(a) 1) Transcend Services, Inc. ("Transcend") entered into an initial agreement with the Development Corporation of Abilene ("DCOA") on March 1, 2005 which was amended June 6, 2006. An Agreement for Financial Assistance by and between DCOA and Transcend effective December 1, 2008 (the "Agreement") was executed on December 26, 2008. The original note as amended is cancelled and replaced by the new note described herein.

(a) (2) Under the terms of the Agreement, DCOA has authorized a principal reduction of $101,714.50 in exchange for agreement by Transcend to retire the debt three years earlier than agreed and the cancellation of potential future credits earned through training and job creation. This principal reduction results in a new note amount of $550,000 as of December 31, 2008. Transcend will pay DCOA six quarterly payments of $91,666.67 commencing January 1, 2009 with the final payment due April 1, 2010 to satisfy the remaining principal amount. The note will continue to carry a zero interest rate.

(d) The following exhibits are filed with this current report on Form 8-K:

Exhibit No.   Description
99.1          Promissory Note between Transcend Services, Inc. and Development
              Corporation of Abilene, Inc.