class A, 7,500 shares authorized; 0, 213 and 213 issued
respectively; 0, 198 and 198 outstanding, respectively
(aggregate liquidation preference $21,300)................ -- 21,300 21,300 $ --
Common Stock, no par value; 10,000,000 shares authorized;
2,228,976 issued; 2,085,088 outstanding, pro forma.......... -- -- -- 314,076
Common Stock, no par value:
Class A, 7,500 shares authorized; 5,693, 5,480 and 5,480
issued, respectively; 5,311, 4,758 and 4,713 outstanding
respectively.............................................. 255,494 234,194 234,194 --
Class B, 7,500 shares authorized; 6,421 issued and
outstanding............................................... 59,757 59,757 59,757 --
Excess purchase price......................................... (83,935) (83,935) (83,935) (83,935)
Subscription receivable....................................... (31,500) -- -- --
Retained earnings (deficit)................................... (284,345) 5,228 461,359 461,359
---------- ---------- ---------- --------
(84,529) 236,544 692,675 691,500
Less -- Treasury stock, Common Class A shares of 382, 722
and 767, respectively, at cost............................ (20,670) (23,340) (25,940) --
Less -- Treasury stock, Preferred Class A shares of 0, 15
and 15, respectively, at cost............................. -- (1,175) (1,175) --
Less -- Treasury stock, Common Stock shares of 143,888, pro
forma..................................................... -- -- -- (25,940)
---------- ---------- ---------- --------
Total stockholders' equity (deficit)................... (105,199) 212,029 665,560 $665,560
========
---------- ---------- ----------
Total liabilities and stockholders' equity (deficit)... $3,847,406 $4,985,669 $5,661,716
========== ========== ==========
</TABLE>

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

F-4
<PAGE> 56

TEAM AMERICA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996

<TABLE>
<CAPTION> NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
--------------------------------------- -------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES........................ $41,252,575 $56,070,617 $74,921,316 $55,019,581 $69,572,430
----------- ----------- ----------- ----------- -----------
DIRECT COSTS:
Salaries and wages............ 34,554,784 47,602,806 63,502,407 46,450,588 59,017,948
Payroll taxes, workers'
compensation premiums,
employee benefits and
other...................... 4,018,691 5,578,069 7,594,264 5,860,089 6,788,562
----------- ----------- ----------- ----------- -----------
38,573,475 53,180,875 71,096,671 52,310,677 65,806,510
----------- ----------- ----------- ----------- -----------
Gross profit............... 2,679,100 2,889,742 3,824,645 2,708,904 3,765,920
----------- ----------- ----------- ----------- -----------
EXPENSES:
Administrative salaries, wages
and employment taxes....... 1,283,926 1,427,432 2,013,481 1,397,318 1,879,395
Other general and
administrative expenses.... 645,831 857,261 995,620 640,308 956,761
Advertising................... 60,694 66,258 116,319 71,611 81,842
Depreciation and
amortization............... 55,149 49,975 42,721 36,843 58,607
----------- ----------- ----------- ----------- -----------
Total operating expenses... 2,045,600 2,400,926 3,168,141 2,146,080 2,976,605
----------- ----------- ----------- ----------- -----------
Income from operations..... 633,500 488,816 656,504 562,824 789,315
OTHER EXPENSES.................. (46,764) (37,561) (120,069) (79,577) (2,883)
----------- ----------- ----------- ----------- -----------
Income before income
taxes.................... 586,736 451,255 536,435 483,247 786,432
INCOME TAX (EXPENSE) BENEFIT.... 171,850 (181,477) (246,862) (222,293) (330,301)
----------- ----------- ----------- ----------- -----------
Net income................. $ 758,586 $ 269,778 $ 289,573 $ 260,954 $ 456,131
=========== =========== =========== =========== ===========
Earnings per share......... $ 0.46 $ 0.14 $ 0.14 $ 0.12 $ 0.22
=========== =========== =========== =========== ===========
Weighted average shares
outstanding.............. 1,668,512 1,920,224 2,129,616 2,140,656 2,089,136
=========== =========== =========== =========== ===========
</TABLE>

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

F-5
<PAGE> 57
TEAM AMERICA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS A
COMMON STOCK COMMON STOCK PREFERRED STOCK RETAINED EXCESS
---------------- --------------- --------------- EARNINGS PURCHASE
NUMBER VALUE NUMBER VALUE NUMBER VALUE (DEFICIT) PRICE
------ -------- ------ ------- ------ ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1992.... 3,393 $243,994 3,221 $ 9,857 -- $ -- $(1,312,709) $(83,935)
Net income.................. -- -- -- -- -- -- 758,586 --
----- -------- ----- ------- --- ------- ----------- --------
BALANCE, December 31, 1993.... 3,393 243,994 3,221 9,857 -- -- (554,123) (83,935)
Stock issued................ 2,300 11,500 3,200 49,900 -- -- -- --
Net income.................. -- -- -- -- -- -- 269,778 --
----- -------- ----- ------- --- ------- ----------- --------
BALANCE, December 31, 1994.... 5,693 255,494 6,421 59,757 -- -- (284,345) (83,935)
Class A common stock
exchanged for Class A
preferred stock........... (213) (21,300) -- -- 213 21,300 -- --
Stock repurchased as
treasury, 340 shares of
Class A common, at cost
and 15 shares of Class A
preferred stock, at cost.. -- -- -- -- -- -- -- --
Subscriptions received in
cash subsequent to
year-end.................. -- -- -- -- -- -- -- --
Net income.................. -- -- -- -- -- -- 289,573 --
----- -------- ----- ------- --- ------- ----------- --------
BALANCE, December 31, 1995.... 5,480 234,194 6,421 59,757 213 21,300 5,228 (83,935)
Stock repurchased as
treasury, 45 shares of
Class A common, at cost... -- -- -- -- -- -- -- --
Net income.................. -- -- -- -- -- -- 456,131 --
----- -------- ----- ------- --- ------- ----------- --------
BALANCE, September 30, 1996
(unaudited)................. 5,480 $234,194 6,421 $59,757 213 $21,300 $ 461,359 $(83,935)
===== ======== ===== ======= === ======= =========== ========
</TABLE>

<TABLE>
<CAPTION>
TREASURY STOCK
------------------- SUBSCRIPTION
COMMON PREFERRED RECEIVABLES TOTAL
-------- --------- ------------ -----------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1992.... $(20,670) $ -- $ -- $(1,163,463)
Net income.................. -- -- -- 758,586
-------- ------- -------- -----------

BALANCE, December 31, 1993.... (20,670) -- -- (404,877)
Stock issued................ -- -- (31,500) 29,900
Net income.................. -- -- -- 269,778
-------- ------- -------- -----------
BALANCE, December 31, 1994.... (20,670) -- (31,500) (105,199)
Class A common stock
exchanged for Class A
preferred stock........... -- -- -- --
Stock repurchased as
treasury, 340 shares of
Class A common, at cost
and 15 shares of Class A
preferred stock, at cost.. (2,670) (1,175) -- (3,845)
Subscriptions received in
cash subsequent to
year-end.................. -- -- 31,500 31,500
Net income.................. -- -- -- 289,573
-------- ------- -------- -----------
BALANCE, December 31, 1995.... (23,340) (1,175) -- 212,029
Stock repurchased as
treasury, 45 shares of
Class A common, at cost... (2,600) -- -- (2,600)
Net income.................. -- -- -- 456,131
-------- ------- -------- -----------
BALANCE, September 30, 1996
(unaudited)................. $(25,940) $(1,175) $ -- $ 665,560
======== ======= ======== ===========
</TABLE>

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

F-6
<PAGE> 58

TEAM AMERICA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
INCREASE (DECREASE) IN CASH

<TABLE>
<CAPTION> NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------------------ -----------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................... $ 758,586 $ 269,778 $ 289,573 $ 260,954 $ 456,131
Depreciation and amortization...... 55,149 49,975 42,721 36,843 58,607
Loss on disposal of assets......... -- -- 14,995 14,995 --
(Increase) decrease in operating
assets:
Accounts and notes receivable... (12,255) (556,271) (398,085) (191,010) (720,748)
Prepaid expenses................ (28,534) (6,512) (20,799) 19,909 34,997
Mandated benefit/security
deposits...................... 28,191 8,350 (23,522) (21,145) (26,070)
Deferred tax asset, net......... (196,000) 144,000 -- -- --
Increase (decrease) in operating
liabilities:
Accounts payable................ 34,406 (67,137) (14,533) (34,940) (13,358)
Accrued expenses and other
payables...................... (282,800) 781,094 724,551 (12,194) 161,537
Client deposits................. 197,505 104,373 122,724 127,482 36,353
Deferred liabilities............ 44,954 78,379 23,146 40,682 58,730
--------- --------- --------- --------- ---------
Net cash provided by operating
activities.................... 599,202 806,029 760,771 241,576 46,179
--------- --------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and
equipment....................... (42,022) (15,950) (133,870) (101,655) (261,474)
Increase in cash surrender value of
life insurance policies......... (12,638) (75,672) (30,439) (47,096) (77,843)
Investments in equity securities
and precious metals............. -- -- (8,000) -- (23,661)
--------- --------- --------- --------- ---------
Net cash used in investing
activities.................... (54,660) (91,622) (172,309) (148,751) (362,978)
--------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on note payable........... (14,669) (17,275) (12,000) (9,000) (14,000)
Payments on capital lease
obligation...................... (22,561) (29,444) (22,853) (21,918) (6,746)
Common stock issued................ -- 29,900 -- -- --
Purchase of treasury stock......... -- -- (3,845) (1,575) (2,600)
Subscriptions received in cash
subsequent to year-end.......... -- -- 31,500 -- --
--------- --------- --------- --------- ---------
Net cash used in financing
activities.................... (37,230) (16,819) (7,198) (32,493) (23,346)
--------- --------- --------- --------- ---------
Net increase (decrease) in
cash.......................... 507,312 697,588 581,264 60,332 (340,145)
</TABLE>

(Continued on next page)

F-7
<PAGE> 59

TEAM AMERICA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
INCREASE (DECREASE) IN CASH

<S> <C> <C> <C> <C> <C>
CASH AND CASH EQUIVALENTS, beginning
of period.......................... $ 152,089 $ 659,401 $1,356,989 $1,356,989 $1,938,253
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, end of
period............................. $ 659,401 $1,356,989 $1,938,253 $1,417,321 $1,598,108
========= ========= ========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest........................ $ 14,476 $ 19,056 $ 16,689 $ 4,462 $ 2,279
Income taxes.................... $ 9,552 $ 32,620 $ 87,403 $ 85,274 $ 333,847
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITY:

During 1994, the Company issued 900 shares of Class B Common Stock in
exchange for a promissory note in the amount of $31,500 which is shown as a
reduction of shareholders' equity (deficit) and was subsequently fully repaid in
1996.

During 1994, the Company entered into a capital lease agreement for
equipment in the amount of $35,000.

During 1995, the Company converted 213 shares of Class A Common Stock,
valued at $21,300, into 213 shares of Class A Preferred Stock. The conversion
was made pursuant to a preferred stock offering made to all Class A Common
shareholders, and was made on a dollar for dollar basis.

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

F-8
<PAGE> 60

TEAM AMERICA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1994 AND 1995

(1) NATURE AND SCOPE OF BUSINESS

TEAM America Corporation, an Ohio corporation (the Company), is the largest
professional employer organization (PEO) headquartered in Ohio and one of the
oldest PEOs in the United States, having been founded in 1986. The Company
provides, through "partnering" agreements, comprehensive and integrated human
resource management services to small and medium-sized businesses, thereby
allowing such businesses to outsource their human resource responsibilities. The
Company offers a broad range of services including human resource
administration, regulatory compliance management, employee benefits
administration, risk management services and employees liability protection,
payroll and payroll tax administration, and placement services. The Company
provides such services by establishing an employment relationship with the
worksite employees of its clients, contractually assuming substantial employer
responsibilities with respect to worksite employees, and instructing its clients
regarding employment practices. While the Company becomes the legal employer for
most purposes, the client remains in operational control of its business. As of
December 31, 1995, the Company provided professional employer services to
approximately 185 client organizations and in excess of 3,100 worksite
employees, substantially all of whom were located in the midwestern United
States, principally Ohio.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Principles of Consolidation -- The consolidated financial statements
include TEAM America Corporation and its twenty (20) subsidiaries. All
significant inter-company accounts and transactions have been eliminated in
consolidation.

Revenue Recognition -- Pursuant to the provisions of its standard client
agreement, the Company is the legal employer of the client's worksite employees
for most purposes and has the right, among others, to hire, supervise, terminate
and set the compensation of such worksite employees. The Company bills its
clients on each payroll date for (i) the actual gross salaries and wages,
related employment taxes and employee benefits of the Company's worksite
employees, (ii) actual advertising costs associated with recruitment, (iii)
workers' compensation and unemployment service fees and (iv) an administrative
fee. In addition, each client must pay a one-time enrollment fee of $50.00 plus
$10.00 per worksite employee.

F-9
<PAGE> 61

TEAM AMERICA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1994 AND 1995

mitigated by the fact that its standard client agreement provides that the
Company, at its discretion, may adjust the amount billed to the client to
reflect changes in the Company's direct costs, including without limitation
statutory increases in employment taxes and insurance. Any such adjustment which
relates to changes in direct costs is effective as of the date of the changes
and all other changes require thirty days' prior notice.

Consistent with PEO industry practice, the Company recognizes all amounts
billed to its clients as revenue because the Company is at risk for the payment
of its direct costs, whether or not the Company's clients pay the Company on a
timely basis or at all. The Company also recognizes as revenue and as unbilled
receivables, on an accrual basis, any such amounts which relate to services
performed by worksite employees as of the end of the accounting period which
have not yet been billed to the client because of timing differences between the
day the Company's accounting period ends and its billing dates.

Concentrations of Credit Risk -- Financial instruments, which potentially
subject the Company to a concentration of credit risk, consist principally of
accounts receivable. The Company provides its services to its customers based
upon an evaluation of the customer's financial condition. Exposure to losses on
receivables is principally dependent on each customer's financial condition. The
Company mitigates such exposure by requiring deposits, letters of credit or
personal guarantees from the majority of its customers. Exposure to credit
losses is monitored by the Company, and allowances for anticipated losses are
maintained.

Cash and Cash Equivalents -- Cash and cash equivalents consist of cash and
highly liquid investments with maturities of three months or less.

Property and Equipment -- Property and equipment is stated at cost with
depreciation and amortization computed on the straight-line method over the
estimated useful lives of the respective assets. Additions and betterments to
property and equipment over certain minimum dollar amounts are capitalized.
Repair and maintenance expenses are expensed as incurred. The following is a
summary of the Company's property, plant and equipment and the associated
accumulated depreciation and amortization at December 31:

<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Furniture and fixtures......................................... $301,061 $305,790
Computer hardware and software................................. 37,861 141,078
Leasehold improvements......................................... 30,421 30,805
-------- --------
Total property and equipment......................... 369,343 477,673
Less: Accumulated depreciation and amortization................ 184,862 216,648
-------- --------
Property and equipment, net.......................... $184,481 $261,025
======== ========
</TABLE>

Depreciation and amortization is provided over the estimated useful lives
of the assets using the straight-line method. The Company capitalizes and
depreciates purchased software, and expenses as incurred any software it
develops. The estimated useful lives are as follows:

<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Furniture and fixtures........................................................ 7
Computer hardware and software................................................ 5
Leasehold improvements........................................................ 5
</TABLE>

Other Assets -- Other assets primarily consist of investments in securities
which are stated at cost because no readily ascertainable market values are
available.

F-10
<PAGE> 62

TEAM AMERICA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1994 AND 1995

Deferred Rent -- The Company entered into the lease of its corporate
headquarters in 1990. This lease included inducements in the early periods of
the lease, including the first six months being rent free, with following years'
payments having scheduled increases. In accordance with generally accepted
accounting principles, rent expense is recognized on a straight-line basis over
the life of the lease. Consequently, a deferred credit has been generated, which
will be amortized over the remaining years of the lease (until the year 2000).

Advertising -- Advertising expenses relate to promotional materials and are
expensed as incurred.

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.

Fair Value of Financial Instruments -- The carrying amounts of current
assets and liabilities approximate their fair value because of the immediate or
short-term maturity of these financial instruments. The carrying amount of the
long-term debt obligation with a bank approximates its fair value as the
underlying financial instrument is a variable rate note that reprices
frequently. Notes receivable have no readily ascertainable market value. Other
assets at December 31, 1994 and 1995 include investments in privately held
non-traded equity securities ($4,500) and real estate ($22,526) for which there
is no readily ascertainable market value, as well as investments in precious
metals ($0 and $8,000, respectively) which are stated at cost.

Earnings Per Share -- Earnings per share was computed by dividing net
income by the weighted average of shares of common stock outstanding and common
stock equivalents outstanding during the respective periods, and has been
restated for the 184-to-1 stock split, as of the effective date of the
registration statement. In 1995, there were no common stock equivalents. For
1994 common stock equivalents were anti-dilutive, and therefore, were not
included in the weighted average number of common stock shares. The Company used
the modified treasury stock method as prescribed by Accounting Principles Board
Opinion No. 15 to compute earnings per share in 1993 since the number of options
outstanding was in excess of 20% of common stock shares issued and outstanding.
Adjustments to 1993 net income relate to interest savings. The computation
adjusted net income and weighted average common and common equivalent shares
used in the calculation of earnings per common share as follows:

<TABLE>
<CAPTION>
1993
----------
<S> <C>
Weighted average of common stock shares outstanding.................... 1,146,688
Dilutive effect of options and warrants outstanding.................... 521,824
----------
Weighted average of common stock and common stock equivalent shares.... 1,668,512
==========
Net income............................................................. $ 758,586
Adjustments to net income.............................................. 3,334
----------
Net income for purposes of the earnings per common share calculation... $ 761,920
==========
Earnings per common stock and common stock equivalent share............ $ 0.46
==========
</TABLE>

Unaudited Interim Consolidated Financial Statements -- The accompanying
interim consolidated financial statements as of September 30, 1996 and for the
nine months ended September 30, 1995 and 1996, are unaudited. However, in the
opinion of management, these interim statements include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the consolidated financial position, results of operations,
changes in shareholders' equity and cash flows of TEAM America Corporation and
its subsidiaries.

F-11
<PAGE> 63

TEAM AMERICA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1994 AND 1995

Accounting Pronouncements Not Yet Effective -- Statement of Financial
Accounting Standards (SFAS) No. 123 "Accounting For Stock Based Compensation"
establishes a fair value based method of accounting for stock-based compensation
plans. It encourages entities to adopt that method in place of the provisions of
APB Opinion No. 25, "Accounting for Stock Issue to Employees" (APB 25), for all
arrangements under which employees receive shares or other equity instruments
from the employer. The Company will continue to follow APB 25 and will comply
with the specific provisions of SFAS 123 that require pro forma disclosures
concerning compensation expense in the notes to the financial statements for
1996. Accordingly, the adoption of SFAS 123 will not impact the results of
financial position or operating results of the Company.

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 "Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of " ("SFAS 121"). SFAS 121 requires that
long-lived assets and certain identifiable intangibles to be held and used by an
entity be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The
Company adopted SFAS 121 effective January 1, 1996. Adoption of SFAS 121 did not
have a material impact on the Company's financial position or results of
operations.

(3) DEBT OBLIGATIONS

The Company had a demand note payable to a bank, bearing interest at the
prime rate plus 2% (10.5% at December 31, 1994 and 1995). The note was secured
by all business assets and was guaranteed by an officer of the Company. This
note was repaid in full in 1996.

The Company has executed a $500,000 promissory note to a bank which, at the
bank's sole discretion, would allow the Company to obtain advances up to such
amount without negotiating or exercising any further agreements. Borrowings
under this credit facility are payable upon demand and bear interest at the
bank's prime rate plus 0.5% (9.0% at December 31, 1995). The credit facility is
unsecured, but has been guaranteed by an officer of the Company. As of December
31, 1995, no borrowings were outstanding under this credit facility.

(4) CAPITAL LEASE

The Company has a capitalized lease obligation for equipment.

Future minimum lease payments are due as follows:

<TABLE>
<S> <C>
1996....................................................................... $11,445
1997....................................................................... 11,445
1998....................................................................... 954
-------
23,844
Less: amount representing interest......................................... (3,228)
-------
20,616
Less: current portion...................................................... (9,155)
-------
Capital lease obligation, net of current portion........................... $11,461
=======
</TABLE>

The cost and related accumulated amortization of the assets capitalized
under capital lease was $121,718 and $84,256 at December 31, 1994 and $35,569
and $21,341 at December 31, 1995, respectively.

F-12
<PAGE> 64

TEAM AMERICA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1994 AND 1995

(5) COMMITMENTS

The Company leases office facilities, automobiles and certain office
equipment under long-term agreements expiring through 2000, which are accounted
for as operating leases. The following is a schedule of future minimum lease
payments due as of December 31, 1995:

YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1996................................................................... $156,000
1997................................................................... 166,000
1998................................................................... 175,000
1999................................................................... 175,000
2000................................................................... 125,000
--------
$797,000
========
</TABLE>

Rent expense under all operating leases was $155,086, $148,989 and $166,337
for the years ended December 31, 1993, 1994 and 1995, respectively.

The Company currently has agreements with certain officers and other
employees which call for payment of commissions on future revenues from clients
brought in by the employees. The amount of such payments is determined by the
achievement of certain sales goals while such employees are employed with the
Company, as well as the level of sales from such employees' clients subsequent
to termination for a certain period, as defined. These commission agreements are
subject to compliance with non-compete agreements which are effective for one
year beyond an employee's termination date. The Company incurred no expense
relating to such agreements in 1993, 1994 or 1995.

(6) DEFERRED COMPENSATION LIABILITY

The Company has several deferred compensation agreements with certain
employees. The liabilities under these agreements are being accrued over the
participants' remaining periods of employment so that, on the payout date, the
then-present value of the payments will have been accrued. These liabilities are
being funded by life insurance policies, the cash surrender value of which
determines the deferred compensation liabilities, as defined in the respective
agreements. Expense for 1993, 1994 and 1995 related to deferred compensation was
$49,280, $62,143 and $58,778, respectively.

(7) EMPLOYEE BENEFIT PROGRAMS

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

401(k) Retirement Plan -- The Company sponsors a 401(k) retirement plan
which covers substantially all full-time employees with at least one year of
service. The Plan does not provide for Company contributions.

Other Programs -- Other available employee programs include life,
accidental death and dismemberment insurance, disability insurance and dependent
care assistance programs. Benefits under such programs are funded by the
Company's employees and customers.

Health Insurance Program -- Prior to September 1, 1993, the Company was
self-insured for medical health claims up to approximately $100,000 per
employee, per annum. Under the Company's insurance programs, coverage was
obtained for catastrophic exposures, as well as those risks required to be
insured by

F-13
<PAGE> 65

TEAM AMERICA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1994 AND 1995

law or contract. Provisions for losses expected under these programs were
recorded based upon the Company's estimates of the aggregate liability for
claims incurred. Effective September 1, 1993, the Company's health plan became
fully insured.

(8) INCOME TAXES

In May 1992, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109 "Accounting for Income Taxes", which requires an asset
and liability approach to financial accounting and reporting for income taxes.
Deferred income tax assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income.
Income tax expense is the tax payable or refundable for the period plus or minus
the change during the period in deferred tax assets and liabilities.

The components of the income tax expense (benefit) for the years ended
December 31, 1993, 1994 and 1995 are as follows:

<TABLE>
<CAPTION>
1993 1994 1995
---------- --------- --------
<S> <C> <C> <C>
Current:
Federal........................................ $ 20,527 $ 31,855 $209,833
State.......................................... 3,623 5,622 37,029
Deferred:
Change in valuation allowance.................. (422,600) -- --
Decrease in deferred income tax assets......... 226,600 144,000 --
--------- --------- --------
Total income tax expense (benefit)..... $(171,850) $ 181,477 $246,862
========= ========= ========
</TABLE>

A reconciliation of the statutory Federal tax rate to the Company's
effective tax rate is as follows:

<TABLE>
<CAPTION>
1993 1994 1995
------ ---- ----
<S> <C> <C> <C>
Statutory Federal tax rate.................................... 34.0% 34.0% 34.0%
Adjustments to Federal statutory tax rate:
State income tax expense, net............................... 6.0 6.0 6.0
Valuation allowance......................................... (72.0) -- --
Other, primarily life insurance............................. 2.7 0.2 6.0
--- --- ---
Effective tax rate............................................ (29.3)% 40.2% 46.0%
==== === ====
</TABLE>

The reduction in the valuation allowance to zero in 1993 resulted from the
Company's expectation to realize its net operating loss (NOL) carryforwards in
future years based upon the Company's growth in recurring operating income in
1993, and its expectation of future income. The Company fully utilized its NOL
carryforwards by 1994.

The Company pays state income tax on the greater of a net worth basis or an
income basis in a majority of the states in which it operates.

F-14
<PAGE> 66

TEAM AMERICA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1994 AND 1995

The significant items giving rise to the deferred income tax assets
(liabilities), as of December 31, 1994 and 1995, are as follows:

<TABLE>
<CAPTION>
1994 1995
---------- --------
<S> <C> <C>
Deferred income tax assets (liabilities):
Deferred compensation....................................... $ 54,000 $ 71,000
Deferred rents.............................................. 59,000 57,000
Other, net.................................................. (41,000) (56,000)
---------- --------
Total deferred income tax assets (liabilities),
net............................................... $ 72,000 $ 72,000
========= ========
</TABLE>

(9) RELATED PARTY TRANSACTIONS

At December 31, 1994, the Company had a non-interest bearing account
receivable from an officer in the amount of $50,894. In 1995, this receivable
was paid in full.

At December 31, 1994 and 1995, the Company had accounts receivable in the
aggregate amount of $48,268 and $38,041, respectively, from related parties
including several members of the Board of Directors who are clients of the
Company.

During the years ended December 31, 1993, 1994 and 1995, the Company
recorded sales to related parties in the amounts of $211,859, $388,105 and
$417,127, respectively. During the years ended December 31, 1993, 1994 and 1995,
the Company purchased services from related parties in the amounts of $80,318,
$98,411 and $147,109, respectively.

(10) SHAREHOLDERS' EQUITY

The Company is authorized to issue 7,500 Class A and 7,500 Class B common
shares, without par or stated value, and 7,500 Class A preferred shares, $100
par value. Each Class A and Class B common share is entitled to participate in
any dividends or distributions when declared by the directors without
distinction as to class. Further, the holders of Class A and Class B common
shares exercise voting rights without distinction as to class; however, the
holders of Class A common shares have exclusive right to elect three Class A
directors and the holder of Class B common shares has exclusive right to elect
three Class B directors.

In 1993, the Board of Directors granted to two officers of the Company
options to purchase 2,300 Class A common shares at $5 per share and 2,300 Class
B common shares at $8 per share. These options were exercised in 1994.

During 1994, the Company issued 900 Class B common shares to an officer in
exchange for a promissory note in the amount of $31,500 which is shown as a
reduction of shareholders' equity. This note bears interest at 5% per annum.
Subsequent to December 31, 1995, this receivable was paid in cash.

In 1994, a total of 5,500 shares was sold to Company officers.

During 1995, the Company converted 213 Class A common shares (valued at the
original purchase price of $21,300), into 213 Class A preferred shares. The
Class A preferred shares are non-voting and have cumulative dividend rights. The
dividend rate is established annually at a rate equal to the prime lending rate,
but not less than 4% or more than 10%. The Company has the right to redeem the
preferred shares at par value. No cumulative liability exists as of December 31,
1995.

F-15
<PAGE> 67

TEAM AMERICA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1994 AND 1995

(11) CONTINGENCIES

Representatives of the Internal Revenue Service (IRS) have publicly stated
that the IRS is conducting a Market Segment Study of the PEO industry, focusing
on selected PEOs (not including the Company), in order to examine the
relationships among PEOs, worksite employees and owners of client companies. The
Company has limited knowledge of the nature, scope and status of the Market
Segment Study because it is not a part thereof and the IRS has not publicly
released any information regarding the study to date. In addition, the Company's
401(k) plan was audited for the year ended December 31, 1992, and as part of
that audit, the IRS regional office has asked the IRS national office to issue a
Technical Advice Memorandum (TAM) regarding whether or not the Company is the
employer for benefit plan purposes. The Company has stated its position in a
filing with the IRS that it is the employer for benefit plan purposes. If the
IRS concludes that PEOs are not "employers" of certain worksite employees for
purposes of the Code as a result of either the Market Segment Study or the TAM,
then the tax qualified status of the Company's 401(k) plan could be revoked and
its cafeteria plan may lose its favorable tax status. The loss of qualified
status for the 401(k) Plan and the cafeteria plan could increase the Company's
administrative expenses and, thereby, materially adversely affect the Company's
financial condition and results of operations. The Company is unable to predict
the timing or nature of the findings of the Market Segment Study Group, the
timing or conclusions of the TAM, and the ultimate outcome of such conclusions
or findings. The Company is also unable to predict the impact which the
foregoing will have on the Company's administrative expenses, and whether the
Company's resulting liability exposure, if any, will relate to past or future
operations. Accordingly, the Company is unable to make a meaningful estimate of
the amount, if any, of such liability exposure.

(12) SUBSEQUENT EVENTS

(13) EVENTS SUBSEQUENT TO DATE OF AUDITORS' REPORT

On October 24, 1996, the Company's shareholders approved the following:

a. An increase in the number of shares of authorized capital stock to
11,000,000 shares, no par value, of which 500,000 will be designated as
voting preferred shares, 500,000 will be designated as nonvoting
preferred shares, and 10,000,000 will be designated as common shares.

b. A conversion of all of the Company's issued Class A common shares and
Class B common shares to a single class of common shares and the
elimination of the classes of Class A common shares and Class B common
shares.

c. A conversion of the Company's issued Class A preferred shares, $100 par
value, to an equal number of common shares and the elimination of the
class of Class A preferred shares.

d. A 184-to-1 split of the common shares prior to the Offering.

F-16
<PAGE> 68

TEAM AMERICA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31, 1994 AND 1995

e. An Incentive Stock Plan for employees which provides for the issuance of
up to 350,000 common shares. The maximum number of shares, that may be
awarded during any calendar year, may not exceed 10% of the total number
of issued and outstanding common shares of the Company.

After the completion of the Offering, the Company intends to execute
employment agreements with two of its officers pursuant to which each such
officer will be employed by the Company for a rolling three-year period and will
receive an annual base salary, plus incentive compensation to be determined by
the Company's Board of Directors or a committee thereof based upon the Company's
results of operations and financial position and various other factors. In
addition to such base salary and incentive compensation, each such officer will
continue to receive commissions on sales to clients for which he is responsible
pursuant to terms and conditions to be determined by the Company's Compensation
Committee. The Company has agreed to grant to each of these officers the right
to purchase 50,000 common shares at the initial public offering price, subject
to vesting 20% per year over five years.

Reference is made to the "Risk Factors" section of the Registration
Statement for further discussion.

The pro forma balance sheet section, as of September 30, 1996, shows the
shareholders' equity (deficit) reflecting the events and transactions in items
a. through e. above as if they had occurred as of that date.

F-17
<PAGE> 69

A REVOLUTIONARY IDEA . . .
"PARTNERING IN EMPLOYMENT"

[PAINTING KNOWN AS "THE SPIRIT OF 1776"]

REVOLUTIONARY "ONE STOP SHOP"

TEAM America does not sell multiple services in competition with payroll
services, insurance companies, consultants and workers' compensation
administrators. Rather, TEAM America actually joins in the employment of the
employees and shares the responsibility and liability of being an employer. As a
result of partnering with TEAM America our Clients gain many services including:

<TABLE>
<S> <C>
- - Human Resource Services - Employment Risk Management
- - Payroll & Payroll Tax Services - Placement Services
- - Government Compliance - Workers' Compensation Claims Administration
- - Benefits Administration - Unemployment Claims Administration
</TABLE>

REVOLUTIONARY "EMPLOYEE BENEFITS"

This unique relationship is widely accepted by employees. The introduction
of TEAM America into the existing employment relationship allows employees to
gain access to TEAM America's "large corporation style" benefits program. The
program is designed to provide greater job satisfaction and increased loyalty to
the clients business and includes:

<TABLE>
<S> <C>
- - Section 125 Pretax "Cafeteria Style" Plan - Discounted Group Life and Disability on a
- - Multiple Health Insurance Options, Dental, Payroll Deduction
Vision, Prescription Card - Payroll Deducted Group Auto and Homeowners
- - Section 129 Day Care Assistance Plan; - Theater, Amusement Park and Store Discount
(Pretax cost) Programs
- - Section 401k Retirement Savings Plan - Free checking and Visa and Discounted
with Multiple Investment Options Services with Various Local Banks
- - Prepaid Legal Services Plan - Long Term Disability Insurance
</TABLE>

[TEAM AMERICA CORP. LOGO]

<PAGE> 70

------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDERS OR BY ANY OF
THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE COMMON SHARES
OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE COMMON SHARES BY ANYONE IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON IS
NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
---------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
The Company........................... 7
Risk Factors.......................... 7
Use of Proceeds....................... 14
Dividend Policy....................... 14
Capitalization........................ 15
Dilution.............................. 16
Selected Consolidated Financial and
Statistical Data.................... 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 19
Business.............................. 25
Industry Regulation................... 34
Management............................ 38
Certain Transactions.................. 42
Principal and Selling Shareholders.... 43
Description of Capital Stock.......... 44
Shares Eligible for Future Sale....... 46
Underwriting.......................... 47
Legal Matters......................... 48
Experts............................... 48
Available Information................. 48
Index to Financial Statements......... F-1
</TABLE>

---------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON SHARES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT 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.
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------

1,250,000 SHARES
[TEAM AMERICA CORP. LOGO]
COMMON SHARES
-------------------------
PROSPECTUS
-------------------------
THE OHIO COMPANY

RONEY & CO.
, 1996
------------------------------------------------------
------------------------------------------------------
<PAGE> 71

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth an estimate of the expenses expected to be
incurred in connection with the issuance and distribution of the securities
being registered, other than underwriting compensation:

<TABLE>
<CAPTION>
NOTICE OF EXPENSE AMOUNT
----------------- --------
<S> <C>
Registration Fee -- Securities and Exchange Commission.................... $ 5,663
Filing Fee -- National Association of Securities Dealers.................. 2,368
Nasdaq National Market Listing and Entry Fee.............................. 22,113
Transfer Agent and Registrar Fees and Expenses............................ 4,000
Blue Sky Counsel Fees and Expenses........................................ 15,000
Legal Fees and Expenses................................................... 110,000
Accounting Fees and Expenses.............................................. 97,000
Printing and Engraving Expenses........................................... 75,000
Miscellaneous............................................................. 93,856
--------
Total........................................................... $425,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

As authorized by Section 1701.13(E) of the Ohio Revised Code, Article V of
the Company's Amended Code of Regulations ("Article V") provides that directors
and officers of the Company may, under certain circumstances, be indemnified
against expenses (including attorneys' fees) and other liabilities actually and
reasonably incurred by them as a result of any suit brought against them in
their capacity as a director or officer, if they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, if they
had no reasonable cause to believe their conduct was unlawful. Article V also
provides that directors and officers may also be indemnified against expenses
(including attorneys' fees) incurred by them in connection with a derivative
suit if they acted in good faith and in a manner they reasonably believed to be
in or not opposed to the best interests of the corporation, except that no
indemnification may be made without court approval if such person was adjudged
liable to the corporation.

The Underwriting Agreement provides for indemnification by the Underwriters
of directors, officers and controlling persons of the Company for certain
liabilities, including certain liabilities under the Securities Act, under
certain circumstances.

The Company has purchased director and officer liability insurance in the
amount of $1 million covering its current executive officers and directors.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Set forth below is certain information concerning all sales of securities
by the Company during the past three years that were not registered under the
Securities Act of 1933. The description presented below gives effect to the
184-to-1 split of the Common Shares prior to the issuance and delivery of the
Common Shares offered hereby:

(a) Pursuant to a Subscription Agreement dated March 11, 1988 between
Richard C. Schilg and a corporation that was merged with and into the
Company in 1989, Mr. Schilg subscribed to purchase 165,600 Common Shares of
the Company for an aggregate purchase price of $31,500 or $0.1902 per
share. On December 31, 1994, Mr. Schilg executed and delivered to the
Company a promissory note in the principal amount of $31,500 bearing
interest at a rate of 5% per annum. Such note was repaid in full

II-1
<PAGE> 72

in October 1996. For accounting purposes, the Company has treated such
shares as having been issued on December 31, 1994.

(b) On January 31, 1994, Mr. Schilg exercised options to purchase
423,200 Common Shares at a price of $0.0435 per share. The aggregate
exercise price of $18,400 was paid in full by Mr. Schilg on December 30,
1994.

(c) On January 31, 1994, Kevin T. Costello exercised options to
Purchase 423,200 Common Shares at a price of $0.0272 per share. The
aggregate exercise price of $11,500 was paid in full by Mr. Costello on
December 30, 1994.

(d) In 1995 and 1996, the Company converted a total of 39,192 Common
Shares held by Clair E. Irish (11,224 Common Shares), Robert and Phyllis
Christian (3,680 Common Shares), Thomas and Sharon Balduf (2,760 Common
Shares), Alfred J. Cappurccini (12,328 Common Shares) and Loren L. and
Carol Welsch (9,200 Common Shares) into an equal number of Class A
Preferred Shares. All of such Class A Preferred Shares will be converted
back into an equal number of Common Shares immediately prior to the
issuance and delivery of the Common Shares offered hereby.

These transactions were completed without registration under the Securities
Act of 1933 in reliance on the exemption provided by Section 4(2) of the
Securities Act of 1933.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(A) EXHIBITS. The following Exhibits are filed as a part of this
Registration Statement:

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.*
3.1 Amended Articles of Incorporation of the Registrant.*
3.2 Amended Code of Regulations of the Registrant.*
4.1 Specimen certificate for Common Shares of the Registrant.*
4.2 See Exhibits 3.1 and 3.2 for provision of the Amended Articles of Incorporation and
Amended Code of Regulations of the Registrant defining rights of holders of Common
Shares.
5.1 Opinion of Squire, Sanders & Dempsey L.L.P. as to the legality of the Common Shares
being registered (including consents).*
10.1 Form of 1996 Incentive Stock Plan.*
10.2 Form of Executive Employment Agreement between Richard C. Schilg and the Registrant.*
10.3 Form of Executive Employment Agreement between Kevin T. Costello and the Registrant.*
10.4 Lease for Cascade Corporate Center dated June 22, 1990 between EastGroup Properties
and the Registrant, as amended.*
10.5 Compensation Continuation Agreement dated July 2, 1991 between the Registrant and
Richard C. Schilg.*
10.6 Employment Agreement dated January 7, 1992 between the Registrant and Kevin T.
Costello.*
21.1 Subsidiaries of the Registrant.*
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Squire, Sanders & Dempsey L.L.P. (see Exhibit 5.1).
24.1 Power of Attorney.*
</TABLE>

- ---------------
* Previously filed.

II-2
<PAGE> 73

(b) FINANCIAL STATEMENT SCHEDULES.

The following financial statement schedules of the Company are attached
hereto and are filed as part of this Registration Statement:

Report of Independent Public Accountants
Schedule II -- Valuation and qualifying accounts

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

ITEM 17. UNDERTAKINGS.

(f) 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.

(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions described in Item 14 above,
or otherwise, the Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
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 of whether
such indemnification by it against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

(i) The undersigned Registrant hereby undertakes that:

(1) for purposes of determining any liability under the Securities Act
of 1933, 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
registration statement as of the time it was declared effective.

(2) for the purpose of determining any liability under the Securities
Act of 1933, each 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-3
<PAGE> 74

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 4 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Columbus, State of Ohio, on December 5, 1996.

TEAM AMERICA CORPORATION,
an Ohio corporation

By: /s/ RICHARD C. SCHILG

------------------------------------
Richard C. Schilg
Chairman of the Board, President and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 4 to the Registration Statement has been signed effective as of December 5,
1996 by the following persons in the capacities indicated below.

<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------------- --------------------------------------------
<C> <S>
/s/ RICHARD C. Chairman of the Board, President and Chief
SCHILG Executive Officer (Principal Executive
- -------------------------------------------- Officer)
Richard C. Schilg
* Senior Vice President, Chief Operating
- -------------------------------------------- Officer and Director
Kevin T. Costello
* Vice President and Chief Financial Officer
- -------------------------------------------- (Principal Financial and Accounting
Russell R. Garver Officer)
* Director
- --------------------------------------------
William W. Johnston
* Director
- --------------------------------------------
Charles F. Dugan II
* Director
- --------------------------------------------
Paul M. Cash
* Director
- --------------------------------------------
M. R. Swartz
</TABLE>

* By: /s/ RICHARD C. SCHILG

------------------------------
Richard C. Schilg,
Attorney-in-Fact

II-4
<PAGE> 75

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of TEAM AMERICA CORPORATION and
subsidiaries included in this Registration Statement and have issued our report
thereon dated August 30, 1996. Our audits were made for the purpose of forming
an opinion on the basic consolidated financial statements taken as a whole. The
schedule listed in Item 16(b) is the responsibility of the Company's management
and is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures applied
in the audit of the basic consolidated financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic consolidated financial statements taken
as a whole.

ARTHUR ANDERSEN LLP

Columbus, Ohio
August 30, 1996 (except with respect
to the matters discussed in Note 13 as to
which the date is December 4, 1996).

II-5
<PAGE> 76

SCHEDULE II

TEAM AMERICA CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
BALANCE AT
BEGINNING OF CHARGED TO BALANCE AT END
DESCRIPTION PERIOD EXPENSE WRITE-OFFS OF PERIOD
- ------------------------------------------- ------------ ---------- ---------- --------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1993
Allowance for doubtful accounts.......... $ 38,088 $ 12,522 $ 35,475 $ 15,135
DECEMBER 31, 1994
Allowance for doubtful accounts.......... $ 15,135 $ 40,773 $ 50,502 $ 5,406
DECEMBER 31, 1995
Allowance for doubtful accounts.......... $ 5,406 $ 35,653 $ 37,793 $ 3,266
</TABLE>

II-6
<PAGE> 77

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.*
3.1 Amended Articles of Incorporation of the Registrant.*
3.2 Amended Code of Regulations of the Registrant.*
4.1 Specimen certificate for Common Shares of the Registrant.*
4.2 See Exhibits 3.1 and 3.2 for provision of the Amended Articles of Incorporation and
Amended Code of Regulations of the Registrant defining rights of holders of Common
Shares.
5.1 Opinion of Squire, Sanders & Dempsey L.L.P. as to the legality of the Common Shares
being registered (including consents).*
10.1 Form of 1996 Incentive Stock Plan.*
10.2 Form of Executive Employment Agreement between Richard C. Schilg and the
Registrant.*
10.3 Form of Executive Employment Agreement between Kevin T. Costello and the
Registrant.*
10.4 Lease for Cascade Corporate Center dated June 22, 1990 between EastGroup Properties
and the Registrant, as amended.*
10.5 Compensation Continuation Agreement dated July 2, 1991 between the Registrant and
Richard C. Schilg.*
10.6 Employment Agreement dated January between the Registrant and Kevin T. Costello.*
21.1 Subsidiaries of the Registrant.*
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Squire, Sanders & Dempsey L.L.P. (see Exhibit 5.1).
24.1 Power of Attorney.*
</TABLE>

- ---------------
* Previously filed.

<PAGE> 1
[ARTHUR ANDERSEN LLP LETTERHEAD]

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our reports
and to all references to our Firm included in or made a part of this
Registration Statement (File No. 333-13913) of TEAM America Corporation.

ARTHUR ANDERSEN LLP

Columbus, Ohio
December 4, 1996.