Value Proposition

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Diversified Corporate Resources, Inc.
DCRI provides staffing solutions through
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Value Proposition

• This is a simple business to understand.
• DCRI is a publicly traded company in a highly
  fragmented, 100 billion industry. Access to the
  capital markets, will determine the long-term
  survivors.

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• According to a nationwide Survey on Jobs
  conducted by Kelly Services, the percentage of
  the workforce employed as free agents
  (contractors) will likely increase from 28 in
  2002 to 36 by 2010.
• The company has very little debt and relatively
  few shares outstanding. with modest additional
  capital, our balance sheet ratios improve
  dramatically. With an improved balance sheet, we
  will be able to take at least 600 basis points
  out of our cost of funds, which should be worth
  at least a nickel per share or more in earnings.

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• The company survived a brutal business cycle that
  wiped out almost half of its competitors. We
  did it by cutting costs and transforming the
  business model.
• In the last 2 years, weve reduced annual
  operating expenses by almost 7 million and
  reducing our operating breakeven to a more
  manageable 4.8 million per month of revenues.
  80 of revenues are now derived through highly
  predictable contract staffing relationships and
  65 of the Companys revenues are generated
  through Fortune 500 credits.

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• This industry is going to consolidate. Fortune
  500 companies are forcing consolidation
  throughout their HR vendor networks. DCRI will
  be an attractive merger partner for many of these
  companies.

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• By way of background, Ill give you a brief
  history of the company

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History

• DCRI is a 25 year old staffing/HR management
  firm traded on the American Stock Exchange.
• For the first 21 years, DCRI focused almost
  exclusively on the permanent placement market.

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• The Company initiated a transformation away from
  its dependence on permanent placement business
  and towards a more blended model with contract
  staffing. Contract staffing is more of a
  regional/national business, requiring a fraction
  of the physical locations.

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• In contract staffing, you trade margin for
  predictability of cash flows. Contract business
  will typically generate gross margins between 20
  and 30 and, depending on the nature of the
  client credits and concentration, support much
  more balance sheet leverage.

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• The Company began seriously transforming its
  business model during 1999 and 2000, with the
  acquisition of several contract staffing
  companies and gradually increasing the contract
  component of its revenues which by the end of
  2002 had become gt 75 of total revenues. At the
  height of the telecom and IT bear market in 2002
  we stepped up our cost cutting efforts and by the
  end of 2003 had reduced annual operating expenses
  by almost 7 million.

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• Also during 2002, we began a review of the
  various industries we serviced. Up until that
  time, the company had been focused on 5 broad
  industry sectors

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• IT
• Bio/Pharm
• Engineering
• Finance Accounting
• Telecom

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• IT
• Bio/Pharm
• Engineering
• Finance Accounting
• Healthcare

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During 2003 we

• Continued looking for ways to reduce our fixed
  costs.
• Continued aggressively recruiting the most
  talented producers available using generous stock
  options.

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• Closed a larger credit facility with Wells Fargo
  which allowed us to pursue additional revenues
  through acquisitions.
• Moved from a local audit firm to BDO Seidman.

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The business strategy from this point is fairly
straight forward

• We will continue serving our core business with
  our nine existing offices around the country.

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Dallas - Corporate
Austin, Houston, Denver, Phoenix, Atlanta,
Raleigh, Philadelphia and Palm Dessert
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We will also

• Continue driving down our cost of funds by
  shoring up the Companys balance sheet and
  continually moving up the credit food chain,
  and closely monitoring our credit exposure.
• Control our operating expenses and other key
  metrics by managing to the model.

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• Continue developing our organic penetration
  within our 5 core industry silos. We are not
  counting on more than 15 year-over-year growth
  in our organic business. With that in mind, the
  bulk of the companys growth will come through
  mergers or acquisitions. The goal of adding 1 of
  earnings for each additional share issued.

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• Managements goal is to add an additional 100
  million in annualized revenues by the third
  quarter 05. As a result, we would expect revenues
  to increase from their current 12.5 million per
  quarter to 12.5 million per month.
• Communicate regularly with the Investment
  Community.

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Financial Model Summary There are five key
metrics to this business

• Gross Margin (Marketplace metric)
• Net Margin (Production efficiency metric)
• Operating Expenses (Management efficiency metric)
• Interest and Depreciation
• Pre tax earnings

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• Fiscal 2003 2004 target ( 90 million
  run rate)

• Gross margin 31 33
• Net Margin 15 19 -20
• Op. Expenses 16 11 -12
• Dep. Interest 4 2
• Pre tax (5) 5 - 7

of Revenues
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