CSMG Technologies, Inc. – ‘ARS’ for 12/31/02

On:  Wednesday, 11/5/03, at 4:03pm ET   ·   Effective:  11/5/03   ·   For:  12/31/02   ·   Accession #:  1060830-3-221   ·   File #:  0-27359

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 1: ARS         Annual Report to Security Holders                     55    207K 

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FULLER, TUBB, POMEROY & STOKES
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
 201 ROBERT S. KERR AVENUE, SUITE 1000
OKLAHOMA CITY, OK 73102 
G.  M.  FULLER  (1920-1999)                              TELEPHONE  405-235-2575
JERRY  TUBB                                              FACSIMILE  405-232-8384
DAVID  POMEROY                                                                  
TERRY  STOKES                                                                   
------                                                                    

OF  COUNSEL:                                                                    
MICHAEL  A.  BICKFORD                                                           
THOMAS  J.  KENAN                                                               
ROLAND  TAGUE                                                                   
BRADLEY  D.  AVEY                                                               

November 5, 2003

Securities  and  Exchange  Commission                                           
Division  of  Corporation  Finance                                              
450  Fifth  Street,  N.W.                                                       
Washington,  DC   20549                                                         

Re:  Consortium  Service  Management  Group,  Inc.
Schedule  14A  Proxy  Statement         
File  No.  0-27359                      

Gentlemen:                                                                      

Forwarded  herewith  is the Annual Report to security holders for the year ended
December 31, 2002 to be mailed to the security holders along with proxy material
on  or  about  November  5,  2003.  No changes were made from 2001 in accounting
principles  or practices or in the methods of application of those principles or
practices.                                                                      

Sincerely,

            /s/  Thomas  J.  Kenan

       Thomas  J.  Kenan
                e-mail:  kenan@ftpslaw.com

Attachment                                                                      

cc:  Donald  S.  Robbins,  CEO                                                  
Gordon  W.  Allison,  CFO                                             

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U.S. SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549

FORM 10-KSB 
 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 

or

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) 
OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NO. 0-27359 

 CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
(Name of small business issuer in its charter)

 Texas                                                74-2653437
------------------------                              --------------------------
(state of incorporation)                              (IRS Employer I.D. Number)

500 North Shoreline Drive, Suite 701 North
Corpus Christi, TX 78471
------------------------------------------
 (Address principal executive offices)

Issuer's telephone number: 361-887-7546 

Securities registered under Section 12(b) of the Exchange Act:

Title of each class: None.

Name of each exchange on which registered: None.

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.001 par value
(Title of class)

 Preferred Stock, $0.001 par value
(Title of class)

     Check  whether  the  issuer  (1)  filed all reports required to be filed by
Section  13  or 15(d) of the Exchange Act during the past 12 months (or for such
shorter  period  that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.  Yes [X] No [
]                                                                               

     Check  if  there  is no disclosure of delinquent filers in response to Item
405  of  Regulation  S-B  contained  in  this  form,  and  no disclosure will be
contained,  to  the  best  of  registrant's  knowledge,  in  definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or  any  amendment  to  this  Form  10-KSB.  [X]                                

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State  issuer's  revenues  for  its  most  recent  fiscal  year:  $100.         

     State the aggregate market value of the voting and non-voting common equity
held  by  non-affiliates  computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as of
a  specified  date within the past 60 days:  $3,071,640 computed by reference to
the  $0.80  average  of the bid and asked price of the company's Common Stock on
April  7,  2003.                                                                

     State  the  number of shares outstanding of each of the issuer's classes of
common  equity,  as  of April 3, 2003:  7,211,200 shares of Common Stock, $0.001
par  value.                                                                     

DOCUMENTS  INCORPORATED  BY  REFERENCE                                          

     If  the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which  the  document is incorporated: (1) any annual report to security holders;
(3) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule  424(b)  or (c) of the Securities Act of 1933 ("Securities Act").  The list
documents  should be clearly described for identification purposes (e.g., annual
report  to  security  holders  for fiscal year ended December 24, 1990).   None.

Transitional  Small  Business  Disclosure  Format  (check  one): Yes [ ] No [X] 

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 TABLE OF CONTENTS

                                                                            Page
                                                                            ----

Item     1.     Description  of  Business                                      1

                Business  Development                                          1
                Business  of  the  Company                                     4
                     Live  Tissue  Bonding  Equipment                          4
                     Anaerobic  Farm-Waste  Disposal  Equipment                6
                     Carbon  Dioxide  Separator                                8
                     CSMG  Gastech  LLC                                        8
                Raw  Materials, Suppliers and Manufacturing                    9
                Distribution  Methods                                         10
                Competition                                                   10
                Patents,  Trademarks  and  Licenses                           10
                Government  Approval  and  Regulations  .                     11
                Research  and  Development                                    11
                Cost  of  Compliance  with  Environmental  Laws               11
                Seasonality.                                                  11
                Employees                                                     11

Item     2.     Properties                                                    11

Item     3.     Legal  Proceedings                                            12

Item     4.     Submission  of  Matters to a Vote of Security Holders         12

Item     5.     Market for Common Equity and Related Stockholder Matters      12

                Holders                                                       13
                Dividends                                                     13
                Recent  Sales  of  Unregistered  Securities                   14

Item     6.     Management's  Discussion  and  Analysis                       15

                Sales                                                         15
                Selling,  General  and  Administrative  Expenses              15
                Net  Loss                                                     15
                Liquidity  and  Outlook                                       16

Item     7.     Financial  Statements                                         17

Item     8.     None                                                            

Item     9.     Directors, Executive Officers,  Promoters and Control           
   Persons; Compliance  with  Section  16(a)
                     of  the  Exchange  Act                                   30

Item     10.    Executive  Compensation                                       32

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Item     11.    Security Ownership of Certain Beneficial                        
                     Owners and Management                                    32

Item     12.    Certain  Relationships  and  Related  Transactions            33

Item     13.    Exhibits  and  Reports  on  Form  8-K                         33

Item     14.    Controls  and  Procedures                                     36

                Signatures                                                    37

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ITEM  1.     DESCRIPTION  OF  BUSINESS.                                         

Business  Development                                                           
---------------------                                                           

     We  were  incorporated  on  November  17,  1992  in the State of Texas.  We
conduct  our  business  from  our  headquarters  in  Corpus Christi, Texas; from
offices in Oklahoma City, Oklahoma; and from offices in Kiev, Ukraine.  We first
had  revenues  from  operations in 1995.  We are a technology management company
that  develops,  invests  in,  patents,  owns,  manages,  and  brings  to market
innovative  technologies.                                                       

     We  have  a  formal  relationship with several prestigious organizations in
Ukraine.  They have, as their stockholders or members, many of Ukraine's leading
scientists,  engineers  and  technicians.                                       

     We  believe  we  are  unique  in  our  business mission.  We facilitate the
transfer  to the U.S. and other developed countries of technologies developed by
the  scientists  and  engineers  of  UkraineIncluded  in  these technologies and
independent  of  other  Ukraine  business  interests  are  -                    

     - our  platform,  medical, Live Biological Tissue Bonding technology, which
       bonds  human  tissue  without  the  use  of sutures, staples, sealants or
       glues.   More  than  1,000 successful human surgeries have been performed
       in clinical  trials  in  Ukraine  using  more  than  30  different  types
of  surgical  procedures,                                         

     - the 390,000-pound proprietary Landfill Gas Purification System, installed
       at  a  municipal  waste landfill in Chastang, Alabama, that processes raw
landfill  gas  to  pipeline  quality,  and                        

     - the  environmentally   friendly,  large-farm,   Anaerobic  Animal   Waste
Processing  System.                                               

     We  are the largest shareholder and foreign investor in "United Engineering
Closed  Joint  Stock  Company  with  Foreign  Investment,"  a successful Ukraine
private engineering company specializing in defense contracts that has also been
successful  in securing private sector contracts.  The Ukraine company's name is
United  Engineering  Company. It is called a "joint stock company with a foreign
investor."    The  foreign  investor  is  us.   United  Engineering  Company  is
authorized  by Ukraine law, among other things, to perform classified and secret
construction  works  related  to  the  national  security  of  Ukraine.         

     We  formalized  our  first  relationship with them in February 1994 when we
registered  with the Ukraine Government a Ukraine company owned 50 percent by us
and  50  percent by the Ukraine organizations.  We now own 33-1/3 percent of the
Ukraine  company,  33 1/3 is owned by key UEC executive employees and members of
the  Supervisory  Council  and  33 1/3 percent is owned by the following Ukraine
companies  or  organizations:                                                   

          - The  State  Property Fund of Ukraine.  It owns all state enterprises
    and property  of  the  state,  and  it  is  represented  by:

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          - Yuzhnoye  (Southern)  Machine  Building  Plant.   This  is  a  giant
            manufacturing complex located in Dniepropetrovsk.   It built many of
            the missiles and nuclear  missiles  for  the  former  Soviet  Union.
            Today,  it  manufactures  commercial  satellites,  farming  tractors
for  export, trolley cars, and other heavy  products.   

          - Design Bureau "Yuzhnoye". This organization was established in 1954.
            It developed and turned over to the Ukraine Army several generations
            of missiles (specifically,  SS-18  "Satan"  satellite and the launch
            rockets  "Cyclone"  and  "Zinet"),  space   carrier   rockets,   and
            artificial  satellites.   Design  Bureau  employs  several  thousand
            researchers and production  engineers and is  the leading enterprise
            in  Ukraine for the development of rocket and other jet systems.  It
            also  is  the  leading  enterprise  for the elimination of launching
            sites in  Ukraine.  The  Bureau  also  works on conversion projects,
            trolley busses, pumps for the  oil  industry,  small-sized  vehicles
            for   cleaning   city   streets,   and   devices  for  manufacturing
            margarine,  oils,  etc.  It  is  under the direction  of Academician
            Stanislav  Nikolayevich  Konyukhov, who also is  president of United
Engineering  Company.                                   

          - Trust  No.  5  for  Special  Construction  Works.  This organization
            believes itself to  be  the  highest  technical  and  most qualified
            engineering firm in  the  former  Soviet  Union.  It was involved in
            building all of  the  former  Soviet Union's nuclear and non-nuclear
            missile launching pads  and silos, the Soviet space station, several
            chemical  and  oil  industry  plants   and  pipelines,   and   other
            installations  requiring  the  highest  technologies  of  the former
Soviet Union.                                           

          - E.O.  Paton  Institute  of  Electric Welding.  This organization was
            founded in  1934 by the Academy of Sciences of the Ukraine S.S.R. It
            is headed today by Professor  Boris  Paton,  the  president  of  the
            Ukraine  Academy  of  Sciences.   It  developed   the   collapsible,
            titanium-welded, building-structure  technology that was used in the
            construction  of  the Soviet space station "MIRE."  We  believe  the
            Paton Institute  is  one  of  the  world's most prominent scientific
            institutions  involved  in  metal  casting  and  bonding   ceramics,
            microwave bonding of  metals  and  plastics,  explosive  welding and
            cutting,  welding  in  space  and  underwater,  electro  metallurgy,
            protective  coatings, and bridge building and coating.  It  employed
            at  one time more than 5,000 scientists  and  engineers and  employs
            today more than 200 engineers and executives.  It has joint ventures
            with  several  multinational  companies  and  governmental  agencies
including the U.S.  Department  of  Energy  and  NASA.  

          - Spivdruznist Business Association.  This was formed by major defense
            enterprises  to   develop  and  implement  methods  of   dismantling
            munitions and  converting  the  metals  and   explosive  by-products
            to  commercially  marketable  products.   It is  composed of 6 large
            manufacturing   facilities   that   developed    and    manufactured
          explosives,  weapons  and  military equipment during the Cold War.

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          - Pivdenexo,  Ltd.    This   is    a   research,    development    and
production-design "think  tank."                        

     The   above   organizations   work   with   us   as   well  as  with  other
organizations in Ukraine.  Our working  relationship  generally  focuses on  two
types  of opportunities:                                                        

          - When  the  above organizations negotiate with local enterprises that
            aim to bring new ideas  and  projects  to  the  U.S.  and  to  world
markets.                                                

          - After  we  first  identify  technologies  developed  in Ukraine that
            appear to have promising commercial application.  In such instances,
            we  frequently  finance  the  costs  of  research  and  development,
            patent  applications, manufacturing, and market distribution, and we
            then own these  technologies.  Our  anaerobic  Farm-Waste   Disposal
Equipment  Project  is  such  a  project.               

     There  are no specific funding arrangements required of the stockholders of
United  Engineering  Company.  Projects  are funded on a case-by-case basis.  An
aggregate of $2,078,072 in costs have been contributed to projects by us and the
Ukraine  shareholders  of  United  Engineering  Company,  and  in  return United
Engineering  Company  pays  us  a  dividend  equal to 10% of the previous year's
profit  pro  rated  on  our  percentage  of  ownership.  The  remaining  90%  is
reinvested  to  avoid  United  Engineering  Company borrowing funds from Ukraine
banks  at  interest  rates  that  ranged  between  35%  to  190%.               

     We  have recovered $218,176 of our share of the costs of United Engineering
projects.  We  wrote  off  $323,612  of  these costs because we do not expect to
recover  this amount of these costs within one year, even though we do expect to
recover  these  funds  over  the  next  several  years.                         

     Business in Ukraine is built on personal relationships and trust as well as
dealing with people who have the authority to make a project work.  In late 1992
and  early  1993  we  dealt with middle management people who had good ideas but
could  not  make anything happen.  We then developed personal relationships with
partners  such  as  the  President  of  the Academy of Science, Yuzhnoye Machine
Building,  Yuzhnoye  Design Bureau and the 43rd missile army.  We were then able
to  reach  the proper leaders and decision-makers to make our progress easier in
working  through  the  bureaucratic  process.                                   

     Ukraine  requires  a  good  deal of documentation for both the national and
regional  governments.  We  have  found  these  problems  are best solved by our
Ukraine  partners,  who are accustomed to dealing with these issues and know how
to  work  through  the  bureaucratic  process.                                  

     The  economic  laws  in Ukraine change often, and our offices deal with the
changing  laws  on  a weekly basis.  In Ukraine and throughout the former Soviet
Union  there  is  constant  change  in  the  economic conditions as well as high
inflation.  We  have  seen bank loan interest rates fluctuate from a high of 190
percent  per  annum  to  a  low  of  35  percent  per annum.  We and the Ukraine
shareholders  in United Engineering Company reinvest the majority of our profits
to  avoid  paying  these  high  loan  rates.                                    

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     The  local currency falling on the international currency markets has had a
strong  negative  impact on our balance sheet.  The exchange rate fell from 1.54
Hryvna  to  the  dollar  in  1997  to  5.47  Hryvna  to  the  dollar  in  2000. 

     We  have  experienced  hyperinflation  during  some  years.  This  has been
neutralized  somewhat  as a result of the UEC contracts being negotiated in U.S.
dollars  and  UEC's  having  been  able  to  take advantage of the exchange rate
fluctuations.  Once  the U.S. funds are received by UEC and converted to Hryvna,
the  exchange  rate  works  against us, as the amount of profit and dividends is
adjusted  to  the December 31 currency exchange rate.  The primary step taken to
offset  the  currency  exchange problem and inflation problem is for UEC to hold
the U.S. currency as long as possible before converting to Hryvna.  UEC has also
invested  in  a  number of inflation sensitive assets that it uses in day-to-day
operations,  such  as  ownership  of  its  offices  in Kiev, Dneipropetrovsk and
Pervomaysk.  Other  difficulties such as language barrier and local customs have
been  solved by hiring quality Ukrainian, bi-lingual, English-speaking staff and
training  them  to  meet  our  standard  and  expectations  of  doing  business.

     There  are  no restrictions related to our investment in United Engineering
Company  including  restrictions on its ability to declare and record dividends.

     Inside  Ukraine,  we  have  assisted  United  Engineering  Company  in  its
negotiation  of  contracts  for  the  dismantling  of  the  Ukraine  nuclear and
non-nuclear  missiles,  silos,  and  related  equipment.   This  dismantling  is
required by the treaty known as START and will be paid for by the U.S. and other
western  countries.  The  Ukraine  members  of UEC designed, built and commanded
these  missiles  and silos, are logical organizations to dismantle them, and are
expected  to  receive  a substantial portion of the contracts to dismantle them.

     Since  1995  United  Engineering  Company has completed contracts with U.S.
contractors  for  more  than  $6.0 million with respect to ICBM dismantlement in
Ukraine  and for more than DM4.7 million in contracts with the German Government
and  German  contractors  for  new  methods  of  dismantling  ICBM  silos.      

     Outside  Ukraine,  we  have  identified several promising Ukraine-developed
technologies.  We  have  been  both  successful  and unsuccessful in negotiating
technology   transfer  agreements  between   Ukraine  entities  or  one  of  its
constituent Ukraine organizations and companies in the U.S.  Working through the
Ukraine Academy of Services and the E.O. Paton Institute of Electric Welding, we
have  successfully negotiated technology transfer agreements for the Live Tissue
Bonding  Equipment  Project  and  the Carbon Dioxide Separator Project set forth
below.                                                                          

Business  of  the  Company                                                      
--------------------------                                                      

     Live  Tissue  Bonding Equipment.  The E.O. Paton Electric Welding Institute
of  Kiev,  Ukraine developed equipment that bonds blood vessels and soft tissues
in substantially less time than other technologies take and apparently leaves no
or  minimal  trace  scar  tissues  after  a  lapse  of  six  to  seven  months. 

     The  equipment  bonds  the  soft biological tissue with a special miniature
surgical  tool.  No  glues,  sutures,  staples or other foreign matter are used.

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The  process  is best described as a welding process.  The scar tissue is either
minimal  or  non-existent.  Tests  conducted  in  Louisville,  Kentucky  by U.S.
surgeons  on  rabbits'  stomachs resulted in scar tissue only forty microns wide
six months after surgery.  It appears that the Ukraine scientists have developed
a  superior,  all-purpose,  seamless  method of bonding soft biological tissues,
which  method  is  characterized  by simple manipulation applicable to different
surgical operations and the fast restoration of tissues without the formation of
coarse  scars.  Apparently  there  is  no need for prolonged special training of
surgeons  and  surgical  personnel.                                             

     The  Ukraine  prototype  for the equipment was successfully demonstrated to
physicians  and  surgeons  in the U.S. in June 1996 on the blood vessels, nerves
and  stomachs  of  rats  and  rabbits.  Additional, subsequent demonstrations on
animals  were  performed  in  Ukraine  by Ukraine surgeons with U.S. surgeons in
attendance.  In  1998 the U.S. surgeons performed successful tests on animals in
Louisville, Kentucky.  Testing on humans in Ukraine began in mid-year 1998.  One
patient  had  a  blood  vessel  welded,  and the other patient had a torn uterus
repaired  using  minimally  invasive  surgery  tools.  According  to the Ukraine
doctors,  both  patients  recovered in the normal amount of healing time without
side  effects.                                                                  

     E.O. Paton Institute of Electric Welding of the Ukraine National Academy of
Sciences  and  International Association of Welding filed U.S. and international
patent  applications  on  the process in February 1999.  An Australia patent has
been  issued,  but no other patents have been issued.  We own the technology and
have  been  assigned  the exclusive world rights of the patents - should they be
issued.  See  Exhibit  10.3  filed  as  part  of  our  Form  10-SB.             

     We  have  submitted  no  applications,  requests  or testing results to the
Federal  Drug Administration.  We have not marketed the bonding equipment in the
Ukraine or any other non-U.S. country and have no plans at this time to do this.
Our  plans  are  to  manufacture  prototypes only in Ukraine and to set up fully
controlled clinical trials in Ukraine for comprehensive human testing.  We began
this  clinical  work  in  May  2000.  To date we have completed more than  1,000
successful  human  surgeries  at Ukraine hospitals. We are currently negotiating
with  a  group  of private investors who are familiar with our company for these
funds.                                                                          

     In  2002  we  formed  Live  Tissue  Connect,  Inc., a Delaware corporation,
through  which  we  propose to develop our Tissue Bonding technology.  We own 86
percent  of  Live  Tissue  Connect,  Inc.                                       

     We  estimate  that in excess of $2 million have been expended in developing
the  project and that $2.5 million of additional funds must be expended to bring
this  product  to market.  We estimate that the first surgical equipment will be
manufactured  in  the  U.S.  when  the U.S. patent applications are approved and
patents  are  issued.                                                           

     This  project is still in the development stage, even though the Ukrainians
have  created  a  finished  product  in  their  special miniature surgical tool.
Improvements  in  the tool are possible, and testing on live tissue of humans to
U.S.  testing  standards  is required.  Approval of the process and equipment by
the  Federal  Drug  Administration  is  required.                               

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     Anaerobic Farm-Waste Disposal Equipment.  We are marketing a closed system,
no  lagoon,  anaerobic  plant  that:                                            

     -  processes  farm-animal  waste  into  a  high  grade  organic fertilizer,

-  captures  the  methane  gas  for  commercial  use,                 

-  reduces  the  odor,  and                                           

-  prevents  all  runoff  and  contamination  of  the  environment.   

     This  processing  plant  was developed in Ukraine before the breakup of the
Soviet  Union.  The  developer  is  a more-than-100-year-old Ukraine joint stock
company that is the Ukraine's largest enterprise that manufactures equipment for
the  petroleum  and  chemical  industries.  The  company's  name  is Sumy Frunze
Machine-Building  Science-and-Production  Association,  called  herein "Frunze."
Through  United  Engineering  Company  we have obtained the exclusive, worldwide
rights  to  market  Frunze's  anaerobic  farm-waste  disposal  plant.           

     Frunze developed the processing plant to solve the above-mentioned problems
that  were  associated  with  a 3,000-head swine farm located in the center of a
city  of  400,000  people.  The  plant  has  operated successfully for more than
twelve  years.                                                                  

     This  technology was patented in 1991 in U.S.S.R.  Patent applications have
not  been  filed  in the U.S.  Frunze has assigned to us the worldwide rights to
market, distribute, license and service products covered by the U.S.S.R. patents
and any upgrades of the 17-year-duration patents.  This assignment extends until
June  4,  2019  but  will  become  non-exclusive  if,  after  the first plant is
installed  and  fully  operational in the U.S., we fail to place orders annually
for  at  least  $1 million in plant and equipment to be manufactured in Ukraine.
We  are  required  to  pay  royalties  equal to five percent of the costs of all
equipment  manufactured  in  Ukraine.                                           

     Under our license agreement with United Engineering Company and the Ukraine
inventor,  Ivan  Semenenko,  the  Ukrainians  are                               

     -  to  design  each  anaerobic  farm-waste disposal facility after visiting
the  site  where  it  is  to  be  placed,                       

     -  to  construct  all  of  the  facility in Ukraine except for the electric
motors,  generators,  tanks  and  computer  controls,           

     -  to  oversee  the  installation  and  startup  of  the  facility  at each
project  site,  and                                             

-  to  provide  equipment  warranties  acceptable  to  us.            

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Our  obligations  are                                                 

-  to  obtain  contracts  for  the  installation  of  the  facilities,

     -  to  pay  the  expenses  of  the  Ukrainians' visits to the U.S. or other
      countries  in  the performance of their obligations under the license,

     -  to  pay  for  and  arrange for the delivery to the facility sites of all
equipment  not  manufactured  in  Ukraine,  and                 

     -  to  act  as  a  liaison  between  the  Ukrainians  and  persons  in  the
countries  where  facilities  are  to  be  installed.           

     United  Engineering  Company  coordinates  our  relations  with Frunze, the
manufacturer,  in  Ukraine.  The  plants  will be custom designed for each user.
The  major  portion  of  each plant will be manufactured initially, at least, by
Frunze in Ukraine.  The electric motors, generators, tanks and computer controls
will  be  obtained in the U.S.  Approximately 70% of the cost of a plant will be
for  Ukraine-manufactured parts at a cost far less than could be obtained in the
U.S.                                                                            

     We  are  attempting  to market this technology ourselves in Oklahoma and in
other  states.  We  are  negotiating  contracts  now.  We expect contracts to be
executed  during  the  fourth  fiscal  quarter  of  2003.                       

     We  believe  a  considerable  market  exists  for  the  plant, should it be
accepted  by the industry.  At the end of 1997 there were 1,520 U.S. swine farms
with  5,000  head  or  more.                                                    

     The  cost of a Farm Waste Anaerobic Plant can be recovered by the farmer or
producer  over  time  from:                                                     

-  organic  fertilizer  sales,                                        

     -  methane  gas  converted  to  electricity  used  on  the  farm  and  sold
commercially,                                                   

-  elimination  of  waste  lagoon  expense,  and                      

-  reduction  of  other  operating  costs.                            

     Of  major  public  relations  importance is a reduction of foul odors.  The
only  exposure  of  the  animal  waste  to the atmosphere is the one-day-or-less
period  that  elapses  before  it  is  hosed  or  scraped  to  the pump site for
transportation  to the closed storage tanks or directly to the processing plant.
Little  decomposition  and  emission  of gases occur during this initial period.

Of  major  health  importance  are:                                   

     -  the  elimination  of  the  volatile organic acids, which are consumed by
the  gas-producing  bacteria,                                   

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   -  the  elimination  of  surface  and  ground  water  contamination,  and

 -  the  dramatic  reduction  of  pathogen  populations  in  the  heated
digesters.                                                      

     We have met resistance from swine and dairy farmers, in our efforts to sell
our  Farm  Waste  Anaerobic  Plant,  due to the long period of time required for
small  farms  to  recover the costs of the plant and due to falling milk prices.

     Carbon  Dioxide Separator.  We own the exclusive and perpetual world rights
to  service,  license  and  market  certain unpatented equipment manufactured in
Ukraine that separates carbon dioxide and other impurities from the gas produced
in  landfills.  The  equipment  converts  the  remaining gas to a cleaner, up to
98-percent  pure  methane gas for use in internal combustion engines or for sale
to  natural gas companies.  This equipment was developed for us by the Institute
of  Gas,  Ukraine  National  Academy of Sciences and will be manufactured for us
only  by  Sumy  Frunze  in  Sumy,  Ukraine.  We  have installed the first set of
equipment at the landfill in Chastang (Mobile), Alabama.  We are now testing the
equipment and fine-tuning the synchronization of the equipment with the 70 wells
drilled  in  the  landfill.                                                     

     The manufacturing costs of our CO2 separator plants are substantially lower
than  the  costs  of competitive units.  We have executed an operating agreement
with  Resource  Technology  Corporation  of  Chicago,  Illinois, to exploit this
technology.  Our  first  plant  will  be  placed  on a landfill in Mount Vernon,
Alabama.  The plant will be manufactured in Ukraine.  The landfill operator will
provide  all  other  equipment  needed as well as the operations.  Our agreement
with  Resource Technology Corporation requires us to provide the plant and bring
it  to  the  U.S.  We have secured and spent approximately $1,000,000 to fulfill
our  obligations  under  the  agreement.  Resource  Technology  Corporation will
contribute  -  all necessary government approvals, all piping, gathering system,
wells,  blower,  metering system, pipeline, tanks and other auxiliary equipment,
the cost of which is estimated to be approximately $1,200,000.  Revenue from the
plant  will  be  shared  65  percent for Resources Technology Corporation and 35
percent  for  us  until  payout  of  costs, at which time revenue will be shared
equally.                                                                        

     CSMG  Gastech  LLC.  In February 2001 CSMG, as its manager, formally formed
CSMG  Gastech  LLC  ("Gastech") as a Texas limited liability company.  Gastech's
purpose  was  to  raise  the  funds needed to buy CO2 Gas Separator equipment to
install  on  landfills to be operated by Resource Technology Corporation ("RTC")
or  other  entities.  We had entered into an agreement with RTC whereby we would
pay  for  and  furnish the CO2 Separator equipment made in Ukraine, installation
and  start-up  and  RTC would furnish all other equipment and expenses needed to
install  and operate the gas gathering system, gas delivery to the CO2 separator
system,  metering  and  the  gas pipeline from the CO2 separator to the customer
pipelineFrom  the  monthly  gross proceeds  of sales of methane gas, each of RTC
and  CSMG  are to first recover its monthly expenses related to the facility and
its  equipment  costs amortized over an eight-year period.  The net proceeds are
then  to  be  shared  50-50  by  RTC  and  us.                                  

     We  assigned  our  interest in the RTC agreement to Gastech and proposed to
potential  investors  in  Gastech that they contribute $800,000 for a 40-percent
interest  in  Gastech.  After Gastech had raised $226,000 from ten investors, in

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March 2001 the Texas Securities Commission commenced an investigation of Gastech
and  wrote  letters  to its investors asking them if they had been advised by us
that  RTC  was  a  chapter  11  debtor  in  a  proceeding in Chicago.  The Texas
Securities  Commission  then  required  us  to  offer  to rescind the securities
purchases  of  the  ten  investors.  We  did  so.  Two  investors  accepted  the
rescission  offer,  and each was returned his $10,000 investment.  We regard the
Texas  Securities  Commission  matter  closed.                                  

     No  further  interests in Gastech were sold, due to the action of the Texas
Securities  Commission.  To  cover  the shortfall in funds needed to pay for the
first  CO2 Separator to be used in a landfill to be operated by RTC, we borrowed
$551,000  in  increments  from  StoneGate LLC of Florida on one-year notes at 10
percent  interest  due  as  follows:  $115,000 plus interest is due in May 2002,
$362,000  plus  interest is due in July 2002 and $74,000 plus interest is due in
August  2002.                                                                   

     The  CO2  Separator  equipment  was  designed by the Gas Institute National
Academy  of  Sciences  of  Ukraine  during  the latter part of 2000.  A purchase
contract  was  executed in February 2001 with Sumy-Frunze Joint Stock Company of
Ukraine  for  a  purchase  price  of $685,484.  The price included all necessary
certifications,  all  necessary equipment for operation, shipping to the Port of
Houston  and  supervision  personnel  for  installation.   The  tonnage  of  the
equipment  is  177  metric  tons.  No  additional  equipment  is  needed.       

     The  equipment  was  fully  paid  for using the funds of Gastech, the funds
borrowed  from  StoneGate  LLC  and  other  sources.  The  equipment  arrived in
Houston,  Texas on November 22, 2001.  It was installed at the Chastang Landfill
near  Mobile,  Alabama  during  the  first  fiscal quarter of 2003.  Natural gas
production  and  sales  should  commence  during  the  second  quarter  of 2003.

     The eight investors in Gastech that invested $206,000 will get 10.3 percent
of  our  and  Gastech's  share  of  the  monthly proceeds from production of the
Chastang  facility  and  we  will get 89.7 percent of this share.  We propose to
assign  part  of  this  89.7 percent interest to persons - as yet unidentified -
that  provide  the  funds  that repay to StoneGate LLC the $551,000 it loaned us
plus  interest  on  the  loans.                                                 

     In  December  2001  the  U.S.  Bankruptcy  Court  in Chicago affirmed RTC's
contract  rights  at Chastang.  RTC is operating as a debtor-in-possession under
its own management, not a trustee.  We were recently advised by the president of
RTC  that  RTC  expects  to  emerge  from  chapter  11,  through  a  plan  of   
reorganization,  in  2003.                                                      

Raw  Materials,  Suppliers and  Manufacturing                         
---------------------------------------------                         

     No  manufacturer  has  been  selected  for  the  tissue  bonding equipment.

     The  anaerobic  plants  will  be  manufactured in Ukraine by Sumy Frunze in
cooperation  with  United  Engineering  Company  at a cost far less than what it
would  cost  in  the  U.S.                                                      

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     The  carbon  dioxide separator plants will be manufactured in Kiev, Ukraine
by Sumy Frunze in cooperation with International Welding Association, again at a
cost  far  less  than  what  it  would  cost  in  the  U.S.                     

Distribution  Methods                                                 
---------------------                                                 

     We  propose  to negotiate with a medical equipment manufacturing company to
market  and  distribute  the  live  tissue  bonding  equipment once Federal Drug
Administration  approval is obtained.  We have no specific manufacturing company
to  do  this  at  this  time.                                                   

     We  have organized a majority-owned subsidiary, Anaerobic Farm Waste, Inc.,
to  own  and lease the anaerobic farm waste disposal equipment.  The officers of
our  company  are  also  the  principal  officers  of  the  subsidiary  company.

     We  have  had  a  number of inquiries from major landfill operators and are
currently working with a major landfill company that is interested in installing
our  units  on  several  of  their  landfills.  This  is  in addition to the CO2
separator  equipment  RTC would like for us to install on more of their landfill
sites.                                                                          

Competition                                                           
-----------                                                           

          Live  tissue  bonding  equipment.  We  have  the only equipment in the
world that bonds live tissues with little or no scarring.  We are in competition
only  with  older  surgical  methods  of  closing  tissue  openings.            

          Anaerobic  farm  waste  disposal plants.  There are ten companies that
offer  various types of anaerobic systems in the U.S.  Based upon our experience
in  the  industry,  it  is  our  belief that none of these systems processes the
manure  and  water  to  the  extent of the Ukraine-made plant.  The plant now in
operation  in  Ukraine  is  the  product of years of experience in designing and
building  various  types  of anaerobic plants.  It is our belief that the design
now  in  operation  will  prove  to  be  the  most  effective and economical for
anaerobically  processing  animal  wastes.                                      

          CO2  Separator.  Numerous  companies  make  CO2 separators in the U.S.
but,  based upon our experience in the industry, we believe none will be able to
compete  with  the  quality  of  our  separators  or  with our price.  It is our
observation  that  their prices are multiples of what we believe we will be able
to  charge  for  our  plants.  Their  separators produce no better than 75 to 90
percent pure methane; based on the CO2 separator plants in operation in Ukraine,
we  believe  ours  will  produce  98-percent  pure  methane.                    

Patents,  Trademarks  and  Licenses                                   
-----------------------------------                                   

     The  live  tissue  bonding  equipment  is the subject of patents and patent
applications  filed  by the Ukraine inventor in the Ukraine, the U.S., and other
countries.  The  patents  and the patent applications for the U.S., the European
Patent  Convention,  Australia,  Canada and Japan have been assigned to us.  The
Australia  patent  has  been  issued.                                           

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     The  anaerobic  farm-waste  disposal  equipment was patented in U.S.S.R. in
1991 but is not the subject of any patent application filed in the U.S.  The CO2
separator  equipment  is  not the subject of any existing patent; the technology
has  been  known  for  more  than  30  years.                                   

     We  have  been assigned the exclusive world rights to license, manufacture,
market,  and distribute both the anaerobic farm waste disposal equipment and the
CO2  separator  equipment.  We will pay a five percent royalty to the Ukrainians
when  the  equipment  is  installed  and fully operational based on the adjusted
retail  price  of  the  equipment.                                              

Government  Approval  and  Regulations                                
--------------------------------------                                

     The  live  tissue bonding equipment must obtain the approval of the Federal
Drug  Administration  before  it  can  be  sold to be used on humans in the U.S.

     The  anaerobic  farm  waste  disposal  plants  and the CO2 separator plants
require  no  governmental approval before being placed into use, but the results
of  their  usage  are  subject  to  the oversight authority of the Environmental
Protection  Agency.                                                             

Research  and  Development                                            
--------------------------                                            

 During  2002,  we  expended  no  funds  on  research  and  development.

Cost  of  Compliance  with  Environmental  Laws                       
-----------------------------------------------                       

     Our  anaerobic  farm  waste disposal plants are designed to dispose of farm
waste  in  a  manner that meets all environmental regulations.  The same is true
with  regard  to  our  CO2  separator  plants.  All  costs  of  complying  with 
environmental  regulations are costs of the projects and reduce our share of the
gross  revenue  produced  from  the  installation  and  use  of  our  equipment.

Seasonality                                                           
-----------                                                           

There  is  no  seasonal  aspect  of  our  business.                   

Employees                                                             
---------                                                             

     We  employ three persons full time in the U.S. and two persons full time in
Kiev,  Ukraine.                                                                 

ITEM  2.     PROPERTIES                                                         

We  lease  office  space  in  the  following  cities  as  follows:    

                                                                [Download Table]

                            Approximate      Monthly       Term  of      
                            Square Feet      Rental        Lease         
                            -----------      -------       ---------     
                                                                         
Corpus  Christi,  TX          1,000          $   999       12-31-2004    
Oklahoma  City,  OK             500          $   500       Month-to-Month
Kiev,  Ukraine                  800          $ 1,200       Month-to-Month

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ITEM  3.     LEGAL  PROCEEDINGS                                                 

     The  Texas  Department  of  Securities  investigated  our sale of ownership
interests  in CSMG Gastech LLC, the entity we created to assist our financing of
our  share  of  the costs of the CO2 separator projects with Resource Technology
Corporation  or  other entities.  The Texas enforcement agency took the position
that  we  were  selling  securities  by means of representations that omitted to
state  a  material  fact  - that Resource Technology Corporation is a chapter 11
debtor.  We  were asked to make a rescission offer to all investors.  We did so.
Two  investors  accepted  the  rescission  offer,  and we returned to them their
$10,000 investments.  We have heard nothing further from the Texas Department of
Securities.                                                                     

ITEM  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS        

None                                                                  

ITEM  5.     MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER             
MATTERS                                               

     The company's Common Stock is quoted on the OTC Bulletin Board.  Its symbol
is  "CTUM,"  or,  depending upon the Internet service that quotes Bulletin Board
stocks,  CTUM.OB.                                                               

     We  filed  a  1934  Exchange Act registration statement with the Commission
that  became  effective  November 15, 1999.    However, our financial statements
did not meet the U.S. GAAP requirements, and our stock was "demoted" to the Pink
Sheets until January 16, 2003, when the SEC staff accepted our revised financial
statements and we became eligible again to be quoted on the Bulletin Board.  Our
difficulties  with  our  financial  statements  were  caused  by  the accounting
practices  in  Ukraine  that  had  not  been  reconciled  with  U.S.  GAAP.     

     Our common stock first traded on April 21, 1998.  The range of high and low
bid  information  for  our  Common Stock is set forth below.  The source of this
information  is  the  Pink  Sheets.  The  quotations reflect inter-dealer prices
without  retail  markup,  markdown  or  commissions and may not represent actual
transactions.                                                                   

                                                                [Download Table]

                             High               Low 
                             ----               --- 
2001                                                
----                                                
                                                    
     1st  Qtr                0.90               0.35
     2nd  Qtr.               0.75               0.47
     3rd  Qtr.               0.705              0.35
     4th  Qtr.               0.40               0.15

2002                                                
----                                                
     1st  Qtr                0.25               0.10
     2nd  Qtr                0.14               0.10
     3rd  Qtr                0.80               0.10
     4th  Qtr                0.80               0.53

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     On  April 3, 2003, there were 7,211,200 shares of Common Stock outstanding.
There  are  1,500,000  shares  subject  to  outstanding  options to purchase, or
securities  convertible  into,  such  shares  of  stock.                        

Holders                                                                         
-------                                                                         

     As  of  April 3, 2003 there were approximately 284 holders of record of our
Common  Stock.  Some 1,361,845 shares of Common Stock are held by numerous other
shareholders  in  brokerage  accounts  under  the  record  name  of "Cede & Co."

Dividends                                                                       
---------                                                                       

     We have paid no dividends to our common stockholders and do not plan to pay
dividends on our Common Stock in the foreseeable future.  We currently intend to
retain  any  earnings  to  finance  future  growth.                             

Recent  Sales  of  Unregistered  Securities                                     
-------------------------------------------                                     

     During  the  past  three  years  our  company sold the following securities
without  registering  the  securities  under  the  Securities  Act  of  1933:   

                                                                [Download Table]

                               No.  of                     
                               Common                      
                               Shares              Offering
          Date                  Sold                Price  
          ----                --------             --------
                                                           
          2000               12,000(1)(2)             7,500
          2000              423,350(1)(3)           257,093
          2000              111,174(1)(4)            67,659
          2000              337,800(1)(5)           211,125
          2001            1,059,957(1)              540,528
          2001            1,135,000(6)              756,690
          2001               76,669(6)                   76
          2002              430,361(2)              318,687
          2002               60,000(1)               37,500
          2002              244,764(7)              181,250
---------------------                                      

(1)     These  shares  were  sold  to accredited investors in an offering exempt
        from  registration  pursuant  to Regulation D, Rule 506.  The securities
        were sold  by  officers  of  the corporation who received no commissions
with regard to the sales.                                       

(2)     These  shares  were  issued in exchange for the cancellation of interest
        owed  on  notes  payable.   The notes  were held  by shareholders of the
company who had  loaned  money  to  the  company.               

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(3)     These  shares  were issued in exchange for the cancellation of the notes
    payable  to  the  same  persons  identified  in  footnote  4  above.

(4)     These  shares  were  issued  for  services rendered to the company.  The
        persons who rendered the services  and  the  nature  of  their  services
were as follows:                                                

                                                                [Download Table]

Date      Name                     No. of Shares  Nature  of  Services       
----      ----                     -------------  --------------------       
                                                                             
04-07-00  Charles  Smith              2,000       Fee  for  loan             
04-07-00  Olympus C R Account        20,000       Consulting                 
04-07-00  Steve  Isenhour             4,300       Fee  for  loan             
04-07-00  Celtic  Cross  Ltd         13,150       Fee  for  loan             
04-07-00  John  Creedon                 880       Consulting                 
05-04-00  Norma  Wilke                6,000       Fee  for  loan             
05-04-00  Olympus  C  R  Account     20,000       Fee  for  loan             
05-04-00  Lou  Pleshe                 2,000       Fee  for  loan             
05-04-00  James  Prejean              5,250       Fee  for  loan             
05-04-00  Celtic  Cross  Ltd         17,498       Fee  for  loan             
05-22-00  Samuel  J.  Carpenter      12,000       Fee  for  loan             
05-22-00  Olympus  C  R  Account     60,000       Fee  for  loan             
05-22-00  Celtic  Cross  Ltd         34,000       Fee  for  loan             
10-25-00  Craig  Adamson              1,500       Fee  for  loan             
10-25-00  William  Dodge             20,000       Fee  for  loan             
10-25-00  John  Crooch                6,000       Fee  for  loan             
12-08-00  Olympus  C  R  Account     45,000       Fee  for  loan             
12-08-00  Vyacheslay  Vaszlevskyz    10,000       Fee  for  administration   
12-08-00  John  Creedon               8,696       Consulting  and  accounting

(5)     These  shares  were  issued  for  cash.                                 

(6)     Don  Robbins,  CEO  of  the  company, and Gordon Allison, Executive Vice
        President of  the  company,  had  in  earlier  years  been issued shares
        of the company's Series A  Preferred Stock for services rendered in lieu
        of salaries.  In 2002  they exchanged these  shares for shares of Common
        Stock.  Even  though  the  shares  of  Preferred Stock  were  issued for
        services  rendered  prior  to  2001,  the  company's  auditor  allocated
        $756,690 to services rendered in 2001 and $76 to the par  value  of  the
common  shares  exchanged  for  the  Preferred  Shares.         

(7)     These  shares  were  issued  for  services rendered to the company.  The
        persons  who  rendered  the  services  and  the nature of their services
were as follows:                                                

                                                                [Download Table]

Date           Name           No. of Shares     Nature  of  Services
----           ----           -------------     --------------------
                                                                    
08-09-02       Raible             6,000              Consulting     
08-09-02       Keith Jones      208,764              Consulting     
08-09-02       Dr.  Kutz         20,000              Consulting     

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ITEM  6.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS                            

     The  following  discussion  and analysis should be read in conjunction with
the  financial statements and the accompanying notes thereto. It is qualified in
its  entirety  by  the  foregoing  and  by  more  detailed financial information
appearing  elsewhere.  See  "Financial  Statements."                            

Sales                                                                 
-----                                                                 

     We  had  revenues  of  $171 in FY 2002 compared with revenues of $100 in FY
2001.                                                                           
We  did report income of $130,825 in FY 2001 and a loss of $47,120 in FY 2002 as
our  33.3 percent interest in the income of an unconsolidated subsidiary, United
Engineering  Company,  a Ukraine company that represents a joint venture between
us  and  several  Ukraine entities.  This income and loss represent our share of
the  profits  and  losses  from the missile site conversion activities of United
Engineering  Company.                                                           

Selling,  General  and  Administrative  Expenses                      
------------------------------------------------                      

     We  reduced  our  general and administrative expenses from $1,683,101 in FY
2001  to  $977,174  during  FY  2002.  The  activities which these expenses were
intended  to  benefit  were our anaerobic farm-waste disposal equipment project,
our  carbon dioxide separator project and our human tissue bonding project.  The
first  two  of  these  projects  -  both  of  which  are  based  upon  excellent
Ukraine-developed  equipment that can be manufactured in Ukraine, brought to the
U.S.  and  installed at considerable savings to the employment of U.S. equipment
of comparable or inferior quality - represent a substantial part of our business
plan  for  the  future.                                                         

Net  Loss                                                             
---------                                                             

     We  reduced  our fiscal year 2001 net loss of $1,594,391, or $0.32 a share,
to  a  net  loss  of  $1,052,773 in FY 2002, or $0.16 a share.  There had been a
significant  increase  in  our  operations  in  2001 in our three projects - our
tissue  bonding  project, our anaerobic farm waste project and our CO2 separator
project.                                                                        

          Tissue  Bonding  Project.  The  Paton  Institute  in  Ukraine received
approval  from  the  Ukraine  Ministry  of  Health for doctors to use the tissue
bonding technology during surgeries in hospitals in Ukraine.  Paton manufactures
the  prototype  equipment  used in the procedure.  Surgeons in Ukraine commenced
using  this  technology  during  regular  surgical  procedures.  To date we have
successfully  completed more than 1,000 human surgeries using the technology and
formed  an  International  Advisory  Council  for  the  project.                

          We have interested a Baltimore, Maryland financial services company in
assisting  us  in  financing  the  Live  Tissue  Bonding  Project,  both  in its
applications  in  Ukraine and in the U.S.  A representative traveled to Ukraine,
met  with  the  Paton  Institute,  and returned to the U.S. interested in moving
forward  with  us.                                                              

          Anaerobic  Farm  Waste  Project.  We  expect  contracts to be executed
during  the  fourth  fiscal quarter of 2003.  We have met resistance from swine,

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dairy and poultry farmers in our efforts to sell our farm waste anaerobic plant,
due  to the long period of time required for small farms to recover the costs of
the  plant  and due to falling producer prices in these industries.  Our efforts
at  this  time  are  concentrated on building a demonstration plant with Poultry
Growers  of  Oklahoma.  The  growers  are  working with the Oklahoma Agriculture
Commission  in  coordination with Anaerobic Farm Waste, Inc. for a loan grant to
do  an  engineering  and  marketing  feasibility  study  of  building a plant in
Southeast  Oklahoma.  Also,  we  have  retained  a Native American consultant to
negotiate  an  arrangement  with the Native American tribes for a grant from the
U.S.  Corps  of  Engineers  to  do a feasibility study for building an anaerobic
plant in Northeastern Oklahoma.  The resolution has been drawn but not signed as
of  this  date.                                                                 

          CO2  Separator Project.  Our CO2 separator plant has been installed at
the Chastang Landfill near Mobile, Alabama and is being tested for delivery to a
pipeline  of  natural  gas  obtained  from  70  wells  drilled  on the landfill.

Liquidity  and  Outlook                                               
-----------------------                                               

     We  have  never  operated  at  a profit.  We were able to stay in operation
during 2002 only from the proceeds of $37,500 from the sale of  common stock, an
increase  in Notes Payable of $589,072, the issuance of common stock in exchange
for  consulting  services valued at $181,250 and the issuance of common stock as
payment  of  $318,687  in  interest  on  notes  payable  to  individuals.       

     Management  believes  our prospects for financial liquidity depend upon the
following:                                                                      

     -  obtaining  contracts  for  the  leasing  of  our  anaerobic  farm  waste
equipment;                                                      

     -  obtaining  contracts  for  the  joint  venturing  of  our CO2 separator;

     -  the  sale  of  capital  stock  in  either our company or our subsidiary,
Anaerobic  Farm  Waste,  Inc.;  and                             

     -  loans  to  finance  the  purchase  of anaerobic farm waste units and CO2
separators.                                                     

At  this time, we have not identified the sources for additional equity capital.

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7.     FINANCIAL  STATEMENTS                                                    

     Independent  Auditors  Report                                            18
     Balance  Sheet  December  31, 2002 and 2001                              19
Statement  of  Operations  Year  Ended  December  31,                 
          2002  and  2001                                                     21
Statement  of  Cash  Flows  Year  Ended  December  31,                
          2002  and  2001                                                     22
Statement  of  Changes  in  Stockholders'  Equity  from               
     January  1,  2000  to  December  31,  2002                               23
     Notes  to  Financial  Statements                                         24

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INDEPENDENT AUDITOR'S REPORT

To  the  Shareholders  and  Board  of  Directors                                
Consortium  Service  Management  Group,  Inc.  and  Subsidiaries                

I  have  audited  the  accompanying  consolidated  balance  sheets of Consortium
Service  Management  Group,  Inc.  and  Subsidiaries as of December 31, 2002 and
December  31,  2001,  and  the  related  statements  of  operations,  changes in
stockholder's  equity  and cash flows for the years then ended.  These financial
statements are the responsibility of the Company's management. My responsibility
is  to  express  an  opinion  on  these  financial statements based on my audit.

I  conducted my audits in accordance with generally accepted auditing standards.
Those  standards require that I plan and perform the audits 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.
I  believe  that  my  audits  provide  a  reasonable  basis  for  my  opinion.  

In  my  opinion, the consolidated financial statements referred to above present
fairly,  in  all material respects, the financial position of Consortium Service
Management Group, Inc. and Subsidiaries as of December 31, 2002 and December 31,
2001, and the results of its operations and cash flows for the years then ended,
in  conformity  with  generally  accepted  accounting  principles.              

The  accompanying  consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
financial  statements, the Company has suffered recurring losses from operations
that  raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2.  The
financial  statements  do not include any adjustments that might result from the
outcome  of  this  uncertainty.                                                 

/s/  Gary  Skibicki                                                             

Gary  Skibicki,  CPA,  PC                                                       
Oklahoma  City,  Oklahoma                                                       
April  8,  2003                                                                 

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 CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 
DECEMBER 31,

ASSETS

                                                                [Download Table]

                                                         2002           2001    
                                                     -----------    ----------- 

CURRENT  ASSETS                                                                 
                                                                                
  Cash                                               $     3,905    $    14,397 
                                                     -----------    ----------- 
        Total  Current  Assets                             3,905         14,397 

FIXED  ASSETS                                                                   
  Furniture  and  Equipment                               61,409         61,409 
    Less  Accumulated  Depreciation                      (51,171)       (43,461)
                                                     -----------    ----------- 

        Total  Fixed  Assets                              10,238         17,948 

OTHER  ASSETS                                                                   
  Investment  -  United  Engineering  Company            314,428        371,336 
  Investment  -  CO2  Equipment                        1,159,788        607,250 
  Tissue  Bonding  Patent                                197,959         28,979 
    Less  Accumulated  Amortization                      (10,514)          (966)
                                                     -----------    ----------- 

        Total  Other  Assets                           1,661,661      1,006,599 

        Total  Assets                                $ 1,675,804    $ 1,308,944 
                                                     ===========    =========== 

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

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 CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED) 
DECEMBER 31,

LIABILITIES 

                                                                [Download Table]

                                                         2002           2001    
                                                     -----------    ----------- 

CURRENT  LIABILITIES                                                            
                                                                                
  Accounts  Payable                                  $   326,767    $    84,169 
  Interest  Payable                                      163,939        179,538 
  Payroll  Taxes  Payable                                 17,708         22,659 
  Notes  Payable  to  Stockholders                     2,492,039      1,655,777 
  CO2  Equipment  Payable                                 92,474              0 
                                                     -----------    ----------- 

        Total  Current  Liabilities                    3,092,927      1,942,143 

Minority  Interest  in  Consolidated  Subsidiary         206,000        206,000 

STOCKHOLDERS'  EQUITY                                                           
  Common  stock  $.001  par  value,  40,000,000                                 
    shares  authorized;  6,934,125  shares  issued                              
    and  outstanding  at  December  31,  2002  and                              
    6,199,000  shares  issued  and  outstanding  at                             
    December  31,  2001                                    6,934          6,199 

  Additional  Paid  in  Capital                        4,285,509      3,748,807 

  Accumulated  Other  Comprehensive  (Loss)             (341,775)      (343,187)

  Accumulated  (Deficit)                              (5,573,791)    (4,521,018)
                                                     -----------    ----------- 

        Total  Stockholders  Equity                   (1,623,123)    (1,109,199)

        Total Liabilities and                                                   
          Stockholders'  Equity                      $ 1,675,804    $ 1,038,944 
                                                     ===========    =========== 

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

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 CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
DECEMBER 31,

                                                                [Download Table]

                                                         2002           2001    
                                                     -----------    ----------- 
                                                                                
Revenues                                             $       171    $       100 

General  and  Administrative  Expenses                   977,174      1,683,101 
  Funded  R  &  D                                              0              0 
  Cost  of  Funded  R  &  D                               28,650         43,129 
  Net  R  &  D  Cost                                      28,650         43,129 
                                                     -----------    ----------- 

        Operating  (Loss)                             (1,005,653)    (1,726,130)

Interest  Income                                               0            914 

Interest  in  Income  of  Unconsolidated  Companies      (47,120)       130,825 

(Loss) from Continuing Operations                     (1,052,773)    (1,594,391)

Income  Taxes                                                  0              0 

Net  (Loss)                                          $(1,052,773)   $(1,594,391)

Net  (Loss)  Per  Share  Common  Stock                      (.16)          (.32)

Weighted  Average  Common  Shares  Outstanding         6,566,563      5,063,187 

Basic and diluted earnings per share are the same.  The corporation is reporting
a net loss for the reporting periods and any potentially dilutive securities are
antidilutive  (reduce  net  loss)  and  therefore  not  presented.              

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

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 CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
JANUARY 1, 2001 TO DECEMBER 31, 2002

                                                                [Download Table]

                                                         2002           2001    
                                                     -----------    ----------- 
CASH  FLOWS  FROM  OPERATING  ACTIVITIES                                        
                                                                                
Net  (Loss)                                          $(1,052,773)   $(1,594,391)
Equity  (Income)  from  investees                              -       (130,825)
Equity  loss  from  investees                             47,120              - 
Depreciation                                               7,710          7,710 
Amortization                                               9,548            484 
Dividends  from  investee                                 11,200              - 
Decrease  in  dividends  receivable                            -          8,155 
Interest  expense  for  common  stock                    318,687         91,212 
Compensation  for  common  stock                               -        755,555 
Consulting  for  common  stock                           181,250              - 
Increase  in  accounts  payable                          242,598         40,508 
(Decrease) Increase in federal payroll taxes payable      (4,951)        (1,237)
(Decrease)  Increase  in  interest  payable              (15,599)        96,206 
Interest                                                  42,861              - 
                                                     -----------    ----------- 

        Net cash (used in) operating activities         (212,349)      (726,623)

CASH  FLOWS  FROM  INVESTING  ACTIVITIES                                        

Consolidate  anaerobic  farm                                   -            880 
Purchase  CO2  equipment                                (255,735)      (579,361)
Sell  equipment,  furniture                                    -         13,500 
(Decrease)  Increase  employee  advances                       -          1,752 
Acquire  tissue  bonding  patent                        (168,980)       (20,312)
                                                     -----------    ----------- 

        Net cash (used in) investing activities         (424,715)      (583,541)

CASH  FLOWS  FROM  FINANCING  ACTIVITIES                                        

Increase  in  membership  capital                              -        206,000 
Increase  in  stock  issue                                37,500        495,528 
Proceeds  from  notes  payable                           589,072        621,541 
                                                     -----------    ----------- 

        Net cash provided by financing activities        626,572      1,323,069 

NET INCREASE  (DECREASE)  IN  CASH  AND                                         
    CASH  EQUIVALENTS                                    (10,492)        12,905 

Cash and cash equivalents at beginning of year            14,397          1,492 
                                                     -----------    ----------- 

Cash and cash equivalents at end of year             $     3,905    $    14,397 
                                                     ===========    =========== 

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

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 CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
JANUARY 1, 2001 TO DECEMBER 31, 2002

                                                        [Enlarge/Download Table]

                                                                                   ACCUMULATED                             
                                                                                     OTHER                                 
                                   NO                                    ADD'L       COMPRE-                               
                                PREFERRED   PAR    NO. COMMON   PAR     PAID IN      HENSIVE      ACCUMULATED              
DESCRIPTION                       SHARES   VALUE   SHARES(EA)  VALUE    CAPITAL   INCOME (LOSS)     DEFICIT         TOTAL  
---------------------------------------------------------------------------------------------------------------------------
                                                                                                                           
Balance  January  1,  2001        75,669   $76     3,927,374   $3,927  $2,452,680   $(346,957)    $(2,926,627)   $(816,901)
Common  Shares  Exchanged                                                                                                  
  for  Preferred  Stock          (75,669)  (76)       76,669       76           -           -               -            - 
Common  Shares  Issued                                                                                                     
  for  Services                        -     -     1,135,000    1,135     755,555           -               -      756,690 
Exchange  $45,000  in  Notes                                                                                               
  for  Common  Stock                   -     -        72,193       73      45,427           -               -       45,500 
Exchange  $500  of  Interest                                                                                               
  for  Common  Stock                   -     -           960        1         499           -               -          500 
Common  Shares Sold 2001               -     -       986,804      987     494,646           -               -      495,633 
Net  (Loss)  Year Ended 2001           -     -             -        -           -           -      (1,594,391)  (1,594,391)
Other Comprehensive Income (Loss)      -     -             -        -           -           -               -            - 
Foreign  Exchange  Gain                -     -             -        -           -       3,770               -        3,770 
                                 ----------------------------------------------------------------------------------------- 
Balance  January  1,  2002             -     -     6,199,000    6,199   3,748,807    (343,187)     (4,521,018)  (1,109,199)

Common  Stock  Sold  2002              -     -       60,000        60      37,440           -               -       37,500 
Common  Stock  Issued                                                                                                      
  for  Services                        -     -      244,764       245     181,005           -               -      181,250 
Common  Shares  Issued                                                                                                     
  for  Interest                        -     -      430,361       430     318,257           -               -      318,687 
Net  (Loss)  Year Ended 2002           -     -            -         -           -           -      (1,052,773)  (1,052,773)
Other Comprehensive Income (Loss)      -     -            -         -           -           -               -            - 
Foreign  Exchange  Gain                -     -            -         -           -       1,412               -        1,412 
                                 ----------------------------------------------------------------------------------------- 

Balance  December 31, 2002             -     -    6,934,125    $6,934  $4,285,509   $(341,775)    $(5,573,791) $(1,623,123)
                                 ========================================================================================= 

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

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 CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
AND SUBSIDIARIES
 NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002, DECEMBER 31, 2001

NOTE 1
 SIGNIFICANT ACCOUNTING POLICIES

Nature  of  Operations                                                          

Consortium  Service Management Group, Inc. (the "Company"), a Texas corporation,
was  incorporated  on  November 17, 1992.  The planned operations of the Company
are  to  develop  business  and investment opportunities worldwide by licensing,
marketing  and  distributing rights in advanced technologies developed primarily
in  the  Ukraine.                                                               

The technologies involve live tissue bonding, CO2 (carbon dioxide) separation of
landfill  gas  and  anaerobic  animal  waste  disposal.  The live tissue bonding
focuses  on  bonding  living  soft biological tissue used in surgical procedures
that  eliminates  the need for sutures, staples, sealants or glues.  The Company
has  an  agreement  with  the  E.O.  Paton  Institute of Electric Welding of the
Ukraine  National  Academy  of Sciences and International Association of Welding
and  owns  the  exclusive  world  rights on licensing, patenting, manufacturing,
development  and  distribution  of  this technology.  The live biological tissue
bonding  process  is a U.S. and international patent pending technology approved
by  the  Ukraine  Ministry  of  Health  for  human  surgical  procedures.       

The  Company  owned  carbon  dioxide separator technology, also developed in the
Ukraine,  promotes  the  economical  separation  of  CO2  gas  from  methane gas
emanating  from  landfills.  Landfills  generate a commingled mixture of methane
and  carbon  dioxide gas which prevents it from being commercially sold as fuel.
The Ukrainian technology has developed an economical CO2 separator that isolates
methane  gas  to  the extent that it can be sold to utility companies as well as
other  industrial and commercial customers with the first installation beginning
in 2002 in Mobile, Alabama with completion estimated to be in the second quarter
of  2003.  Carbon  dioxide  separator equipment exists in the U.S. however it is
more  expensive than Ukrainian technology necessitating methane gas be burned or
flared  on  site  for  environmental purposes as opposed to being sold for fuel.

At  the  end  of  December  2002  the  Company spent $1,159,788 on CO2 separator
equipment  all of which is paid except $92,474 still owed to Sumy Frunze Machine
Building  Science  and  Production  Association in the Ukraine.  At December 31,
2002  equipment  installation  was  still  in process, and in 2003 approximately
$300,000  in  additional  installation  costs will be incurred before operations
begin  which  the company anticipates will be in the second quarter of the year.

The  third  technology  developed  in  the  Ukraine is an anaerobic animal waste
process  that  via  a  closed  loop  system  eliminates  animal waste, odors and
microorganisms. The Company owns the exclusive marketing and distribution rights
for  this equipment.  A by-product of this process is an organic fertilizer that
will  also be marketed in the U.S. and Canada in accord with rights owned by the
Company.                                                                        

The Company does not internally separate financial information including results
of operations by segments such as geographic areas, products, major customers or
operating  segments.  With the major component of income being from the earnings
of  United  Engineering  Company ("UEC"), management considers it impractical to
further  segment  financial  information.                                       

Investments in companies in which the Company has an equity interest of at least
20%  are  accounted  for  under the equity method. Under this method the Company
records  its  share  of  income  or  losses  as Interest In Income, or Losses of
Unconsolidated  Companies  with  corresponding  increases  or  decreases  in the
investment  account.  Investments  in   which  the  Company  has  a  controlling
financial interest represented by either direct or indirect controlling interest
(more  than 50%) are consolidated.  In 2002 Live Tissue Connect, Inc. was formed
(86%  Company  owned) to manage live tissue bonding activities, and in 2001 CSMG

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 CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
AND SUBSIDIARIES
 NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002, DECEMBER 31, 2001

Gastech, LLC (89.7% Company owned) was formed to manage CO2 operations.  In 1999
Anaerobic  Farm Waste, Inc. was incorporated (100% Company owned) to manage that
technology.  The  2002  and  2001 financial statements are presented with parent
and  these  majority  owned  subsidiaries  consolidated  with  intercompany     
transactions  and  accounts  eliminated.                                        

Cash  and  Cash  Equivalents                                                    

For  purposes  of the statements of cash flows, the Company considers all highly
liquid  investments  with  maturities  of  less  than  three  months  to be cash
equivalents.                                                                    

Revenue  Recognition                                                            

The  Company  has  experienced  long  and  uncertain  collection time frames and
accordingly  the  general  policy  is  revenue  is  recognized  as  received.   

Furniture,  Fixtures  and  Equipment                                            

Furniture,  fixtures  and  equipment  are  stated  at  cost and are straightline
depreciated  over  the  estimated  economic  lives of the assets, primarily five
years.  Equipment  with  no  continuing  value  is  written  off.               

Foreign  Operations                                                             

Foreign  currency transactions and financial statements are translated into U.S.
dollars  in  accordance  with Statement of Financial Accounting Standards No. 52
"Foreign   Currency  Translations."   All   balance  sheet  accounts  have  been
translated  using the exchange rate at the balance sheet date.  Income Statement
accounts  have  been  translated  using the average exchange rates for the year.
The  Company owns a 33.3% interest in UEC which was organized in and operates in
Ukraine.  In  2002  the  average  exchange rate used to record income was .19311
functional currency to U.S. dollars and the year end exchange rate used to value
the  UEC  investment account was .19390 functional currency to U.S. dollars.  In
2001  the  average  exchange  rate  used  to record income was .18601 functional
currency  to  U.S.  dollars and the year end exchange rate used to value the UEC
investment  account  was  .18680  functional  currency  to  U.S.  dollars.      

The  summarized  2002  and 2001 financial information of UEC presented in accord
with  U.S.  GAAP  and  translated  into  U.S.  dollars  is presented as follows:

UNITED ENGINEERING COMPANY
DNIPROPETROVSK, UKRAINE 

                                                                [Download Table]

                                                         2002           2001   
                                                     -----------    -----------
                                                                               
Current  Assets                                      $   736,000    $ 1,076,000
Non  Current  Assets                                     310,000        306,000
                                                     -----------    -----------
        Total  Assets                                  1,046,000      1,382,000

Current  Liabilities                                     105,000        268,000
Non  Current  Liabilities                                      0              0
                                                     -----------    -----------
        Total  Liabilities                               105,000        268,000

Equity                                                   941,000      1,114,000
                                                     -----------    -----------
        Total  Liabilities  and  Equity                1,046,000      1,382,000

Sales                                                  1,642,000      2,153,000

Gross  Profit                                            342,000      1,171,970
Operating  Expense                                       483,360        779,489
                                                     -----------    -----------
        Net  (Loss)  Income                          $  (141,360)   $   392,481
                                                     ===========    ===========

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 CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
AND SUBSIDIARIES
 NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002, DECEMBER 31, 2001

Loss  Per  Share                                                                

The  computation  of  loss  per  share  of common stock is based on the weighted
average  number of shares outstanding.  The Company had net losses of $1,052,773
in  2002  and  $1,594,391 in 2001 and accordingly basic and diluted earnings per
share are the same because any dilutive or potentially dilutive securities would
be  antidilutive.                                                               

Issuance  of  Shares  for  Services  and  Interest                              

Valuation  of shares for services and interest is based on the fair market value
of  services  and  the  stated  interest rates on notes payable. In 2002 244,764
shares  were  issued  in  exchange  for  $181,250  in  management  and marketing
services.  The  cost  of  the  services  has  been  charged  to  operations  and
additional  paid  in  capital  has  been  increased by $181,005 representing the
excess  of  the  cost  of  the  services  over the par value of the common stock
issued.  Also  in  2002  the  Company  issued 430,361 shares of common stock for
interest  on  notes payable to shareholders with the cost charged to operations,
and  additional paid in capital increased by $318,257 representing the excess of
the  interest  expense  over  the  par  value  of  the  common  stock  issued.  

In  2001  the Company exchanged 1,135,000 shares of common stock for $756,690 in
compensation  expense  charged  to  operations,  and  additional paid in capital
increased by the excess of compensation expense over the par value of the common
stock  issued,  $755,555.                                                       

Preferred  Stock                                                                

On  December  28,  1995  the Company authorized the issuance of 75,669 shares of
Series  A  preferred  stock,  $10.00  face  amount,  .001 par value which pays a
cumulative  dividend  on  net corporate profit equal to 8% of the face amount of
the outstanding stock.  If the Company does not realize profits, preferred stock
dividends  are  not  accruable.  Such preferred Series A stock is preferred over
all  common  stock  in the event of corporate liquidation and dissolution to the
extent  of  its  unredeemed  face  amount.                                      

On  September  29, 2000 the Board of Directors approved converting all preferred
shares  outstanding  to  common  stock.  In  2001  75,669  preferred shares were
converted  to  1,210,704  common  shares  as  compensation  for  unpaid services
recorded  at  $756,690  in  compensation  expense  with corresponding entries to
common  stock  and  paid  in  capital.                                          

Use  of  Estimates                                                              

The  preparation  of  financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect  the amounts reported in the financial statements and accompanying notes.
Actual  results  could  differ  from  those  estimates.                         

Accounting  Pronouncements  Adopted                                             

During  2002,  the  Financial  Accounting  Standards  Board issued the following
statements  of  financial  accounting  standards  ("SFAS").  Adoption  of  these
standards  did  not have a material effect on the financial position, results of
operations,  or  on  discloses  within  the  financial  statements.             

(1)  SFAS  No  142  -  Goodwill  and  Intangible  Assets    
        (2)  SFAS  No  143  -  Retirement  of  Tangible  Long  Lived  Assets
          (3)  SFAS  No  144  -  Impairment  on  Disposal  of  Long Lived Assets

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 CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
AND SUBSIDIARIES
 NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002, DECEMBER 31, 2001

During  2001  the  Financial  Accounting  Standards  Board  issued the following
Statement of Financial Accounting Standards ("SFAS").  Adoption of this standard
did not have a material effect on its financial position, results of operations,
or  on  disclosures  within  the  financial  statements.                        

(1)  SFAS  No  141  -  Business  Combinations               

Income  Taxes                                                                   

The  Company  records  its  income tax provision in accordance with Statement of
Financial  Standards  No.  109,  "Accounting  for  Income  Taxes."  (See Note 3)

NOTE 2
BASIS OF PRESENTATION AND CONSIDERATIONS RELATED
TO CONTINUED EXISTENCE (GOING CONCERN)

The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of  liabilities  in  the  normal course of business.  The Company incurred a net
loss  of  $1,052,773 for the year ended December 31, 2002 and $1,594,391 for the
year  ended  December  31,  2001  and these factors combined with prior year net
losses  raises  substantial  doubt  as  to  the Company's ability to obtain debt
and/or  equity  financing  and  achieve  profitable  operations.                

The  Company's  management  intends  to raise additional operating funds through
equity  and/or  debt offerings and the sale of technologies.  However, there can
be  no  assurance  management will be successful in its endeavors.  The possible
consequences  of not obtaining additional funds either through equity offerings,
debt  offerings,  or  sale  of technologies is that there will not be sufficient
money to fund the capital projects required to earn long term revenues.  A major
component of planned future operations involves the construction of animal waste
and  disposal facilities for either sale and/or lease and these undertakings are
only  possible from outside financing.  In 2002 the company began carbon dioxide
separator  equipment  installation  at the Chastain landfill in Mobile, Alabama.
By  the  end  of  2002  the  Company invested $1,159,788 in Ukraine manufactured
equipment of which $92,474 was unpaid at December 31, 2002.  The Company expects
to  spend  an estimated additional $300,000 in 2003 to complete the installation
and debugging process. Although this technology has proven successful in Ukraine
it  is new to the United States making it unclear if further funding beyond this
amount  will  be  necessary.                                                    

The  possible consequences of not obtaining additional financing for either farm
waste  disposal,  tissue  bonding  research,  and/or carbon dioxide projects are
operations  ceasing  resulting  in  liquidation  of  the  Company.              

NOTE 3
INCOME TAXES

The  Company  records  its  income tax provision in accordance with Statement of
Financial  Accounting  Standards  No.  109,  "Accounting for Income Taxes" which
requires  the  use  of  the  liability  method of accounting for deferred income
taxes.                                                                          

With the Company not generating taxable income since inception, no provision for
income  taxes  has  been  provided.  At  December  31,  2002  net operating loss
carryforward  will  exceed  $2,000,000  making it reasonably uncertain if any of
these  loss  carryforwards  will  result  in  tax  benefits.                    

NOTE 4
INVESTMENT - UNITED ENGINEERING COMPANY 

At  December  31,  1999  the  Company was a 50% owner of UEC, a Ukraine and U.S.
joint stock company registered under the laws of Ukraine. The other 50% of UEC's

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 CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
AND SUBSIDIARIES
 NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002, DECEMBER 31, 2001

equity  were owned by several Ukrainian organizations one of which was the State
Property Fund of Ukraine. All UEC decisions require a 75% shareholder vote.  UEC
is  a  Ukraine  closed  joint stock company with foreign investment, the Company
being  the  foreign  investor. UEC holds a Ukraine license to perform classified
and  secret  construction  works  relating  to  projects that are in the Ukraine
national  security  sector.  To  complete its authorized capital during the year
ending  December  31,  2000,  approximately  9  UEC  employees  were  given  the
opportunity  to purchase stock and paid 26,100 gryvna (approximately $4,760 U.S.
dollars)  for  5,000  shares.  The  sale of stock to its employees completed the
full  complement of its 20,000 registered shares that was authorized by UEC with
the  Company owning 6,666 shares or 33.3% ownership. For the year ended December
31,  2002  UEC  had  $1,046,000  in assets and $105,000 in liabilities for a net
worth of  $941,000 in U.S. dollars. For the year ended December 31, 2001 UEC had
revenues  of $1,382,000 in assets and $268,000 in liabilities for a net worth of
$1,114,000  in  U.S.  dollars.                                                  

A  portion  of  investment,  which is included in the UEC investment account, is
considered a Founders Fund and has special priority in the event of liquidation.
In  1994  the  Company  made  its  original  investment  in  UEC  which included
contributing  $73,843  in  autos,  equipment and furniture.  The Company and UEC
agreed  that  in  the  event  of UEC liquidating, $73,843 would be repaid to the
Company  in  preference  to all creditors.  As an incentive to encourage foreign
investment,   the   Ukraine  government   has  guaranteed   repayment  if,  upon
liquidation,  UEC  has  insufficient  funds  to  do  so.  This  special  funding
arrangement continues to exist but for presentation purposes is included as part
of  the  UEC  investment  account  on  the  balance  sheet.                     

NOTE 5
 CSMG GASTECH, LLC

In  2001  CSMG Gastech, LLC was formed in which the Company owns 89.7% interest.
The  consolidated  financial  statements  show  $206,000  in  Membership Capital
representing  the  investment  of 8 members.  Originally 10 membership interests
were sold but, due to an inquiry by the Texas Security Commission, each investor
was  given  the  opportunity  to  rescind their investment. Two memberships were
rescinded  requiring  two  $10,000  capital  contributions  with  interest to be
returned.  It was alleged that membership interests were sold without disclosing
that  Resource  Technology  Corporation, the company owing landfill contracts at
CO2  installation  sites,  was  in chapter 11 business reorganization.  Both the
Company  and  the  Texas Securities Commission contacted all investors and eight
memberships  reaffirming  their  investments.                                   

NOTE 6
 NOTES PAYABLE TO STOCKHOLDERS

Notes  to  shareholders  consist  of 48 short-term (generally one year) interest
bearing  unsecured  notes  with  varying maturity dates the most common interest
rate  being  11%  per  annum  on  the unpaid balance. On December 31, 2002 notes
payable  to shareholders totaled $2,492,039 with interest expense of $359,879 as
follows:                                                                        

                                                                [Download Table]

                                                    
a.  Cash  paid  to  noteholders            $  13,930
b.  Common stock  issued  for  interest      318,687
c.  Accrued  interest  through  12/31/02      27,262
                                           ---------
                                           $ 359,879

The  Company  currently owes Stonegate Management $691,940 in past due principal
and  interest  as  of December 31, 2002.  Specifically, four notes with original
principals of $362,000, $100,000, $53,000 and $115,000 (total $630,000) all came
due  in  2002  and  the  Company's  attorney  is  currently in negotiations with
Stonegate  to  restructure  a  repayment  schedule.  At  the date of the audit a
revised  payment  schedule  on  restructuring  agreement has not been finalized.

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 CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
AND SUBSIDIARIES
 NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002, DECEMBER 31, 2001

December 31, 2001 notes payable to shareholders totaled $1,655,777 with interest
expense  of  $221,629  as  follows:                                             

                                                                [Download Table]

                                                     
a.  Cash  paid  to  noteholders             $  20,249
b.  Common  stock  issued  for  interest       93,000
c.  Accrued  interest  through  12/31/01    $ 108,380
                                            ---------
                                            $ 221,629

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ITEM 9.     DIRECTORS,   EXECUTIVE   OFFICERS,  PROMOTERS  AND  CONTROL PERSONS;
COMPLIANCE  WITH  SECTION  16(a)  OF  THE EXCHANGE  ACT   

     Set forth below are the names and terms of office of each of the directors,
executive officers and significant employees of the company and a description of
the  business  experience  of  each.                                            

                                                                [Download Table]

                                                                 Director's
                                                       Director    Term    
      Person                 Positions  and  Offices     Since    Expires  
-----------------------      -----------------------   --------  ----------
                                                                           
Esmeralda  G.  Robbins,  58  Chairman  of the Board       1992     2003    
                             of  Directors                                 

Donald  S.  Robbins,  58     President,  Chief            1992     2003    
                             Executive  Officer  and                       
                             Director                                      

Gordon  W.  Allison,  76     Executive  Vice  Presi-      1992     2003    
                             dent,  Chief  Financial                       
                             Officer,  Secretary  and                      
                             Director                                      

James  Workman,  75          Director                     1998     2003    

     Esmeralda  G.  Robbins.  From  1979  to 1993 Mrs. Robbins worked as Product
Consultant  and  Salon  Coordinator  for  Corpus Christi Beauty Supply, a family
owned  business  that  covered   a  500-mile  radius.   Mrs.  Robbins  consulted
boutiques,  beauty,  and  barber  salons  providing  the  equipment and products
necessary  for  them to start a new salon.  Working with furniture manufacturers
and  product  technicians she also coordinated large-scale seminars to introduce
shop  owners and their employees to new products and ideas to improve and update
their  services.  Mrs.  Robbins  would also oversee the day-to-day operations of
the  business  along with other family members.  In 1993 the business was closed
due  to  the  declining  health  of  elder  family  members.  Mrs. Robbins is an
original  founder  of  Consortium  Service  Management  Group  and  has been its
Chairman  of  the  Board  since  1992.  She has worked full time for the company
since  1993.  She  is the spouse of Donald S. Robbins, president of the company.

     Donald S. Robbins, President and Chief Executive Officer.  Mr. Robbins is a
founder  of  our  company  and  currently  serves  as President, Chief Executive
Officer  and  Board  Member.  Mr.  Robbins  has  been instrumental in developing
relationships  with the company's foreign and domestic partners and oversees the
management  of  the  company,  as  well  as  any  new  technology  acquisitions,
evaluation  and  investment.  These  acquisitions have included state of the art
technologies, such as Live Soft Biological Tissue Bonding for humans and animals
and  CO2  separation  technologies  for  landfill gas and anaerobic animal waste
processing.  Prior  to  founding  our  company,  Mr.  Robbins  gained  extensive
experience  in  the  financial  services and insurance industries, where he held
numerous  licenses  such   as  Registered   Investment  Advisor  and  Registered
Principal.  He  was nationally recognized in the financial services industry and
has  lectured in public seminars as well as industry related symposiums.  During
his  22  years in the financial services industry, Mr. Robbins has received over

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140  awards  and  honors  including  numerous  "Man  of  the  Year"  awards from
multinational  financial  service  and insurance companies.  Mr. Robbins is also
President and CEO of Live Tissue Connect, Inc. and Chairman and CEO of Anaerobic
Farm Waste, Inc., both of which are subsidiaries of our company.  Mr. Robbins is
on the Supervisory Council of United Engineering Company and serves as a foreign
member  of the International Association of Welding of the E. O. Paton Institute
of Electric Welding National Academy of Sciences of Ukraine.  He devotes all his
time  to  the  affairs  of  our  company.                                       

     Gordon  W.  Allison,  Executive Vice President and Chief Financial Officer.
Mr.  Allison  is  a  founder  of  our  company  and serves as its Executive Vice
President, Chief Financial Officer and Board Member.  Mr. Allison is responsible
for  the  company's  public  regulatory issues and coordination, as well as U.S.
operations  when  Mr.  Robbins is out of the country. Mr. Allison also serves as
President  of  Anaerobic  Farm  Waste,  Inc.,  where  he  is responsible for the
company's  everyday  operations.  Mr.  Allison  has an exceptional track record,
with over 35 years in the insurance services industry, of which 28 years were in
executive  management level positions for public companies.  Mr. Allison is also
Secretary  Treasurer  and  CFO of Live Tissue Connect, Inc., a subsidiary of our
company.  Mr.  Allison  served  as  a  bank  director and served as a Trustee of
Oklahoma City University for 21 years.  He has received a number of industry and
public service honors and awards.  He devotes all his time to the affairs of our
company.                                                                        

     James  Workman.  An  agriculture entrepreneur and expert, James Workman has
spent  his  entire  working  life  in agriculture projects.  For 35 years he has
operated  and  owned  several thousand acres of farming.  He retired in 1993 and
sold his 26,000-acre farming operation in Mississippi specializing in soy beans,
rice, cotton, corn and wheat.  Prior to moving to Mississippi, James Workman had
operated  a  10,000-acre farm operation in Arkansas for a German company farming
rice,  cotton,  corn  and  soy  beans.  He  specialized  in  land clearing, land
precision leveling, drainage and irrigation for the German company.  Mr. Workman
has  worked  part  time  with  Consortium Service Management Group since January
1993.                                                                           

Compliance  with  Section  16(a)  of  the  Securities  Exchange  Act. 
--------------------------------------------------------------------- 

     Based  solely upon a review of Forms 3 and 4 furnished to the company under
Rule  16a-3(e) of the Securities Exchange Act during its most recent fiscal year
and Forms 5 furnished to the company with respect to its most recent fiscal year
and any written representations received by the company from persons required to
file  such  forms,  the  following  persons  -  either  officers,  directors  or
beneficial owners of more than ten percent of any class of equity of the company
registered  pursuant  to  Section  12 of the Securities Exchange Act - failed to
file  on  a  timely  basis  reports  required by Section 16(a) of the Securities
Exchange  Act  during  the  most  recent  fiscal  year  or  prior  fiscal years:

                                                                [Download Table]

                                                                No. of Failures 
                                           No. of Transactions     to File a    
                      No. of Late Reports  Not Timely Reported   Required Report
                      -------------------  -------------------  ----------------
                                                                                
Esmeralda G. Robbins         None                 None                 None     
Donald S. Robbins            None                 None                 None     
Gordon W. Allison            None                 None                 None     
James Workman                None                 None                 None     

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ITEM 10.     EXECUTIVE  COMPENSATION                                            

     Set forth below is the aggregate compensation during fiscal years 2000, and
2001  of  the  chief  executive  officer  of the company.  During the period, no
executive  officer  of the company received compensation that exceeded $100,000.

                                                                [Download Table]


            Name                 Fiscal Year  Annual Salary   Other Compensation
            ----                 -----------  -------------   ------------------
                                                                                
Donald S. Robbins, President         2002       $  69,514        $       0      
Gordon Allison, Exec. Vice Pres.     2002       $  32,356        $       0      
Donald S. Robbins, President         2001       $  99,678        $ 438,222      
Gordon Allison, Exec. Vice Pres.     2001       $  48,500        $ 317,333      
Donald S. Robbins, President         2000       $ 131,295          None         

     Set  forth  below  is information concerning each exercise of stock options
during  the  last  fiscal  year  by each of the named executive officers and the
fiscal  year-end values of unexercised options, provided on an aggregated basis:

                                                        [Enlarge/Download Table]

                                              No.  of  Shares                          
                                                Underlying       Value  of  Unexercised
                                           Unexercised  Options      In-the-Money      
                       Shares                 at  FY-End          Options  at  FY-End  
                      Acquired    Value       Exercisable/            Exercisable/     
       Name        or Exercised  Realized     Unexercisable           Unexercisable    
       ----        ------------  --------  --------------------  ----------------------
                                                                                       
Donald S. Robbins        0           0           725,000/0               $415,875/0    
Gordon W. Allison        0           0           725,000/0               $415,875/0    

     Directors  of  the  company  receive  no compensation for their services as
directors.                                                                      

ITEM 11.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND          
MANAGEMENT                                            

     The  table  below sets forth, as of March 31, 2003, the number of shares of
Common  Stock  of the company beneficially owned by each officer and director of
the  company,  individually  and  as  a  group,  and by each person known to the
company  to  be  the  beneficial  owner  of more than five percent of the Common
Stock.                                                                          

                                                                [Download Table]

                                              Number  of                
                                              Shares  of                
Name  and  Address                            Common  Stock      Percent
------------------                           --------------      -------
                                                                        
Esmeralda  G.  Robbins(1)(2)                    250,000            3.5  
701  CCNB  North  Tower                                                 
500  North  Shoreline                                                   
Corpus  Christi,  TX  78471                                             

Donald  S.  Robbins(2)(3)                     1,476,250           20.5  
701  CCNB  North  Tower                                                 
500  North  Shoreline                                                   
Corpus  Christi,  TX  78471                                             

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Gordon  W.  Allison(4)                        1,575,400           21.8  
P.  O.  Box  770304                                                     
Oklahoma  City,  Oklahoma  73177                                        

James  Workman                                   70,000            1.0  
1826  War  Eagle  Street                                                
North  Little  Rock,  AR  72116                                         

Officers  and  Directors                      3,371,650           46.8  
as  a  group  (4  persons)                                              
--------------------------                                              

(1)     These  shares  are  held  of  record  by the Esmeralda G. Robbins Family
Limited  Partnership.                                           

(2)     Esmeralda  G.  Robbins  and  Donald  S.  Robbins  are  wife and husband.

(3)     These  shares are held of record by the Donald S. Robbins Family Limited
Partnership.                                                    

(4)     341,600  of  these shares are held of record by Electronic Data Service,
        Inc.,  an  Oklahoma  corporation,  of  which  Mr. Allison is an officer,
director  and 100  percent  beneficial  shareholder.            

Changes  in  Control                                                            
--------------------                                                            

     There  are  no  arrangements which may result in a change in control of the
company.                                                                        

ITEM 12.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS                 

     There  have  been  no  transactions  during the past two years, or proposed
transactions,  to  which  our  company  was  or  is  to be a party, in which any
director,  executive  officer,  nominee  for election as a director, a holder of
more  than  five  percent  of  our voting stock or any member of their immediate
family  had  or  is  to  have  a  direct  or  indirect  material  interest.     

ITEM 13.     EXHIBITS  AND  REPORTS  ON  FORM  8-K                              

(a)     Exhibits                                                                

     The following exhibits are filed, by incorporation by reference, as part of
this  Form  10-KSB:                                                             

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Exhibit  No.                    Description                           
------------                    -----------                           
           3         -     Amended  and  Restated  Articles  of Incorporation of
                    Consortium  Service  Management  Group,  Inc.*

           3.1       -     Bylaws of  Consortium Service Management Group, Inc.*

          10         -     Founders'  Agreement  of  United Engineering Company*

       10.1       -     Statutes  (Bylaws)  of United Engineering Company*

          10.2       -     Agreement  of  April  24,  1996  between   Consortium
                           Service Management Group, Inc. and  The L Group, Inc.
                           concerning tissue bonding  technology*  (rescinded in
January  2000)            

          10.3       -     Agreement  of   July  9,  1996   between   Consortium
                           Service  Management  Group, Inc.  and   International
                    Welding concerning tissue bonding  technology*

          10.4       -     Agreement   among   Consortium   Service   Management
                           Group, Inc.,  United Engineering Company  and Ivan V.
                           Semenenko, the inventor of the anaerobic  farm  waste
technology*               

          10.5       -     Agreement  of  June 9, 1998 among  Consortium Service
                           Management  Group,  Inc.,   The  Sumy  Frunze Machine
                           Building  Science  and  Production  Association,  and
                           United  Engineering Company concerning  the anaerobic
farm waste technology*    

          10.6       -     Agreement  between   Consortium   Service  Management
                           Group,  Inc.   and   Western  Waste  Management, Inc.
                      concerning the anaerobic farm waste  technology*

          10.7       -     Agreement   between   Consortium  Service  Management
                           Group,  Inc.  and   Aardema  Dairy   concerning   the
      anaerobic farm waste technology*

          10.8       -     Agreement   between   Consortium  Service  Management
                           Group, Inc.  and John  and  Ruth  Beukers  concerning
          the anaerobic farm waste technology*

          10.9       -     Agreement  of  December  1998  between  International
                           Welding Association of  Kiev, Ukraine  and Consortium
                           Service Management Group, Inc. concerning  the carbon
     dioxide  separator  technology*

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          10.10      -     Operating  Agreement   o f  June  14,  2001   between
                           Consortium   Service  Management   Group,  Inc.   and
        Resource Technology Corporation***

          10.11      -     Contract Agreement Effective August 14,  2000 between
                           Consortium  Service  Management  Group/Anaerobic Farm
        Waste Co. and Rondeau Anaerobic***

          10.12      -     Contract     IAW-USA    002-PR-19.04.2000     between
                           International  Association  Welding,  Kiev  and  E.O.
                           Paton  Electric  Welding Institute  National  Academy
                           Science  Ukraine  and  Consortium  Service Management
Group,  Inc.***           

          10.13      -     Contract    IAW-USA     003-PR-19.04.2000     between
                           International  Association  Welding,  Kiev  and  E.O.
                           Paton  Electric  Welding Institute  National  Academy
                           Science  Ukraine  and  Consortium  Service Management
Group,  Inc.***           

          10.14      -     Contract    IAW-USA     004-PR-19.04.2000     between
                           International  Association  Welding,  Kiev  and  E.O.
                           Paton  Electric  Welding Institute  National  Academy
                           Science  Ukraine and  Consortium  Service  Management
Group,  Inc.***           

          10.15      -     Contract    IAW-USA     005-PR-19.04.2000     between
                           International  Association  Welding,  Kiev  and  E.O.
                           Paton  Electric  Welding Institute  National  Academy
                           Science  Ukraine  and  Consortium  Service Management
Group,  Inc.***           

          10.16      -     Contract    IAW-USA     006-PR-19.04.2000     between
                           International  Association  Welding,  Kiev  and  E.O.
                           Paton  Electric  Welding Institute  National  Academy
                           Science  Ukraine  and  Consortium  Service Management
Group,  Inc.***           

          10.17      -     Contract    IAW-USA     007-PR-19.04.2000     between
                           International  Association  Welding,  Kiev  and  E.O.
                           Paton  Electric  Welding Institute  National  Academy
                           Science  Ukraine  and  Consortium  Service Management
Group,  Inc.***           

          10.18      -     Contract    IAW-USA    008-PR  between  International
                           Association Welding,  Kiev,  Ukraine  and  Consortium
       Service Management Group, Inc.***

          10.19      -     Natural  Gas  Purchase Agreement  of  June  20,  2000
                           between  Texas  Energy  Transfer  Company,  Ltd.  and
   Resource Technology Corp.****

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          10.20      -     Agency  Agreement   between   Joint   Stock   Company
                           "Sumy Frunze Machine-Building Science and  Production
                           Association"  of  Ukraine  and   Consortium   Service
Management  Group,  Inc.  

          16         -     Letter  dated January 29, 2000 from Jaak (Jack) Olesk
                           to Consortium  Service  Management  Group,  Inc.  Re:
Termination as Auditor**  

          99         -     Ukraine  Ministry   of  Health,   State   Department,
                           Certificate of  State  Registration  No.  1105-193***

*Previously  filed  with  Form  10-SB;  Commission  File  No.  0-27359
incorporated herein.                                                  

     **Previously  filed with Amendment No. 1 to Form 10-SB; Commission File No.
0-27359  incorporated  herein.                                        

     ***Previously filed with Amendment No. 2 to Form 10-SB; Commission File No.
0-27359  incorporated  herein.                                        

     ****Previously  filed  with  Amendment  No. 1 to Form 10-QSB for the period
     ended  September 30, 2002; Commission File No. 0-27359 incorporated herein.

(b)     Reports  on  Form  8-K                                                  

None                                                            

ITEM 14.     CONTROLS AND PROCEDURES                                            

     Evaluation of disclosure controls and procedures.  We maintain controls and
procedures  designed to ensure that information required to be disclosed in this
report  is  recorded, processed, accumulated and communicated to our management,
including  our chief executive officer and our chief financial officer, to allow
timely decisions regarding the required disclosure.  Within the 90 days prior to
the  filing  date  of this report, our management, with the participation of our
chief  executive  officer and chief financial officer, carried out an evaluation
of  the  effectiveness  of the design and operation of these disclosure controls
and  procedures.  Our  chief  executive  officer  and  chief  financial  officer
concluded,  as  of  fifteen  days  prior to the filing date of this report, that
these  disclosure  controls  and  procedures  are  effective.                   

     Changes  in  internal  controls.  Subsequent  to  the  date  of  the  above
evaluation,  we made no significant changes in our internal controls or in other
factors  that  could  significantly  affect  these controls, nor did we take any
corrective  action,  as  the  evaluation revealed no significant deficiencies or
material  weaknesses.                                                           

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SIGNATURES

     In accordance with Section 15(d) of the Exchange Act, the registrant caused
this  report  to  be  signed  on  its  behalf by the undersigned, thereunto duly
authorized.                                                                     

                             CONSORTIUM  SERVICE  MANAGEMENT
          GROUP,  INC.

                         By:/s/  Donald  S.  Robbins
Date:  April  15,  2003                   --------------------------------------
                                         Donald  S.  Robbins,  Chief Executive
               Officer

     In  accordance  with  the  Exchange Act, this report has been signed by the
following  persons  on behalf of the registrant and in the capacities and on the
dates  indicated.                                                               

                      /s/  Donald  S.  Robbins
Date:  April  15,  2003                -----------------------------------------
                                     Donald  S.  Robbins,  President,  Chief
                                   Executive  Officer  and  Director

                         /s/  Esmeralda  G.  Robbins
Date:  April  15,  2003                -----------------------------------------
                                       Esmeralda G.  Robbins,  Chairman  of  the
                      Board  and  Director

                      /s/  Gordon  W.  Allison
Date:  April  15,  2003                -----------------------------------------
                                   Gordon  W.  Allison,  Chief Financial
                       Officer and  Director

                 /s/  James  Workman
Date:  April  15,  2003                -----------------------------------------
                       James  Workman,  Director

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 CERTIFICATION PURSUANT TO
 SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

I,  Donald  S. Robbins, Chief Executive Officer of the registrant, certify that:

     1.     I  have  reviewed  this  annual  report on Form 10-KSB of Consortium
Service  Management  Group,  Inc.;                                              

     2.     Based  on  my  knowledge,  this  annual  report does not contain any
untrue  statement  of a material fact or omit to state a material fact necessary
to  make  the  statements  made,  in light of the circumstances under which such
statements  were made, not misleading with respect to the period covered by this
annual  report;                                                                 

     3.     Based on my knowledge, the financial statements, and other financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods  presented  in  this annual report;

     4.     The registrant's other certifying officers and I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  have:    

            a.   designed such disclosure controls and procedures to ensure that
material  information  relating  to  the  registrant, including its consolidated
subsidiaries,  is made known to us by others within those entities, particularly
during  the  period  in  which  this  annual  report  is  being  prepared;      

            b.   evaluated  the  effectiveness  of  the  registrant's disclosure
controls  and procedures as of a date within 90 days prior to the filing date of
this  annual  report  (the  "Evaluation  Date");  and                           

            c.   presented  in  this  annual  report  our  conclusions about the
effectiveness  of the disclosure controls and procedures based on our evaluation
as  of  the  Evaluation  Date;                                                  

     5.     The  registrant's  other  certifying  officers and I have disclosed,
based  on our most recent evaluation, to the registrant's auditors and the audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent  functions):                                                         

            a.   all  significant  deficiencies  in  the  design or operation of
internal  controls  which  could  adversely  affect  the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and 

            b.   any fraud, whether or not material, that involves management or
other  employees  who  have  a  significant  role  in  the registrant's internal
controls;  and                                                                  

     6.     The  registrant's  other certifying officers and I have indicated in
this  annual  report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.               

Date:  April  15,  2003                                                         
                      /s/  Donald  S.  Robbins
                                       -----------------------------------------
                 Donald  S.  Robbins
                           Chief  Executive  Officer

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 CERTIFICATION PURSUANT TO
 SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

I,  Gordon  W. Allison, Chief Financial Officer of the registrant, certify that:

     1.     I  have  reviewed  this  annual  report on Form 10-KSB of Consortium
Service  Management  Group,  Inc.;                                              

     2.     Based  on  my  knowledge,  this  annual  report does not contain any
untrue  statement  of a material fact or omit to state a material fact necessary
to  make  the  statements  made,  in light of the circumstances under which such
statements  were made, not misleading with respect to the period covered by this
annual  report;                                                                 

     3.     Based on my knowledge, the financial statements, and other financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods  presented  in  this annual report;

     4.     The registrant's other certifying officers and I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  have:    

            a.   designed such disclosure controls and procedures to ensure that
material  information  relating  to  the  registrant, including its consolidated
subsidiaries,  is made known to us by others within those entities, particularly
during  the  period  in  which  this  annual  report  is  being  prepared;      

            b.   evaluated  the  effectiveness  of  the  registrant's disclosure
controls  and procedures as of a date within 90 days prior to the filing date of
this  annual  report  (the  "Evaluation  Date");  and                           

            c.   presented  in  this  annual  report  our  conclusions about the
effectiveness  of the disclosure controls and procedures based on our evaluation
as  of  the  Evaluation  Date;                                                  

     5.     The  registrant's  other  certifying  officers and I have disclosed,
based  on our most recent evaluation, to the registrant's auditors and the audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent  functions):                                                         

            a.   all  significant  deficiencies  in  the  design or operation of
internal  controls  which  could  adversely  affect  the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and 

            b.   any fraud, whether or not material, that involves management or
other  employees  who  have  a  significant  role  in  the registrant's internal
controls;  and                                                                  

     6.     The  registrant's  other certifying officers and I have indicated in
this  annual  report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.               

Date:  April  15,  2003                                                         
                      /s/  Gordon  W.  Allison
                                       -----------------------------------------
                 Gordon  W.  Allison
                           Chief  Financial  Officer

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 CERTIFICATION PURSUANT TO
 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

     In  connection  with  the  accompanying Annual Report of Consortium Service
Management  Group,  Inc.,  (the  "Company")  on  Form  10-KSB for the year ended
December  31, 2002 (the "Report"), I, Donald S. Robbins, Chief Executive Officer
of  the  Company,  hereby  certify  that  to  my  knowledge:                    

     (1)     The Report fully complies with the requirements of Section 13(a) or
15(d)  of  the  Securities Exchange Act of 1934 (15 U.S.C.  78m or  78o(d)); and

     (2)     The  information  contained  in  the Report fairly presents, in all
material  respects,  the  financial  condition  and results of operations of the
Company.                                                                        

                      /s/  Donald  S.  Robbins
Dated:  April  15,  2003               -----------------------------------------
                 Donald  S.  Robbins
                                       President  and  Chief  Executive  Officer

     The  above certification is furnished solely pursuant to Section 906 of the
Sarbanes-Oxley  Act  of 2002 (18 U.S.C.  1350) and is not being filed as part of
the  Form  10-K  or  as  a  separate  disclosure  document.                     

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 CERTIFICATION PURSUANT TO
 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

     In  connection  with  the  accompanying Annual Report of Consortium Service
Management  Group,  Inc.,  (the  "Company")  on  Form  10-KSB for the year ended
December  31, 2002 (the "Report"), I, Gordon W. Allison, Chief Financial Officer
of  the  Company,  hereby  certify  that  to  my  knowledge:                    

     (1)     The Report fully complies with the requirements of Section 13(a) or
15(d)  of  the  Securities Exchange Act of 1934 (15 U.S.C.  78m or  78o(d)); and

     (2)     The  information  contained  in  the Report fairly presents, in all
material  respects,  the  financial  condition  and results of operations of the
Company.                                                                        

                      /s/  Gordon  W.  Allison
Dated:  April  15,  2003               ---------------------------------------- 
                 Gordon  W.  Allison
                       Chief  Financial  Officer

     The  above certification is furnished solely pursuant to Section 906 of the
Sarbanes-Oxley  Act  of 2002 (18 U.S.C.  1350) and is not being filed as part of
the  Form  10-K  or  as  a  separate  disclosure  document.                     

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 Consortium Service Management Group, Inc.
Commission File No. 0-27359 

 EXHIBIT INDEX

FORM 10-KSB 
For the fiscal year ended December 31, 2002 

     The following exhibits are filed, by incorporation by reference, as part of
this  Form  10-KSB:                                                             

Exhibit  No.                    Description                           
------------                    -----------                           
           3         -     Amended  and  Restated  Articles  of Incorporation of
                    Consortium  Service  Management  Group,  Inc.*

           3.1       -     Bylaws of  Consortium Service Management Group, Inc.*

          10         -     Founders'  Agreement  of  United Engineering Company*

       10.1       -     Statutes  (Bylaws)  of United Engineering Company*

          10.2       -     Agreement  of  April  24,  1996  between   Consortium
                           Service Management Group, Inc. and  The L Group, Inc.
                           concerning tissue bonding  technology*  (rescinded in
January  2000)            

          10.3       -     Agreement  of   July  9,  1996   between   Consortium
                           Service  Management  Group, Inc.  and   International
                    Welding concerning tissue bonding  technology*

          10.4       -     Agreement   among   Consortium   Service   Management
                           Group, Inc.,  United Engineering Company  and Ivan V.
                           Semenenko, the inventor of the anaerobic  farm  waste
technology*               

          10.5       -     Agreement  of  June 9, 1998 among  Consortium Service
                           Management  Group,  Inc.,   The  Sumy  Frunze Machine
                           Building  Science  and  Production  Association,  and
                           United  Engineering Company concerning  the anaerobic
farm waste technology*    

          10.6       -     Agreement  between   Consortium   Service  Management
                           Group,  Inc.   and   Western  Waste  Management, Inc.
                      concerning the anaerobic farm waste  technology*

          10.7       -     Agreement   between   Consortium  Service  Management
                           Group,  Inc.  and   Aardema  Dairy   concerning   the
      anaerobic farm waste technology*

          10.8       -     Agreement   between   Consortium  Service  Management
                           Group, Inc.  and John  and  Ruth  Beukers  concerning
          the anaerobic farm waste technology*

          10.9       -     Agreement  of  December  1998  between  International
                           Welding Association of  Kiev, Ukraine  and Consortium
                           Service Management Group, Inc. concerning  the carbon
     dioxide  separator  technology*

          10.10      -     Operating  Agreement   o f  June  14,  2001   between
                           Consortium   Service  Management   Group,  Inc.   and
        Resource Technology Corporation***

          10.11      -     Contract Agreement Effective August 14,  2000 between
                           Consortium  Service  Management  Group/Anaerobic Farm
        Waste Co. and Rondeau Anaerobic***

          10.12      -     Contract     IAW-USA    002-PR-19.04.2000     between
                           International  Association  Welding,  Kiev  and  E.O.
                           Paton  Electric  Welding Institute  National  Academy
                           Science  Ukraine  and  Consortium  Service Management
Group,  Inc.***           

          10.13      -     Contract    IAW-USA     003-PR-19.04.2000     between
                           International  Association  Welding,  Kiev  and  E.O.
                           Paton  Electric  Welding Institute  National  Academy
                           Science  Ukraine  and  Consortium  Service Management
Group,  Inc.***           

          10.14      -     Contract    IAW-USA     004-PR-19.04.2000     between
                           International  Association  Welding,  Kiev  and  E.O.
                           Paton  Electric  Welding Institute  National  Academy
                           Science  Ukraine and  Consortium  Service  Management
Group,  Inc.***           

          10.15      -     Contract    IAW-USA     005-PR-19.04.2000     between
                           International  Association  Welding,  Kiev  and  E.O.
                           Paton  Electric  Welding Institute  National  Academy
                           Science  Ukraine  and  Consortium  Service Management
Group,  Inc.***           

          10.16      -     Contract    IAW-USA     006-PR-19.04.2000     between
                           International  Association  Welding,  Kiev  and  E.O.
                           Paton  Electric  Welding Institute  National  Academy
                           Science  Ukraine  and  Consortium  Service Management
Group,  Inc.***           

          10.17      -     Contract    IAW-USA     007-PR-19.04.2000     between
                           International  Association  Welding,  Kiev  and  E.O.
                           Paton  Electric  Welding Institute  National  Academy
                           Science  Ukraine  and  Consortium  Service Management
Group,  Inc.***           

          10.18      -     Contract    IAW-USA    008-PR  between  International
                           Association Welding,  Kiev,  Ukraine  and  Consortium
       Service Management Group, Inc.***

          10.19      -     Natural  Gas  Purchase Agreement  of  June  20,  2000
                           between  Texas  Energy  Transfer  Company,  Ltd.  and
   Resource Technology Corp.****

          10.20      -     Agency  Agreement   between   Joint   Stock   Company
                           "Sumy Frunze Machine-Building Science and  Production
                           Association"  of  Ukraine  and   Consortium   Service
Management  Group,  Inc.  

          16         -     Letter  dated January 29, 2000 from Jaak (Jack) Olesk
                           to Consortium  Service  Management  Group,  Inc.  Re:
Termination as Auditor**  

          99         -     Ukraine  Ministry   of  Health,   State   Department,
                           Certificate of  State  Registration  No.  1105-193***

*Previously  filed  with  Form  10-SB;  Commission  File  No.  0-27359
incorporated herein.                                                  

     **Previously  filed with Amendment No. 1 to Form 10-SB; Commission File No.
0-27359  incorporated  herein.                                        

     ***Previously filed with Amendment No. 2 to Form 10-SB; Commission File No.
0-27359  incorporated  herein.                                        

     ****Previously  filed  with  Amendment  No. 1 to Form 10-QSB for the period
     ended  September 30, 2002; Commission File No. 0-27359 incorporated herein.

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AGENCY AGREEMENT No. __________ 

                                                                   Ukraine, Sumy
                                                                          , 2002
                                                       -------------

Joint  Stock  Company  "Sumy  Frunze  Machine-Building  Science  and  Production
Association"  of  Ukraine, hereinafter referred to as the "The Principal" on the
one  part,  and  Consortium  Service  Management  Group,  Inc., United States of
America,  hereinafter  referred  to  as Agent and "The Agent" on the other part,
hereinafter  jointly  referred  to  as  "Parties", have entered into the present
Agreement  hereinafter  referred  to  as  "AGREEMENT"  as provided herein below:

1.   AGREEMENT  Subject                                                         

     1.1.    The  Principal  entrusts  and  the   Agent  hereby   undertakes  to
represent  the Principal as an exclusive Agent to represent the Principal and to
render  services  as  to  selling  the Equipment manufactured by Principal's and
provided  in  Attachment  No.  1  to  AGREEMENT  being an integral part therein,
hereinafter  referred  to  as  "EQUIPMENT"  within  the boundaries of the United
States of America, Mexico and Canada hereinafter referred to as the "TERRITORY",
as  well  as  related  services,  such as commissioning, start-up, bringing into
operation,  personal  training and after-sales services, hereinafter referred to
as  "SERVICES".                                                                 

     1.2.    The Agent,  will act the part of the Principal on the TERRITORY and
will  act in accordance with AGREEMENT and mutual written agreements between the
Agent  and  the  Principal.                                                     

     1.3.    The  Agent  will  have the right to offer the Principal's EQUIPMENT
to  the  Buyers  outside the TERRITORY where the AGREEMENT is currently in force
with  the  written  consent  of  the  Principal.                                

     1.4.    It  will be a  breach of rights entitled to the Agent in accordance
with  the AGREEMENT during selling of the EQUIPMENT or rendering SERVICES by the
Principal  on  the  TERRITORY  directly  to  third  parties.                    

2.   Agent's  Obligations                                                       

   For  the  duration  of  the  present  Agreement,  the  Agent  undertakes:

     2.1.    To  safeguard bonafidely  the Principal's commercial, financial and
other  interests.                                                               

2.2.    To  act  in  full  cooperation  with  the  Principal.         

     2.3.    Not to represent  directly or indirectly on the TERRITORY any other
firm  competing  with  the  Principal  without  the  Principal's  consent.      

                                                                   Exhibit 10.20
                                                               Page 1 of 8 Pages

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     2.4.    To deal with  the Buyers in state and private sections and keep the
Principal informed about all offers for the EQUIPMENT and SERVICES purchases and
to  take  measures  for  increase  in  sales  volume.                           

     2.5.    To  render  assistance  to  the Principal in amicable regulating of
the  possible  claims  and  disputes.                                           

     2.6.    To  negotiate  with  the  Buyers and to participate in coordinating
the terms of trade transactions on the basis of the Principal's draft contracts.

     2.7.    To coordinate with  the Principal tenders declared on the TERRITORY
in  due  time  in  order  for  the Principal to provide Agent with the documents
necessary  for  participation.                                                  

     2.8.    To  participate  in  tenders  having the authority of the Principal
and  to  inform  him  about  the  results  of  their  activity.                 

     2.9.    To  assist  in  earnest the proper fulfillment by the Buyers of the
contract  obligations,  in  particular  to render assistance to the Principal in
realization  of  payments  from  the  Buyers  under  the  concluded  contracts. 

     2.10.   To  qualify  the  Buyers financial situation, assist in structuring
the  buyers equipment financing and inform, in this respect, the Principal about
all  possible  cases  of  damages  to  the  Principal.                          

     2.11.   Not  to  disclose  confidential  and  other  data of the Principals
supplied  to  him  in  the  course  of  its  activity  as  intermediary.        

     2.12.   To  organize  systematically,  at  his own expense, the advertising
of the EQUIPMENT in such form and to such event that successful marketing of the
EQUIPMENT  on  the TERRITORY should be ensured using for this purpose the press,
radio,  TV,  cinema,  catalogues  and  other  means  of  on the basis of printed
material  provided  by  the Principal, to demonstrate the EQUIPMENT in operation
using  International  and  special  Exhibitions  and  Fairs  on  the  TERRITORY.

     2.13.   Each  quarter  of  the year to inform the Principal of the market's
developments  on  the  TERRITORY  including   the  developments  of  legislative
character  which  concern  the foreign trade and agency agreements and represent
the  interests  to  the  Principal.  The  information  have  to be confirmed, if
possible  by  the  price  lists,  offers,  contracts  and legislative documents.

     2.14.   Annually  in  January/July  to  submit  to  Principal report on the
activity  of  Agent on the marketing of the EQUIPMENT sold on the TERRITORY, and
to  provide  Principal  with the information about the development of the market
and  about  the  activity of competitors of the EQUIPMENT in the issue of prices
and  conditions  of  its  selling.                                              

     2.15.   Develop  a  sales  force  for  the  agent to market the Principal's
equipment.                                                                      

                                                                   Exhibit 10.20
                                                               Page 2 of 8 Pages

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     2.16.   Arrange  for  personnel  to  travel  to  Sumy  FRUNZE  for  product
orientation,  technical  training  and  instructions for equipment operators and
service.                                                                        

     2.17.   Agent  may  order and  resale  Principal's equipment or deal direct
with  customer  and  Principal  without  being  in  violation of this agreement.

     2.18.   Agent  has  the  right  to arrange financing for customer or dealer
in  purchasing  Principal's  equipment.                                         

3.   Principal's  Obligations                                                   

For  the  duration  of  the  AGREEMENT  the  Principal  undertakes:   

     3.1.    To render  earnest assistance to the Agent in the increasing volume
of  sales  on  the  TERRITORY  and  finding  new  ways  of  the  EQUIPMENT trade
development.                                                                    

     3.2.    Immediately  inform the Agent about the production of new EQUIPMENT
developed,  types  of  modification  of  the  existing ones, if possible, as per
demand  on  the  TERRITORY.                                                     

     3.3.    To  make  over  to  the Agent materials necessary for advertisement
and  sales  of  the  EQUIPMENT;  catalogues, drawings, technical documents, etc.

     3.4.    To  inform  the  Agent well in advance of the Principal's intention
to  participate  in  tenders.                                                   

     3.5.    To  send  its  specialists  to  the   Agreed  Territory  to  render
technical  assistance  to  the  Buyers  in  assembling,  erection,  putting into
operation  and  service,  if  required  or  on  the basis of separate contracts.

     3.6.    Provide  technical  training   and  instructions  for equipment and
operation  and  service to Agent's personnel at the FRUNZE plant in SUMY Ukraine
or  in  the  territory  as  agreed  by  both  parties.                          

     3.7.    Provide  assistance  to  Agent  in  thorough  project  planning and
equipment  technical  design  as  needed  by  dealer to compete in the design as
needed  by  dealer  to  compete  in  the  North  American  Market.              

     3.8.    Provide  in-depth  assistance to Agent's personnel for servicing of
principal's  warranty  issues.                                                  

4.   Agent's  remuneration                                                      

     4.1.    For  the  fulfillment of its obligations under the Agreement and if
any  contracts are concluded between the Principal and Agent or buyer due to the

                                                                   Exhibit 10.20
                                                               Page 3 of 8 Pages

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Agent's activity, the Agent will be entitled a commission fee, the rate of which
is  subject  to reconciliation of the parties in each particular case by signing
the  additional  agreements.                                                    

             The agreed rate will be valid if the EQUIPMENT or SERVICES are sold
at prices not lower than those ones agreed between the Parties before signing of
a  contract  (submission  of  tender  quotation).                               

             Any  cases  of  selling  EQUIPMENT or SERVICES at prices lower than
those  agreed  between  the Parties must be subject to additional reconciliation
between  Parties.                                                               

             If in the course  of  contractual  negotiations  the  price  of the
EQUIPMENT  or SERVICES is reduced, and, respectively, the price of the concluded
contract appears to be lower than the one preliminary agreed by the Parties, the
Agent  will  be  entitle  a commission rate proportionally reduced compared with
initially  agreed.                                                              

     4.2.    The  commission  fee  is  paid  to  the  Agent's  bank  account  by
installments  in  proportion  to  payments  received by the Principal from final
buyer.  Each  installment  will  be  paid  within thirty (30) days following the
receipt by the Principal of his share of the total amount due under the contract
with  final  buyer.                                                             

     4.3.    Should  Agent  purchase  equipment  in  its  own account for resale
Agent  shall  retain  all  remuneration  between  agent's  purchase  price  from
Principal  and  agent's  resale  price.  In this event Agent will be Principal's
customer.                                                                       

     4.4.    All  banking  expenses related  to the Agreement implementation out
of  the  Territory  are  born  by  the  Principal.                              

4.5.    The  type  of  payment  documents  -  bank  order.            

4.6.    Payment  currency  is  US  Dollars.                           

     4.7.    The  Agent  is  obliged  to submit to the Principal by April 2003 a
written  confirmation  that  the  Agent  is  a  resident  of  the USA, issued in
accordance  with  the  form approved by the Order of the Cabinet of Ministers of
Ukraine  #470  dated May 6, 2001 or with the form established by the legislation
of  USA.                                                                        

             In  case  when the  Agent does not submit to the Principal by April
2003 the  document stipulated in item 4.4 of the Agency Agreement, the Principal
will keep back and transfer in established  manner  to the budget of Ukraine the
repatriation  tax  form  the  agency  commission  in  the   amount  of  15%   of
remuneration.                                                                   

5.   Arbitration                                                                

     5.1.    Both Parties  will take all the measures to settle amicably all the
disputes  and  differences  arising  from  or connected with the AGREEMENT.  For
disputes  in  Ukraine  settlement  shall  be  by a court of arbitration in World

                                                                   Exhibit 10.20
                                                               Page 4 of 8 Pages

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International  Commercial  Arbitral Court of Chamber of Commerce and Industry of
Ukraine  according  to the Procedure of this Legal Body and mutually agreed upon
by both Parties.  Arbitration shall be final and binding upon both Parties.  For
dispute  outside Ukraine settlement shall be by in the Texas State court, Nueces
County according to the Procedure of this Legal Body and mutually agreed upon by
both  Parties.  Arbitration  shall  be  final  and  binding  upon  both Parties.

6.   Force-majeure                                                              

     6.1.    Should  circumstances  arise  which  prevent either  of the Parties
from,  complete or partial fulfillment of their obligations under the AGREEMENT,
such  as  fire,  acts  of  elements,  war,  military  operations  of any nature,
blockage,  export  or import prohibitions, or strike in the country, accident in
the  plant  other circumstances beyond the control of the parties concerned, the
date  of  fulfillment  of their obligations will be postponed in accordance with
the  time  during  such  circumstances  prevail.                                

     6.2.    If the above  circumstances are in force for over 6 months, each of
the  Parties have the right to refuse the fulfillment of their obligations under
the  AGREEMENT.                                                                 

7.   Other  Conditions                                                          

     7.1.    The Contracts  will be concluded directly between the Agent and the
Buyer  of  the  EQUIPMENT  and  SERVICES.                                       

     7.2.    All negotiations  and correspondence between the Parties concerning
the  subject of the AGREEMENT that have take place prior to its signing shall be
considered  null  and  void  from  the  day  of  its  signing.                  

     7.3.    Any  amendments or  supplements to the AGREEMENT will be valid only
if  they are made in by duly authorized representatives of writing and signed by
both  Parties.                                                                  

     7.4.    Neither  the Principal  nor the Agent shall be entitled to transfer
its  rights  and  obligations under the AGREEMENT to any third party without the
written consent of the other Party.  However Agent has the right to transfer its
rights  under  this  agreement  to a Subsidiary of the Agent established for the
purpose  marketing  equipment and promotion of Principals products, services and
name.                                                                           

     7.5.    Upon expiration of the AGREEMENT, all  materials supplied by either
Party  for  which  no  payment  has been made shall be returned to the supplying
Party.                                                                          

     7.6.    All taxes, fees,  duties and all the other expenses, connected with
execution  and  fulfillment  of  the  AGREEMENT and contracts on the Principal's
territory  shall be paid by Principal, and out of Principal's territory shall be
paid  by  the  Agent.                                                           

     7.7.    The  Agent  shall  use  its  best  efforts  to achieve annual sales
exceeding  1  000  000  (One  Million)  US  Dollars.                            

                                                                   Exhibit 10.20
                                                               Page 5 of 8 Pages

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8.   The  Term  of  Validity  of  AGREEMENT                                     

     8.1.    AGREEMENT  shall  enter  into  force  upon  its  execution  by both
Parties  and  shall remain in force for a period of ten (10) years from the date
of  execution  and  will be renewed automatically with 10 year extensions unless
some  of  the  parties  inform  by register letter to the other the intention to
cancelled  three  months  before  expiration  date.                             

     8.2.    This  AGREEMENT  may  be  terminated  by  either Party if the other
Party  violates  the material terms of the AGREEMENT and such violation does not
stop  within  three (3) month period of cure following notice given by the Party
alleging  the violation.  All notices under the AGREEMENT shall be in writing in
the  English  or  Russian  language  and  sent  by messenger, prepaid registered
airmail,  or  by confirmed facsimile to the address of the Party being notified.

     8.3.    Irrespective  of   the  expiration   of  the   AGREEMENT   or   its
cancellation  the  Parties are to fulfill their obligations during the period of
its  validity.                                                                  

     8.4.    This  AGREEMENT  shall  be  governed  by Ukrainian material law for
issues  within  the Ukraine and U.S. law for issues outside the Ukraine and U.S.
law  for  issues  outside  the  Ukraine.                                        

     8.5.    If  one  or  several  provisions  of  the  AGREEMENT shall be found
invalid,  illegal,  or  unenforceable,  this  shall  not  effect  the  validity,
legality,  or  enforceability  of the other provisions of the AGREEMENT, and the
Parties shall pay every effort to substitute a new, legally effective provisions
for  any  invalid  one.                                                         

     8.6.    Both  parties  agree  to  cooperate  in  adding  addendums  to  the
agreement  as  needed  to  insure  the  success of the business described in the
agreement.                                                                      

     8.7.    The  AGREEMENT is executed  in 2 (two) originals, simultaneously in
English  and  Russian  language,  the one original - to each of the parties.  If
there  are  any  discrepancies  between  English  and  Russian,  English wording
prevails.  Each  copy  has  equal  legal  force.                                

9.   Legal  addresses  of  the  Parties:                                        

9.1.    The  Principal                                                
----------------------                                                

JSC  "Sumy  Frunze  NPO"                              
58,  Gorkogo  St.,  40004,  Sumy,  Ukraine            
Tel     38  0542  24  36  66,  38  0542  21  09  66   
Fax     38  0542  24  34  57                          
e-mail:  fortrade@frunze.com.ua                       

                                                                   Exhibit 10.20
                                                               Page 6 of 8 Pages

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9.2.     The  Agent:                                                  
--------------------                                                  

Consortium  Service  Management  Group,  Inc.         
701  CCNB  North  Tower,  500  N.  Shoreline          
Corpus  Christi,  Texas  78471  USA                   
Tel     1  361  887  75  46                           
Fax     361  884  07  92                              
e-mail:  csmg@sbcglobal.net                           

Principal/          

 /s/  V.M.  Lukyanenko

V.M.  Lukyanenko    
                              Chairman  of  the  Board,   acting  on  the  basis
 of  Statute

Agent/Azeum:        

    /s/  Donald  S.  Robbins

   D.S.  Robbins/[Russian]
                              President  and  CEO acting on the basis of Charter
[Russian]           

                                                                   Exhibit 10.20
                                                               Page 7 of 8 Pages

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                                            Attachment No. 1 to Agency Agreement
                                             No. ________ dated ___________ 2002

        The  list  of  equipment  manufactured  by  the  Principal

1.   EQUIPMENT  FOR  OIL  AND  GAS  PRODUCTION  AND  PROCESSING                 
Gas  transfer  turbocompressor  packages  with  spare  parts          
Automated  compressor  stations  and  plants                          
Shut-off  valves                                                      
Condensate  processing  plant                                         
Well  workover  rig                                                   
  Clay  separator  for  drilling  waste  cleaning  (on  centrifuge  basis)
Gas  preparation  plant                                               
Equipment  for  oil  terminals                                        
2.   EQUIPMENT  FOR  TRANSFER  OF MOTOR TRANSPORT TO NATURAL AND LIQUEFIED GAS  
Gas-filling  compressor  stations  AGNKS                              
Vehicle  gas-fuelling  compressor  stations  AGZS                     
Mobile  gas  fuelers                                                  
Block-container  sections                                             
3.   EQUIPMENT  FOR  CHEMICAL  PLANTS                                           
Pressurized  vessels  equipment                                       
Heat  exchangers                                                      
Column  apparatus                                                     
4.   COMPRESSORS                                                                
Compressors  for  oil  refining  industry                             
Compressors  for  natural  and  casing-head  gas  compression         
Compressors  for  liquefied  gases  production                        
Compressors  for  polyethylene  production                            
Compressors  for  mineral  fertilisers  production                    
Compressors  for  gas-filling  stations                               
   Air  compressors  of  general  industrial  purpose  and  special  purpose
Screw  compressors  for  industrial  refrigerating  installations     
Mobile  compressor  units                                             
Liquid-packed  ring  compressors                                      
5.   PUMPS                                                                      
Pumps  for  nuclear  power  stations                                  
Pumps  of  general  industrial  purpose                               
6.   OTHER  EQUIPMENT                                                           
Landfill  systems                                                     
Equipment  for  aluminum  production                                  
Air  cooling  equipment                                               
Balancing  equipment                                                  
Production  of  extruded  profiles  made  of  aluminum  alloys        
Heat  and  sound  insulating  materials  and  their  products         

7.   Agent  may  sell  the  Principal's Kellys and Collars in the territory on a
non-exclusive  basis.                                                           

The  Principal:                              The  Agent:                        

/s/  V.M.  Lukyanenko                        /s/  Donald  S.  Robbins           
----------------------------------           -----------------------------------
V.M.  Lukyanenko                             D.S.  Robbins                      
Chairman  of  the  Board                     President  and  CEO                

                                                                   Exhibit 10.20
                                                               Page 8 of 8 Pages

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘ARS’ Filing		Date		First		Last			Other Filings
		6/4/19		11
Filed on / Effective on:		11/5/03		1					DEF 14A
		4/15/03		42		46			10KSB
		4/8/03		23
		4/7/03		3
		4/3/03		3		18
		3/31/03		37					10QSB,  NT 10-Q
		1/16/03		17
For Period End:		12/31/02		1		47			10KSB,  DEF 14A,  NT 10-K
		9/30/02		41		47			10QSB,  10QSB/A,  NT 10-Q
		1/1/02		28
		12/31/01		22		34			10KSB,  10KSB/A,  NT 10-K
		11/22/01		14
		6/14/01		40		47
		5/6/01		51
		1/1/01		27		28
		12/31/00		33					10KSB,  10KSB/A
		9/29/00		31
		8/14/00		40		47
		6/20/00		40		47
		1/29/00		41		47
		1/1/00		22
		12/31/99		32					10KSB,  NT 10-K
		11/15/99		17
		6/9/98		39		47
		4/21/98		17
		7/9/96		39		47
		4/24/96		39		47
		12/28/95		31
		11/17/92		6		29
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