Transcend Services (TRCR)

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information the Company is required to disclose in the reports that are filed or submitted under the Exchange Act is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

During the second quarter of 2008, management reevaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective because of the material weakness in the Company’s internal controls described below.

A material weakness in internal control over financial reporting (as defined in paragraph A7 of Auditing Standard No. 5 of the Public Company Accounting Oversight Board) is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.

In April and May of 2008, the Company identified an internal control deficiency as of December 31, 2007 related to certain aspects of accounting for income taxes. The internal control deficiency was expanded in May of 2008 to encompass accounting for income taxes in general as follows:

Controls over the accounting for income taxes:    The Company did not maintain effective controls over accounting for income taxes. The Company did not have effective policies and procedures and adequately trained and qualified accounting personnel to ensure that the financial impact to the Company of transactions and assets and liabilities affecting income taxes were accounted for in accordance with generally accepted accounting principles (“GAAP”). As a result of this material weakness, the Company was required to restate its consolidated financial statements and related disclosures as of and for the year ended December 31, 2007.

During 2008, the Company implemented remediation efforts, as described below. Accordingly, management believes that the consolidated financial statements included in this Form 10-K fairly present in all material respects the Company’s financial position, results of operations and cash flows for the periods presented and the material weakness in internal control over financial reporting has been remediated.

Management believes, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all controls are working as designed and that instances of fraud, if any, within a company have been detected.

Disclosure Controls and Procedures

FACE="Times New Roman" SIZE="2">Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that the Company files or submits under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”). Disclosure
controls and procedures include, without limitation, controls and procedures designed to ensure that information the Company is required to disclose in the reports that are filed or submitted under the Exchange Act is accumulated and communicated to
management as appropriate to allow timely decisions regarding required disclosure.

During the second quarter of 2008, management
reevaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act). Based on that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the Company’s disclosure controls and procedures were not effective because of the material weakness in the Company’s internal controls described below.

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure.

Our management evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act), as of the end of the period covered by the Original Filing. Based on that evaluation, our management initially concluded and disclosed in our Original Filing that, as of the end of such period, our disclosure controls and procedures were effective. After the Original Filing, during preparation of our income tax returns, we disclosed certain tax accounting errors resulting in the restatement reflected in the First Amended Filing. On May 9, 2008, management, the Audit Committee and the Board of Directors of the Company determined that an additional restatement was necessary as a result of additional tax accounting errors as discussed in Note 15 of Notes to Consolidated Financial Statements. Based on this new information, our Chief Executive Officer and Chief Financial Officer have re-evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by the First Amended Filing. As a result of the re-evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosures controls and procedures were not effective because of the material weakness in our internal controls described below.

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A material weakness in internal control over financial reporting (as defined in paragraph A7 of Auditing Standard No. 5 of the Public Company Accounting Oversight Board) is a control deficiency, or combination of control deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.

In May 2008, the Company modified its previously identified internal control deficiency as of December 31, 2007, broadening the description to encompass accounting for income taxes in general:

Controls over the accounting for income taxes: The Company did not maintain effective controls over accounting for income taxes. The Company did not have effective policies and procedures and adequately trained and qualified accounting personnel to ensure that the financial impact to the Company of transactions and assets and liabilities affecting income taxes were accounted for in accordance with GAAP. As a result of this material weakness, the Company was required to restate its consolidated financial statements and related disclosures as of and for the year ended December 31, 2007.

In light of the material weakness in our internal control over financial reporting described above, we performed additional analysis and other post-closing procedures to ensure our consolidated financial statements as restated are prepared in accordance with GAAP. We are in the process of implementing certain changes in internal control over financial reporting and will continue to implement remediation efforts, as described below. Accordingly, we believe that the consolidated financial statements included in this Form 10-K/A fairly present in all material respects our financial position, results of operations and cash flows for the periods presented.

Management believes, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all controls are working as designed and that instances of fraud, if any, within a company have been detected.

Disclosure Controls and Procedures

FACE="Times New Roman" SIZE="2">Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”). Disclosure controls and
procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management as
appropriate to allow timely decisions regarding required disclosure.

Our management evaluated the effectiveness of our disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act), as of the end of the period covered by the Original Filing. Based on that evaluation, our management initially concluded and disclosed in our Original
Filing that, as of the end of such period, our disclosure controls and procedures were effective. After the Original Filing, during preparation of our income tax returns, we disclosed certain tax accounting errors resulting in the restatement
reflected in the First Amended Filing. On May 9, 2008, management, the Audit Committee and the Board of Directors of the Company determined that an additional restatement was necessary as a result of additional tax accounting errors as
discussed in Note 15 of Notes to Consolidated Financial Statements. Based on this new information, our Chief Executive Officer and Chief Financial Officer have re-evaluated the effectiveness of our disclosure controls and procedures as of the end of
the period covered by the First Amended Filing. As a result of the re-evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosures controls and procedures were not effective because of the material weakness in
our internal controls described below.

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Table of Contents

A material weakness in internal control over financial reporting (as defined in paragraph A7 of Auditing
Standard No. 5 of the Public Company Accounting Oversight Board) is a control deficiency, or combination of control deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.

SIZE="2">In May 2008, the Company modified its previously identified internal control deficiency as of December 31, 2007, broadening the description to encompass accounting for income taxes in general:

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure.

Our management evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act), as of the end of the period covered by the Original Filing. Based on that evaluation, our management initially concluded and disclosed in our Original Filing that, as of the end of such period, our disclosure controls and procedures were effective. After the Original Filing, during preparation of our income tax returns, we identified certain tax accounting errors resulting in the restatement discussed in Note 15 of Notes to Consolidated Financial Statements. Based on this new information, our Chief Executive Officer and Chief Financial Officer have re-evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by the Original Filing. As a result of the re-evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosures controls and procedures were not effective because of the material weakness in our internal controls described below.

A material weakness in internal control over financial reporting (as defined in paragraph 140 of Auditing Standard No. 2 of the Public Company Accounting Oversight Board) is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim consolidated financial statements will not be prevented or detected. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects a company’s ability to initiate, authorize, record, process or report external financial data reliably in accordance with generally accepted accounting principles (GAAP) such that there is more than a remote likelihood that a misstatement of the Company’s annual or interim consolidated financial statements that is more than inconsequential will not be prevented or detected.

In April 2008, the Company identified the following internal control deficiency as of December 31, 2007:

Controls over the accounting for income taxes:    The Company did not maintain effective controls over accounting for income taxes. Specifically, the Company did not have effective policies and procedures and

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adequately trained and qualified accounting personnel to ensure that the financial impact to the Company of the exercise of equity-based option awards and stock purchase warrants was accounted for in accordance with GAAP. As a result of this material weakness, the Company was required to restate its consolidated financial statements and related disclosures as of and for the year ended December 31, 2007.

In light of the material weakness in our internal control over financial reporting described above, we performed additional analysis and other post-closing procedures to ensure our consolidated financial statements as restated are prepared in accordance with GAAP. We are in the process of implementing certain changes in internal control over financial reporting and will continue to implement remediation efforts, as described below. Accordingly, we believe that the consolidated financial statements included in this Form 10-K/A fairly present in all material respects our financial position, results of operations and cash flows for the periods presented.

Management believes, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all controls are working as designed and that instances of fraud, if any, within a company have been detected.

Disclosure Controls and Procedures

FACE="Times New Roman" SIZE="2">Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”). Disclosure controls and
procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management as
appropriate to allow timely decisions regarding required disclosure.

Our management evaluated the effectiveness of our disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act), as of the end of the period covered by the Original Filing. Based on that evaluation, our management initially concluded and disclosed in our Original
Filing that, as of the end of such period, our disclosure controls and procedures were effective. After the Original Filing, during preparation of our income tax returns, we identified certain tax accounting errors resulting in the restatement
discussed in Note 15 of Notes to Consolidated Financial Statements. Based on this new information, our Chief Executive Officer and Chief Financial Officer have re-evaluated the effectiveness of our disclosure controls and procedures as of the end of
the period covered by the Original Filing. As a result of the re-evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosures controls and procedures were not effective because of the material weakness in our
internal controls described below.

A material weakness in internal control over financial reporting (as defined in paragraph 140 of
Auditing Standard No. 2 of the Public Company Accounting Oversight Board) is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim
consolidated financial statements will not be prevented or detected. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects a company’s ability to initiate, authorize, record, process or
report external financial data reliably in accordance with generally accepted accounting principles (GAAP) such that there is more than a remote likelihood that a misstatement of the Company’s annual or interim consolidated financial statements
that is more than inconsequential will not be prevented or detected.

In April 2008, the Company identified the following internal control
deficiency as of December 31, 2007:

Controls over the accounting for income taxes:    The Company did not
maintain effective controls over accounting for income taxes. Specifically, the Company did not have effective policies and procedures and

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Table of Contents

adequately trained and qualified accounting personnel to ensure that the financial impact to the Company of the exercise of equity-based option awards and
stock purchase warrants was accounted for in accordance with GAAP. As a result of this material weakness, the Company was required to restate its consolidated financial statements and related disclosures as of and for the year ended December 31,
2007.

In light of the material weakness in our internal control over financial reporting described above, we performed additional analysis
and other post-closing procedures to ensure our consolidated financial statements as restated are prepared in accordance with GAAP. We are in the process of implementing certain changes in internal control over financial reporting and will continue
to implement remediation efforts, as described below. Accordingly, we believe that the consolidated financial statements included in this Form 10-K/A fairly present in all material respects our financial position, results of operations and cash
flows for the periods presented.

Management believes, however, that a controls system, no matter how well designed and operated, cannot
provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all controls are working as designed and that instances of fraud, if any, within a company have been
detected.