UNITED STATES
            SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

                                   FORM 10-KSB


              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                    FOR THE FISCAL YEAR ENDED MARCH 31, 1999

                        COMMISSION FILE NUMBER 000-21725

                           THE TRANSLATION GROUP, LTD.

                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

           DELAWARE                                           23-3382869
--------------------------------                     ---------------------------
(State or other jurisdiction of                      (I.R.S. Employ. Ident. No.)
incorporation or organization)

                              30 WASHINGTON AVENUE
                              HADDONFIELD, NJ 08033
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                    ISSUER'S TELEPHONE NUMBER: (609) 795-8669
                       ISSUER'S FAX NUMBER: (609) 795-8737

         SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:

                                      NONE

         SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:

                          COMMON STOCK, $.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 no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B is 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. [ ]



<PAGE>

         Issuer's revenues for its most recent fiscal year:  $ 5,987,002

         Aggregate  market value of the voting stock held by  non-affiliates  of
registrant on June 21, 1999,  based on average of the high and low price on that
date, was $8,935,452 million.  Exclusion of shares in this calculation shall not
be deemed an admission that such person is an affiliate and inclusion  shall not
be deemed an admission that such person is not an affiliate. This information is
provided  solely for record  keeping  purposes of the  Securities  and  Exchange
Commission.

         See "Market of the  Registrant's  Common Stock and Related  Stockholder
Matters."

         The number of shares  outstanding  of each of the  issuer's  classes of
common equity,  as of the latest  practicable  date:  2,798,008 shares of common
stock,  par value $ .001 per share,  as of June 21, 1999,  which  includes up to
103,000 shares to be issued pursuant to an agreement with a former  executive of
a wholly owned  subsidiary and 416,668 shares issued in connection with a recent
acquisition.

         Transitional Small Business Disclosure Format: Yes [ ]; No [X]


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<PAGE>


                                     PART I

         PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT


         When used in this  Annual  Report on Form  10-KSB  and in other  public
statements by the Company and Company officers, the words "expect",  "estimate",
"project",   "intend",   and  similar   expressions  are  intended  to  identify
forward-looking  statements  regarding  events and  financial  trends  which may
affect the Company's  future  operating  results and financial  condition.  Such
statements are subject to risks and uncertainties that could cause the Company's
actual  results and  financial  condition  to differ  materially.  Such  factors
include,  among others,  the risk factors  described under Item 1 in this Annual
Report.  Additional  factors are described in the Company's other public reports
filed with the Securities and Exchange Commission.  Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date made.  The Company  undertakes no  obligation  to publicly  release the
result of any revision of these forward-looking  statements to reflect events or
circumstances  after  the date they are made or to  reflect  the  occurrence  of
unanticipated events.

ITEM 1.  DESCRIPTION OF BUSINESS

HISTORY AND BACKGROUND

         The Translation Group, Ltd. was incorporated under the laws of Delaware
on July 6, 1995. On January 17, 1996,  The  Translation  Group  consummated  its
first acquisition when the shareholders of Bureau of Translation Services, Inc.,
a Pennsylvania corporation ("BTS"),  exchanged their shares of BTS for shares of
The  Translation  Group so that BTS  became a  wholly  owned  subsidiary  of The
Translation Group. Prior to the acquisition of BTS, The Translation Group's only
activity was related to the  negotiations  and other  matters  pertaining to the
raising of funds under a private placement.

         On June 30, 1997,  The  Translation  Group  acquired all the issued and
outstanding  common stock of the companies that comprise the Word House Group in
exchange for shares of The Translation  Group whereby Word House became a wholly
owned  subsidiary  of The  Translation  Group.  Word House has been in operation
since 1984, and currently has offices in The Netherlands, France, and China.

         On May 28,  1999,  The  Translation  Group  acquired all the issued and
outstanding  stock of Planet Access  Networks,  Inc., a web site development and
management  company  that will  also  provide  intranet  and  internet  delivery
services for the Company's planned  translation  products now under development.
The  consideration  for the shares of Planet  Access was the issuance of 416,668
shares  of The  Translation  Group's  common  stock  and cash in the  amount  of
$900,000 to be paid by September 15, 1999.

         The   Translation   Group  and  its  wholly  owned   subsidiaries   are
collectively  referred to herein as "The  Translation  Group" or the  "Company."
Corporate and  administration  office of the Company is located at 30 Washington
Avenue, Haddonfield, NJ 08033, and its telephone number is (609) 795-8669.


                                       3

<PAGE>

BUSINESS

         The Company translates  conventional  documents and software written in
one language  into other  languages,  and  specializes  in  providing  high tech
translation and localization services, principally in the Information Technology
("IT") sector of the translation  market.  Localization is the art of converting
text from one language to another giving careful consideration to the customs of
the local area.

         The Company has recently launched research programs directed toward the
development of computer-based  machine translation  systems.  These new powerful
information  tools will provide the basis for the  development  of new products.
The basic business model is to accelerate technical developments,  together with
product marketing and sales, to create unique  translation  products for special
niche  markets.   The  Company  believes  that  this  strategy  will  result  in
significant increases in revenues and profitability.

         Thus,  the  Company is changing  from a  translation  and  localization
service  provider,   generally  using  human  resources  and  industry-available
technology  and software  tools,  to a Company  with its own uniquely  developed
translation  and  localization  technologies.  During the past year, the Company
experimented with various projects to coordinate customers,  technology changes,
and its own facilities  with the growing  markets.  The Company  believes that a
basic change from a labor  intensive  process to a technology  driven process is
required in the industry.  Therefore,  the Company has been in transition  while
developing   its  own  software   systems   through  its  strategic   technology
relationships  with  Gedanken  and  ESTeam  to  produce  specialized   automated
translation products for the financial,  medical/pharmaceutical,  environmental,
information technology and telecommunication fields.

THE TRANSLATION MARKET

         The translation  market breaks down into two broad  categories,  namely
"retail" and "professional/technical." The retail translation segment includes a
variety  of  applications  such as  general  business  correspondence,  consumer
product   marketing,   newspapers,   magazines,   literary   works,   chat  room
conversations,  TV shows,  news programs,  personal letters and similar forms of
commercial and interpersonal communications.

         The  professional/technical  translation  market  includes all types of
business  products and  services as well as  government  publications  requiring
translation.  Virtually all businesses which export products or services require
that their products be tailored to the local target market or country.

         The Company  plans to devote most of its  resources to competing in the
high volume professional/technical market.

         The demands of the  professional/technical  market on  translators  are
substantially  greater than those in the retail translation  market. Not only is
native fluency in the target language  required,  but knowledge of the terms and
vocabulary of the particular business is also required. Translators must also be
language  competent  in the source  language  to  understand  the


                                       4

<PAGE>

sophisticated  concepts of the  products.  Businesses  often hire  bilingual  or
multilingual  persons as translators and teach these  translators the details of
their  products or  services,  rather  than  depend upon an outside  translation
company with language skills but no product knowledge.

         According  to  published  industry  reports,  the demand  for  language
translation  is  growing  at  25 - 30%  per  year.  Among  the  fastest  growing
translation markets are (i) Eastern Europe,  including the countries  comprising
the former USSR, due to the multiple  language needs in those countries and (ii)
the  Asia/Pacific  region due to their  emerging  markets which appeal to global
businesses. Computer-aided language translation is an emerging trend. Management
estimates  that  machine   translation  systems  currently  represent  sales  of
approximately  one percent of the total market  potential  exceeding $10 billion
annually.

CURRENT SERVICES AND PRODUCTS

         The Company  presently  specializes  in  managing  and  producing  high
volume, technical translations for the IT and software industries, including the
production of the software itself,  software manuals, and software documentation
with a current capability of 24 languages.  The Company provides a full range of
translation  and  localization  services to  international  customers as well as
customers preparing to engage in international  commerce. The Company translates
product  materials and helps  customers  localize  products and services for the
global  marketplace.  The Company  provides  services that are customized to the
customer's requirements.

         The primary products and services the Company currently provides are as
follows:

         1.       Multilingual Localization and Translation, including

               o    All levels of product management
               o    Terminology development
               o    Re-use  of  previously  translated  materials  using  latest
                    technology tools
               o    Translation and technical editing of text
               o    Software engineering, including resizing and compiling
               o    On-line help compiling and formatting
               o    Linguistic, functionality, and QA testing
               o    Desktop   publishing,    graphic   layout,    editing,   and
                    proofreading
               o    Coordination of in-country review
               o    Production of publishable  materials and  electronic  media,
                    including CD ROM
               o    Multimedia localization and production

               o    Web site and on-line publishing localization and production


         2.       Internationalization and Development Consulting

         3.       In-Country Training, Support, and Service Centers

         4.       Facilities Management and Resource On-Site Placement Services

                                       5

<PAGE>

         Historically,  the process of multilingual localization has been highly
labor  intensive.  Much of the  hands-on  work  has  been  done  principally  by
independent  translators and editors retained by the Company, as well as Company
employees.  Various  computer-assisted  translation  tools have been employed to
reduce costs and to enhance  consistency.  The Company  utilizes  these software
applications for extracting and storing data, to preserve  formatting during the
translation process,  for online dictionaries,  for presentation of text and use
of previous  translation.  In this  regard,  the  Company's  translation  memory
capabilities  have  depended  upon  the  storage  of and  access  to  previously
translated material in computer usable form.

         Our ability to take  advantage  of  translation  memory  depends on the
stability  of  customers,  types of  products,  material  to be  translated  and
customer  requirements.  If  variables  negatively  affect any of the  foregoing
factors,  such as occurs with first-time customers or when translating materials
in new topics, we may be unable to exploit this advantage.  For this reason, the
Company is  pursuing  the  production  of its own  phased-in  system of computer
assisted  translation  tools  which  would not be limited to the same  materials
being previously translated. See "Technology Applications," below.

         The Company considers its highly detailed project management,  tracking
and  costing  procedures  as an  integral  part  of  producing  its  specialized
services.  The Company  places a strong  emphasis on  efficient  processes,  and
believes that  centralized  project  management is essential to  efficiency.  To
better  implement  this policy,  a project  manager is assigned to each project.
Thus,  even when a project may have team  members in many  different  locations,
most work is coordinated  centrally in the Company's  United States and European
headquarters  via  electronic  communication.  Certain  core  functions  such as
editing,  proofreading,  desktop publishing and client  coordination are part of
central  project  management.  In preparing work for  translation  into multiple
languages a project  editor may  identify  problems or issues which are relevant
across the entire project.  Similarly, in a multiple-language  project, problems
may be identified by the  translators  in one or two languages that are relevant
to others.  The Company believes that central control of the process is the best
way to handle certain situations, such as the identification of software bugs.

         The Company provides an extensive range of communications facilities by
utilizing  its  own  internal  systems  integration  group  that  maintains  the
Company's Internet/Extranet/ Intranet and e-mail systems. Files are prepared for
translation by the Company's technical staff and are distributed  electronically
to translators either locally or in the applicable country. All of the Company's
translators are native speaking  professionals in the target  language,  and are
required  to know the  subject  matter of the area in which they  translate.  In
addition,  a project  must have  technically  knowledgeable  staff in the source
language, preferably a specialist in that area. Translated versions are returned
to the Company's central project  management for technical review,  proofing and
compilation  if software is  involved.  The target  language  versions  are then
distributed to appropriate client locations,  which may be multiple locations or
a central  site.  The Company  considers  itself an  extension  of the  client's
documentation and software development  departments.  All project activities are
closely tracked using custom-designed and commercial project management/tracking
applications.  This data is fully  available to the client and the client always
knows the status of the project. The Company expects to expand its communication
abilities  with the  acquisition  of Planet Access  Networks,  Inc. as described
below. See "Recent Agreements and Acquisitions."


                                       6
<PAGE>

         The Company  realizes that many of its customers do not possess all the
expertise needed to manage the localization process. The Company, therefore, has
created  expanded   services   including   management   consulting  and  on-site
management.  Systems  development  and consulting  services also include product
planning and redesign for local markets.  The Company understands the changes in
technology,  that  taking  a  product  to a  global  market  can be a  difficult
proposition.  In order to offset the technical  difficulties  for its customers,
the Company has taken an active role in the development and modifications of its
customers'  products to support local  specifications and character encoding for
different  regions of the world.  These services allow the Company to manage the
localization while simultaneously allowing the customer to manage their product.
Therefore, costs are reduced while quality is maintained.

CUSTOMERS

         The Company provides translation and localization services to a diverse
range of industries and industry sectors,  with an emphasis on IT companies such
as  software  publishers,  computer  hardware  manufacturers  and  computer  and
peripherals   vendors.  Our  target  markets  include  nearly  all  professional
technical and industrial  applications such as financial,  medical, legal, trade
publications,   automotive,   software,   technical  abstracts,   equipment  and
instrumental manuals, environmental and various other governmental regulations.

         At present,  key  markets  for the  Company's  services  are  customers
located in Japan,  Europe and in the  Americas,  which  include the  dialects of
Canadian  French,  Latin  American  Spanish,  and Brazilian  Portuguese.  Growth
markets are primarily in Asia and Eastern  Europe.  Japanese and Dutch represent
the Company's  largest  languages by volume;  the Company  believes that Chinese
will also become more significant in the future. The Company's business in Japan
is primarily in translation for suppliers of applications software,  including a
substantial  volume of Unix-based  systems and customized  implementations.  The
principal  applications  supported are financial and  manufacturing,  as well as
client systems encompassing everything from order entry to distribution.

         The  Company  has a  large  number  of  IT-based  clients.  The  strong
relationships  the Company has developed with its IT clients have also generated
a volume of more  conventional  translation  work.  For example,  the Company is
currently  translating and localizing software messages,  software dialog boxes,
software  help,  and related  documentation  for several of its  clients.  These
products are localized for Okidata Peripherals, a division of OKI America, Inc.,
Bentley Systems Inc.'s CAD/CAM software,  Matrox Electronic Systems Ltd.'s video
and networks products, Microsoft(R) Corporation's software products, and Project
Software &  Development,  Inc.'s  management  system.  Other  customers  include
Hewlett-Packard  Company,  Creative Labs Inc., Bay Networks,  INSO  Corporation,
Automatic  Data  Processing,   Inc.,   Fisher-Rosemont  Systems,  Minitab  Inc.,
Caterpillar Inc., Oracle Corporation and Xerox Corporation.


                                       7
<PAGE>


TECHNOLOGY APPLICATIONS

         The Company has followed the progress of machine  translation  over the
years. After much careful review and  consideration,  the Company concluded that
to the best of its  knowledge no one system  exists that meets its  standards of
accuracy,  efficiency and effectiveness.  Accordingly, the Company is developing
its responses to common problems in the  localization  process.  Currently under
development  are  fully   automatic  and   language-aware   automatic   computer
machine-translation systems at both Gedanken and ESTeam.

         The goal for the design of computer  systems  and  machine  tools is to
enhance or replace the manual  translation  process.  Moreover,  included in the
software systems design are sets of tools and other production-enhancing factors
such as quality control. These tools and systems are intended to address some of
the problems  involved in the  translation/localization  of a text from a source
language to a target language by dealing with the following ambiguities:

o    Lexical ambiguity--multiple meanings (polysemy) of the same words.

o    Structural  ambiguity--language  that is vague, unclear and or uncertain in
     meaning.

o    Contextual   ambiguity--words  can  acquire  idiosyncratic  meaning  within
     specific context;  these meanings do not relate to the normal senses of the
     words as normally used.

         The Company believes that its technology for computer-aided translation
will  provide  90+ %  accurate  translation  on the  first  pass  without  human
intervention.  The operating  methodology of the Company's computer  translation
system is based upon the input of large amounts of legacy language  translations
in both  source  and target  language.  In this  manner,  the  Company's  system
"learns"  the  language  of the  specific  topic and  continues  to improve  its
knowledge as post-edited  texts are inputted to the system.  Thus, the Company's
system,  in time,  becomes expert in the particular  products or services of the
customer.

         The  computer  translation  systems  used by the Company are made up of
modules or sub-routines that perform specific tasks in sequence. A module may be
a database or a set of instructions. Typically, a system includes:

o    A PARSER which diagrams a sentence into its constituents such as a subject,
     verb, object, modifying clauses, adjective and adverb modifiers;

o    AN ALIGNMENT TOOL which sequentially translates into a parallel fashion the
     sentences in one language into the target language;

o    A  TRANSLATION  MEMORY  FEATURE which is a database  containing  all of the
     previously  aligned  translated  words,  phrases,  and  sentences  from one
     language linked to the target language;

o    A BI-LINGUAL DICTIONARY which links the proper translation of words/phrases
     in one language to another;


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<PAGE>

o    A "FUZZY  MATCH"  ROUTINE  which is a software  routine which looks for the
     most probable word or phrase match when no perfect match exists; and

o    A CONVERSION  RULE ROUTINE  which is a set of  instructions  directing  the
     sentence structure conversion from one language to another.

         In addition,  a number of  additional  and often  proprietary  software
features can be incorporated  into a machine  translation  system to assist with
quality control items such as consistency checks and spelling checks.

         The  Company  is  committed  to invest  significant  amounts on machine
translation  with  specific  emphasis  on  acquiring  a  proprietary   real-time
completely  automated  machine  translation  system.  These include the Gedanken
system and the BTR system  described  below.  Target  applications for automated
translation  will include  products in the financial,  medical/  pharmaceutical,
environmental,  information technology and telecommunications  fields. Financial
information products include company reports and financial statements,  research
and credit reports, and news releases.  Included in  medical/pharmaceutical  are
such products as Material  Safety Data Sheets  ("MSDS") for  pharmaceutical  raw
materials  and drug  "product  inserts."  In the  environmental  area,  products
include MSDS and their equivalents,  international  governmental regulations and
news, bills of lading for shipments,  standard operating procedures for handling
chemicals  and other  compounds  covered by  environmental  regulations.  Target
applications for information technology and telecommunications  include products
such as software with technical/operating  manuals,  software help, and software
documentation.

THE GEDANKEN SYSTEM

         The Gedanken  system is owned by Gedanken  Inc., a development  company
unaffiliated with the Company. The Company has an exclusive worldwide license to
use the system once  developed  and ready for  deployment in exchange for future
royalties  and  development  funding.  The Company has agreed to pay to Gedanken
$750,000 for the  development  of the improved  translation/localization  system
(that  includes a specific  topic  builder,  general topic  dictionary,  quality
control and alignment tools).  Over the past two years, the Company has invested
more than $500,000 in system research and development, and anticipates providing
an  additional  funding  during  1999-2000  to complete  the  transition  from a
research  system to a development  and production  system.  The Gedanken  system
addresses the added  complexities of translating  information from  free-flowing
texts of any kind.  The  Gedanken  system is rooted in  statistical  analysis of
large  amounts of language  data and is  constructed  of modules  which  perform
different  functions.  These  modules  are  designed to make the system a single
comprehensive   automated   translation  system.  There  are  several  important
differentiating  features of the Gedanken system, one of which is the "Precision
English" module. The system also includes a sophisticated  parser which dissects
sentences and bilingual  dictionaries.  By eliminating the bulk of the ambiguous
words and phrases and substituting more accurate words, the "Precision  English"
module raises the level of correct translation markedly.


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<PAGE>

         Gedanken,  Inc.  has filed for a patent  on its  system,  for which the
principal  claim is the  incorporation  of  various  inter-related  modules in a
comprehensive  computer  translation  system.  The Company is  obligated  to pay
royalties  on all  revenues  generated  that use in whole or in part the  patent
rights and know-how.  Various production modules of the system will be completed
during 1999,  and overall  system  completion is scheduled for 2000. The Company
also has the option to the development of a Real Time Voice  Translation  System
subject to providing the necessary funding estimated at $4,000,000.

BTR SYSTEM

         In April  1999,  the Company  entered  into a  development  and license
agreement with ESTeam, A.B.  ("ESTeam"),  a Swedish corporation  specializing in
the  development  of a  computer-automated  language  system  known  as the "BTR
system."  The  Agreement  provides  for the  customization  of this  system  for
specific market applications. This system is designed to accept and analyze very
large amounts of data, namely, words, word phrases,  sentence segments and whole
sentences  in both  source  and target  languages.  The  particular  application
already  perfected  by ESTeam was for the  automated  translation  of  trademark
information for its customer Compu-Mark,  S.A., a Thompson Group Company,  which
holds a license to use the system for patent and trademark  registrations.  This
custom  system is now  available in eleven  different  languages and it performs
95+% accurate translations automatically with no human intervention.

         As with other machine translation  systems, the BTR system is comprised
of  sub-routines,  or modules,  that  perform  specific  tasks while the modules
interrelate via a master control program. Sub-routines include such functions as
text  delineation,  spell check,  spell  correct with  correct  word,  bilingual
dictionary  matches,  large capacity data bases,  target language  verification,
"fuzzy"  logic   matches  and   statistical   word  matches.   One  of  the  key
differentiating  features  of the BTR system is its  ability to analyze and find
language matches at the sub-sentence level,  namely,  sentence segments and word
phrase  levels.  This  feature  was  positively   reflected  in  an  independent
side-by-side  test  conducted  by the  European  Union  Commission  in which BTR
outperformed the world's largest selling  translation  memory system by a 5-to-1
margin.

         The BTR system excels in automated  translation within a defined topic,
such as the financial markets and the chemical and  environmental  applications,
for which The Translation Group is initially developing "products" using the BTR
system. The projects being developed by ESTeam are financially  supported by the
Company.  Under the  current  arrangement,  ESTeam  will  complete  the  product
developments  and the Company will  commercialize  them. The  development of the
first products for the financial market commenced in May 1999 and is planned for
commercialization in the fourth quarter of 1999.


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<PAGE>


PLANET ACCESS

         Planet  Access  provides  the  Company  with  capabilities  in internet
services,  website  development and website management  services and also allows
the Company's  new  translation  products to be  effectively  delivered  through
secure  intranet  or  internet  services.  Planet  Access  is fully  capable  of
providing  the  most  sophisticated  and  comprehensive   internet  engineering,
including  but not  limited to site  design,  security,  security  pass  access,
secured credit card transactions, secure private access and site hosting. Planet
Access also provides custom network  solutions and engineering  services such as
Local Area Networks  (LAN's),  Wide Area Networks  (WAN's),  internet design and
security,  dedicated high speed corporate  internet access and many other custom
applications.  Customers for the above  activities  now include AVIS,  Novartis,
Lucent Technologies,  Lockheed-Martin,  ABN AMRO, Knoll Pharmaceutical and about
90 other clients.

         Planet Access compliments the Company's business because  substantially
every new translation  application  requires that the source text be transported
in  digital  form into the  translation  system  software,  processed,  and then
subsequently   transported   back  to  the  client.   Depending  on  the  market
applications,  the users may access the system  remotely via private  subscriber
intranet lines, public internet lines or dedicated services lines. Virtually all
of  the  Company's  product  business  lines  such  as  information  technology,
financial  translations  and  medical  device  labels will  require  remote-user
electronic interface with the Company's clients.

COMPETITION

         The  worldwide  translation  market  is  estimated  by  OVUM,  a market
research company specializing in this area and by LISA (Localization  Industrial
Standards  Association) to be  approximately  $20 billion  annually.  Both firms
estimate annual growth rates at 25%-30%,  due to the  globalization  of commerce
which requires the  localizing of a product or service to a particular  country.
An unknown percentage of language  translation is performed "in house", that is,
by  medium  and large  sized  multinationals  with  product  offerings  in 10-20
languages. Companies as diverse as Caterpillar,  Boeing, Oracle, IBM, Bloomberg,
and XEROX have in-house translation staffs for certain languages. Companies that
perform  translation  as a  business  tend to be small  firms with  revenues  of
$300,000 to $700,000.  The Company  estimates  that 95% of the 3000+  U.S.-based
translation agencies have revenues of less than $1.5 million.

         As translation/localization contracts become larger, Company management
believes  that large  corporate  IT  customers  will  continue to migrate to the
solution-based  models offered by large capacity  service  providers.  While the
Company's  competitors  can  currently be divided  into two main  subcategories,
traditional  translation companies and machine translation and/or solution-based
companies   offering  large  capacity   machine   translation   products  and/or
solution-based  models,  Company  management  believes  that within a relatively
short period of time the Company will be competing  primarily  with companies in
the second subcategory.

         The Company  believes that the common  structural  flaw of competitors'
machine translation systems is their reliance upon software driven by linguistic
rules,  which are rules  developed  by academic  linguists  to address  grammar,
syntax,  lexical usage, context,  sentence


                                       11
<PAGE>

structure and the like. The Company's  solution to the problem is  fundamentally
different and simpler than the rule based systems. The Company's approach relies
upon  mathematical  and  statistical  evaluations  of  dual  language  texts  in
particular topics. By statistically analyzing substantial amounts of legacy text
in two  languages,  patterns  of word  matches,  as well as phrase and  sentence
matches become apparent and remembered in such a way to allow the translation of
newly inputted text with a target accuracy of 90% + correct.

         The Company  differentiates itself from its competitors not only in its
technological  approach  but  also in its  marketing  strategy  . The  Company's
strategy is to develop specific niche  translation  products for markets such as
IT, financial, pharmaceutical and environmental in which the customer subscribes
to the 'product' via a limited  access  internet/intranet  service as opposed to
the  historic  business  model of  existing  translation  companies,  namely the
fee-for-service  competitive  bid model.  While  numerous  specialty  niches for
translation 'products' are available,  the Company is setting product priorities
based upon the best combination of development time and profitability.

         Many more  companies  outside the U.S.  perform  translation  since the
non-US market is substantially  larger than the U.S. market. The same fragmented
market structure of thousands of small firms prevails overseas. Worldwide, fewer
than 10 companies have annual translation revenues of over $50 million.

         The Company's principal competitors in traditional language translation
include Berlitz,  Lernout & Hauspie,  N.V., Bowne Translation Division,  Alpnet,
Lionbridge and XEROX Lingua.  In machine  translation,  the Company's  principal
competitors include Logos, Systran,  Transparent Language Inc., and the Language
Technologies  division  of Lernout &  Hauspie.  Many of these  competitors  have
substantially greater financial resources, more extensive experience, and better
established research and development,  marketing and servicing capabilities than
the Company.

         Company management believes that competition in the machine translation
market is based primarily upon accuracy, functionality, ease-of-use, versatility
and price. The Company's  performance will depend on its ability to innovate, as
well as maintain and solicit  quality people in technical,  sales and management
positions.

DEVELOPMENT AGREEMENTS

         On April 15, 1999, the Company  entered into a development  and license
agreement with ESTeam, a Swedish corporation, for market applications identified
by the Company.  ESTeam is a  software-development  company  specializing in the
development of a  computer-automated  language  translation system, known as the
"BTR System," and customizing such system for specific market applications.  The
BTR  System,  its  modifications,  improvements,  and  adaptations,  are used to
perform computer translations of specific text documents in a particular domain.
The Translation  Group has received an exclusive  worldwide  license for certain
applications  for a period of fifteen years. In  consideration  of the worldwide
license,  The Translation Group has agreed: (1) to pay royalties on sales of any
application and (2) to pay ESTeam the  development  costs for perfecting each of
the market applications.


                                       12

<PAGE>

         Although  the  Company  has  historically  adopted  state  of  the  art
technologies  in its  operations,  during the past two years,  the  Company  has
increased  its  investment  in  computer  automated  translation  with  specific
emphasis  on  developing  a  proprietary   and  completely   automated   machine
translation  system.  In  November  1996,  the  Company  obtained  an  exclusive
worldwide  license  and  rights  for the  life  of the  patent  to use and  sell
know-how,  apparatus,  and  methods  pertaining  to  software  tools and systems
developments based on a patent application owned by Gedanken.

EMPLOYEES

         The Company presently  employs 82 full-time people,  comprised of 11 in
management  positions,  10 in  administration,  6 in sales and marketing,  55 in
production and engineering.  In addition,  the Company also uses the services of
about 450 freelance and/or  independent  translators and editors on an as-needed
basis from a roster of several thousand worldwide.  The Company's acquisition of
Planet Access added an additional 35 full-time employees.

         All of the Company's  translators are native-speaking  professionals in
the target language,  and are required to know the subject matter of the area in
which they translate. In addition, a project must have technically knowledgeable
staff in the source language, preferably a specialist in that area.

         Even  with  machine   translation,   there  is  a  need  for  qualified
individuals as in-house quality-control  personnel and as translators of subject
areas that have not been mechanized. The Company expects that the available pool
of  qualified  translators  will  not  grow  as  rapidly  as the  growth  in the
translation  and  localization  market as a whole. To respond to the anticipated
labor shortage caused by the expansion of the total market growth, in April 1998
the Company  entered into an agreement  with New Jersey  Department of Labor and
Felician  College to develop a network of qualified  translators and localizers,
through  the  implementation  of a  certificate  training  program.  Under  this
partnership,  the State of New Jersey  will  provide  funding  for the  Felician
College  Office of  Continuing  Education to implement the  certificate  program
comprised of three core courses and one elective.  The Company provided the core
curriculum and trained Felician staff. All program  graduates who participate in
the  program are  eligible to enroll in paid  internships  at the  Company.  The
agreement with New Jersey  Department of Labor and Felician  College  expires in
May, 2000. The Company will continue to evaluate the merits of this program,  as
well as any other programs which may assist it in alleviating the industry labor
shortage.



                                       13
<PAGE>


RECENT AGREEMENTS AND ACQUISITIONS

PLANET ACCESS

         On May 28, 1999, the Company acquired all of the outstanding  shares of
Planet Access  Networks,  Inc. based in Stanhope,  New Jersey,  which provides a
broad range of Internet related  services,  including  development of e-commerce
sites built to client's specifications.

         The purchase price for the Planet Access shares was approximately  $3.8
million, consisting of an aggregate 416,668 shares of the Company's common stock
paid as of the closing and $900,000,  payable not later than September 15, 1999.
In addition,  the Company is obligated to provide  funding to Planet Access in a
minimum amount of $4,000,000 (prior to costs and expenses of such funding) which
may be obtained, at the Company's discretion, in the form of a public or private
sale of securities of the Company or Planet Access.  To secure such obligations,
the Company has pledged the Planet Access shares to the former  shareholders  of
Planet Access.  In the event the Company  breaches its obligations to the former
Planet  Access  shareholders,  their  remedies  include the return of the Planet
Access  shares and  payment by the  Company of their  costs and  expenses of the
transaction.  In addition, Planet Access would retain $250,000 advanced to it by
the Company and any profits  earned by Planet  Access  subsequent to the closing
would be evenly divided by the Company and Planet Access.

         The Company also agreed to repurchase  the Company shares within ninety
(90) days of the first  anniversary  of the  acquisition at a price of $7.00 per
share,  if, on such  anniversary  date:  (1) the shares of common  stock are not
listed for trading on a national  securities exchange or included on NASDAQ; (2)
during the ninety (90) days  preceding  such date,  the average  weekly  trading
volume is less than 100,000  shares;  and (3) the average of the closing or high
bid price during the twenty (20) trading days  preceding  such date is less than
$10.00 per share.

         The terms of the transaction were determined by arms-length negotiation
between  the  parties.   Prior  to  the  acquisition,   there  was  no  material
relationship between the former shareholders of Planet Access and the Company or
any  director,  officer or affiliate of the Company or any associate of any such
director or officer.

         In  addition to  maintaining  Planet  Access'  historic  business,  the
Company  intends to utilize  Planet  Access'  resources  to offer the  Company's
translation services over the Internet.  The purchase price will be allocated to
the underlying fair value of the assets acquired, and the balance to excess.

                                  RISK FACTORS
                                  ------------

OUR FUTURE PROFITABILITY, AND THE VALUE OF YOUR INVESTMENT, WILL DEPEND UPON THE
SUCCESS OF OUR GROWTH STRATEGY.

         We have reflected only modest net income from operations  during fiscal
1997,  and a net loss  during  fiscal  1998 and 1999.  As a result,  our  future
profitability,  our  ability  to  effectively  compete  in the  translation  and
localization  industry and the ultimate  value of your  investment  is likely to
depend  upon the  successful  implementation  of our  business  strategy,  which
primarily  relies upon the  development  and  implementation  of computer  aided
translation and localization products.

                                       14

<PAGE>

WE HAVE COMMITTED A SIGNIFICANT  PORTION OF OUR WORKING  CAPITAL TO RESEARCH AND
DEVELOPMENT AND THE FAILURE TO COMMERCIALIZE  OUR COMPUTER AIDED TRANSLATION AND
LOCALIZATION  PRODUCTS AND SERVICES WILL HAVE A MATERIAL  ADVERSE  IMPACT ON OUR
FINANCIAL CONDITION.

         Over  the  past  two  years  we  have  invested  over  $500,000  on the
development  of the Gedanken  system,  and we  anticipate  providing  additional
funding during 1999-2000 to complete the research and  commercialize the system.
We are  also  funding  research  by the  ESTeam  A.B.  to  further  develop  and
commercialize a proprietary  computer-automated  translation system known as the
BTR System. Our inability to commercialize  either one or both of these projects
will adversely  affect our  competitive  position in the industry and negatively
impact our profitability.

FAILURE  TO  SUCCESSFULLY  INTEGRATE  PLANET  ACCESS,  INC.  INTO  OUR  EXISTING
OPERATIONS OR MEET CERTAIN  PERFORMANCE GOALS UNDER THE PURCHASE  AGREEMENT WILL
MAKE IT UNLIKELY WE CAN SUCCESSFULLY IMPLEMENT OUR STRATEGIC PLAN AND NEGATIVELY
AFFECT OUR LIQUIDITY.

         Our  business  strategy  depends  on our  ability  to use the  services
provided by Planet Access to transport text in digital form into the translation
system software and then subsequently  transport the translated text back to the
client. Our purchase  agreement with former  shareholders of Planet Access gives
them the right to sell  their  shares in the  Translation  Group  back to us for
$7.00 per share if the selling price of our common stock is less than $10.00 per
share  on the  one-year  anniversary  of the  closing.  If we  are  required  to
repurchase  our stock,  our  liquidity  would be  severely  reduced as would our
ability to fund our research and commercialization efforts.

LIMITED  MARKET FOR OUR COMMON STOCK  INCREASES  THE POSSIBLE  VOLATILITY OF OUR
STOCK PRICES AND THE VALUE OF ANY INVESTMENT IN OUR EQUITY MAY BE REDUCED.

         The public  trading market for shares of our common stock is limited on
the OTC  Bulletin  Board,  however,  in view of the  minimal  supply  of  shares
eligible for public resale,  trading has been extremely limited. There can be no
assurances that a regular trading market for our common stock will be sustained.
By its very nature,  trading on the OTC  Bulletin  Board  provides  only limited
market liquidity. In addition, the stock markets generally have experienced, and
continue  to  experience,  extreme  price and  volume  fluctuations  which  have
affected the market price of many small cap  companies and which have often been
unrelated to the operating  performance of these  companies.  These broad market
fluctuations,  as  well  as  general  economic  and  political  conditions,  may
adversely affect the market price of our common stock.

IF WE USE OUR COMMON STOCK TO CARRY OUT ANY MORE  ACQUISITIONS  OR ISSUE MORE OF
OUR COMMON STOCK IN A PUBLIC  OFFERING,  ADDITIONAL  DILUTION TO YOUR INVESTMENT
WILL OCCUR.

         We may grow our business through acquisitions. We could accomplish this
through The issuance of additional  shares of our common stock.  This would have
the effect of increasing  the number of shares of common stock  outstanding.  In
addition,  in order to accomplish our business


                                       15
<PAGE>

strategy on a longer-term basis, we are likely to require additional  financing,
which may entail the issuance of additional  shares of common  stock,  preferred
stock or common  stock  equivalents,  which  would  have the  further  effect of
increasing the number of shares outstanding. This may be done in order to, among
others,  facilitate a business  combination,  acquire assets or stock of another
business,  compensate  employees  or  consultants  or for other  valid  business
reasons in the discretion of our Board of Directors.

WE OPERATE IN HIGHLY COMPETITIVE  MARKETS,  WHICH COULD RESULT IN LOSS OF MARKET
SHARE OR REDUCED MARGINS.

         We face  intense  competition  from  multinational,  regional and local
companies in every market in which we operate. The principal competitive factors
within the translation and localization  industry  include price,  technological
capability,  accuracy,  extent of geographic coverage and the ability to deliver
our services in a timely manner.  Many of our competitors  have well established
reputations and significantly greater financial,  marketing, personnel and other
resources than we do. Our principal competitors are Berlitz,  Lernout & Hauspie,
N.V., Bowne  Translation  Division,  Alpnet,  Lionbridge,  XEROX Lingua,  Logos,
Systran,  and  Transparent  Language  Inc.,  some of  which  are  multinational,
highly-visible and well-regarded enterprises.  There can be no assurance that we
will be able to compete effectively against these or any other competitors.

SENIOR MANAGEMENT BENEFICIALLY OWNS A SIGNIFICANT PERCENTAGE OF OUR COMMON STOCK
AND THEREFORE HAS SIGNIFICANT INFLUENCE OVER THE ELECTION OF DIRECTORS.

         Our officers,  directors and principal  stockholders own  approximately
44.9% of the common stock of the Company on a fully diluted basis. See "SECURITY
OWNERSHIP  OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT."  Consequently,  upon
exercise of their vested  options and  warrants  and by virtue of Delaware  law,
these  stockholders  could be in a position to influence  the election of all of
our  directors  and  possibly  control  the outcome of other  corporate  matters
without  the  approval  of  our  other  stockholders.  In  addition,  applicable
statutory  provisions  and the ability of the Board of Directors to issue one or
more series of Preferred Stock without stockholder approval could deter or delay
unsolicited  changes in  control of the  Company  by  discouraging  open  market
purchases  of our stock or a  non-negotiated  tender or exchange  offer for such
stock, which may be disadvantageous to our stockholders who may otherwise desire
to participate in such a transaction and receive a premium or their shares.

THE  SUCCESSFUL  IMPLEMENTATION  OF OUR  BUSINESS  STRATEGY  IS  DEPENDENT  UPON
MANAGEMENT PERSONNEL AND EXECUTIVE OFFICERS.

         Our  operations  are dependent  upon the  continued  services of senior
management  and upon our  ability to hire and retain  qualified  management  and
technical personnel. The loss of services of any of the those executive officers
or other  management or personnel,  whether as a result of death,  disability or
otherwise, would have a material adverse effect upon our business.


                                       16

<PAGE>

WE POTENTIALLY HAVE EXPOSURE TO YEAR 2000 ISSUES.

         We are presently  attempting to respond to Year 2000 issues.  Year 2000
issues are the result of computer programs being written using two digits rather
than four digits to define the applicable year associated with the program or an
associated  computation.  Any of The Translation  Group's computer programs that
have  time-sensitive  software may  recognize a date using "00" as the year 1900
rather  than  the  year  2000.   This  could  result  in  a  system  failure  or
miscalculation causing disruptions of operations,  including among other things,
a temporary inability to process transactions, send invoices or engage in normal
business activities. Management expects to have substantially all of the systems
application  changes  completed within the next six (6) months and believes that
its level of preparedness is appropriate.

         Our failure or the failure of any party with which we conduct  business
to be Year 2000 ready in a timely manner could have a material adverse impact on
our  operations.  If our  systems  or the  systems of our  significant  vendors,
customers,  lenders,  strategic partners and other outside parties with which we
transact  business were to fail because they were not Year 2000 ready,  we would
incur  significant  costs and  inefficiencies.  Due to the  general  uncertainty
inherent  in the Year  2000  problem,  resulting  in part  from  the  Year  2000
readiness  of third  parties,  we cannot be sure that we will be able to resolve
problems  associated  with the Year 2000  issue in a timely  and  cost-effective
manner.  Our inability to do so may adversely affect our operations and business
or expose us to third-party liability.

A  SIGNIFICANT  PORTION  OF OUR  REVENUES  ARE  DERIVED  FROM OUR  INTERNATIONAL
OPERATIONS,  AND A DOWNTURN IN INTERNATIONAL  COMMERCE COULD SEVERELY IMPACT OUR
RESULTS OF OPERATIONS.

         A significant  portion of our business is conducted  outside the United
States.  International  trade is influenced by many factors,  including economic
and political  conditions,  employment  issues,  currency  fluctuations and laws
relating to tariffs, trade restrictions,  foreign investments and taxation. As a
result,  our operations are subject to various risks such as loss of revenue due
to the instability of foreign economies, currency fluctuations and devaluations,
adverse  tax  policies  and  governmental  activities  that may limit or disrupt
markets, restrict payments or the movement of funds or result in the deprivation
of contract rights.  The Transaction Group is subject to taxation in a number of
jurisdictions,  and the final determination of its tax liabilities  involves the
interpretation  of the statutes and requirements of various domestic and foreign
taxing authorities. Moreover, many of the countries where we operate and plan to
operate have legal  systems that differ from the United  States legal system and
may provide substantially less protection for foreign investors.  A reduction in
the level of international trade,  material  restrictions on trade or a downturn
in the  economies  of  countries  in which we  currently  operate  could  have a
material adverse effect on our results of operations.



                                       17
<PAGE>


ITEM 2.  DESCRIPTION OF PROPERTY

         The   Company's   principal   operating   facilities   are  located  in
Haddonfield,  New Jersey, Amsterdam, The Netherlands,  and Lyon, France. The New
Jersey production facility occupies approximately 6,000 square feet at a monthly
rate of $8,300  pursuant to a lease that extends until February 28, 2003. In May
1997 Word House  moved its  principal  location to  Amsterdam.  Its lease is for
approximately  5,500 square feet, and is for a period of five years at a rent of
$7,500 per month. A French  subsidiary  owns a condominium  floor in Lyon,  with
approximately  3,000 square feet of space.  Estimated  annual costs  approximate
$43,000.  The Company also has an office in Beijing,  China, with an annual rent
of $21,000 for approximately 800 square feet. In January 1999 the Company closed
its London office and its  administration  facility in Westmont,  New Jersey. In
March 1999,  the Company closed its Canadian  office and in May 1999,  opened an
office in San Jose, California.

         Planet  Access  leases  approximately  2,500  square feet of office and
production  space in Stanhope,  New Jersey with an annual rent of $32,400.  This
lease expired on June 30, 1998.  Since the  expiration  date,  Planet Access has
been on a  month-to-month  extension.  Planet Access has recently entered into a
lease for 8,500  square feet of office and  production  space in  Flanders,  New
Jersey with an annual rent of $127,500. This lease expires on July 15, 2004.

         The Company believes that all of its facilities are currently  adequate
and further believes that, if necessary, adequate facilities could be located in
the event the Company needs to replace or expand its current facilities.

ITEM 3.  LEGAL PROCEEDINGS

         The  Company  has been sued by a  stockholder  who is seeking  monetary
damages,  specific  performance,  equitable  relief  and costs in the  amount of
$3,000,000.  The Company and its special  litigation  counsel  believe that this
suit is completely without merit and will vigorously defend it. On September 15,
1997 the Company was served with a summons which was  subsequently  filed in the
New York State  Supreme  Court,  Kings  County,  alleging  various acts of fraud
associated with the Company's reverse stock split which occurred on November 21,
1996.  The  plaintiff,  Lee Dan Ltd., a shareholder  of the Company,  is seeking
monetary damages, specific performance, equitable relief and costs in the amount
of $3,000,000.  Based on a review of the file and  discussions  with the Company
management,  counsel  for the  Company  believes  that  there  is a  substantial
likelihood that the Company will prevail in this matter.

         The Company is not a party to, or involved in, any other material legal
proceedings.  In the ordinary  course of business the Company may become subject
to certain legal  proceedings and there can be no assurances that the results of
such  proceedings  will not have a  material  adverse  affect  on the  Company's
results of operations.

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

         Not applicable.


                                       18

<PAGE>


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Company  completed its initial public offering on December 6, 1996.
Since that date its common  stock has been  reported on the NASDAQ OTC  Bulletin
Board under the symbol  THEO.  The  following  table sets forth the range of the
high and low bid  prices  for the  common  stock  as  reported  by the  National
Quotation  Bureau  for the  periods  indicated  and  represents  prices  between
broker-dealers,  which do not include  retail  mark-ups and  mark-downs,  or any
commission to the broker-dealer.  The bid prices do not reflect prices of actual
transactions.

          1997                                          HIGH              LOW

          Quarter ended June 30, 1997                 $10.00             $7.50
          Quarter ended September 30, 1997             9.125              4.25
          Quarter ended December 31, 1997              6.1875             4.00

          1998

          Quarter ended March 31, 1998                $ 4.75             $ 3.75
          Quarter ended June 30, 1998                   6.50               4.00
          Quarter ended September 30, 1998              7.5625             5.25
          Quarter ended December 31, 1998               6.25               4.50

          1999

          Quarter ended March 31, 1999                $ 5.00             $ 3.00

         On June 18, 1999 the closing bid price for the  Company's  common stock
was $4.1875. The approximate number of record holders of common stock as of June
15, 1999 was 61. The approximate  number of beneficial owners was 650 as of June
15, 1999.

         The Company also issued  common stock  purchase  warrants in connection
with its initial public offering which are  exercisable  until December 31, 1999
for a share of common stock upon payment of the exercise  price of $6.20.  There
is currently no registration  statement in effect covering the exercise of these
warrants and therefore the Company is not permitted under applicable  securities
laws to accept exercises thereof.

DIVIDEND POLICY

         The Company has not declared or paid any  dividends  nor does it expect
to pay  dividends on its common  stock in the  foreseeable  future  intending to
retain earnings to finance the growth of its operations.



                                       19
<PAGE>


TRANSFER AGENT

         The Company  uses  American  Stock  Transfer & Trust  Company,  40 Wall
Street,  New York,  New York 10005,  to act as Transfer  Agent for the Company's
common stock.

ITEM 6.  MANAGEMENT'S  DISCUSSION  &  ANALYSIS  OF  RESULTS  OF  OPERATIONS  AND
FINANCIAL CREDIT (000'S)

YEAR ENDED MARCH 31, 1999, 1998 & 1997

<TABLE>
<CAPTION>


OPERATIONS                         1999        %        1998*       %       CHANGE      1997        %       CHANGE
----------                         ----        -        -----       -       ------      ----        -       ------
<S>                            <C>           <C>     <C>           <C>     <C>       <C>          <C>     <C>
Sales.........................  $  5,987      100.0   $  6,421      100.0  ($   432)  $  3,193     100.0   $  3,228
Operating Costs &
EXPENSES
Cost of Sales.................     4,832       80.6      4,189       65.3       643       2,201     68.9      1,988
Selling & Admin...............     1,865       31.1      1,309       20.3       556         596     18.6        713
Research & Develop............       147        2.4        244        3.8     (  97)        --       --         244
Special & Other...............       979       16.3        --         --        979         --       --         --
Corporate Admin...............       736       12.2        774       12.0     (  38)        216      6.7        558
Amort. of excess..............        97        1.6         73        1.1        24         --       --          73
                                ----------- --------- ---------- --------- ---------- --------- ---------- ----------

Total.........................     8,657     1,44.2      6,589      102.5     2,068       3,013     94.2      3,576

Operating loss before other
income........................    (2,670)     (44.2)      (168)      (2.5)   (2,502)        180      5.8       (348)
Interest income, net..........       125        2.1        178        2.7  (     53)         76      2.4        102
                                ----------- --------- ---------- --------- ---------- --------- ---------- ----------

Loss (income) before taxes....    (2,545)     (42.1)        10         .2    (2,555)        256      8.2       (246)

Income taxes..................       396        6.5         24         .4       420         102      3.2         78
                                =========== ========= ========== ========= ========== ========= ========== ==========
Net Income (Loss).............  $ (2,149)     (35.6)  $    (14)       (.2) $  2,135   $     154      5.0   $   (168)
                                =========== ========= ========== ========= ========== ========= ========== ==========

Average shares outstanding....     2,278                 2,124                            1,465
Primary earnings per share....  $   (.94)             $   (.01)                       $     .11


*Includes sales and costs of acquired subsidiary for the nine months ended March
1, 1998 Reflects reclassifications for consistency of comparisons.

                                                                          3/31/99       3/31/98
FINANCIAL CONDITION                                                            (IN 000'S)              CHANGE

Cash and short term investments........................................ $    1,896     $    3,298    $   (1,402)
Other current assets...................................................      1,697          2,066       (   369)
                                                                        ------------   -----------   -----------
Total Current Assets...................................................      3,593          5,364        (1,771)
Total Current Liabilities..............................................      1,452          1,585           133
                                                                        ------------   -----------   -----------
Working Capital........................................................      2,141          3,779        (1,638)
                                                                        ------------   -----------   -----------
Current Ratio..........................................................      2.5:1          3.4:1
Total Assets...........................................................      6,161          8,181        (2,020)
Total Liabilities......................................................      1,639          1,660            21
                                                                        ------------   -----------   -----------
Stockholders' equity...................................................      4,522          6,521        (1,999)
                                                                        ============   ===========   ===========
Book value per share................................................... $    2.00      $    2.86     $   (0.86)
                                                                        ============   ===========   ===========
</TABLE>


                                       20

<PAGE>

RESULTS OF OPERATIONS

FISCAL YEAR ENDED MARCH 31, 1999 AS COMPARED TO FISCAL YEAR ENDED MARCH 31, 1998

         As presented in the above summary,  the Company lost $2,149,000 for the
year ended  March 31,  1999 in  comparison  to a loss of  $14,000  for the prior
fiscal year. The primary reasons for the increased loss were: a 6.7% decrease in
sales from $6,421,000 in 1998 to $5,987,000 in 1999 and a 15.3% increase of cost
of sales from  $4,189,000  to $4,832,000  during the same period;  the Company's
expenses  for  special  projects  and other  costs not  directly  related to the
current  production-sales  cycle of  $979,000;  and an  increase  in selling and
administration  of $556,000,  which was only partially offset by other decreases
of $55,000 and an income tax recovery  change of $402,000,  also  contributed to
the loss.

         A reduction in the Company's  gross margin of $1,075,000 was the result
of a decrease in sales of $432,000  and  increase of cost of sales of  $643,000.
The increased costs were primarily the result of the Company's  expansion of its
capacity.  The Company moved to larger  quarters and increased its  engineering,
production and support personnel. During this fiscal year, the Company's results
from operations were  negatively  affected by the economic  downturn in Asia. At
the  same  time,  the  Company  was  in the  beginning  of a  transition  from a
translation  service  bureau  utilizing  tools and memory  translation to a more
technologically   based   products   enterprise   developing  its  own  computer
translation system.

         The special projects and other costs included:

              new product development and strategic
                alliance discussions                                    $261,000

              settlement of salary contracts of president
                of subsidiary                                           $316,000

              loss in establishing and closing of
                Canadian operations                                     $122,000

              amortization of value of options relating to service
                and consulting agreement                                $180,000

              overlaps in the settlement of certain professional fees   $100,000
                                                                        --------
                           Total:                                       $979,000
                                                                        ========

         Selling and administrative  expenses increased by $556,000,  from 20.3%
to 31.1% of sales. These included the following:



                                       21
<PAGE>


              increased costs of sales personnel                       $  85,000

              marketing campaign                                       $ 170,000

              accounting system charges and increased
                accounting personnel                                   $  80,000

              salary increase to senior management of subsidiaries     $  70,000

              severance costs                                          $  90,000
                                                                      ----------
                       Total:                                          $ 495,000
                                                                      ==========

         Management  believes that most of the causes of this  significant  loss
have  been  eliminated  or their  effects  reduced.  The  Company  has taken the
following steps to mitigate further losses and to return to profitability:

         (i)  International  operations in Europe and Canada lost  approximately
$500,000 in the most  recent  fiscal  year.  The  Canadian  entity was closed in
March,  1999. It is anticipated  that European  operations will be profitable in
the first quarter of fiscal 2000.

         (ii) Personnel costs have been reduced.  Such changes will reduce costs
by approximately $350,000.

         (iii)  The  general  advertising   campaign  has  been  terminated  and
marketing costs reduced by approximately $200,000.

         (iv) The Company has achieved  "technological  feasibility" relative to
its research and development efforts to design a computer translation system. It
has  also  acquired  under  a  license   exclusive  rights  for  computer  based
translations for certain of the products (see "Business").

         (v) The  Company  has  acquired  a Web  site  and  internet  management
services  operation  (see  "Business")  which  is  expected  to  be  immediately
accretive to earnings.



                                       22
<PAGE>


FISCAL YEAR ENDED MARCH 31, 1998 AS COMPARED TO FISCAL YEAR ENDED MARCH 31, 1997

         The Company's profit decreased from $256,000 before taxes to $10,000 as
a result of the following factors:

         Research and  development:  There were  significant  efforts to develop
computer  translation systems and tools with consequent research and development
expenses of approximately $244,000.

         Public entity: As a publicly traded entity, the Company incurred direct
expenditures  for  legal,  financial,  accounting  and other  fees that were not
required by a private entity.  It is estimated that expenditures for these costs
approximated $150,000.

         Expansion  of capacity:  As more fully  described  in  "Business,"  the
Company  expanded its ranges of services.  As a result,  there were additions to
management and technical staff, support services and space.

         A detailed  comparison  of costs and expenses is not  appropriate.  The
increase in sales of  $3,228,000  for the  current  year as compared to the same
period for the prior  year  consists  of an  increase  in sales of the  domestic
subsidiary of $638,000 and of the acquired  foreign  subsidiaries of $2,590,000.
The  acquisition  gave  rise to the  amortization  of  excess  of  approximately
$73,000.  Moreover,  Corporate  Administration  expenses  included  in  Selling,
General,  and  Administrative  for the year ended March 31, 1997 were for a four
month period and aggregated $216,000 in comparison to $774,000 for the full year
ended March 31, 1998.

LIQUIDITY AND WORKING CAPITAL

         As of 3/31/99 working  capital  decreased to $2,139,000 from $3,778,000
for $1,639,000,  as a result of operating losses and the changes detailed in the
accompanying  consolidated  statement of cash flow. The Company believes that it
has adequate cash and other components of working capital  necessary for planned
operations  for the next 12  months.  Inflation  has not  been a  factor  in the
Company's results of operations.

YEAR 2000 ISSUE

         The Year 2000 Issue is the result of computer  programs  being  written
using two digits rather than four to define the  applicable  year. The Company's
computer  programs or  hardware  that have  date-sensitive  software or embedded
chips may  recognize  a date  using "00" as the year 1900  rather  than the year
2000.  This  could  result  in  a  system  failure  or  miscalculations  causing
disruptions of operations,  including, among other things, a temporary inability
to process  transactions,  send invoices,  or engage in similar normal  business
activities.

         Based on recent  assessments,  the Company  determined  that it will be
required to modify or replace  non-compliant  computer  equipment  and  up-grade
non-compliant  software.  These will be replaced in 1999.  The Company's plan to
resolve the Year 2000 Issue  involves the  following  four  phases:  assessment,
remediation, testing and implementation.  To date, the Company has completed its
assessment of all systems that could be significantly affected by the Year 2000.


                                       23

<PAGE>

The  Company is  primarily  in the  business  of  providing  services  but those
services are supported by the use of computer  hardware and software  systems in
the production of a substantial portion of those services. The Company's vendors
consist primarily of individual  translators and other service professionals who
are not expected to be materially  impacted by the Year 2000 Issue.  The Company
is  also  dependent  upon  third  party  suppliers  for  utility   services  and
telecommunications  capabilities.  The  Company  has its  primary  locations  in
geographically  diverse  locations in North America,  Europe and Asia. If one of
the Company's  locations  should be unable to operate due to the Year 2000 Issue
affecting  one  of  its  third  party  suppliers,   the  Company  believes  that
replacement services could be rendered from another of the Company's locations.

         The Company has not yet completed a  comprehensive  study as to whether
its third party suppliers and strategic partners are Year 2000 compliant.  It is
in the  process  of  gathering  information  bout the Year 2000  status and will
continue to assess and monitor their compliance.

         STATUS.  The Company  has  completed  a full  evaluation  of all of its
systems,  the Company  has began the  remediation  phase and  believes it is 60%
complete with the information  already obtained in the evaluation  process.  The
Company  expects to have all  critical  systems  and  hardware  replaced  before
October 1, 1999.  Following  these  replacements,  the Company plans to test all
equipment  and  software.  The  testing  phase will be  completed  no later than
November 1, 1999. During the period of testing the critical systems,  any system
or piece of  equipment  that is found to be  non-compliant,  will be retired and
replaced.  The Company does not expect the cost to replace such  equipment to be
material.

         THIRD PARTIES.  The Company has queried its  significant  suppliers and
strategic partners that do not share information  systems with the Company,  but
has not  received  answers to all of its  queries.  To date,  the Company is not
aware of any of these third parties with a Year 2000 Issue that would materially
impact the Company's  results of operations,  liquidity,  or capital  resources.
However, the Company has no means of ensuring that they will be Year 2000 ready.
The  inability  of those third  parties to complete  their Year 2000  resolution
process in a timely  fashion is not expected to  materially  impact the Company.
The Company believes that it could partially compensate for the failure of those
third  parties  to  comply  by  utilizing  its  operations  in other  geographic
locations to meet the client requirements or by using alternate suppliers.

         COSTS.  The  Company  will  utilize  primarily  internal  resources  to
reprogram,  replace, test and implement the software and operating equipment for
required  Year 2000  modifications.  The total costs of the Year 2000 project is
estimated at $85,000 and is being funded through  operating cash flows.  To date
the Company has incurred approximately ($25,000 expensed and $10,000 capitalized
for new equipment), related to all phases of the Year 2000 project. Of the total
estimated remaining project costs,  approximately $30,000 is related to software
up-grades and $20,000 for testing and monitoring of remaining systems.

         RISKS.  Management  believes  it has an  effective  program in place to
resolve the Year 2000 Issue in a timely manner.  As noted above, the Company has
not yet completed all  necessary  phases of its Year 2000 program.  In the event
that the Company does not complete any additional  phases, the Company's ability
to  produce  certain  orders  may  be  negatively  impacted.  More  importantly,
disruptions  resulting from Year 2000 Issues in the world economy in



                                       24
<PAGE>

geographies  where the Company or its clients have significant  operations could
adversely affect the Company.

         The Company may be unable to meet service  commitments  due to computer
system failure.  The amount of potential  liability,  lost revenue,  and damages
cannot be reasonably estimated at this time.

         CONTINGENCY  PLANS. The Company  currently has no contingency  plans in
place in the event it does not  complete  all  phases  of the Year 2000  program
because of the planned  changes.  The Company plans to  reevaluate  its state of
readiness in October 1999 and determine whether such a plan is necessary.

FOREIGN CURRENCY FLUCTUATIONS

         The Company bills its customers in US Dollars and in foreign currencies
at agreed  upon  amounts of  exchange.  The  Company's  operations  impacted  by
exchange rate fluctuations have been immaterial.

THE EURO

         On January 1, 1999 a new currency was launched,  the Europe, which is a
significant step towards full European Monetary Union (EMU) whereby the national
currencies of certain  European  sovereign  states will be replaced by a single,
supra-national currency in July 2002.

         Currently,  the Euro  co-exists at fixed  exchange  rates with existing
national  currencies  of the  eleven  participating  European  countries.  It is
planned  that the Euro will  stimulate  the  economies  of the EMU  countries by
introducing  transparent pricing between countries,  lower transaction costs and
greater certainty of investment and trade within Europe.

         Approximately  45% of the  Company's  revenue for the fiscal year ended
March 31, 1999 is located within countries adopting the Euro (Ireland,  Germany,
France,  Spain,  the  Netherlands  and  Belgium).   The  impact  of  the  Euro's
introduction and future  implementation is not expected to be significant to the
revenue and net income of the Company.

ITEM 7.  FINANCIAL STATEMENTS

         The  information  called  for by Item 7 is  included  in the  Financial
Statements contained in this Annual Report on Form 10-KSB.

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

         Not applicable.



                                       25
<PAGE>


                                    PART III

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

         During the fiscal  year ended  March 31,  1999,  the  directors  and/or
executive officers of The Translation Group were as follows:

        NAME                         AGE        POSITION
        ----                         ---        --------

        Charles D. Cascio             62        President, Chief Executive
                                                Officer/Director
        Julius Cherny, Ph.D.          62        President of BTS and Director
        John Toedtman                 54        Chief Operating Officer/Director
        Gary M. Schlosser             48        Director
        Theodora Landgren             54        Director
        Robert J. Wussler             62        Director
        James W. Grau                 59        Director
        Richard J. L. Herson          80        Director/Employee

         CHARLES D. CASCIO  became a  Director,  President  and Chief  Executive
Officer of the Company in May of 1996.  He had  previously  been  engaged by the
Company,  from its inception,  as a financial  consultant.  From late 1992 until
July 1996 he was Chairman  and  President of  Electro-Kinetic  Systems,  Inc., a
publicly held company. From 1990 to late 1992, Mr. Cascio was employed as a full
time  marketing  and  financial  consultant  to John B.  Canuso,  Inc.,  a large
privately  held  development,  building  and  entertainment  company  located in
Southern  New  Jersey.  From  1987 to 1990,  he was a full  time  financial  and
marketing   consultant  to  Drug  Screening  Systems,   Inc.,  a  publicly  held
manufacturer  of drug  screening  systems  to detect the  presence  of "drugs of
abuse."  From  1984 to 1987,  Mr.  Cascio  managed  a wholly  and  family  owned
sporting,  entertainment  and  recreational  facility,  known  as the  Coliseum,
located in Voorhees,  NJ. Mr. Cascio holds a Bachelors  Degree in Economics from
Iona College.

         JULIUS  CHERNY,  PH.D. was a Director from May 1996 to October 1998 and
on September 2, 1997 assumed the presidency of Bureau of  Translation  Services,
Inc. Dr. Cherny is a founder and partner of Mottola,  Cherny and  Associates,  a
consulting firm specializing in providing financial,  organizational and systems
consulting services. He is currently president and a director of Electro-Kinetic
Systems,  Inc., a publicly held company.  Dr. Cherny holds a Ph.D. in accounting
and is currently on staff at the NYU Graduate  School of Business and previously
at the Hagen School of Business at Iona College.  Dr. Cherny has held  positions
as Director,  Senior Vice President,  and Chief Financial  Officer with firms in
the  securities  industry.  Dr. Cherny has published  numerous  papers and books
dealing with finance,  accounting and advanced  mathematical theory. In November
of 1998, Mr. Cherny resigned as President of BTS and a director of the Company.

         JOHN  TOEDTMAN has been  employed by the Company since October 1998 and
was appointed as a Director in February 1999. From 1996 to 1998 Mr. Toedtman was
employed  as  Managing  Director  of  Blue  Stone  Capital  Partners,  L.P.,  an
investment  banking  firm.  From 1990



                                       26
<PAGE>

to  1996  Mr.   Toedtman  was  President   and  Director  of  Gen/Rx,   Inc.,  a
pharmaceutical firm; from 1980 to 1986 he was President and Director of Personal
Diagnostics,  Inc.,  a  medical  device  company;  and from  1976 to 1980 he was
President  and  Director  of  Princeton  Chemical  Research,   Inc.,  a  process
technology  company;  and  from  1970 to 1976 he was  Group  Vice  President  of
Englehard  Industries,  a large precious metals company. Mr. Toedtman has a B.A.
in economics from Georgetown University.

         GARY M.  SCHLOSSER was elected a Director in August 1996.  Since August
1, 1994,  Mr.  Schlosser has been the President and a director of Jefferson Bank
of New  Jersey.  From  October  1989  through  July 1994 he was  Executive  Vice
President of Glendale  National Bank of New Jersey and prior thereto,  from July
1988, he was President of Glendale Mortgage Services  Corporation,  a subsidiary
of Atlantic Bancorporation.  Mr. Schlosser received a bachelor of arts degree in
history and business from the University of Colorado at Denver. Mr. Schlosser is
a member of the Camden County Bankers  Association and the South Jersey Security
Bankers Association.

         THEODORA  LANDGREN  currently  is a  Director  and  resides  in London,
England.  She was the  Chairperson of the Board of Directors and Chief Operating
Officer of the Company from January 1996, to April 1998 and she was the Chairman
and  President of BTS since  founding the firm in 1984 until  September 2, 1997.
Prior to starting  BTS she  studied  linguistics  and  computer  programming  at
several  universities  including  Universities of Denver and Innsbruck (Austria)
and  USC  College  of  Continuing  Education,  as well as  teaching  English  to
non-English  speaking  students at the  University  of  Stockholm,  Sweden.  Ms.
Landgren  is  active  in the  American  Translator's  Association  (ATA) and the
Society of Technical Communication (STC).

         ROBERT WUSSLER was elected a Director in September 1997. Mr. Wussler is
currently  President & CEO of The Wussler  Group and  Affiliate  Enterprises,  a
company  owned by ABC  Television  Network.  He is the former  President  of CBS
Television  and CBS  Sports  and was an  original  founder  of CNN  (Cable  News
Network).  Mr. Wussler received a bachelor of arts degree in communications from
Seton Hall University.  Additionally,  he holds honorary  doctorates of law from
Seton Hall  University  and  Emerson  College.  He has served as Chairman of the
National  Academy of Arts and  Sciences  and member of the Board of Governors of
both the National Cable Television Association and the National Academy of Cable
Programming.

         JAMES W. GRAU was elected a Director in April of 1997.  Since 1980, Mr.
Grau has served as  President  and was the founder of  Charisma  Communications,
Ltd.  which  specializes  in producing  programs,  industrials,  live events and
concerts  for the  networks,  cable and  industry.  During  its 19 year  history
Charisma has created  programs earning the highest industry awards and accolades
and has eleven productions in The Museum of Television and Radio.

         RICHARD J. L.  HERSON is a Director  and  employee  of The  Translation
Group. Mr. Herson served as the Chief Financial Officer from July 6, 1995, until
August 31, 1997.  From 1945 to 1974 Mr. Herson was a general partner in the firm
of Hertz, Herson and Company, CPA's with offices in New York, and Charlotte.  He
is currently Secretary of the Bruner Foundation, where he directs its investment
portfolio.  He is also  secretary/treasury of Electro-Kinetic  Systems,  Inc., a
publicly held company. He holds a Bachelor's Degree from the City College of New
York and a M.S. in  Accounting  from Columbia  University.  He has also authored
numerous  articles  and a book on  accounting.  Mr.  Herson  will  retire  as an
employee in July 1999.



                                       27
<PAGE>


ITEM 10.  EXECUTIVE COMPENSATION

         The following  table  summarizes  the total  compensation  of the chief
executive officer and the other most highly compensated officers whose salary is
in excess of $100,000 for the fiscal year ending March 31, 1999.


<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE

===========================================================================================================================
                                                                                   Long Term Compensation
                                                                        ===================================================
                                        Annual Compensation                     Awards                 Payouts
===========================================================================================================================
                                                             Other      Restricted
Name and                                                     Annual       Stock       Stock        LTIP     All
Principal                        Salary        Bonus        Compen-      Award(s)   Options/SARS(Payouts    Other
Position           Year(s)        ($)           ($)        sation($)       ($)                     ($)      Compen-sation($)
============================================================================================================================
<S>               <C>         <C>              <C>        <C>
Charles D. Cascio  1999        $108,058         -0-        $24,956(ii)
   President and   1998        $106,775         -0-        $19,188
   CEO             1997         $87,000 (i)     -0-             -0-
============================================================================================================================

Julius Cherny      1999        $104,000         -0-        $21,044(iv)
   President of    1998(iii)    $60,000         -0-             -0-
   BTS             1997             N/A         N/A            N/A
============================================================================================================================

Theodora           1999       $126,748(v)       -0-         $5,309(vi)
Landgren           1998       $106,775          -0-         $9,000
   Chief           1997       $104,000          -0-             -0-
   Operating
   Officer
============================================================================================================================

</TABLE>

(i)    for the period from May 10, 1996 to March 31, 1997.
(ii)   consists of car allowance and related expenses totaling $10,608,  medical
       reimbursement  of $2,215,  health  insurance,  premium of $5,104 and life
       insurance premium of $7,028.
(iii)  for the period from September 1, 1997 to March 31, 1998.
(iv)   consists  of  health  insurance  premiums  totaling  $6,469  and  medical
       reimbursements of $14,575.
(v)    consists of settlement agreement payments in lieu of salary of $123,548.
(vi)   consists of health insurance premiums.

EMPLOYMENT AGREEMENTS

         The Company has a five year written  employment  contract dated July 1,
1996 with its Chief  Executive  Officer  for an annual  base  salary of $104,000
during each of the five years thereof,  plus annual cost of living  adjustments.
This agreement also (i) contains  restrictions on competing with the Company for
two years  following  termination  of  employment,  (ii)  provides for severance
payments in the event of  termination  without cause by the Company in an amount
equal to the  aggregate  amount of payments due under the term of the  Agreement
(without  regard  to  extensions),   but  in  no  event  less  than  one  year's
compensation,  (iii)  provides that the Company will  purchase a life  insurance
policy  naming as  beneficiary a person chosen by the officer in an amount equal
to 2.5 times his salary and (iv) provides for a car or a car allowance.


                                       28

<PAGE>

         The Company has a three-year written employment contract with its Chief
Operating Officer,  John Toedtman,  for an annual base salary of $100,000 during
each of the three years thereof,  plus annual cost of living  adjustments.  This
agreement  also (i) provides for a car or car allowance.  Mr.  Toedtman was also
granted options to purchase 100,000 shares of the Company's common stock.

         The Company  also had a similar  agreement  with the  president  of its
foreign  subsidiary.  This  executive  has since  retired from the Company as of
January 31, 1999.  The Company also had an agreement  with the  president of its
American subsidiary for a salary in the base amount of $104,000 per year.

STOCK OPTION PLAN

         In October of 1996,  the Board of  Directors  and  stockholders  of the
Company adopted a Stock Option Plan (the "Option Plan") as an incentive for, and
to encourage share ownership by, the Company's officers, directors and other key
employees  and/or  consultants  and  potential  management  of  possible  future
acquired companies.  The Option Plan provides that options to purchase a maximum
of  2,500,000  shares  of  common  stock,   subject  to  adjustment  in  certain
circumstances may be granted under the Option Plan. Both incentive stock options
within the  meaning of Section  422 of the  Internal  Revenue  Code of 1986,  as
amended (the "Code") and non-qualified  options are provided for under the Plan.
The  Option  Plan also  allows for the  granting  of stock  appreciation  rights
("SARs") in tandem with, or  independently  of, stock options.  Any SARs granted
will not be counted against the 2,500,000 share limit.

         The purpose of the Option Plan is to make options and SARS available to
certain  officers,  directors and other key employees and/or  consultants of the
Company in order to give such  individuals  a greater  personal  interest in the
success of the Company  and, in the case of  employees,  an added  incentive  to
continue and advance in their employment.

         The Plan is currently  administered by the majority vote of a committee
(the "Committee")  appointed by the Board of Directors and comprised of at least
two members of the Board who, in the case of the Option  Plan,  are not eligible
to receive  options,  other than pursuant to a formula,  it being  intended that
such  plan  shall  qualify  under  Rule  16b-3 as  promulgated  pursuant  to the
Securities  Exchange Act of 1934,  as amended.  The Committee  designates  those
persons to receive grants under the Plan and determines the number of options to
be granted and the price payable for the shares of Common stock thereunder.  The
price  payable for the shares of Common  stock under each option is fixed by the
Committee at the time of the grant,  but, for incentive  stock options,  must be
not less than 100% (110% if the person granted such option owns more than 10% of
the outstanding shares of Common stock) of the fair market value of Common stock
at the time the option is granted, and 85% of such price for non-qualified stock
options.  The above  notwithstanding,  the Company  intends shortly to amend the
Option Plan so it will conform to the recent revisions of Rule 16b-3.



                                       29
<PAGE>


         See Note 8-Stock Options and Warrants,  Notes to Consolidated Financial
Statements, relative to the granting of options during the years ended March 31,
1999, and March 31, 1998,  unexercised  options held as of the end of the fiscal
year, options exercised and options forfeited during the years.

         Compensation of Directors

         Beginning  April 1, 1999,  outside  directors  of the  Company  will be
compensated  for their  services  at the rate of $1,000 per  meeting and receive
options to acquire  5,000  shares of common  stock each  quarter at the  average
market  value  of  the  last  ten  days  of the  quarter.  See  also  "Executive
Compensation  - Employment  Agreements"  for  descriptions  of other  agreements
between  the  Company  and certain of its  directors  who are  employees  of the
Company.

SECTION 16(A)  BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Based solely upon information supplied to the Company by its directors,
officers and beneficial  owners of at last 10% of the common stock,  the Company
believes  that  during  the  fiscal  year  ended  March  31,  1999,  all  filing
requirements  under  Section  16(a)  applicable  to its  directors and executive
officers  were met except that Mr.  Herson failed to file Form 4 relative to the
disposition  of  certain  of  his  shares  to  members  of his  family  and to a
foundation of which he is president.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following  table sets forth  information  regarding the  beneficial
ownership of the Company's common stock, as of June 15, 1999, by (a) each person
known by the Company to own beneficially more than five percent of the Company's
outstanding  shares of common stock, (b) each director and executive  officer of
the Company who owns shares and (c) all directors and executive  officers of the
Company as a group. Unless otherwise  indicated,  all shares of common stock are
owned by the individual named as sole record and beneficial owner with exclusive
power to vote and dispose of such shares.  The reported  numbers and percentages
include  stock  options  and  warrants   which  are  currently   exercisable  or
exercisable  within  60  days of  June  15,  1999  as  required  by Item  403 of
Regulation S-B of the Securities Act.

                                    COMMON STOCK
                                       OWNED                     PERCENTAGE
    NAME AND ADDRESS                BENEFICIALLY                  OF CLASS
    ----------------                ------------                 ----------
Theodora Landgren (2)(3)              477,000                       17.1%
Charles D. Cascio (1)(2)(4)           365,000                       13.0%
Richard J.L. Herson (1)(5)             74,000                        2.6%
Gary M. Schlosser (1)(6)               50,000                        1.8%
Julius Cherny (6)                     300,000                       10.7%
James W. Grau (7)                       6,660                         *
Edouard Prisse (8)                    253,000                        9.0%




                                       30
<PAGE>


John Toedtman (1)(6)                  100,000                        3.6%
Robert J. Wussler (6)                  60,000                        2.1%
All Executive Officers and
Directors as a Group (9)            1,685,660                       44.9%
                                    =========                       =====
------------------

*        Less than 1%

(1)    Uses the Company's address at 30 Washington, Haddonfield, NJ 08033.

(2)    Includes 100,000  currently  exercisable  warrants and 100,000  currently
       vested stock options.

(3)    Does not include an additional  112,500  shares of Common Stock held in a
       Voting Trust under which she had sole voting  control  until  December 2,
       1998. The Voting Trust has since been  terminated and the shares returned
       to their respective record owners.

(4)    Does not  include  an  aggregate  of  144,000  shares  owned by his adult
       independent  children.  Mr. Cascio disclaims beneficial ownership of such
       shares.

(5)    Includes 39,000 currently exercisable stock options.

(6)    Consists of currently exercisable stock options.

(7)    Consists of currently exercisable warrants.

(8)    Includes 100,000 shares of common stock, an additional  103,000 shares of
       common stock to be  delivered  pursuant to a prior  agreement  and 50,000
       currently exercisable stock options.

(9)    Includes 587,500 shares, 749,000 currently exercisable stock options, and
       206,660  warrants  owned by all  executive  officers and directors of the
       Company during the reporting period.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The Company has an exclusive license agreement with Gedanken, a company
controlled  by Dr.  Julius  Cherny,  for the  worldwide  rights to an  automated
machine  translation  system.  Dr.  Cherny  owns a  United  States  Patent  that
describes  apparatus  and  methods  for  translating  languages  using  advanced
telecommunications and computer technologies. The Company is obligated under the
agreement to pay  royalties on all revenues  generated  that use, in whole or in
part, the patent rights and know-how.

         On June 29,  1998,  the Company  entered  into a  five-year  consulting
agreement  with a former officer of a foreign  subsidiary  which provides for an
annual  retainer of $20,000 plus the ability to borrow up to $50,000 a year from
the  Company  which  will be secured by common  stock of The  Translation  Group
currently  owned by the former  officer.  In  exchange  for the above  mentioned
remuneration,  the  consultant  will  provide his  services to the Company for a
minimum of one day per week throughout the term of the agreement.


                                       31

<PAGE>

         Michael Cascio, Esquire, the son of Charles Cascio, President and Chief
Executive  Officer of The  Translation  Group,  provided  legal  services to the
Company for the fiscal years ended March 31, 1999 and 1998 valued at $49,004 and
$47,000, respectively.

         The Company has entered into written employment agreements with certain
of its officers. See "Executive Compensation."

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      EXHIBITS

         The  following  exhibits  were  filed  as  part  of  SB-2  Registration
Statement dated July 25, 1996 (Registration No. 333-8857):

<TABLE>
<CAPTION>

Exhibit No.           Description                                                          Method of Filing
<S>                  <C>                                                                  <C>
1.1                   Revised Underwriting Agreement                                       (4)

2.1                   Stock Purchase Agreement between the Stockholders of Planet Access   Filed herewith
                      Networks, Inc., Planet Access Networks, Inc. and the Company, as
                      amended dated April 27, 1999

3.1                   Restated Certificate of Incorporation of the Company                 (1)

3.2                   By-laws of the Company                                               (1)

4.1                   Specimen Common Stock Certificate                                    (3)

4.2                   Specimen Warrant Certificate                                         (3)

4.4                   Revised Form of Warrant Agreement                                    (4)

4.5                   Form of Revised Representative's Warrant Agreement                   (4)

4.6                   Form of Revised Representative's Warrant                             (4)

4.7                   Form of Subscription Agreement between the Company and investors     (1)
                      pursuant to December 7, 1995 Private Placement Memorandum

10.1                  Lease Agreement between Bureau of Translation Services, Inc. and     (1)
                      J.C.G. Partnership dated January 18, 1995

10.2                  Employment Agreement between the Company and Charles D. Cascio       (2)
                      dated as of December 7, 1995, as amended

</TABLE>


                                       32
<PAGE>

<TABLE>

<S>                  <C>                                                                  <C>
10.3                  Agreement between the Bureau of Translation Services, Inc. and       (2)
                      debis Systemhaus KSP - Rommorzielle Systeme und Projeit Gomblt
                      dated May 24, 1995

10.4                  The Translation Group, Ltd. 1995 Stock Option Plan                   (1)

10.5                  Consulting Agreement between the Representative and the Company      (4)

10.6                  License Agreement between the Company and Gedanken Corporation       Incorporated by reference
                      dated as of November 1, 1996                                         to the Company's Annual
                                                                                           Report on Form 10-KSB for
                                                                                           the year ended March 31,
                                                                                           1997

10.7                  Consulting Agreement between the Company and James W. Grau dated     Incorporated by reference
                      February 20, 1997                                                    to the Company's
                                                                                           Registration Statement on
                                                                                           Form S -8 filed May 21,
                                                                                           1997

10.8                  Agreement between the Company and Felician College dated April 6,    Incorporated by reference
                      1998                                                                 to the Company's Annual
                                                                                           Report on Form 10-KSB for
                                                                                           the year ended March 31,
                                                                                           1998

10.9                  Employment Agreement between the Company and Jeffrey Cartwright      Filed herewith
                      dated May 18, 1999

10.10                 Employment Agreement between the Company and Frederick LaParo        Filed herewith
                      dated May 18, 1999

10.11                 Employment Agreement between the Company and John Toedtman dated     Filed herewith
                      May 18, 1999

</TABLE>

                                       33
<PAGE>

<TABLE>

<S>                  <C>                                                                  <C>
10.12                 Stock Pledge Agreement between the Company and various former        Filed herewith
                      stockholders of Planet Access Network, Inc. dated May 18, 1999

10.13                 License Agreement between the Company and ESTeam AB dated April      Filed herewith
                      15, 1999*

</TABLE>

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

*        Subject to confidential treatment request pursuant to Rule 24b-2 of the
         Exchange Act of 1934.

(1)     Incorporated  by reference to the  Company's  Registration  Statement on
        Form SB-2 dated July 25, 1996  (Registration  No.  333-8857)  (the "Form
        SB-2").
(2)     Incorporated by reference to Amendment No. 1 to the Company's Form SB-2.
(3)     Incorporated by reference to Amendment No. 2 to the Company's Form SB-2.
(4)     Incorporated by reference to Amendment No. 3 to the Company's Form SB-2.


(b)     REPORTS ON FORM 8-K.

         During the quarter ended March 31, 1999 the Company filed the following
Reports on Form 8-K.

         1.       Report  on Form 8-K  filed  March  10,  1999  relating  to the
                  Company  decision  not to retain  Richard A. Eisner & Company,
                  LLP ("Eisner") to audit the Company's financial statements for
                  the year ended March 31, 1999.

         2.       Report on Form 8-K/A  filed  march 19,  1999  relating  to the
                  Company's decision not to retain Eisner to audit the Company's
                  financial statements for the year ended March 31, 1999.


                                       34
<PAGE>

                                   SIGNATURES


         In accordance  with Section 13 or 15(d) of the Securities  Exchange Act
of 1934,  the  Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                                 THE TRANSLATION GROUP, LTD.


                                                 By:   /S/ CHARLES D. CASCIO
                                                    ----------------------------
                                                    Charles D. Cascio, President


                                                 Dated:  July 14, 1999


                                                 By:  /S/ JUSTINE KOSTKA
                                                    ----------------------------
                                                    Justine Kostka, Controller


                                                 Dated:  July 14, 1999


         In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following  persons on behalf of the  Registrant  and in
the capacities and on the dates indicated:

<TABLE>
<CAPTION>

Signature                                   Title                                       Date
<S>                                        <C>                                         <C>
/s/  Charles D. Cascio                      President, Chief Executive                  July 14, 1999
CHARLES D. CASCIO                           Officer and Director

/s/ Theodora Landgren                       Director                                    July 14, 1999
THEODORA LANDGREN

/s/  Richard J.L. Herson                    Director and Employee                       July 14, 1999
RICHARD J.L. HERSON

/s/  Gary M. Schlosser                      Director                                    July 14, 1999
GARY M. SCHLOSSER

/s/  Robert Wussler                         Director                                    July 14, 1999
ROBERT WUSSLER

/s/  John Toedtman                          Chief Operating Officer                     July 14, 1999
JOHN TOEDTMAN                               and Director

</TABLE>


<PAGE>


                          INDEPENDENT AUDITORS' REPORT




To the Board of Directors and Stockholders
The Translation Group, Ltd.

We have audited the accompanying  consolidated  balance sheet of The Translation
Group, Ltd. and subsidiaries as of March 31, 1999, and the related  consolidated
statements of operations,  comprehensive  operations,  stockholders'  equity and
cash flows for the year then ended. These consolidated  financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  consolidated  financial  statements  are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting  principles used and significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audit provides a reasonable  basis
for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all materials respects,  the consolidated  financial position of The Translation
Group, Ltd. and subsidiaries as of March 31, 1999, and the consolidated  results
of their operations and their  consolidated  cash flows for the year then ended,
in conformity with generally accepted accounting principles.





                                                         /s/ Wiss & Company, LLP
                                                         -----------------------
                                                             WISS & COMPANY, LLP


Livingston, New Jersey
June 22, 1999


                                       F-1
<PAGE>



INDEPENDENT AUDITORS' REPORT




Board of Directors and Stockholders
The Translation Group, Ltd.


We have audited the accompanying  consolidated  balance sheet of The Translation
Group, Ltd. and subsidiaries as of March 31, 1998, and the related  consolidated
statements of operations,  stockholders' equity and cash flows for the year then
ended.  These  consolidated  financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  consolidated  financial  statements  are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting  principles used and significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audit provides a reasonable  basis
for our opinion.

In our opinion, the financial statements enumerated above present fairly, in all
materials  respects,  the  consolidated  financial  position of The  Translation
Group, Ltd. and subsidiaries as of March 31, 1998, and the consolidated  results
of their operations and their  consolidated  cash flows for the year then ended,
in conformity with generally accepted accounting principles.



/s/ Richard A. Eisner & Company, LLP
Richard A. Eisner & Company, LLP

New York, New York
June 30, 1998


                                      F-2



<PAGE>
                           THE TRANSLATION GROUP, LTD.
                                and Subsidiaries
                           Consolidated Balance Sheet
                              As of March 31, 1999
<TABLE>

<S>                                                                                       <C>
 ASSETS
 Current assets:
   Cash and cash equivalents                                                               $ 1,895,970
   Accounts receivable, net of allowance for doubtful
    accounts of $71,140                                                                        857,261
   Work in process                                                                             390,780
   Certificate of deposit, pledged                                                             106,540
   Other current assets                                                                        350,337
                                                                                               -------

 Total current assets                                                                        3,600,888

 Property and equipment, net of accumulated depreciation and
  amortization of $773,878                                                                   1,007,719

 Excess of purchase price over fair value of net assets acquired, net of
  accumulated amortization of $169,547                                                       1,249,717
 Loan receivable from officer                                                                  149,500
 Other assets                                                                                  128,017
                                                                                               -------

 TOTAL ASSETS                                                                              $ 6,135,841
                                                                                           ===========

 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
   Accounts payable                                                                        $   451,631
   Notes payable, banks                                                                        196,672
   Current maturities of long-term obligations                                                 123,630
   Accrued liabilities                                                                         444,742
   Deferred income                                                                             244,780
                                                                                               -------

 Total current liabilities                                                                   1,461,455

 Long-term obligations, less current maturities                                                178,254

 TOTAL LIABILITIES                                                                           1,639,709
                                                                                             ---------
 Commitments and contingencies

 Stockholders' equity:
   Preferred stock, $.001 par value, 1,000,000 authorized,
    no shares issued and outstanding
   Common stock, $.001 par value, 15,000,000 shares authorized,
    2,278,340 shares outstanding and to be issued                                                2,278
   Additional paid-in capital                                                                6,051,985
   Unearned portion of compensatory warrants                                                   (45,000)
   Retained earnings                                                                        (1,467,025)
   Common stock in treasury, 8,000 shares                                                      (68,032)
   Foreign currency translation adjustment                                                      21,926
                                                                                                ------

 Total stockholders' equity                                                                  4,496,132
                                                                                             ---------
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                $ 6,135,841
                                                                                           ===========

</TABLE>



 SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.




                                      F-3
<PAGE>


                           THE TRANSLATION GROUP, LTD.
                                and Subsidiaries
                      Consolidated Statements of Operations
                   For the years ended March 31, 1999 and 1998

<TABLE>
<CAPTION>


                                                                          MARCH 31,         MARCH 31,
                                                                            1999              1998
                                                                            ----              ----
<S>                                                                     <C>               <C>
 Revenue                                                                 $ 5,987,002       $ 6,420,833
 Cost of revenue                                                           4,832,359         4,189,366
                                                                         -----------       -----------

 Gross profit                                                              1,154,643         2,231,467
                                                                           ---------         ---------

 Cost and expenses:
   Selling, general and administration                                     1,864,721         1,309,349
   Research and development                                                  147,320           244,169
   Special projects and other costs                                          979,357
   Corporate administration                                                  736,184           773,897
   Amortization of excess of purchase price over
    fair value of net assets acquired                                         96,884            72,663
                                                                           ---------         ---------
 Total                                                                     3,824,466         2,400,078
                                                                           ---------         ---------

 Loss before other income (expense)                                       (2,669,823)         (168,611)
                                                                          -----------         ---------

 Other income (expense):
   Interest income                                                           185,212           197,488
   Interest expense                                                          (45,461)          (18,754)
   Foreign currency gains (losses)                                           (14,774)               -
                                                                             --------          -------
                                                                             124,977           178,734
                                                                            --------           -------

 (Loss) income before provision for income taxes                          (2,544,846)           10,123

 Provision for income taxes                                                 (396,160)           24,437
                                                                            ---------           ------

 Net loss                                                             $   (2,148,686)        $ (14,314)
                                                                      ===============        ==========



 Net loss per common share outstanding - basic                               $ (0.94)          $ (0.01)
                                                                            ========           ========
                                       - diluted                             $ (0.94)          $ (0.01)
                                                                             ========          ========

 Weighted-average shares - basic                                           2,278,340         2,124,000
 Dilutive effect of potential common shares                                       -                 -
                                                                           ---------         ---------
 Weighted-average shares - diluted                                         2,278,340         2,124,000
                                                                           =========         =========

</TABLE>


 SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.



                                      F-4
<PAGE>


                           THE TRANSLATION GROUP, LTD.
                                AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                   FOR THE YEARS ENDED MARCH 31, 1999 AND 1998

<TABLE>
<CAPTION>

                                                                             UNEARNED                         FOREIGN
                                                                 ADDITIONAL  PORTION OF                       CURRENCY      TOTAL
                                                COMMON   COMMON    PAID-IN  COMPRETAINED RETAINED TREASURY TRANSLATION STOCKHOLDERS'
                                                SHARES    STOCK     CAPITAL   WARRANTS     EARNINGS  STOCK    ADJUSTMENT    EQUITY
                                                ------   ------  ----------  -----------  --------- ------- ------------ -----------
<S>                                           <C>       <C>                  <C>         <C>        <C>      <C>       <C>
 BALANCE AT MARCH 31, 1997                     1,943,000 $ 1,943 $4,046,772   $   -       $ 695,975  $   -    $   -     $ 4,744,690

  Shares issued with the exercise of warrants     13,340      13     80,027                                                  80,040

  Shares issued in connection with consulting
   agreement                                      25,000      25    149,975                                                 150,000

  Adjustments in connection with prior financings 10,000      10    (11,502)                                                (11,492)

  Shares issued in connection with exercise of
  employee stock options                           2,000       2     11,998                                                  12,000

  Shares issued and issuable in connection with
    the acquisition of the Word House Companies  185,000     185  1,109,815                                               1,110,000

  Shares issuable in connection with the contingent
   purchase price of the Word House Companies    100,000     100    399,900                                                 400,000

  Warrants issued in connection with public
   relations agreement                                               40,000                                                  40,000

  Option granted for warrants to a consultant                       225,000  (225,000)                                            -

  Foreign currency translation adjustment                                                                        9,769        9,769

  Net loss                                          -         -          -          -    (14,314)       -           -       (14,314)
                                               ---------  ------  ---------  ---------  ---------  ---------  ---------   ----------

BALANCE AT MARCH 31, 1998                      2,278,340   2,278  6,051,985  (225,000)   681,661         -       9,769    6,520,693

  Amortization of unearned compensation                                       180,000                                       180,000

  Purchase of treasury stock, 8,000 shares                                                         (68,032)                 (68,032)

  Foreign currency translation adjustment                                                                        12,157      12,157

  Net loss                                                                -          -   (2,148,686)         -        -  (2,148,686)
                                              --------- ------- ----------- ---------  ------------- ---------- -------- -----------

BALANCE AT MARCH 31, 1999                     2,278,340 $ 2,278 $ 6,051,985 $ (45,000) $ (1,467,025) $ (68,032) $ 21,926 $ 4,496,132
                                              ========= ======= =========== ========== ============= ========== ======== ===========

</TABLE>




See accompanying notes to financial statements.



                                      F-5
<PAGE>
                           THE TRANSLATION GROUP, LTD.
                                AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS
                   FOR THE YEARS ENDED MARCH 31, 1999 AND 1998



                                                    MARCH 31,      MARCH 31,
                                                      1999           1998

 Net loss                                        $ (2,148,686)    $ (14,314)

 Other comprehensive income (loss)
   Currency translation adjustment                     12,157         9,769
                                                 ------------     ---------

 Comprehensive loss                              $ (2,136,529)     $ (4,545)
                                                 =============     =========





See accompanying notes to financial statements.




                                      F-6

<PAGE>



                           THE TRANSLATION GROUP, LTD.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED MARCH 31, 1999 AND 1998

<TABLE>
<CAPTION>

                                                                                       MARCH 31,     MARCH 31,
                                                                                         1999          1998
                                                                                         ----          ----
<S>                                                                                <C>              <C>
 Cash flows provided by (used for) operating activities:
   Net loss                                                                         $ (2,148,686)    $ (14,314)
   Adjustments to reconcile net loss to net cash provided by (used for)
    operating activities:
     Depreciation and amortization                                                       325,382       250,508
     Amortization of excess purchase price over fair value of net assets acquired        130,882
     Amortization of compensatory warrants                                               180,000
     Settlement agreement                                                                270,251
     Warrants issued for services                                                                       40,000
     Loss on abandonment of property and equipment                                                       6,258
     Deferred income taxes                                                              (218,172)      (60,620)
   Changes in operating assets and liabilities:
     Accounts receivable                                                                 326,779       112,917
     Work in process                                                                     346,917      (575,908)
     Other current assets                                                               (205,962)      236,945
     Other assets                                                                        (22,261)       (2,813)
     Accounts payable                                                                    108,828        80,470
     Accrued liabilities and deferred income                                              (3,034)      (73,340)
     Accrued income taxes - foreign                                                      (31,954)       31,954
                                                                                         --------      --------

 Net cash provided by (used for) operating activities                                   (941,030)       32,057
                                                                                        ---------       ------

 Cash flows provided by (used for) investing activities:
   Investments in US Government obligations                                            2,000,000     1,000,720
   Purchase of property and equipment                                                   (404,851)     (311,329)
   Acquisition costs of $83,978, net of cash acquired of $14,438                                       (69,540)
   Investment in certificate of deposit                                                   (6,540)     (100,000)
   Loans and advances to officers                                                        (12,000)     (153,200)
                                                                                         --------     ---------

 Net cash provided by (used for) investing activities                                  1,576,609       366,651
                                                                                       ---------       -------

 Cash flows provided by (used for) financing activities:
   Net proceeds from issuance of common stock                                                           80,548
   Net proceeds from notes payable, banks                                                 46,672       150,000
   Payments on long-term obligations                                                     (95,477)           -
                                                                                         --------      -------

 Net cash provided by (used for) financing activities                                    (48,805)      230,548
                                                                                         --------      -------

 Foreign currency translation adjustment                                                  12,157         9,769
                                                                                          ------         -----

 Net increase in cash and cash equivalents                                               598,931       639,025

 Cash and cash equivalents, beginning of year                                          1,297,039       658,014
                                                                                       ---------       -------

 Cash and cash equivalents, end of year                                              $ 1,895,970   $ 1,297,039
                                                                                     ==========================

 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:  During
   the year ended March 31, 1999, the Company acquired 8,000 shares
     of its common stock in  satisfaction  of a loan  receivable from an officer
   During the year ended March 31, 1998, the Company issued 25,000 shares
    of its stock for a consulting agreement valued at $150,000.
   On June 30, 1997, the Company acquired the stock of Word House as
    described in Note 1.

 SUPPLEMENTAL  DISCLOSURE  OF CASH FLOW  INFORMATION:  Cash paid during the year
   for:
      Interest                                                                          $ 45,461      $ 14,633
                                                                                        --------      --------
      Income taxes                                                                         $ 359         $ 602
                                                                                           -----         -----

</TABLE>



 SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.



                                      F-7
<PAGE>


                  THE TRANSLATION GROUP, LTD. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--THE COMPANY

The Translation  Group, Ltd. and Subsidiaries  (TTGL or the Company)  translates
and  localizes  documents  and  software  into various  languages.  Services are
provided to many  industries  with a  concentration  in  information  technology
companies.  The  Company has  launched a research  program  directed  toward the
development of computer-based  translation  systems. The basic business model is
to accelerate technical developments together with product marketing and sales.

TTGL was  incorporated  in the State of Delaware on July 6, 1995,  and under the
terms of an agreement  and plan of  reorganization,  acquired 100% of the issued
and  outstanding  shares of the Bureau of  Translation  Services,  Inc. (BTS) on
January 17, 1996. BTS was incorporated in 1984 in the State of Pennsylvania.  On
December 2, 1996, the Company  completed its initial  public  offering (IPO) and
sold  705,000  shares  of its  common  stock at a price of $6.00  per  share and
1,840,000 warrants at a price of $.20 per warrant.  The net proceeds amounted to
approximately $3.5 million.

In February 1997, the Company obtained an exclusive worldwide license and rights
to use and sell know-how, apparatus, and methods pertaining to tools and systems
developments  based  on  a  patent  application  by  the  Gedanken   Corporation
("Gedanken").  Gedanken has applied for a United  States  Patent that  describes
apparatus and methods for  translating  words,  phrases,  and  sentences  from a
source language to other target languages using advanced  telecommunications and
computer technologies.  The original agreement has been modified as described in
Note 4.

Effective June 30, 1997, and as later amended,  TTGL acquired all the issued and
outstanding  common stock of the  companies  that  comprise the Word House Group
(Word House) in exchange for 185,000 of its common shares and 200,000 additional
common shares contingent on future earnings levels, of which 100,000 shares were
issuable as of March 31, 1998.

On April 15, 1999, the Company entered into a development and license  agreement
with ESTEAM AB (EST), a corporation organized under the laws of Sweden. EST is a
software-development    company   specializing   in   the   development   of   a
computer-automated  language translation system, known as the "BTR System," that
tailors such system to specific  applications.  The BTR System,  when applied to
appropriate hardware,  automatically  performs language translations without any
human  intervention.  TTGL has received an exclusive  worldwide license for four
identified  applications  and for four additional  applications  for a period of
fifteen years. For royalties, development costs, and other information, see Note
11.

As of May 1, 1999, the Company acquired all the issued and outstanding shares of
Planet Access Networks, Inc. (Planet) for 416,668 shares of its common stock and
cash in the amount of $900,000.  The Company agreed further to secure additional
funding for Planet;  moreover, the sellers have the right to require the Company
to repurchase all or part of the issued shares based on certain conditions.  See
Note 11.


NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FISCAL YEARS

The Company's  reporting  year ends March 31. For purposes of reporting,  fiscal
year ended March 31,  1999 will also be  referred  to as the 1999  fiscal  year;
fiscal  year ended  March 31,  1998 will also be  referred to as the 1998 fiscal
year;  and any  reference  to fiscal  year  ended  March  31,  1997 will also be
referred to as the 1997 fiscal year.

PRINCIPLES OF CONSOLIDATION

The  consolidated  financial  statements  include the accounts of TTGL, BTS, and
Word  House,  from the date of Word  House  acquisition  on June 30,  1997.  All
significant  inter-company  accounts  and  transactions  have  been  eliminated.
Accordingly,  the consolidated financial statements for the year ended March 31,
1999 and 1998 reflect the results of activities of all of these companies.

The Company has accounted for its  acquisition of the Word House Companies under
the purchase  method of  accounting,  wherein the purchase price is allocated to
the  assets  and  liabilities  as of the  acquisition  date  based on  estimated
respective  fair  values.  The excess of purchase  price over fair values of net
assets acquired is being amortized over fifteen years.  Stockholders'  equity as
of March 31, 1999 includes issuable shares (see Note 1).


                                      F-8

<PAGE>


REVENUE RECOGNITION

Translation  service  contracts  are  accounted  for  under  the  percentage  of
completion method of accounting,  whereby sales and costs are recognized as work
on contracts progresses. Changes in estimates for revenue, costs and profits are
recognized  in the  period  in which  they are  determinable.  Work in  progress
represents  the excess of revenue  recognized for financial  reporting  purposes
over amounts contractually permitted to be billed to customers. Deferred revenue
represents  excess of amounts  billed  over  revenue  recognized  for  financial
reporting purposes. Invoices are rendered based upon terms of the contract.


RESEARCH AND DEVELOPMENT

Research and development  costs are expensed as incurred.  Systems  acquisitions
and specialized  tools,  together with related  software,  are expensed while in
development until technological feasibility has been established.

CAPITALIZED COMPUTER SOFTWARE COSTS

AcSEC  SOP98-1  requires  companies to  capitalize  and amortize  certain  costs
associated  with  developing  software for internal use. There are three stages:
the  preliminary  project stage;  the  application  development  stage;  and the
post-implementation/operation  stage.  After the  preliminary  project  stage is
completed and management has committed to funding a probable successful software
project,  such costs  should be  capitalized.  Once the  software is placed into
service,  the  capitalized  cost should be amortized over the period of expected
benefit in a systematic and rational manner.

SFAS No. 2, together with FASB No. 86,  accounting for research and  development
(R&D)  costs,  require  that  companies  expense  R & D until the  research  and
development project has reached technological feasibility.  The Company believes
that these releases apply to its  development  of  machine-translation  computer
systems and that such  technological  feasibility  was  achieved as at August 1,
1998. Accordingly, all expenditures to that point have been expensed as research
and development and capitalized after that date.

FOREIGN CURRENCY TRANSLATION

Statement of operations  amounts have been translated using the average exchange
rates in  effect  for each  period.  Gains  and  losses  from  foreign  exchange
transactions  have been included in the Statements of Operations.  Balance sheet
amounts have been translated using exchange rates in effect at the balance sheet
dates and the translation  adjustment has been included in the foreign  currency
translation adjustment, as a separate component of stockholders' equity.

EARNINGS PER COMMON SHARE

The Company has adopted Statement of Financial  Accounting  Standards (SFAS) No.
128,  "Earnings Per Share" (EPS) which requires dual  presentation  of basic and
diluted EPS for all entities  with complex  capital  structures on a retroactive
basis. Basic income (loss) per share is computed based upon the weighted average
number of common  shares  outstanding  during  each  year,  shares  contingently
issuable under the Word House acquisition have been included for fiscal 1999 and
excluded from the calculation for the 1998 fiscal year. Diluted EPS gives effect
to outstanding  warrants and options using the treasury stock method. For fiscal
1999 and fiscal 1998,  options and warrants were  considered  anti-dilutive  and
were excluded from the calculation of diluted EPS.

CASH AND CASH EQUIVALENTS

The Company  considers  highly liquid debt  instruments  when  purchased  with a
maturity of three months or less to be cash equivalents.

CONCENTRATION OF CREDIT RISK

 Financial  instruments that potentially subject the Company to concentration of
credit risk  consist  primarily of cash and  unsecured  trade  receivables.  The
Company maintains its cash balances in financial  institutions some of which are
insured by the Federal Deposit Insurance  Corporation up to $100,000.  Uninsured
balances at March 31, 1999 totaled  approximately  $1,936,000.  Of the uninsured
cash  balances,  $1,823,000  is held in a  Salomon  Smith  Barney  money  market
account.

The Company grants unsecured  credit to virtually all of its customers,  with no
individual  customer  comprising a concentrated risk.  Management  believes that
credit risk associated with accounts  receivable is limited due to the Company's
long standing relationships with the majority of its customers.


                                       F-9

<PAGE>


PROPERTY AND EQUIPMENT

Property and equipment are stated at cost net of depreciation and  amortization.
Depreciation and amortization are computed using  straight-line  and accelerated
methods over the estimated useful lives of the assets in place.  Amortization of
leasehold  improvements  is  provided  over the shorter of the lease term or the
estimated useful life of the asset.

STOCK OPTIONS

The Company has adopted the disclosure  provisions of SFAS No. 123,  "Accounting
for Stock-Based Compensation," which requires pro-forma disclosure of net income
as if the SFAS No. 123 fair-value method had been applied.  The Company measures
and recognizes  compensation costs under the provisions of Accounting  Princples
Board Opinion No. 25,  "Accounting  for Stock Issued to Employees"  (by SFAS No.
123) which permits that when the exercised price of the Company's employee stock
option  equals or is more than the market price of the  underlying  stock on the
date of grant, no compensation expense is recognized.

MARKETING AND ADVERTISING

Marketing  and  advertising  costs  are  expensed  as  incurred.  Such  expenses
approximated  $223,000  and $98,000 for the years ended March 31, 1999 and 1998,
respectively.

INCOME TAXES

The Company  accounts  for its income  taxes using the  liability  method  which
measures  deferred income taxes by applying enacted statutory rates in effect at
the  balance  sheet  date to  differences  between  the tax bases of assets  and
liabilities and their reported  amounts in the financial  statements.  The asset
arising from the net operating  loss carry forwards was fully reserved since the
realization of the benefits is uncertain.

SPECIAL PROJECTS AND OTHER COSTS

During the year ended March 31, 1999,  the Company  incurred  significant  costs
which  include:  special  projects  relating  to new  product  developments  and
investigation  of  strategic  alliances;  settlement  of salary  contracts  with
previous  chief  operating  officer;  the  opening  and  closing  of a  Canadian
facility;  the  amortization  of the  value of  options  regarding  a  financial
consulting contract;  and settlement of differences of professional fees for the
prior and current periods.

USE OF ESTIMATES

The  preparation of the  consolidated  financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of contingent  assets and  liabilities  at the dates of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting periods.  Certain of the Company's subsidiaries were previously a part
of a consolidated group in the Netherlands. Such subsidiaries may be jointly and
severally  liable for any tax assessments  resulting from the group.  Management
estimates that no provision for such  contingency  is necessary.  Actual results
could differ from these estimates.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The Company has implemented: SFAS No. 130 "Reporting Comprehensive Income" which
establishes standards for reporting and displaying  comprehensive income and its
components  in  financial  statements;  and SFAS  No.  131,  "Disclosures  About
Segments of an Enterprise and Related  Information" which establishes  standards
for the way public  business  enterprises  report  information  about  operating
segments in annual and interim financial statements.  The Company considers that
it operates in one industry segment and is reporting  segment data in accordance
with markets.

FACTORS AFFECTING FUTURE OPERATING RESULTS

The Annual Report to Stockholders contains forward-looking  statements. To date,
the  Company has not  completed  the  commercialization  of products or services
based on its  technological  approaches,  and there can be no assurance that the
approaches will enable the Company to commercially  exploit such technology.  In
addition, the Company faces competition from other companies,  many of which are
larger and better financed.


                                      F-10

<PAGE>


The Company had a substantial  operating loss for its year ended March 31, 1999.
While it expects to reduce its losses  significantly  in its first  quarter  and
return to profitability,  there is no assurance that funds will become available
for its research and  development  programs and related  sales and  marketing of
products.  Insufficient funds could require the Company to delay, scale back, or
eliminate certain of these programs. There also can be no assurance that pending
developments  will  be  protected  by  enforceable  patents  or  copyrights,  or
maintained in confidence as trade secrets.

Other factors may affect the Company's future operations,  including the ability
to attract  and  retain  qualified  management,  to  exploit  current  marketing
efforts, and to compete successfully in the market.


NOTE 3-SIGNIFICANT CUSTOMERS

For the year ended  March 31,  1999,  two  customers  account for 20% and 11% of
revenues,  in  comparison  to two  customers  that  represented  10%  and 14% of
revenues for the year ended March 31, 1998.


NOTE 4-RESEARCH AND DEVELOPMENT

The Company expensed  approximately $147,000 and $244,000 for the development of
a machine-translation  system during the year ended March 31, 1999 and 1998. The
goal  for  the  design  of  machine  tools,  or  systems,   is  to  enhance  the
translation/localization   (production)  process.  The  Company  considers  that
technological  feasibility  was  achieved as at August 1, 1998,  and  subsequent
payments  to  the  Gedanken  Corporation,   in  the  amount  of  $180,000,  were
capitalized after that date.

In February 1997, the Company obtained an exclusive worldwide license and rights
to use and sell know-how, apparatus, and methods pertaining to tools and systems
developments based on a patent  application by Gedanken.  By assignment from Dr.
Julius  Cherny,  Gedanken  applied for a United  States  Patent  that  describes
apparatus and methods for  translating  words,  phrases,  and  sentences  from a
source language to other target languages using advanced  telecommunications and
computer technologies. The Company is obligated to pay royalties on all revenues
generated that use in whole or part the patent rights and know-how.  The Company
has the right to stop funding at specified times or accomplishment  periods. The
Company has agreed to pay  Gedanken  $750,000  for a  translation/  localization
system  (that  includes a specific  topic  builder,  general  topic  dictionary,
quality  control,  and  alignment  tools) at the rate of $20,000 a month through
December 15, 1998, and at the rate of $40,000 a month  thereafter;  the original
arrangement  of $20,000 per month has been  verbally  extended  through June 30,
1999.

Under the 1997 license agreement,  the Company also has the option from Gedanken
for the rights to the development of a Real Time Voice Translation  System based
on providing the necessary funding estimated at $4,000,000.

Dr. Cherny  resigned his positions as the president of BTS and a director of the
Company in November, 1998. Since that time, he has devoted full time to research
and  development  on behalf of the Company.  Dr.  Cherny  remains  president and
principal shareholder of Gedanken.

NOTE 5-PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

                                         March 31, 1999      Average Useful Life
                                                                   (Years)


Equipment (includes                         $848,461                  5
$520,000 pledged as collateral
for bank notes payable)
Software                                     238,615                  5
Equipment and software
under licenses                               334,564                  5
Office condominium                           245,182                  20
Furniture & fixtures                          54,219                  5
Vehicles                                      23,269                  3
Leasehold improvements                        37,287                  5
                                           ---------
Total                                      1,781,597
Less: accumulated
depreciation and amortization                773,878
                                          ----------
Net property and equipment                $1,007,719
                                          ==========

For the years  ended  March 31,  1999 and 1998,  depreciation  and  amortization
expenses were $258,880 and $183,651, respectively.


                                      F-11

<PAGE>


NOTE 6-RELATED PARTY TRANSACTIONS

The Company  settled the outstanding  employment  contract and loan account with
its former  chairperson and chief operating officer for  approximately  $360,000
(which  includes legal fees) and the return of 8,000 shares of its common stock.
It was deemed  that  $275,000  of the  settlement  was a period  expense and the
balance a  deferred  consulting  fee.  Due from the  Company's  chief  executive
officer (CEO) is a loan of $149,500 (which includes accrued interest at the rate
of 6% per annum) that is collateralized by 20,000 of such individual's shares of
the Company's common stock.

The  Company  has  retained a former  officer  and son of the  Company's  CEO as
outside  legal  counsel;  fees were $49,000 in fiscal 1999 and $47,000 in fiscal
1998. For consulting services for year ended March 31, 1998, a director received
20,000 warrants valued at $40,000, and a corporation under his control, received
$24,013.  A former officer and a current director and employee  received $26,851
in fiscal 1999 and $17,912 in fiscal 1998.

Gedanken,  a company  controlled by Dr. Julius Cherny,  was paid $240,000 by the
Company  during both fiscal  1999 and fiscal 1998 for the  computer  translation
system that Gedanken is developing  (see Note 4 relative to the  accounting  for
such payments).


NOTE 7-DEBT

The original  bank loan for  financing of equipment in the amount of $150,000 is
payable  monthly,  beginning April 1998, in the principal  amount of $6,250 plus
interest at the rate of 9.5%. The loan is  collateralized  by the  equipment,  a
$100,000 certificate of deposit and certain other assets.

Word  House  has a bank  net  overdraft  facility  of up to  $150,000,  which is
collateralized by cash, accounts  receivable,  and equipment.  The bank has also
issued a letter of credit for the account of Word House in the amount of $50,000
as a security deposit.


NOTE 8-INCOME TAXES

As of March 31, 1999 and 1998 other assets  include  approximately  $112,000 and
$31,000  respectively  of claims  for income  taxes  paid in prior  periods as a
result of carry back of operating losses.


Net operating loss carry-forwards:

         The Company has US Federal and State  operating loss carry forwards and
deferred tax assets of  approximately  $1,100,000  which expire over the ensuing
period of twenty years.

         The  Company  has  foreign  net  operating   loss   carry-forwards   of
approximately $473,000 which expire as follows:

                              Year Ending
                               March 31,                               Amount
                               ---------                               ------
                                  2001                               $ 10,000
                                  2003                                 67,000
                                  2004                                226,000
                                                                    ---------
                                                                      303,000
                           Net operating losses that
                           do not expire                              170,000
                                                                      -------
                           Total                                     $473,000
                                                                     ========

         The deferred tax asset of  approximately  $600,000 has been offset by a
         100% valuation allowance because of the uncertainty of its realization.


                                      F-12

<PAGE>


NOTE 9-STOCK OPTIONS AND WARRANTS

Stock Options

In October  1996,  the Company  adopted a Stock  Option Plan (the  "Plan")  that
provides  for a maximum  of  2,500,000  shares  of common  stock to be issued in
connection  with such plan.  The price  payable  for the shares of common  stock
under  incentive  stock  options  must be not less that 100% of the fair  market
value at the time the option is granted  (and 110% if the  person  granted  such
option  owns  more than 10% of the  outstanding  shares  of the  common  stock).
Additionally,  under the Plan,  participants  may be granted stock  appreciation
rights (SAR).  SARs consist of rights to receive either cash or shares of common
stock equal to the amount by which the value of such  shares of common  stock on
the date the SAR is exercised  exceeds the per share option price.  No SARs have
been  granted.  Options  granted  under this Plan  expire ten years from date of
grant, for non-affiliated persons and five years for a 10% owner.

The Company follows Accounting  Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25") and related  interpretations in accounting
for its employee  stock  options.  Under APB 25, when the exercise  price of the
Company's  employee stock options equals or is more than the market price of the
underlying  stock on the date of grant, no  compensation  expense is recognized.
The alternative  fair value  accounting is disclosed only for pro forma purposes
as provided for under SFAS No. 123,  "Accounting for Stock-Based  Compensation",
which  requires  the  use  of  option  valuation  models.   Options  granted  to
non-employees are valued at their fair value at the date of grant.

The following is a schedule of the status of options granted under the Company's
stock option plan:

                                                                Weighted Average
                                                                 Exercise Price
                                            Options                 Per Share

    Outstanding at March 31,1996              -0-
        Granted                             700,000                   $6.17
                                            -------                   -----

    Outstanding at March 31, 1997           700,000                    6.17
        Granted                             599,000                    4.75
        Exercised                            (2,000)                   6.00
        Cancelled                          (100,000)                   6.00
                                           ---------                   ----

    Outstanding at March 31, 1998         1,197,000                   $5.47
                                          ---------                   -----

    Granted                                 495,000                    4.99
    Cancelled                              (263,000)                   5.75
                                           ---------                   ----


    Outstanding at March 31, 1999         1,429,000                   $5.25
                                          =========                   =====






Exercisable at March 31, 1999               852,300                   $5.37
                                            =======                   =====
Exercisable at March 31, 1998               409,200                   $5.12
                                            =======                   =====


As of March 31, 1999, the Company has 1,069,000 options available to grant under
the Plan.

As of March 31, 1999 for each of the following  classes of options as determined
by  the  range  of  exercise   price,   the  following   information   regarding
weighted-average  exercise  prices and  weighted-average  remaining  contractual
lives of each class is as follows:



                                      F-13
<PAGE>

<TABLE>
<CAPTION>

                 Weighted Average     Weighted Average          Number of
 Number         Exercise Price of    Remaining Contract Life   Options          Weighted Average Exercise
   Of             Options            of Outstanding Options    Currently        Price of Options Currently
 Options                             (Years)                   Exercisable      Exercisable
---------       -----------------    -----------------------   -----------      ---------------------------
<S>                <C>                  <C>                    <C>               <C>
   20,000           $4.00                 9.75                     -                -
  520,000            4.50                 8.94                  370,000           $4.50
  372,500            5.00                 9.54                  100,000            5.00
  306,500            6.00                 3.67                  182,300            6.00
  210,000            6.60                 7.71                  200,000            6.60
---------          ------                 ----                  -------            ----
1,429,000           $5.25                $7.81                  852,300           $5.37
=========           =====                =====                  =======           =====

</TABLE>


The pro forma information  regarding net (loss) and (loss) per share as required
by SFAS No. 123, has been  determined as if the Company had been  accounting for
its employee  stock options under the fair value method of that  statement.  The
fair  value  of  these  options  was  estimated  at the  date of  grant  using a
Black-Scholes   option   pricing  model  with  the  following   weighted-average
assumptions:

                                                        March 31,
                                              1999      ---------      1998
                                              ----                     ----

Range of risk free interest rates           6.10% - 6.30%          6.10% - 6.30%
Dividend yield                              0%                     0%
Volatility factor                           64%                    70%
Expected life of options (in years)         8                      8


The weighted  average fair value of options granted was $4.91 for the year ended
March 31, 1999 and $3.29 for the year ended March 31,  1998.  The  Black-Scholes
option  valuation  model was developed  for use in estimating  the fair value of
traded options which have no vesting restrictions and are fully transferable. In
addition, for traded shares, option valuation models require the input of highly
subjective  assumptions  including  the  expected  stock price  volatility.  For
purposes  of pro forma  disclosures,  the  estimated  fair value of the  options
granted in fiscals  1999 and 1998 is  amortized  to  expense  over the  options'
average vesting period. The Company's pro forma information follows:

                                                    Year Ended March 31
                                             1999   -------------------  1998
                                             ----                        ----

          Pro forma loss                 $(3,063,591)               $(2,010,919)

          Pro forma loss per share       $ (1.35)                   $ (.95)
                                         ========                   =======


The  pro  forma   disclosures   presented  above  for  fiscals  1999  and  1998,
respectively,  reflect  compensation expense only for options granted in fiscals
1999 and 1998.  These amounts may not necessarily be indicative of the pro forma
effect of SFAS No. 123 for future periods in which options may be granted.

WARRANTS

Pursuant to the IPO in December 1996, the Company sold 1,840,000 warrants. There
were also 300,000 warrants outstanding to shareholders given in consideration of
their  give-back  of shares to the  Company  in  connection  with the IPO.  Each
warrant  entitles  the  registered  shareholder  to purchase one share of common
stock at an  exercise  price of $6.20  per  share  for a period  of three  years
beginning  December 1996. There is no current  registration  statement in effect
covering  the  exercise  of  these  warrants.   The  Company  also  granted  the
underwriters,  of its IPO,  rights to purchase  60,000  shares of the  Company's
common stock at an exercise price of $7.80 per share and 160,000  warrants at an
exercise  price of $.26 per warrant and in turn, an exercise price for the stock
of $7.80 per share that  expires on December  2, 2001.  In  connection  with the
Company's  earlier private  placement,  additional stock warrants were issued to
purchase  40,000  shares of the  Company's  common stock at a price of $1.50 per
share that expires on January 17, 2001.


                                      F-14
<PAGE>

During the year ended March 31,1998,  the Company issued 20,000  warrants valued
at $40,000 for consulting fees and also gave an option to a consultant for three
years and an additional  three years by mutual  consent for 100,000  warrants at
the then market price of $.80 per warrant and a price of $4.50 per common share.
The term of the warrant  overlays  the option  period.  The  Company  valued the
warrants at $225,000 and services are to be provided  from April 1, 1998 to June
30, 1999; the costs are being amortized over the period of fifteen months during
which the services are to be performed.


Outstanding warrants consist of the following:


          Issued in connection with the Initial Public
          Offering                                              2,140,000
                                                                ---------
          Balance at March 31, 1997                             2,140,000
               Granted                                             20,000
               Exercised                                          (13,340)
          Balance at March 31, 1998                             2,146,660
                                                                =========

          Balance at March 31, 1999                             2,146,660
                                                                =========




The above  outstanding  warrants  do not include the  warrants  described  above
relating to the Company's  underwriters' options to acquire 260,000 warrants and
for the option to acquire 100,000 warrants issued to the consultant.


NOTE 10-COMMITMENTS AND CONTINGENCIES

(A) Employment Contracts

The Company has employment  contracts with its chief  executive  officer and its
chief operating  officer that expire June 30, and September 30, 2001.  Aggregate
remaining compensation and benefits under such contracts approximate $635,000.

(B) Rent

The Company has operating leases for its production facilities and office space.
Aggregate minimum future annual rental payments are as follows:

                                  Year Ending
                                   March 31,                         Total
                                  -----------                        -----

                                     2000                           248,097
                                     2001                           124,436
                                     2002                           105,110
                                     2003                            96,351
                                                                  ---------
                                    Total                          $573,994

Rent  expenses  from  fiscal  years  1999 and 1998  were  $196,707  and  $96,250
respectively.



(C)      Year 2000 Issue

The Company has completed a full  evaluation of its systems  involving  computer
hardware  and  applicable  software.  Management  believes  it has an  effective
program in place to resolve  this issue in a timely  manner.  Estimated  related
costs of this project are projected to be approximately $50,000.


                                      F-15
<PAGE>


(D) Other matters and Litigation

The  Company has been sued by a  stockholder  who is seeking  monetary  damages,
specific  performance,  equitable  relief and costs in the amount of $3,000,000.
Legal  counsel,  after a review  of the file and  discussions  with  management,
believes there is substantial  likelihood  that the Company will prevail in this
matter.


NOTE 11-ACQUISITIONS AND RECENT AGREEMENTS

DEVELOPMENT AND LICENSE AGREEMENT WITH ESTEAM AB

On April 15, 1999, the Company entered into a development and license  agreement
with ESTEAM AB (EST), a corporation organized under the laws of Sweden. EST is a
software-development    company   specializing   in   the   development   of   a
computer-automated  language translation system, known as the "BTR System," that
tailors such system to specific applications. The BTR System, its modifications,
improvements, and adaptations, are used to perform translations of specific text
documents in a particular  domain.  The BTR System,  when applied to appropriate
hardware,   automatically  performs  language  translations  without  any  human
intervention.   The  computer  software  utilized  in  the  BTR  System  may  be
"off-the-shelf" or proprietary,  that is, created for a specific purpose and not
commercially  available.  TTGL has received an exclusive  worldwide  license for
four identified  applications and for four additional  applications for a period
of fifteen years, with an option,  under certain conditions and  considerations,
to extend the agreement for an additional  three years. In  consideration of the
worldwide  license,   TTGL  has  agreed:  to  pay  royalties  on  sales  of  any
application;  to pay EST a minimum of $50,000 per month towards EST's  operating
expenses for two years; and will provide certain development funding in addition
to the $50,000  minimum.  In addition,  TTGL has granted  stock options to three
employees of EST,  aggregating  102,000 shares of its common stock at a price of
$3.50 per share. Such options are subject to the provisions of TTGL's 1995 Stock
Option  Plan and will vest  with the  grantees  based  upon the  achievement  of
revenues by TTGL from the development work of EST.

ACQUISITION OF PLANET ACCESS NETWORKS, INC.

Planet Access  performs  field internet and website  development  and management
services for its clients. As of May 1, 1999, the Company acquired all the issued
and outstanding shares of Planet for 416,668 shares of its common stock and cash
in the amount of $900,000 to be paid on  September  15,  1999.  The  purchase is
secured by the seller's  shares;  the officers of the seller received  four-year
employment  contracts that include  incentive stock options of the Company.  The
Company  agreed  further:

i.                 to secure  funding by  September  15,  1999,  in the  minimum
                   amount of $4,000,000.
ii.                that each of the four  sellers  has the right to require  the
                   purchaser to repurchase at $7.00 per share all or part of the
                   416,668  shares  issued  under the  agreement  if, on May 28,
                   2000,  certain  conditions  are not met,  including  that the
                   selling  price of the  Company's  common  shares  is at least
                   $10.00 per share.
iii.               to  establish  a $250,000  line of credit for  Planet,  to be
                   considered  as  liquidated  damages in the event the  Company
                   fails to implement its obligations under the agreement.

The purchase price will be allocated to the underlying  fair value of the assets
acquired,  and the  balance to excess of  purchase  price over fair value of net
assets acquired.


CANADA

On June 29, 1998, the Company formed The Translation  Group (Canada) as a wholly
owned subsidiary of the Company.  The subsidiary  ceased  operations in March of
1999.


NOTE 12-SEGMENT OPERATIONS

The  sales of BTS  originate  in the  United  States  to  domestic  and  foreign
customers. Translation/localization is in Japanese, Chinese, and other languages
of the Asian rim, as well as European  languages and Canadian French.  The sales
of Word House originate in Europe and are almost  entirely in Dutch,  French and
other European languages.

Financial  information that can be classified by the principal  locations of the
Company is as follows (stated in thousands):


                                      F-16

<PAGE>

Year Ended March 31, 1999

<TABLE>
<CAPTION>

                                            United
                                            States           Europe            Parent           Eliminations        Total
                                            ------           ------            ------           ------------        -----
<S>                                        <C>              <C>                <C>                 <C>             <C>
         Revenues                           $3,115           $3,029             $                    $157           $5,987
                                            ------           ------                                  ----           ------

         Costs of  revenues, selling
         and other expenses                  3,475            3,380                                  (157)           6,698
         Special and other costs                                                    979                                979
         Research and development                                                   147                                147
         Corporate administration                                                   736                                736
                                            -------           -------            ------            -------         -------
         Loss before amortization of excess,
         other income and income taxes      $ (360)           $ (351)           $(1,862)            $ -0-          $(2,573)
                                            ===============================================================================


         Identifiable assets as at
             March 31, 1999                 $6,392            $1,233                               $(2,739)        $ 4,886
                                            ==============================================================================

Year Ended March 31, 1998


         Revenues                           $3,832            $2,723                                  $134          $6,421
                                            ------            ------                                  ----          ------

         Costs of revenues, selling
         and other expenses                  3,093             2,539                                  (134)          5,498
         Research and development                                                   244                                244
         Corporate administration                                                   774                                774
                                            -------           -------           -------             -------         ------
         Income (loss) before amortization
         of excess, other income
         and income taxes                   $   739           $   184           $(1,018)           $    -0-         $  (95)
                                            =======           =======           ========           ========         =======

         Identifiable assets as at
              March 31, 1998                $5,877            $1,147                               $  (224)         $  6,800
                                            ======            ======            ========           ========         ========
</TABLE>


                                      F-17