SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, D.C.  20549
                          ___________________
                                FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO ________

                        Commission File No. 0-23382
                        Trans Global Services, Inc.
                (Exact name of Company as Specified in its Charter)

     Delaware                                    62-1544008
(State or other jurisdiction of               (I.R.S. employer
incorporation or organization)                identification no.)

1393 Veterans Memorial Hwy.,
   Hauppauge, New York                            11788
(Address of principal executive offices)        (Zip Code)

Issuer's telephone number, including area code:  (516) 724-0006

Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:

        Title of Each Class
Common  Stock,  par value .01 per share  Indicate  by a check mark  whether  the
Company (1) has filed all reports required to be filed by Section 13 or 15(d) of
the Securities  Exchange Act of 1934 during the preceding twelve months (or such
shorter period that the Company was required to file such reports),  and (2) has
been subject to such filing requirements for the past 90 days. Yes X No

Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Company's  knowledge,  in  definitive  proxy or  information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

State the  aggregate  market  value of the voting  stock held by  non-affiliates
computed by reference  to the price at which the stock was sold,  or the average
bid and asked prices of such stock as of March 31, 1999: $2,023,459

State the  number of shares  outstanding  of each of the  Company's  classes  of
common stock as of March 31, 1999:  3,819,716 shares of Common Stock, par value
$.01 per share.

        DOCUMENTS INCORPORATED BY REFERENCE

Item III is incorporated by reference from the Registrant's definitive proxy
statement relating to its 1999 Annual Meeting of Stocklholders.

2.  The following replaces all of Part III, which consists of Items 10, 11, 12,
and 13.
<PAGE>      2

        PART I

Item 1. Business.

Trans Global Services,  Inc. (the "Company"),  is engaged in providing technical
temporary staffing services. In performing such services,  the Company addresses
the current trend of major  corporations in "downsizing"  and  "outsourcing"  by
providing  engineers,  designers and technical personnel on a temporary contract
assignment basis pursuant to contracts with major  corporations.  The engagement
may relate to a specific  project or may cover an extended  period  based on the
client's  requirements.  The Company  believes  that the market for  outsourcing
services  such as  those  offered  by the  Company  results  from  the  trend in
employment   practices  by  major  corporations  in  the  aircraft,   aerospace,
electronics,  energy,  engineering and  telecommunications  industries to reduce
their  permanent  employee  staff and to supplement  their staff with  temporary
personnel  on an  as-needed  basis.  The  Company  seeks to offer its  clients a
cost-effective  means  of work  force  flexibility  and the  elimination  of the
inconvenience  associated  with the employment of temporary  personnel,  such as
advertising, initial interviewing,  fringe benefits and record keeping. Although
the employees provided by the Company are on temporary contract assignment, they
work with the client's permanent employees;  however, they may receive different
compensation and benefits than permanent employees.

In providing its services,  the Company engages the employees,  pays the payroll
and related costs, including FICA, worker's compensation and similar Federal and
state mandated  insurance and related payments.  The Company charges its clients
for services based upon the hourly payroll cost of the personnel. Each temporary
employee  submits to the Company a weekly time sheet with work hours approved by
the client.  The employee is paid on the basis of such hours,  and the client is
billed for those hours at agreed upon billing rates.

The Company  also offers its clients a range of  integrated  logistical  support
services which are performed at the Company's facilities.  These services, which
are ancillary to a project,  can include the  management of technical  documents
involving  technical  writing,   preparation  of  engineering   reports,   parts
provisioning  documents  and  test  equipment  support  documents,  establishing
maintenance  concepts and  procedures,  and  providing  manpower  and  personnel
support.  In  performing  these  services,  the Company  may hire the  necessary
employees  for its own  account and may work with the client in  developing  and
preparing the documentation. Payments are made pursuant to a purchase order from
the  client  on a  project  basis  and not as a  percentage  of the  cost of the
employees.  To date, the integrated logistics support business has not generated
more than nominal  revenue,  and no assurance can be given that the Company will
generate any significant revenue or profit from such services.

The Company's  strategy has been  directed at  increasing  its customer base and
providing  additional  services,  such as integrated  logistics support,  to its
existing customer base. The Company believes that the key to profitability is to
provide a range of services to an increased  customer base. In this  connection,
the Company is increasing  its  marketing  effort both through its own personnel
and in marketing efforts with other companies that offer complementary services.







<PAGE>      3

Item 1. Business [Continued]

Forward Looking Statements

The  statements  in this Form 10-K Annual  Report that are not  descriptions  of
historical facts may be forward looking statements that are subject to risks and
uncertainties.  In  perticular,  statements  in this  Form 10-K  Annual  Report,
including any material  incorporated  by reference in this Form 10-K, that state
our  intentions,  beliefs,  expectations,  strategies,  predictions or any other
statements  relating  to  our  future  activities  or  other  future  events  or
conditions  are  "forward-looking  statements."  Forward-looking  statements are
subject to risks,  uncertainties and other factors,  including,  but not limited
to, those  identified  under "Risk  Factors,"  those  described in  Management's
Discussion  and Analysis of Financial  Conditions  and Results of Operations and
those   described  in  any  other  filings  with  the  Securities  and  Exchange
Commission,  as well as general  economic  conditions,  any one or more of which
could  cause  actual  results to differ  materially  from  those  stated in such
statements.

Risk Factors

Our  clients are  concentrated  in the  aerospace  industry.  Our three  largest
clients for 1998 and 1997 were The Boeing Company,  Lockheed-Martin  Corporation
and Northrop Grumman, which accounted for revenues of approximately $40 million,
or 60.1% of revenue,  for 1998, and $48 million, or 63.2% of revenue,  for 1997.
Our clients may generally terminate their agreements with us without significant
notice.  The loss of a major  client  could have a  significant  effect upon our
earnings.  See  Item 7,  "Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations" and "Business-- Markets and Marketing".

Because our clients are in the aerospace  industry,  our business is affected by
industry trends.  In recent years, the aerospace  industry has been reducing its
overhead  by using  temporary  staffing  from third  parties to provide  certain
technical  services.  Any change in this trend  could  reduce  our  revenue  and
earnings.  In addition,  factors which affect the aerospace  industry in general
will affect our business.  During 1998, the aerospace  industry was subject to a
dramatic  slowdown,  which was  reflected in a decline in revenue from our major
customers.  A  continuation  or  acceleration  of this slowdown in the aerospace
industry  could have an increasing  negative  impact on our  business.  See Item
7,"Management's  Discussion  and Analysis of Financial  Condition and Results of
Operations" and "Business -- Markets and Marketing."

We need to offer certain benefits to our employees.  At present,  because of our
financial  position,  we do not offer our employees the direct  deposit of their
payroll  checks  into their bank  accounts.  We believe  that our growth will be
impaired if we cannot offer employees direct payroll deposit.

We need additional working capital. At December 31, 1998, we had working capital
of approximately  $973,000.  We require  additional  working capital in order to
expand our  business,  to reduce our interest  costs and to offer our  employees
direct payroll deposit.  We do not have any agreements with any party to provide
us with such  working  capital,  and we may not be able to obtain  such  working
capital.  See  Item  7,  "Management's  Discussion  and  Analysis  of  financial
Condition and Results of Operations".




<PAGE>      4

Item 1.  Business [Continued]

We need to attract qualified  personnel to service our clients. We are dependent
upon both our  ability to obtain  contracts  with  clients  and to  provide  our
clients with qualified  employees.  The market for qualified personnel is highly
competitive,  and we compete with other  companies in obtaining  contracts  with
potential clients and in attracting employees. See "Business--Competition."

Certain  of our  directors  have a  conflict  of  interest.  Three  of our  five
directors  are also the directors of  Consolidated  Technology  Group Ltd.,  our
largest  stockholder,  which owns 40.1% of our common  stock.  As a result  such
directors may have the power to determine the terms of any agreement  between us
and Consolidated.

On February 25, 1999, we entered into an agreement with Consolidated pursuant to
which Consolidated,  through a subsidiary, is to transfer to us 1,150,000 shares
of our common stock in satisfaction of (i) Consolidated's obligations to pay the
redemption price of $2,100,000 payable with respect to the Consolidated Series G
2%  Cumulative  Redeemable  Preferred  Stock owned by us,  together with accrued
dividends of approximately $140,000, and (ii) Consolidated's  obligations to pay
us  $325,952  in respect  of  advances  made by us to certain of  Consolidated's
subsidiaries.  The  agreement  as amended also gives  Consolidated  the right to
retain the 1,150,000 shares of our common stock if it pays us by April 30, 1999,
the redemption price of $2,100,000  together with the accrued  dividends and the
$325,952 due us. The shares are being held in escrow  pending the  determination
by Consolidated whether to make such payment.

We are dependent upon our management.  Our business is dependent upon our senior
executive  officers,  principally  Mr.  Joseph G.  Sicinski,  president,  who is
responsible  for the  Company's  operations,  including  marketing  and business
development.


Organization of the Company

The Company is a Delaware  corporation  which was incorporated in September 1993
under the name Concept  Technologies  Group,  Inc.  ("Concept").  The  Company's
executive  offices are located at 1393 Veterans  Memorial Hwy.,  Hauppauge,  New
York 11788, telephone (516) 724-0006

In May 1995,  Concept acquired all of the issued and outstanding  stock of Trans
Global  Services,  Inc., a Delaware  corporation now known as TGS Services Corp.
("TGS"), in exchange for a controlling interest in the Company. 

The Company's  operations are conducted through its two  subsidiaries,  Avionics
Research Holdings, Inc. ("Holdings") and Resource Management International, Inc.
("RMI").

References to the Company refer to the Company and its subsidiaries,  unless the
context indicates otherwise.

As  of  February  25,  1999   Consolidated   Technology  Group  Ltd.,  a  public
corporation,  ("Consolidated")owned,  through its  subsidiary  SIS Capital Corp.
("SISC")  approximately  40.1% of the Company's  outstanding  Common  Stock.  On
February  25,  1999 the  Company  and  Consolidated  entered  into an  agreement
pursuant to which Consolidated is to transfer to the Company 1,150,000 shares of
Trans Global's  common stock,  which are owned by SISC, in  satisfaction  of (i)
Consolidated's  obligations  to pay the redemption  price of $2,100,000  payable
with respect to the  Consolidated  Series G 2% Cumulative  Redeemable  Preferred
<PAGE>    5

Item 1.  Business [Continued]

Stock owned by Trans Global  together  with accrued  dividends of  approximately
$140,000  and (ii)  Consolidated's  obligation  to pay the  Company  $325,952 in
respect  of  advances  made  by  Trans  Global  to  certain  of   Consolidated's
subsidiaries.  The  agreement  as amended also gives  Consolidated  the right to
retain such shares if, by April 30, 1999, Consolidated pays the redemption price
of  $2,100,000  together  with  accrued  dividends  and the  $325,952 due to the
Company. If the 1,150,000 shares are transferred,  Consolidated will own 379,994
shares,  or approximately  14.2% of the Company's common stock, and Consolidated
will have certain registration rights with respect to such shares.

Markets and Marketing

The market for the Company's services is comprised of major corporations in such
industries as aircraft, aerospace,  electronics,  energy, engineering,  computer
services and  telecommunications,  where  "downsizing"  and  "outsourcing"  have
become an increasingly  important method of cost reduction.  Typically, a client
enters into an  agreement  with one or a small  number of  companies to serve as
employer of record for its temporary staff, and its agreements are terminable by
the client without significant notice.

The Company maintains a computerized data base of technical personnel based upon
their  qualifications  and experience.  The data base,  which contains more than
100,000  names,  is  generated  through  employees  previously  employed  by the
Company,  referrals and responses to  advertisements  placed by the Company in a
variety of local media, including newspapers,  yellow pages, magazines and trade
publications.  Part of the Company's  responsibilities for any engagement is the
recruitment  and initial  interviewing of potential  employees,  with the client
conducting  any  final  interviews  it deems  necessary.  The  majority  of work
performed by the Company's  employees is performed at the client's  premises and
under the client's direction, although the Company is the employer of record.

The Company  markets its services to  potential  clients  through its  officers,
management and recruitment  personnel who seek to provide potential clients with
a program  designed to meet the client's  specific  requirements.  The marketing
effort  utilizes  referrals  from  other  clients,  sales  calls,  mailings  and
telemarketing.  The  Company  also  conducts  an  ongoing  program to survey and
evaluate the clients' needs and satisfaction with the Company's services,  which
it uses as part of its marketing effort.

Although  the  Company  has seven  offices,  including  its main  office in Long
Island, New York,  throughout the United States,  there is no limited geographic
markets for the  Company's  services.  The  Company has in the past  established
offices in new  locations  when it receives a contract in the area and it cannot
effectively service such contract from its existing offices. The Company intends
to  continue to  establish  new  offices as  necessary  to meet the needs of its
customers.

A client will utilize  contract  engineering  services such as those provided by
the Company  when it  requires a person with  specific  technical  knowledge  or
capabilities  which are not available  from the client's  permanent  staff or to
supplement  its  permanent  staff for a  specific  project  or to meet peak load
requirements. When the client requires personnel, it provides the Company with a
detailed job description.  The Company then conducts an electronic search in its


<PAGE>   6

Item 1.  Business [Continued]

computerized  resume data base for candidates  matching the job description.  In
addition,  each  branch  office  maintains  a file of active  local  resumes for
candidates  available for assignment in the vicinity of the branch  office.  The
candidates  are then  contacted by telephone by the  Company's  recruiters,  who
interview interested candidates. If a candidate is acceptable to the Company and
interested in the position,  the Company refers the candidate to the client.  An
employment  agreement is executed with the Company prior to the  commencement of
employment.

The Company serves primarily the aircraft,  aerospace and electronics industries
as well as the  telecommunications,  banking and computer science industries and
public  utilities along with numerous  manufacturing  companies.  The Company is
expanding  its  effort  to  address  the  general  trend  of  "downsizing"   and
"outsourcing" by major  corporations on a national basis. To meet this goal, the
Company has commenced a national sales  campaign  addressing a broad spectrum of
Fortune 500 companies, offering a managed staffing service to those companies in
the process of downsizing and outsourcing  specific  functions.  Since a company
engaged  in  downsizing  seeks  to focus on its  core  business  needs  with its
in-house  staff,  the  Company  seeks to  identify  and  address  the needs of a
specific task or department not part of the core business for which  outsourcing
would be an appropriate  method of addressing  those needs. In addressing  these
needs, the Company has conducted marketing efforts with Manpower  International,
Inc., Adecco and Olsten Corporation.

The Company's contracts are generally terminable by the client on short notice.

The  Company's  largest  customers  for 1998  were  Boeing,  Lockheed,  Northrop
Grumman,  Gulfstream  Aerospace and Bell Helicopter  Textron which accounted for
approximately $16 million,  $12 million,  $12 million, $6 million and $4 million
or 24.4%, 18.3%, 17.4%, 9.0% and 6.3% of revenue, respectively.

In 1997,  Boeing,  Northrop  Grumman,  Lockheed,  Gulfstream  Aerospace and Bell
Helicopter Textron were the Company's largest  customers.  Revenue attributed to
those customers were $20 million,  $15 million,  $13 million,  $7 million and $6
million  or 25.9%,  19.9%,  17.4%,  8.6% and 7.5%  respectively.  The  Company's
largest customers for 1996 were Boeing, Lockheed,  Northrop Grumman,  Gulfstream
Aerospace Corp. and Bell Helicopter  Textron , which accounted for approximately
$16  million,  $13  million,  $9 million,  $5 million and $4 million,  or 25.6%,
20.8%, 14.4%, 8.0% and 6.4% of revenue, respectively.

Competition

The business of providing  employees on either a permanent or temporary basis is
highly  competitive and is typically local in nature.  The Company competes with
numerous  technical  service  organizations,   a  number  of  which  are  better
capitalized,  better known,  have more extensive  industry  contacts and conduct
extensive advertising campaigns aimed at both employers and job applicants.  The
Company believes that the ability to demonstrate a pattern of providing reliable
qualified  employees  is an  important  aspect of  developing  new  business and
retaining existing business. Furthermore, the ability of the Company to generate
revenues  is  dependent  not only  upon its  ability  to obtain  contracts  with
clients,  but also to provide its clients with qualified  employees.  The market
for qualified  personnel is highly  competitive,  and the Company  competes with



<PAGE>    7

Item 1.  Business [Continued]

other  companies in attracting  employees.  In order to attract these  qualified
employees  the  company  needs to  provide  them with  similar  benefits  to its
competitiors,  such as direct payroll deposit. The Company is not presently able
to provide that benefit to its employees due to insufficient capitalization. The
ability of the Company to increase  its  business  with  existing  clients or to
attract other clients will be affected by its working capital.  Accordingly, the
failure of the Company to increase its working capital may adversely  effect its
ability to expand its business.

Government Regulations

The technical temporary staffing industry,in which the Company is engaged,  does
not require licensing as a personnel or similar agency.  However,  as a provider
of personnel for other corporations, the Company is subject to Federal and state
regulations concerning the employment relationship,  including those relating to
wages and hours and  unemployment  compensation.  The Company  also  maintains a
401(k) plan for its  employees  and is subject to  regulations  concerning  such
plan.

The Company does not have contracts with any government  agencies.  However, the
Company does have contracts with clients,  including major defense  contractors,
that have contracts with government  agencies.  The Company's contracts with its
clients are based on hourly billing rates for each technical discipline. Many of
the clients' contracts with government  agencies are subject to renegotiation or
cancellation for the convenience of the government.  Since the manpower needs of
each of the Company's  clients are based on the clients own requirements and the
client's needs are affected by any modification in  requirements,  any reduction
in  staffing  by  a  client  resulting  from  cancellation  or  modification  of
government contracts could adversely impact the business of the Company.

Employees

At December 31, 1998, the Company had 744 employees,  of which 698 were contract
service  employees who performed  services on the clients'  premises and 46 were
executive and administrative employees. Each of the Company's offices is staffed
by recruiters and sales managers.  Each contract  service employee enters into a
contract  with the Company which sets forth the client for whom and the facility
at which the employee's  services are to be performed and the rate of pay. If an
employee  ceases to be required  by the  Company's  clients for any reason,  the
Company has no further obligation to the employee.  Although  assignments can be
for as short as 90 days, in some cases,  they have been for several  years.  The
average  assignment  is in the  range  of  six to  nine  months.  The  Company's
employees are not  represented by a labor union,  and the Company  considers its
employee relationship to be good.

Executive Officers of the Company

The following are the executive officers of the Company as of March 31, 1999:

     Name            Age       Position with the Company
    -----            ----      -------------------------
Joseph G. Sicinski   67        Chief Executive Officer, President and director
Edward D. Bright     61        Chairman of the Board
Glen R. Charles      45        Chief Financial Officer, Secretary and Treasurer
Frank J. Vincenti    46        Vice President

<PAGE>    8

Item 1.  Business [Continued]

Mr.  Joseph G.  Sicinski has been  president and a director of the Company since
May 1995. He served in the same  capacities  for TGS since its  organization  in
January 1995,  and served as president of a predecessor  of TGS since  September
1992. He has been chief  executive  officer of the Company since April 1998. For
more than  eight  years  prior  thereto,  he was  executive  vice  president  of
corporate marketing for Interglobal Technical Services,  Inc., which was engaged
in providing  technical  temporary  staffing  services.  Mr.  Sicinski is also a
director of Netsmart  Technologies,  Inc.,  ("Netsmart"),  which markets medical
information systems. SISC, the Company's largest stockholder is also the largest
stockholder of Netsmart.

Mr.  Edward Bright has been a director of the Company since April 1998. In April
1998,  Mr.  Bright was also  elected as  chairman,  secretary,  treasurer  and a
director  of  Consolidated,  the  parent  company  of SISC,  and a  director  of
Netsmart.  Consolidated,  through  SISC,  is the  principal  stockholder  of the
Company and, through another  subsidiary,  offers  telecommunications  services.
From January 1996 until April 1998,  Mr.  Bright was an executive  officer of or
advisor to a subsidiary of Netsmart which was acquired by Netsmart in June 1994.
From June 1994 until January 1996, he was chief executive officer of Netsmart.

Mr.  Glen R.  Charles has been chief  financial  officer  and  treasurer  of the
Company since May 1995 and of TGS since its organization in January 1995. He has
been  secretary of the Company  since April 1998.  Mr.  Charles  served as chief
financial  officer of RMI since its  acquisition in November 1994.  From 1992 to
November 1994, he was engaged in the private  practice of accounting.  

Mr. Frank J. Vincenti has been Vice President in charge of operations  since May
1998.  Mr.  Vincenti has  approximately  25 years of  experience in the contract
engineering industry with direct experience in staffing,  recruiting,  sales and
marketing.  Mr. Vincenti was previously employed by CDI, a leading competitor of
the Company,  where he served as Vice  President of regional  operations  in the
information technology division.

Item 2. Description of Property.

The Company leases  approximately  7,500 square feet of office facilities at its
location in Long Island, New York, where it maintains its executive offices.  It
also rents modest  office space in Houston  Texas,  Phoenix  Arizona,  Arlington
Texas,  Los Angeles  California,  Seattle  Washington and Orlando  Florida.  The
aggregate annual rent payable by the Company is approximately $225,000, which is
subject to annual increases.  The Company believes that its present office space
is adequate for its present  needs and that  additional  office space is readily
available on commercially reasonable terms.













<PAGE>    9




Item 3. Legal Proceedings.

In November  1997,  an action was commenced in the Supreme Court of the State of
New York,  County of Suffolk,  by Ralph  Corace  against RMI seeking  damages of
approximately $1.1 million for an alleged breach of contract by the Company. Mr.
Corace was the president of Job Shop Technical  Services,  Inc.,  from which RMI
purchased  assets in  November  1994.  The Company  believes  that the action is
without merit, will vigorously  contest this matter and has filed  counterclaims
against Mr. Corace.

Item 4.  Submission of Matters to a vote of Security Holders.
         
         No matters were voted upon during the fourth quarter of 1998.










































<PAGE>     10

                                        PART II

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

The  Company's  Common Stock is traded on The Nasdaq  SmallCap  Market under the
symbol  TGSI.  

On June 20, 1997, the Company effected a one-for-six reverse split in its Common
Stock. All share and per share information give effect, retroactively,  to such
reverse split.

The high and low closing price for the Company's Common Stock since January 1996
are as follows:
                                                      Common Stock            
                                                    ---------------         
                                                      High      Low            
1997
  First Quarter                                     12-9/16     6-3/4         
  Second Quarter                                     9-3/16     1-5/8        
  Third Quarter                                      4-3/4      1-9/16        
  Fourth Quarter                                     6-9/16     3-7/8         

1998
  First Quarter                                      6-1/8      5          
  Second Quarter                                     5-3/4      4-1/16
  Third Quarter                                      5          3
  Fourth Quarter                                     4/3/4      1-1/16

1999 
  First Quarter                                      1-7/8        3/4           
                                   
The  closing  price for the Common  Stock on March 31, 1999 was  $1.1875.  These
quotations reflect  inter-dealer  prices,  without retail mark-up,  mark-down or
commission and may not represent actual transactions.

As of February  28, 1999,  the Company  believes  that there were  approximately
2,000 beneficial holders of record of the Common Stock.

The Company has paid no dividends on its Common Stock since inception,  and does
not expect to pay any dividends for the foreseeable future.


















<PAGE>      11

Item 6.  Selected Financial Data.

                             TRANS GLOBAL SERVICES, INC.
                              SELECTED FINANCIAL DATA
                        (In thousands, except per share amounts)

Set forth below is selected  financial  data with respect to the Company for the
years ended December 31, 1998, 1997, 1996, 1995 and 1994. The selected financial
data has been derived from the financial  statements  which appear  elsewhere in
this  Report.  This  data  should  be read in  conjunction  with  the  financial
statements of the Company and the related notes which are included  elsewhere in
this Report.

Statement of Operations Data 1:
------------------------------
        <TABLE>
        <S>                                          <C>          <C>          <C>        <C>         <C>
                                                                      Year Ended December 31,
                                                        -----------------------------------------------------
                                                        1998        1997        1996         1995        1994
        Revenue                                       $ 67,244     $75,725     $62,594     $63,152     $25,287
        Net income/(loss) from continuing operations       805       1,023        (681)     (4,413)       (411)
        Net income/(loss)                                  805       1,023        (681)     (4,696)       (411)
        Net income/(loss) per share of Common Stock        .21         .27       ( .27)      (8.88)      (4.08)
        Weighted average number of shares of
         Common Stock outstanding                        3,820       3,820       2,530         529         100   
        
Balance Sheet Data:
                                                                          December 31,
                                                          -----------------------------------------------------
                                                       1998          1997        1996         1995        1994
        
        Working capital (deficiency)                 $    972      $  257       $  (755)   $(2,401)    $(1,805)
        Total assets                                   12,597      13,942        13,100     12,763      10,345
        Total liabilities                               3,630       5,943         6,274      8,511       9,033
        Accumulated deficit                            (3,959)     (4,765)       (5,788)    (5,106)       (411)
        Stockholders' equity                            8,967       7,999         6,826      4,252       1,312
        
        

Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations.

Results of Operations

Years ended December 31, 1998, 1997 and 1996

Revenue from technical  temporary  staffing services is based on the hourly cost
of payroll plus a  percentage.  The success of the  Company's  business  will be
dependent upon its ability to generate  sufficient revenue to enable it to cover
its fixed costs and other operating expenses,  and to reduce its variable costs.
Under its  agreements  with its  clients,  the  Company is  required  to pay its
employees and pay all applicable Federal and state withholding and payroll taxes
prior to the receipt of payment from the  clients.  Furthermore,  the  Company's
payments  from its clients are based upon the hourly rate paid to the  employee,
without regard to when payroll taxes are payable with

</TABLE>
<PAGE>      12

Item  7.  Management's Discussion and Analysis of Financial Condition and
          Results of Operations [Continued].

respect to the employee. Accordingly, the Company's cost of services are greater
during the first part of the year,  when Federal Social Security taxes and state
unemployment  and  related  taxes,  which  are  based  on a  specific  level  of
compensation,  are due.  Thus,  until the  Company  satisfies  its  payroll  tax
obligations,  it will have a lower gross margin than after such  obligations are
satisfied.  Furthermore,  to the extent that the Company experiences turnover in
employees,  its gross margin will be adversely  affected.  For example, in 1999,
Social  Security  taxes are payable on the first $72,600 of  compensation.  Once
that level of  compensation  is paid with respect to any  employee,  there is no
further  requirement  for the  Company  to pay  Social  Security  tax  for  such
employee.  Since most of the Company's employees receive  compensation in excess
of  that  amount,   the  Company's  costs  with  respect  to  any  employee  are
significantly  higher  during  the  period  when it is  required  to pay  Social
Security taxes than it is after such taxes have been paid.

The  Company's  revenues,  derived  principally  from the aircraft and aerospace
industry, in 1998, totalled $67.2 million. This reflected a decrease of 11% from
the revenue in 1997. In 1997, the Company  experienced a 21% increase in revenue
over that  achieved in 1996.  The decrease  from 1997 to 1998,  can be primarily
attributed  to the general  slowdown in the  aerospace  industry,  including the
effects of reduced  orders  particularly  resulting  from the unstable  economic
climate in Asia. This trend has continued  during the first quarter of 1999. The
increase from 1996 to 1997 was a reflection of the Company's  placement  efforts
in meeting the  increased  needs of its  customers.  During 1998,  approximately
60.1% of the Company's  revenue was generated  from its three largest  customers
and  approximately  75.4% of the revenue  was  generated  from its five  largest
customers. In 1997,  approximately 63% of the Company's revenue was derived from
its three largest  customers and  approximately  79% of such revenue was derived
from its five largest clients.  In 1996,  these customers  accounted for 61% and
75% of revenue  respectively.  The trend  toward  consolidation  in the  defense
industry in general and the aerospace industry in particular has accentuated the
concentration  of major clients within the aerospace  industry,  and the Company
may be adversely  affected by any factors which affect the defense and aerospace
industries.

The  Company's  gross margins for 1998,  1997 and 1996 were 9.2%,  8.8% and 8.2%
respectively.  The  continued  improvement  of gross  margins  reflects both the
Company's  efforts to expand its customer base with higher gross margin business
and its willingness to terminate  customer  relationships or reduce the scope of
services for customers that do not generate an acceptable gross margin.

Selling, general and administrative expenses exclusive of related party expenses
and  amortization  of  intangibles  in 1998  increased  by 5.2% over 1997  which
reflected  an increase of 9.0% from 1996.  The Company is focusing  its business
strategy on maintaining  general and administrative  expenses and increasing its
sales  efforts  in  order  to  compete  more  effectively  in  this  competitive
marketplace. Related party expenses decreased by 54% based on the termination of
the Company's management services agreement with Consolidated  Technology Group,
Ltd., effective April 30. 1998.






<PAGE>      13
Item  7.  Management's Discussion and Analysis of Financial Condition and
          Results of Operations [Continued].

Years Ended December 31, 1998, 1997 and 1996

Amortization of customer lists and other  intangible  assets declined in 1998 by
approximately 18% compared to that of 1997 which had decreased by 26.6% compared
to that of 1996.  This  reduction  reflected  the full  amortization  in 1997 of
certain intangible assets.

Interest  expense for 1998 decreased by 33% compared to 1997 which had increased
by  approximately  9% over 1996. This decrease is primarily  attributable to the
lower  financing  rates  payable  through the  Company's  credit  facility  with
Citizens  and by reduced  borrowing  reflecting  a reduced  level of revenue and
accounts receivable.

Net Income (Loss)

The  Company's  net income  before  income tax  benefit was  $469,000  for 1998,
compared  with  $748,000  in 1997 and a loss of  $681,000  in 1996.  The Company
recognized a tax benefit from the use of its tax loss  carryforwards of $336,000
in 1998 and $275,000 in 1997. The company's net income was income  approximately
$805,000 or $.21 per share for 1998 as compared with net income of approximately
$1,023,000  or $.27 per  share for 1997 and a net loss of  $681,000  or $.27 per
share loss for
1996.

Liquidity and Capital Resources

At December  31,  1998,  Trans  Global  Services,  Inc.  had $972,643 of working
capital.  The Company's  principal  source of cash during 1998 was the cash flow
generated from operations and its credit facility with Citizens.  Cash flow from
operating  activity was  $1,116,260  in 1998  compared to $1,072,461 in 1997 and
($1,109,899)  in 1996.  This  increase in cash flow is primarily a result of the
Company's net income of $805,261 in 1998.

On April 23, 1998 the Company entered into a two-year revolving credit agreement
with  Citizens  Business  Credit  Company,   a  division  of  Citizen's  Leasing
Corporation  ("Citizens").  Pursuant  to the credit  agreement,  the Company can
borrow up to 85% of its qualified  accounts  receivables  at an interest rate of
prime plus 3/4% with a maximum  availability of $7.5 million.  Additional  costs
associated with the new financing  arrangement  include an unused line fee equal
to 1/4 of one  percent  of the  unused  line and a monthly  fee of  $2,000.  The
borrowings  from  Citizens  are  secured  by a security  interest  in all of the
Company's assets. At December 31, 1998, such borrowings were  approximately $2.6
million.  At December 31, 1997 and 1996 the borrowings  from the Company's prior
lender amounted to $3.6 million and $3.7 million.  The interest rates (exclusive
of the fee) payable by the Company at December 31, 1998 was 8.5% and at December
31,  1997 and 1996  10.50% and 10.25%  respectively.  

On February 25, 1999, the Company  entered into an agreement  with  Consolidated
and SISC,  pursuant to which SISC is to transfer to the Company 1,150,000 shares
of the  Company's  common stock which are owned by SISC in  satisfaction  of (i)
Consolidated's  obligations  to pay the redemption  price of $2,100,000  payable
with respect to the  Consolidated  Series G 2% Cumulative  Redeemable  Preferred
Stock owned by the Company  together  with accrued  dividends  of  approximately
$140,000 and (ii)  Consolidated's  obligations to pay the Company  $325,952 (the


<PAGE>    14
Item  7.  Management's Discussion and Analysis of Financial Condition and
          Results of Operations [Continued].

"Consolidated Payable") in respect of advances made by the Company to certain of
Consolidates's  subsidiaries.  The agreement as amended also gives  Consolidated
the right to retain the 1,150,000  shares if  Consolidated  pays the  redemption
price of  $2,100,000  together with the accrued  dividends and the  Consolidated
payable by April 30, 1999. The 1,150,000 shares and the Series G Preferred Stock
are being held in escrow  pending  the  election  by  Consolidated  to make such
payment.  The Series G Preferred  Stock is  reflected  on the  balance  sheet as
Investment in Preferred Stock of Affiliate.

If  the  1,150,000  shares  are  transferred  to  the  Company  pursuant  to the
agreement, the carrying value of the Series G Preferred Stock, which at December
31, 1998, includeing accrued dividends,  and the $325,592  Consolidated payable
will be treated as a reduction of stockholder's  equity,  and the 1,150,000 will
be treated as treasury shares, unless canceled by the Company.  

Other assets include deferred acquisition costa of $236,000. If the Company does
not complete an acquisition, such costs will be expensed.

Investing   and  financing   activities   required   $203,974  and   $1,005,850,
respectively,  primarily as a result of $136,500 of accrued  dividends earned on
the Company's  Investment in the Preferred Stock of an Affiliated  Company,  and
payments amounting to $923,584 to reduce its borrowings from Citizens.

The Company  continues to believe that as profits  increase its working  capital
will  increase  as well.  However,  the Company  must still  improve its working
capital and  stockholders'  equity in order to increase its revenue from certain
major clients and to attract clients requiring greater working capital.

The Company relies on its ability to generate cash flows from operating activity
and its borrowings to fund operations.  The Company does not have any agreements
with any other  funding  sources and its business may be impaired if it does not
obtain adequate financing.

The previously  reported claim by the U.S.  Government  Printing Office has been
settled with no payment by the Company.

Year 2000 Issue

Many existing computer programs use only two digits to identify a year in a date
field. These programs were designed and developed without considering the impact
of  the  upcoming  change  in  the  century.  If not  corrected,  many  computer
applications could fail or create erroneous results by or at the year 2000. This
issue is  referred to as the "Year 2000  Issue".  A  significant  portion of the
Company's  computer  software,  particularly  the software  relating to payroll,
billing and other  employee  records,  is  presently  Year 2000  compliant.  The
Company is in the process of evaluating  the potential  cost to it in addressing
the Year 2000  issue  with  respect  to its  other  software  and the  potential
consequences  of and  incomplete or untimely  resolution of the Year 2000 issue.
Although the Company  believes  that it will not incur  significant  expenses to
become Year 2000 compliant,  no assurance can be given that the Company will not
incur  significant cost in addressing the Year 2000 issue or that the failure to
adequately  address the Year 2000 issue will not have a material effect upon the
Company.

Item 7A.   Quantitative and Qualitative Disclosure About Market Risk.

   Not Applicable.
<PAGE>     15

Item 8. Financial Statements.

The Financial Statements begin on Page F-1.


Item 9. Changes In and Disagreements With Accountants on Accounting and
        Financial Disclosure.

        None

                                        PART III

The  information  required by Part III is  incorporated  by  reference  from our
definitive  proxy  statement for our 1999 Annual Meeting of  Stockholders  to be
filed with the Securities and Exchange Commission not later than April 30, 1999.










































<PAGE>     16
                                    PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)     Financial Statements.

The following financial statements are filed as part of this Form 10-K:

Trans Global Services, Inc. and Subsidiaries

Report of Independent Certified Public Accountants
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated  Statements  of Operations  for the years ended  December 31, 1998,
1997, and 1996  
Consolidated  Statements of Changes in Stockholders'  Equity for the years ended
December 31, 1998, 1997, and 1996
Consolidated  Statements  of Cash Flows for the years ended  December  31, 1998,
1997, and 1996

Notes to Financial Statements

(b)     Financial Statement Schedules.
    None

(c)     Exhibits

3.1-1     Restated Certificate of Incorporation.
3.2-2     By-Laws.
10.1.-6   Employment agreement dated October 15, 1997, between the Company and
          Joseph G. Sicinski.
10.2      Employment agreement dated May 26, 1998, between the Company and
          Frank Vincenti.
10.3-3    1995 Long-Term Incentive Plan.
10.4-4    1993 Stock Option Plan.
10.5-4    1995 Incentive Stock Plan.
10.6-2    Form of Series A Common Stock Purchase Warrants.
10.7-2    Form of Series D common Stock Purchase Warrants.
10.8-1    Agreement dated February 3, 1995 between the Company and Metro 
          Factors, Inc. ("Metro").
10.9-1    Letter agreements dated January 29, 1997 and February 5, 1997 between 
          the Company and Metro.
10.10-6   Letter agreement dated January 29, 1998, between the Company and 
          Metro.
10.11-7   Credit Agreement dated April 23, 1998 between the Company and Citizens
          Business Credit Company.
10.12-8   1998 Long-Term Incentive Plan
10.13     COTG agreement incorporated by reference with Form 8K.
10.14     Agreement dated March 23, 1999 between Trans Global Services, Inc.,
          ARC Networks, Consolidated Technology Group, Ltd. Technology
          Acquisitions Ltd., and Gemini II, Inc.












<PAGE>  17

Part IV [Continued]


11.1    Computation of income (loss) per share.
21.1-5  Subsidiaries of the Registrant
24.1    Consent of Moore Stephens, P.C.
25.1    Powers of attorney (See Signature Page).
27.1    Financial data schedule.
                       

1.   Filed as an exhibit to the Company's registration statement on Form S-1,
     File No. 333-14289, and incorporated herein by reference.
2.   Filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
     year ended December 31, 1995 and incorporated herein by  reference.
3.   Filed as an exhibit to the Company's definitive proxy material for its
     special meeting of stockholders for November 1996  and incorporated herein
     by reference.
4.   Filed as an exhibit to the Company's Registration Statement on Form SB-2,
     File No. 33-73178 and incorporated herein by reference.
5.   Filed as an exhibit to the Company's Annual Report on Form 10-K for the 
     year ended December 31, 1996 and incorporated herein by reference.
6.   Filed as an exhibit to the Company's Annual Report on Form 10-K for the
     year ended December 31, 1997 and incorporated herein by reference.
7.   Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
     the quarter ended March 31, 1998 and incorporated herein by reference.
8.   Filed as an exhibit to the Company's definitive proxy material for its
     annual meeting of stockholders for August 1998 and incorporated herein by
     reference.


(d)  Reports on Form 8-K

     None






























<PAGE>    18

        SIGNATURES


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

                                           TRANS GLOBAL SERVICES, INC.


Date: April 15, 1999                    By:
                                           Joseph G. Sicinski
                                           President, Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this  report has been signed by the  following  persons on behalf of the Company
and in the capacities and on the dates  indicated.  Each person whose  signature
appears  below  hereby  authorizes  Joseph G.  Sicinski  as his true and  lawful
attorney-in-fact  and agent, with full power of substitution and  resubstitution
for him and in his name,  place and stead, in any and all capacities to sign any
and all  amendments  to this  report,  and to file the same,  with all  exhibits
thereto and other  documents in connection  therewith,  with the  Securities and
Exchange Commission.


Signature                              Title                       Date



                        
Joseph G. Sicinski       President, Chief Executive            April 15,   1999
                         Officer and Director
                        (Principal Executive Officer)

 Glen R. Charles         Chief Financial Officer (Principal    April 15,   1999
                         Financial and Accounting Officer)     
                         

 Edward D. Bright        Director                              April 15,   1999
 


Donald Chaifetz          Director                              April 15,   1999



Seymour Richter          Director                              April 15,   1999











<PAGE>     19


                        INDEX TO FINANCIAL STATEMENTS


TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES                     PAGE

Report of Independent Certified Public Accounts                   

Consolidated Balance Sheets as of December 31, 1998 and 1997      F-3

Consolidated Statements of Operations for the years ended 
December 31,  1998, 1997 and 1996                                 F-5

Consolidated Statements of Changes in Stockholders' Equity 
for the years ended December 31, 1998, 1997,and 1996              F-7

Consolidated Statements of Cash Flows for the years ended 
December 31,  1998, 1997 and 1996                                 F-10

Notes to Consolidated Financial Statements                        F-13






































<PAGE>    20

                      INDEPENDENT AUDITOR'S REPORT

To the Stockholders and Board of Directors of Trans Global Services, Inc.
Hauppauge, New York


We have audited the  accompanying  consolidated  balance  sheets of Trans Global
Services,  Inc. and its  subsidiaries  as of December 31, 1998 and 1997, and the
related consolidated  statements of operations,  stockholders'  equity, and cash
flows for each of the three years in the period ended  December 31, 1998.  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 audits.

We  conducted  our  audits  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
consolidated  financial  statement  presentation.  We  believe  that our  audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated  financial position of Trans
Global Services, Inc. and its subsidiaries as of December 31, 1998 and 1997, and
the results of their operations and their cash flows for each of the three years
in the period ended  December 31, 1998, in conformity  with  generally  accepted
accounting principles.




MOORE STEPHENS, P.C.
Certified Public Accountants

Cranford, New Jersey
March 23, 1999



















<PAGE>    21

TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                           December 31,
                                                   1 9 9 8           1 9 9 7

<S>                                          <C>              <C>
Assets:
Current Assets:                              
Cash and Cash Equivalents                    $      234,917   $       328,484   
Accounts Receivable - Net                         3,922,843         5,470,353      
Loans Receivable - Officer                            5,000            47,500
Deferred Tax Asset-Current Portion                  144,000           177,000
Deferred Loan Costs                                  82,266             -0-
Prepaid Expenses and Other Current Assets           214,323           176,353
                                                 ----------        ----------
Total Current Assets                              4,603,349         6,199,690
                                                 ----------         ---------
Property and Equipment - Net                        171,123           194,513
                                                 ----------         ---------
Other Assets:
Due from Affiliates                               1,615,035         1,675,955
Customer Lists                                    2,388,607         2,613,564
Goodwill - Net                                      726,968           775,545
Deferred Acquisition Costs                          235,560           160,645 
Deferred Tax Asset-Non Current                      578,000           178,000
Other Assets                                         41,407            43,232
Investment in Preferred Stock of Affiliate        2,237,230         2,100,730
                                                 ----------          --------
Total Other Assets                                7,822,807         7,547,671
Total Assets                               $     12,597,279        13,941,874
                                           ================        ==========   
               

See Notes to Consolidated Financial Statements.

</TABLE>















                                    F-3




<PAGE>     22
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                       December 31,
                                                  1 9 9 8           1 9 9 7 
             
<S>                                            <C>              <C>
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts Payable and Accrued Expenses          $    314,625     $    591,614
Accrued Income Taxes Payable                         13,496           76,357
Accrued Payroll and Related Taxes and Expenses      528,574        1,416,134
Voluntary Settlement Agreement                          -0-          150,000 
Loans Payable - Asset-Based Lender                2,647,244        3,570,828
Note Payable - Other                                126,767          138,230
                                                  ---------         --------
Total Current Liabilities                         3,630,706        5,943,163
                                                   ---------        --------

Commitments and Contingencies [10]                      --               --
                                                  ---------        --------
Stockholders' Equity:

Common Stock $.01 Par Value, 25,000,000 Shares
Authorized at December 31,1998 and 50,000,000 Shares
Authorized at December 31,1997. Issued and 
Outstanding 3,819,716                               38,197            38,197

Capital in Excess of Par Value                  12,887,851        12,887,851

Deferred Consulting Fees                               -0-          (162,601)

Accumulated Deficit                             (3,959,475)       (4,764,736)
                                                ----------          ---------
Total Stockholders' Equity                       8,966,573         7,998,711
                                                ----------           --------
Total Liabilities and Stockholders' Equity     $12,597,279      $ 13,941,874
                                               ===========         ==========

See Notes to Consolidated Financial Statements.

</TABLE>













                                      F-4


<PAGE>     23
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                               Y e a r s   e n d e d
                                                D e c e m b e r  31,
                                        1 9 9 8         1 9 9 7      1 9 9 6
<S>                                 <C>             <C>           <C>
Revenues                            $ 67,243,713    $ 75,724,759  $  62,594,051

Cost of Services Provided             61,023,970      69,077,544     57,436,052
                                      ----------      ----------     ----------
Gross Profit                           6,219,743       6,647,215      5,157,999
                                      ----------      ----------     ----------
Operating Expenses:
Selling, General and
Administrative Expenses                 5,040,121      4,791,674      4,396,503 
Related Party Administrative Expenses      55,000        120,000        120,000
Amortization - Intangibles                273,537        333,995        455,200          
                                        ---------      ---------        -------
Total Operating Expenses                5,368,658      5,245,669      4,971,703        
                                        ---------      ---------      ---------
Operating Profit                          851,085      1,401,546        186,296      
                                        ---------      ---------      ---------
Other Income (Expenses):
Interest Expense                         (516,698)      (775,437)      (712,289)
Related Party-Interest Income             130,000        130,000        106,000       
Other Income (Expense)                      4,611        ( 8,591)        14,743        
Settlement Costs                               --             --       (300,000)            
                                        ---------       --------        -------
Total Other Expenses - Net               (382,087)      (654,028)      (867,546)       
                                        ---------       --------       --------
Income(Loss)before Income Tax Benefit     468,998        747,518     (  681,250)    
Income Tax Benefit                        336,263        275,363             --            
                                       ---------        --------      ---------
Net Income (Loss)                     $   805,261     $1,022,881     $ (681,250)    
                                       =========     ===========    ===========

Basic Earnings (Loss) Per Share       $       .21      $     .27     $    ( .27)


Weighted Average Number of Shares       3,819,716      3,819,574      2,530,495                              

Diluted Earnings (Loss) Per Share:
  Incremental Shares from Assumed
  Conversion of Options and Warrants      11,500          69,415              0              
                                       ---------      ----------     ----------
Weighted Average Number of
  Shares Assuming Dilution             3,831,216       3,888,989      2,530,495        

Diluted Earnings (Loss) Per Share     $      .21       $     .26      $ (   .27)       
  
 
See Notes to Consolidated Financial Statements
</TABLE>
                                      F-5                    



<PAGE>     24

Trans Global Services, Inc.
Consolidated Statement of Stockholders' Equity
<TABLE>
<CAPTION>
                                                       Shares         Amounts
<S>                                                    <C>            <C>

Preferred stock $0.01 Par Value Series "A"
Convertible participating Authorized 25,000
shares
Balance - December 31,1995                               25,000          250
Conversion of Series "A"  Preferred Stock
to Common                                               (25,000)        (250)
                                                       --------      -------
Balance - December 31, 1996, 1997 and 1998                    0            0
                                                       ========      =======
Preferred Stock $.01 Par Value Series
"B" & C"
Convertible Authorized 25,000 shares each
Balance - December 31,1995                               50,000          500
Cancelled in SISC Recapitalization                      (50,000)        (500)
                                                        -------        -----
Balance - December 31,1996, 1997 and 1998                     0            0
                                                         ======        =====
Preferred stock $.01 Par Value Series "D"
Convertible 6.25% Redeemable Authorized 20,000 shares
Balance - December 31,1995                             20,000            200
Cancelled in SISC Recapitalization                    (20,000)          (200)
                                                      -------          -----
Balance December 31, 1996, 1997 and 1998                    0          $   0
                                                      =======          =====

Preferred stock $0.01 Par Value Series "E"
Convertible participating Authorized 5,000 shares

Balance - December 31,1995                              5,000             50
Conversion of shares of Series "E" Preferred
Stock to Common Stock                                  (5,000)         (  50)
                                                       -------          -----
Balance - December 31,1996, 1997 and 1998                   0              0
                                                       =======         ======


See Notes to Consolidated Financial Statements
</TABLE>                                              


                                       F-6










<PAGE>  25
Trans Global Services, Inc.
Consolidated Statement of Stockholders' Equity

<TABLE>
<CAPTION>
                                                       Shares         Amounts
<S>                                                    <C>            <C>

Preferred stock $0.01 Par Value Series "F"
Convertible participating Authorized 10,000 shares
Balance - December 31,1995                                 --              --
Issued in SISC Recapitialization                       10,000             100
Cancelled on Conversion into Common Stock             (10,000)           (100)
                                                       ------            ----
Balance- December 31, 1996, 1997 and 1998                   0               0
                                                      =======           ======
Common Stock $.01 Par Value Authorized
50,000,000 shares at December 31, 1997 and
25,000,000 at December 31, 1998
Balance - December 31,1995                            570,766           5,707
Issued on Conversion of Series "A" and "E"
 Preferred Stock                                      353,333           3,533
Issuance of shares of Common Stock -
 Regulation S                                         916,666           9,167
Issuance of shares of Common Stock-
 Sirrom Capital                                         1,040              10
Deferred Issuance of shares of Common Stock
 Related to Acquisition Stock of Concept              123,413           1,234
Deferred Issuance of shares of Common Stock
 Related to Sale of WWR                               176,666           1,767
Issued on Conversion of Series F Preferred
 Stock                                              1,666,666          16,667
Exercise of Common Stock Options                        8,333              83
                                                   ----------         -------
Balance - December 31, 1996                         3,816,883          38,168
Exercise of Common Stock Options                        2,833              29
                                                  -----------        -------- 
Balance - December 31, 1997                         3,819,716         $38,197
                                                    ---------         -------
Balance - December 31, 1998                         3,819,716         $38,197
                                                    =========         =======




See Notes to Consolidated Financial Statements
</TABLE>


                                       F-7









<PAGE>   26
 Trans Global Services, Inc.
Consolidated Statement of Stockholders' Equity
<TABLE>
<CAPTION>
                                                                    Amounts
<S>                                                                <C>
Capital in Excess of Par Value
Balance - December 31,1995                                          9,859,773
Conversion of Series "A" and "E" Preferred
 Stock to Common                                                      ( 3,233)
Issuance of shares of Common Stock-Regulation S                     2,315,833
Issuance of shares of Common Stock-Sirrom Capital                       9,496
Deferred Issuance of shares of Common Stock related to
Acquisition Stock of Concept                                           (1,234)
Deferred Issuance of shares of Common Stock related to
 Sale of WWR                                                          ( 1,767)
SISC Recapitalization                                                 750,600
Expiration of Below Market Options                                   (138,125)
Issuance of Below Market Options                                       79,687
Conversion of Series F Preferred Stock to Common                      (16,567)
Exercise of Common Stock Option                                        24,917
                                                                     --------
Balance - December 31,1996                                         12,879,380
Exercise of Common Stock Options                                        8,471
                                                                   ----------
Balance - December 31, 1997                                        12,887,851
                                                                   ----------
Balance - December 31, 1998                                        12,887,851
                                                                   ==========
                                                                   
Accumulated Deficit                                               
Balance - December 31, 1995                                        (5,106,367)
Net (Loss)                                                         (  681,250)
                                                                   ----------
Balance - December 31, 1996                                        (5,787,617)
Net Income                                                          1,022,881 
                                                                    --------- 
Balance - December 31, 1997                                       $(4,764,736)
Net Income                                                            805,261
                                                                   -----------
Balance - December 31, 1998                                       $(3,959,475)                                
                                                                  =========== 


See Notes to Consolidated Financial Statements                                
</TABLE>



 

                                       F-8







<PAGE>   27
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>                                                            AMOUNT
<S>                                                              <C>
Deferred Charges
Balance - December 31, 1995                                      $   (508,512)
Amortization of Deferred Consulting Costs                             230,108
Expiration of Below Market Options                                    138,125
Issuance of Below Market Options                                     ( 79,687)
Recapture of Amortization on Expired Below
 Market Options                                                      ( 83,507)
                                                                    ---------
Balance - December 31, 1996                                         ( 303,473)
Amortization of Deferred Consulting Costs                             140,872
                                                                     --------
Balance - December 31, 1997                                         ( 162,601)
Amortization of Deferred Consulting Costs                             162,601
                                                                     --------
Balance - December 31, 1998                                               -0-
                                                                    =========
Total Stockholders' Equity
Balance - December 31, 1995                                         4,251,601
Issuance of shares of Common Stock-Regulation S                     2,325,000
Issuance of shares of Common Stock-Sirrom Capital                       9,506
SISC Recapitalization                                                 750,000
Amortization Deferred Consulting Costs                                230,108
Recapture of Amortization on Expired Below
 Market Options                                                       (83,507)
Exercise of Common Stock Options                                       25,000
Net (Loss) for the Year Ended December 31,1996                       (681,250)
                                                                      -------
Balance - December 31, 1996                                         6,826,458
Exercise of Common Stock Options                                        8,500
Amortization of Deferred Consulting Costs                             140,872
Net Income for the Year Ended December 31, 1997                     1,022,881
                                                                     --------
Balance - December 31, 1997                                       $ 7,998,711
Amortization of deferred Consulting Costs                             162,601
Net Income for the Year Ended December 31, 1998                       805,261
                                                                   ----------
Balance - December 31, 1998                                       $ 8,966,573
                                                                  
</TABLE>                                                            


See Notes to Consolidated Financial Statements




                                       F-9







<PAGE>     28
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>                                         Y e a r s   e n d e d
<CAPTION>                                        D e c e m b e r  31,
                                            1 9 9 8      1 9 9 7        1 9 9 6        
             
<S>                                       <C>          <C>          <C>             
Operating Activities:
Net Income (Loss)                         $  805,261   $1,022,881   $(681,250)  
Adjustments to Reconcile Net Income (Loss)
 to Net Cash Provided By (Used in)
 Operations:
  Depreciation and Amortization              393,364      385,351     477,160        
  Charges from Option Exercise               162,601      140,872     230,108   
 Deferred Offering Costs                          --      320,245          --  
 Deferred Income Taxes                      (367,000)    (355,000)         --  
Recapture of Amortization on
  Expired Below Market Options                    --           --     (83,507)  
  Settlement Costs                                --           --     300,000  
Changes in Operating Assets and Liabilities:
 (Increase) Decrease in Assets:
   Accounts Receivable-Net                  1,547,510    (280,297)   (320,940) 
   Loan Receivable - Officer                   42,500    (  5,000)    (20,000) 
   Prepaid Expenses and Other
    Current Assets                          (  37,970)     53,721    (149,108) 
Increase (Decrease) in Liabilities:
  Accounts Payable and Accrued
    Expenses                                ( 276,989)    308,258    (267,738) 
  Accrued Payroll and Related
    Taxes and Expenses                      ( 887,560)   (367,927)     28,376  
  Accrued Payroll Tax Penalties                   -0-    ( 77,000)   (623,000) 
  Accrued Income Taxes Payable              (  62,861)     76,357          --  
  Accrued Voluntary Settlement Agreement    ( 150,000)   (150,000)         -- 
                                           ---------   ----------      --------
Total Adjustments                             363,595      49,580    (428,649) 
                                           ----------   ---------   ---------- 
Net Cash -  Operating Activities            1,168,856   1,072,461  (1,109,899)   
                                          ----------   ---------    ----------
Forward



See Notes to Consolidated Financial Statements.
</TABLE>


                                       F-10












<PAGE>     29
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>                                        Y e a r s   e n d e d
                                                  D e c e m b e r  31,
                                       1 9 9 8         1 9 9 7        1 9 9 6  
                                    
<S>                                 <C>            <C>             <C>         
Net Cash -  
 Operating Activities Forwarded     $1,168,856     $1,072,461      $ (1,109,899)

Investing Activities:
 Capital Expenditures                  (55,307)      (171,288)          (55,536)
 Deferred Acquisition Costs            (74,915)      (160,645)               -- 
 Repayments from Affiliates             60,920             --                --
 Advances to Affiliates                     --       (167,453)         (274,074)
 Other, net                              1,825       ( 20,337)            2,116                                             
Investments in Preferred Stock
   of Affiliate                      (136,500)            -0-               -0-
                                     --------         --------         -------- 
Net Cash -  Investing Activities     (203,977)       (519,723)         (327,494)
                                    ----------     -----------         ---------
Financing Activities:
 Net(Payments to) Advances from 
  Asset-Based Lender                 (923,584)       (120,047)           12,173  
 Repayment of Subordinated Debt            --              --          (700,000)
 Payments to Affiliates                    --              --          (176,832)
 Deferred Offering Costs                   --        (168,938)         (151,307)
 Deferred Loan Costs                 (123,399)             --                -- 
 Issuance of shares of Common Stock        --              --         2,334,506 
 Exercise of Stock Options                 --           8,500            25,000
 Repayment of Note Payable            (11,463)             --           (60,513)
                                      ---------      ---------       ----------
Net Cash - 
 Financing Activities              (1,058,446)       (280,485)        1,283,027
Net(Decrease) Increase in Cash and
 Cash Equivalents                  (   93,567)        272,253          (154,366)
Cash and Cash Equivalents
  - Beginning of Year                 328,484          56,231           210,597         
Cash and Cash Equivalents
  - End of Year                  $    234,917        $328,484        $   56,231 
                                  ===========     ===========       ===========
Supplemental Disclosures of Cash
  Flow Information:
   Interest                      $    516,698      $  775,437        $  712,289 
   Income Taxes                  $     68,936      $       --        $       --


See Notes to Consolidated Financial Statements.
</TABLE>




                                       F-11




<PAGE>      30
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS


Supplemental Disclosures of Non-Cash Investing and Financing Activities:
During the year ended December 31, 1996, the Company had the following:

Issued  preferred stock and warrants to an affiliate and reduced amounts owed to
such affiliate by $750,000 plus accrued interest. A stock option granted in 1995
expired  without having been  exercised as to 85,000 shares.  This resulted in a
recapture of $83,507 of  amortization  expense.  Additional  stock  options were
granted  and  non-cash  deferred  charges of $79,687  were  incurred  which were
amortized over the 2 year life of the option.




















See Notes to Consolidated Financial Statements.






















                                       F-12


<PAGE>     31

TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS

[1] Basis of Presentation

Trans  Global  Services,  Inc.  ("the  Company  or Trans  Global"),  a  Delaware
corporation,  operates through two  subsidiaries,  Avionics  Research  Holdings,
Inc.,  formerly known as ARC Acquisition  Group,  Inc.["Holdings"]  and Resource
Management  International,Inc.  ["RMI"].  The  Company is  engaged in  providing
technical temporary staffing services throughout the United States,  principally
in the  aerospace  industry.  The  principal  stockholder  of the Company is SIS
Capital Corp.  ["SISC"],  a wholly-owned  subsidiary of Consolidated  Technology
Group Ltd. ["Consolidated"], a publicly held company. (See Note 18 in connection
with an agreement with  Consolidated and SISC pursuant to when SISC may transfer
1,150,000  shares of common  stock to the  Company  in  satisfaction  of certain
obligations of Consolidated to the Company.


[2] Summary of Significant Accounting Policies

Principles of Consolidation - The consolidated  financial statements include the
accounts of Trans Global Services, Inc. and its subsidiaries,  Holdings and RMI.
All intercompany transactions have been eliminated in consolidation.

Cash and Cash Equivalents - The Company considers all highly liquid  instruments
purchased with a maturity of three months or less to be cash equivalents.  There
were no cash equivalents at December 31, 1998 and 1997. 

Prepaid Expenses and Other Current Assets - Prepaid expenses  primarily  consist
of approximately $172,000 and $144,000 of prepaid insurance at December 31, 1998
and 1997, respectively.

Property  and  Equipment  -  Property  and  equipment  are  stated  at cost less
accumulated  depreciation  and  amortization.  Depreciation and amortization are
computed using  straight-line and accelerated  methods over the estimated useful
lives of the respective assets.  Estimated useful lives range from 5 to 10 years
as follows:

Furniture and Fixtures                  5 - 7   years
Leasehold Improvements                  5 - 10  years
Equipment                               5 - 10  years


Expenditures  for  maintenance  and repairs,  which do not improve or extend the
life of the  respective  assets are expensed  currently  while major repairs are
capitalized.

Offering Costs- Deferred  offering costs of $ 169,000 and $151,000 were incurred
in 1997 and 1996  with  respect  to a  proposed  public  offering  which was not
completed  in  1997.   These  costs  were  expensed  to  selling,   general  and
administrative expenses in 1997.


                                     F-13




<PAGE>  32
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS




Deferred  Acquisition  Costs  -  Deferred  acquisition  costs  represent  legal,
accounting  and  other  costs  associated  with  the  consummation  of  business
acquisitions by the Company. When such acquisitions are consummated, these costs
will be added to other costs incurred in the acquisition of such businesses.  If
such  acquisitions  are not  completed  in the near  term,  these  costs will be
expensed. (See Note 18)

Revenue Recognition - The Company records revenue as services are provided.

Stock Options and Similar  Equity  Instruments - On January 1, 1996, the Company
adopted  the  disclosure  requirements  of  Statement  of  Financial  Accounting
Standards ["SFAS"] No. 123, "Accounting for Stock-Based Compensation," for stock
options and  similar  equity  instruments  [collectively,  "Options"]  issued to
employees, however, the Company will continue to apply the intrinsic value based
method of accounting  for options  issued to employees  prescribed by Accounting
Principles  Board  ["APB"]  Opinion  No.  25,  "Accounting  for Stock  Issued to
Employees"  rather than the fair value based method of accounting  prescribed by
SFAS No.123. SFAS No. 123 also applies to transactions in which an entity issues
its equity  instruments to acquire goods or services from non- employees.  Those
transactions  must be accounted for based on the fair value of the consideration
received or the fair value of the equity instruments  issued,  whichever is more
reliably measurable.

Income  Taxes - The  Company  accounts  for income  taxes  under  SFAS No.  109,
"Accounting  for Income  Taxes".  Under SFAS No.  109,  the asset and  liability
method  is used to  determine  deferred  tax  assets  and  liabilities  based on
differences  between financial reporting and tax bases of assets and liabilities
and are  measured  using the  enacted  tax rates and laws that will be in effect
when the differences are expected to reverse.

Earnings Per Share-  Earnings  per share of Common  Stock  reflects the weighted
average  number of shares  outstanding  for each  year.  On June 20,  1997,  the
Company effected a one-for-six  reverse split in its Common Stock. All share and
per share information in these financial statements gives effect, retroactively,
to such reverse split.

The Financial Accounting  Standards Board has issued SFAS No.128,  "Earnings Per
Share",  which is effective for financial  statements  issued for periods ending
after December 15, 1997.  Accordingly,  earnings per share data in the financial
statements for the years ended December 31, 1998 and 1997,  have been calculated
in accordance  with SFAS No. 128.The year ended  December 31, 1996 earnings per
share data has been recalculated as necessary to conform to SFAS No.128.








                                          F-14


<PAGE>    33
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS


SFAS No. 128 supercedes APB Opinion  No.15,  "Earnings Per Share",  and replaces
its primary earnings per share with a new basic earnings per share  representing
the amount of earnings  for the period  available  to each share of common stock
outstanding  during the  reporting  period.  SFAS  No.128  also  requires a dual
presentation  of  basic  and  diluted  earnings  per  share  on the  face of the
statement of  operations  for all  companies  with complex  capital  structures.
Diluted  earnings  per share  reflects  the  amount of  earnings  for the period
available to each share of common stock outstanding during the reporting period,
while  giving  effect  to  all  dilutive   potential  common  shares  that  were
outstanding during the period,  such as common shares that could result from the
potential exercise or conversion of securities into common stock.

The  computation  of diluted  earnings  per share  does not assume  conversion,
exercise or contingent  issuance of securities  that would have an  antidulutive
effect on earnings  per share (i.e.  increasing  earnings per share or reducing
loss per share).  The dilutive  effect of  outstanding  options and warrants and
their   equivalents  are  reflected  in  dilutive  earnings  per  share  by  the
application  of the treasury  stock method which  recognizes the use of proceeds
that could be obtained  upon the  exercise of options and  warrants in computing
diluted  earnings  per share.  It  assumes  that any  proceeds  would be used to
purchase common stock at the average market price during the period. Options and
warrants will have a dilutive effect only when the  average market price of the
common  stock  during the period  exceeds the  exercise  price of the options or
warrants.

Securities  that could  potentially  dilute earnings per share in the future are
disclosed in Note 15.

Impairment - The Company reviews certain long-lived  assets,  including goodwill
and other intangibles for impairment whenever events or changes in circumstances
indicate  that  the  carrying  amount  of such  assets  may not be  recoverable.
pursuant to guidance established in SFAS No. 121, "Accounting for the impairment
of long-lived assets and for long-lived assets to be disposed of." [See Note 5]

Estimates - The preparation of 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 date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.






                                 F-15







<PAGE>     34
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS

[2] Summary of Significant Accounting Policies [Continued]

Concentration  of Credit Risk - The Company  extends  credit to customers  which
results in accounts receivable arising from its normal business activities.  The
Company  does not require  collateral  or other  security  to support  financial
instruments subject to credit risk. It routinely assesses the financial strength
of its customers and believes that its accounts  receivable credit risk exposure
is limited.  Such  estimate of the financial  strength of such  customers may be
subject to change in the near term.  For each of the years  ended  December  31,
1998 and 1997, a significant  portion of the Company's  receivables were derived
from three customers [See Note 13].

Due to the nature of its operations,  the Company deposits,  on a monthly basis,
amounts in excess of the federally  insured limit in financial  institutions for
the payment of payroll  costs.  Such  amounts are  reduced  below the  federally
insured  limit as payroll  checks are  presented  for  payment.  Such  reduction
generally  occurs over three to four  business  days. At December 31, 1998,  the
Company had amounts on deposit with two financial  institutions  which  exceeded
the  federally  insured  limit by  approximately  $400,000.  The Company has not
experienced any losses and believes it is not exposed to any significant  credit
risk from cash and cash equivalents.

[3] Accounts Receivable and Loan Payable - Asset Based Lender

Receivables  are shown net of an allowance  for doubtful  accounts of $62,500 at
December  31, 1998 and 1997.  On April 23, 1998 the Company  entered  into a two
year  revolving  credit  agreement  with Citizens  Business  Credit  Company,  a
division of Citizen's Leasing Corporation  ("Citizens").  Pursuant to the credit
agreement,  the  Company  can  borrow  up  to  85%  of  its  qualified  accounts
receivables  at an interest rate of prime plus 3/4% with a maximum  availability
of $7.5 million.  Additional costs associated with the new financing arrangement
include an unused  line fee equal to 1/4 of one percent of the unused line and a
monthly fee of $2,000.  The  borrowings  from Citizens are secured by a security
interest in all of the Company's  assets.  At December 31, 1998, such borrowings
were  approximately  $2.6 million.  At December 31, 1997 and 1996 the borrowings
from the company's prior lender  amounted to $3.6 million and $3.7 million.  The
interest  rates  (exclusive  of the fee)  payable by the Company at December 31,
1998 was 8.5% and at December 31, 1997 and 1996 10.50% and 10.25%  respectively.
Prior to April 1998 the Company  financed a majority of its receivables  from an
asset-based   lender  under  agreements   entered  into  in  February  1995  and
subsequently amended. The agreements provided a maximum availability of funds of
$5,500,000.  Funds  were  advanced  in an amount  equal to 85% of the total face
amount of outstanding and unpaid receivables, with the asset-based lender having
the right to reserve 15% of the outstanding and unpaid receivables financed.










                                    F-16


<PAGE>     35

TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS


[4] Property and Equipment

Property and equipment at December 31, 1998 and 1997  is as follows:
<TABLE>
<S>                                         <C>          <C>                   
                                             19 9 8      1 9 9 7               
Equipment                                   $  393,873   $ 349,701          
Furniture and Fixtures                         196,071     189,134            
Leasehold Improvements                          97,797      93,602              
                                             ---------    ---------        
Totals - At Cost                               687,741     632,437           
Less: Accumulated Depreciation                 516,618     437,924           
                                             ---------    ---------         
Totals                                      $  171,123   $ 194,513         
</TABLE>
Depreciation expense charged to operations was $78,694 in 1998, $51,359 in 1997,
and $22,160 in 1996.

[5] Intangibles

The Company  acquired  its  subsidiaries  during  1994.  As part of the purchase
agreements,  the Company  acquired  customer  lists, a restrictive  covenant and
goodwill.  The intangible  assets  acquired and the related  amortization on the
straight-line method are summarized as follows:
<TABLE>
<S>               <C>  <C>                   <C>           <C>              <C>           <C>

                                               Accumulated Amortization      Net of Amortization
                 Life                               December 31,                 December 31,
                 Years    Cost                    1998        1997            1998            1997
Customer Lists    15   $3,374,477             $ 985,870    $  760,913        $2,388,607   $2,613,564   
Goodwill          20   $  971,623             $ 244,655    $  196,078        $  726,968   $  775,545 

</TABLE>

Goodwill  represents the excess of the acquisition  costs over the fair value of
net  assets of  business  acquired.  Amortization  expense  is  calculated  on a
straight-line  basis over twenty years. Other intangibles are Customer Lists and
Covenants  Not-to-Compete.   Customer  Lists  represent  listings  of  customers
obtained  through  acquisitions  to which the Company  can market its  services.
Customer  Lists are recorded at cost and are amortized on a straight- line basis
over the estimated  useful life of fifteen years.  The Company reviews  Goodwill
and other  intangibles to assess  recoverability  from future  operations  using
undiscounted  cash flows. If the review indicates  impairment,  the Company will
incur a charge against operations to the extent that carrying value exceeds fair
value.  Management has determined  that fair value exceeds  carrying value as of
December 31, 1998.


                                    F-17




<PAGE>     36
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS

[6] Related Party Transactions

During 1996, the Company issued to SISC 9,900 shares of Series F Preferred Stock
and warrants to purchase  3,200,000 shares of Common Stock at $7.50 per share in
exchange for the cancellation of $750,000 principal amount of the Company's debt
to SISC and all of the shares of the three series of  Preferred  Stock that were
owned by SISC, including accrued dividends.  Such exchange is referred to as the
"SISC  Recapitalization".  SISC transferred 1,000 of such shares to Mr. Lewis S.
Schiller,   who  was  then  president  and  chief  executive   officer  of  both
Consolidated and the Company,  pursuant to Mr. Schiller's  employment  agreement
with  Consolidated.  An additional  100 shares of Series F Preferred  Stock were
issued to DLB, Inc.,  which was controlled by Mr.  Schiller's  wife, in exchange
for the  cancellation  of shares of  preferred  stock  owned by DLB.  The 10,000
shares of Series F Preferred  Stock were  converted  into  10,000,000  shares of
Common  Stock  during  1996.  As a result  of this  SISC  Recapitalization,  the
Company's  obligations  to SISC were reduced to $300,000,  which was paid during
1996.

Additionally,  the Company issued two-year  warrants to purchase an aggregate of
83,333 shares of Common Stock at $21.00 per share. As a result of the March 1996
amendment  to  the  Company's   certificate  of  incorporation   increasing  the
authorized  Common Stock,  the 25,000  shares of Series A Convertible  Preferred
Stock were  automatically  converted  into 333,333  shares of Common Stock.  The
former  stockholders  of Trans  Global  have  certain  registration  rights with
respect to securities issued pursuant to the Trans Global Transaction.

In connection with the sale of a subsidiary engaged in an unrelated business, to
a subsidiary of Consolidated,  the Company issued 176,666 shares of Common Stock
to SISC.  In  connection  with  such  transaction,  Consolidated  satisfied  the
obligation  to pay  approximately  $2.1  million due to the Company  through the
issuance of preferred stock of Consolidated.

The Company had a management  services agreement with a wholly-owned  subsidiary
of  Consolidated  pursuant  to which the  Company  paid a monthly fee of $10,000
through January 1998. Commencing February 1998 such fee was increased to $15,000
through March 2000. The Company  terminated the  management  services  agreement
effective April 30, 1998.

At June 30, 1995, SISC converted  $200,000 of the Company's  obligations to SISC
into 5,000  shares of Series E Preferred  Stock.  In March 1996,  as a result of
amendment  to  the  Company's   certificate  of  incorporation   increasing  its
authorized  common  stock,  the 5,000  shares of  Series E  Preferred  Stock was
automatically converted into 20,000 shares of Common Stock.










                                F-18


<PAGE>     37

TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS

As of July,  1996 The Company owed SISC  $1,050,000  for advances  made by SISC.
Pursuant to an exchange  [the "SISC  Recapitalization"],  the Company  issued to
SISC 9,900 shares of Series F Preferred  Stock and warrants to purchase  533,333
shares of Common  Stock at $7.50 per share in exchange for the  cancellation  of
$750,000 principal amount of the Company's debt to SISC and all of the shares of
Series B, C, and D Preferred Stock owned by SISC,  including  accrued  dividends
due on the Series D Preferred Stock. As part of the SISC  Recapitalization,  the
Company issued 100 shares of Series F Preferred  Stock to DLB, which owned 5% of
the Series B and C  Preferred  Stock.  The 10,000  shares of Series F  Preferred
Stock were  converted  into  1,666,666  shares of Common  Stock in  October  and
December  1996.  As  a  result  of  the  SISC  Recapitalization,  the  Company's
obligations to SISC was reduced to $300,000, which was paid in 1996.

In April  1996,  the  Company  issued to its  directors  warrants to purchase an
aggregate  of 283,333  shares of Common  Stock at $7.50 per share.  The warrants
expire  on April 1, 2001 and  provide  the  holders  with  certain  registration
rights. In connection with the issuance of such warrants,  the obligation of the
Company to issue to two  directors  warrants to purchase an  aggregate of 25,000
shares at $21.00 per share was terminated.

In July  1997,  SISC  sold  258,333  shares  of  Common  Stock to the  President
("President")  for $1.625 per share,  which was the market  price on the date of
sale. The President issued his five-year non-recourse promissory note in payment
of the shares.  In August 1997,  SISC  transferred to the president a warrant to
purchase  83,334  shares  of  Common  Stock at  $7.50  per  share.  SISC and the
president also canceled,  ab initio,  an option granted by SISC to the president
to purchase 133,333 shares of Common Stock from SISC at $1.50 per share.

The Company has from time to time made  advances to three  subsidiaries  of SISC
[the "SISC  Subsidiaries"] which are not owned or controlled by the Company. The
aggregate  amount of such advances  outstanding on December 31,1998 and 1997 was
$1,615,000  and  $1,676,000,  respectively.  The Company has  recorded  interest
income from these subsidiaries of $130,000,  $130,000 and $106,000 for the three
years ended December 31, 1998, 1997,and 1996 respectively. [See Note 18]

The advances to the SISC Subsidiaries are an obligation from Arc Networks, Inc.,
which is represented  by Arc's 10%  installment  promissory  note due August 31,
2003 in the principal  amount of $1,216,673 (the "Arc Note"),  and an obligation
from Consolidated with respect to $325,952, which is sujbect to the February 25,
1999 agreement with Consolidated. See Note 1.



[7] Note Payable - Other

At  December  31, 1998 and 1997,  a note  payable to former  stockholders  of an
acquired subsidiary due September 1996 with interest at 7% remained outstanding.
The  payment of  principal  and  interest on this note was  suspended  until the
outcome of the Government Printing Office contingency was resolved.



                                   F-19


<PAGE>     38

TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENT



[8] Income Taxes

Deferred  income taxes reflect the net tax effects of (a) temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes,  and (b)  operating  loss
carryforwards. The tax effects of significant items comprising the Company's net
deferred tax asset as of December 31, 1998 and 1997  are as follows:

                                                     December 31,
                                             1998        1997        1996
<TABLE>
<S>                                      <C>            <C>           <C>
Deferred Tax Liabilities                 $    --        $      --     $      --
                                           -------       --------      ---------
Deferred Tax Assets:
 Allowance for Doubtful Accounts not
  Currently Deductible                       25,000        25,000        25,000
 Net Operating Loss Carryforwards         1,296,000     1,482,000     2,200,000
                                         ----------     ---------     ---------
Totals                                    1,321,000     1,507,000     2,225,000

Valuation Allowance                         599,000     1,152,000     2,225,000
                                          ---------     ---------     ---------
Net Deferred Tax Asset                      722,000       355,000            --
Net Deferred Tax Asset - Current Portion    144,000       177,000            --
                                          ---------     ---------     ---------
Net Deferred Tax Asset - Non Current      $ 578,000     $ 178,000      $     --
                                          =========    ==========     =========  
                                        
</TABLE>

The Company has  recorded a net  deferred  tax asset of $722,000 at December 31,
1998. The  realization of the net deferred tax asset is dependent on the Company
generating  sufficient taxable income in future years.  Although  realization is
not assured,  management believes it is more likely than not that all of the net
deferred  tax asset will be  realized.  The amount of the net deferred tax asset
considered  realizable,  however, could be reduced in the near term if estimates
of future taxable income are reduced.

The Company's deferred tax asset valuation  allowance was 599,000 and $1,152,000
as of  December  31,  1998  and 1997 ,  respectively.  The  valuation  allowance
represents  the tax  effects  of net  operating  loss  carryforwards  and  other
temporary  differences  which  the  Company  does not  expect  to  realize.  The
(decrease) in the valuation  allowance  amounted to $(553,000) and  $(1,073,000)
for the years ended December 31, 1998 and 1997 respectively.





                                  F-20

<PAGE>     39
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS

The current and deferred income tax components of the provision [benefit] for
income taxes consist of the following:
                                             Years ended  December 31,        
                                           1998           1997           1996 
                                           -----          ----          -----  
<TABLE>
<S>                                      <C>              <C>             <C>           
Current:
 Federal                                 $    1,041       $      --      $     --     
 State                                       29,696          79,637            --      
                                            -------         -------       -------      
Totals                                   $                $  79,637      $     --      

Deferred:
 Federal                                   (286,994)       (277,610)           --            
 State                                     ( 80,006)       ( 77,390)           --           
                                           ---------      ---------      --------      
Totals                                     (367,000)      $(355,000)     $     --      
                                           --------      ----------      --------      
Totals                                   $ (336,263)      $(275,363)     $     --      
                                         ==========      ==========      ========     
</TABLE>

A reconciliation of the federal statutory rate to the Company's effective tax
rate is as follows:
                                               Years Ended December 31,
                                            1998            1997        1996
<TABLE>                                     ----            ----        ----
<S>                                         <C>             <C>         <C>
Federal Statutory Rate                        34%           34%         (34%)      

State Income Taxes, net of
 federal tax                                   7%            7%          --         

Federal tax benefit of net operating
 loss carryforwards                          (32%)         (30%)         --         
(Decrease )Increase in valuation allowance   (81%)         (48%)         34%        
                                             -----         -----       -----      
Effective tax rate                           (72%)         (37%)         --
                                            =====            =====      =====



The following summarizes the operating loss carryforwards by year of expiration:

                  Amount                 Expiration Date
                 2,260,000               December 31, 2009
                 2,826,000               December 31, 2010
                   189,000               December 31, 2011
                 ---------
                 3,241,000
</TABLE>


                                   F-21


<PAGE>     40
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS

[9] Commitments

The Company  leases office space and several  office  machines  under  operating
leases which  expire in 2002.  The  following  is an analysis of future  minimum
lease commitments as of December 31, 1998:

1999                    166,824
2000                    134,742
2001                    134,807
2002                     11,328
2003                         --
                       --------
Total           $       447,701

Rent  expense  amounted to  $225,198,  $211,503 and $174,312 for the years ended
December 31, 1998, 1997 and 1996 , respectively.

[10] Contingencies

In November  1997,  an action was commenced in the Supreme Court of the State of
New York,  County of Suffolk,  by Ralph  Corace  against RMI seeking  damages of
approximately $1.1 million for an alleged breach of contract by the Company. Mr.
Corace was the president of Job Shop Technical  Services,  Inc.,  from which RMI
purchased  assets in  November  1994.  The Company  believes  that the action is
without merit, will vigorously  contest this matter and has filed  counterclaims
against Mr. Corace.

Due to the  uncertainties  in the legal process it is  reasonably  possible that
management's  view of the  outcome  of the above  matter  may change in the near
term.

[11] Fair Value of Financial Instruments

Effective  December 31, 1995,  the Company  adopted SFAS No. 107, which requires
disclosing fair value to the extent practicable for financial  instruments which
are  recognized  or  unrecognized  in the balance  sheet.  The fair value of the
financial instruments disclosed therein is not necessarily representative of the
amount  that  could be  realized  or  settled,  nor does the fair  value  amount
consider the tax consequences or realization or settlement.  The following table
summarizes  financial  instruments  by individual  balance sheet  accounts as of
December 31, 1998 and 1997:
                                  Carrying Amount              Fair Value
                                   December 31,               December 31,
                                1 9 9 8      1 9 9 7     1 9 9 8       1 9 9 7 
<TABLE> 
<S>                            <C>         <C>          <C>         <C>

Investment in Preferred Stock 
of Affiliate  (1)              $2,237,230  $2,100,730   $2,237,230  $2,100,730  
Debt Maturing Within One Year  $2,774,011  $3,859,058   $2,774,011  $3,859,058  
---------------------------
</TABLE>
(1) See Note 18 in  connection  with the  agreement  relating to  Investment  in
Preferred Stock of Affiliate.

                                    F-22
<PAGE>   41
TRANS GLOBAL SERVICES,INC.
NOTES TO FINANCIAL STATEMENTS

For certain financial  instruments,  including cash and cash equivalents,  trade
receivables and payables,  and short-term debt, it was assumed that the carrying
amount  approximated  fair  value  because of the near term  maturities  of such
obligations.  The  investment in preferred  stock of affiliate is based upon the
fair value of the guarantee of fair value issued by such affiliate.

[12] Economic Dependency

In 1998,  three  customers  of the  Company,  accounted  for  approximately  $16
million,  $12  million  and  $12  million  respectively  of  revenue.   Accounts
receivable of $1,720,000 were due from these customers  collectively at December
31, 1998. In 1997, three customers of the Company,  accounted for  approximately
$20  million,  $15  million and $13 million  respectively  of revenue.  Accounts
receivable of $2,700,000 were due from these customers  collectively at December
31, 1997.  Three  customers  of the Company,  accounted  for  approximately  $16
million,  $13  million  and $9 million  respectively,  of the  revenue for 1996.
Accounts  receivable of  approximately  $2,850,000 were due from these customers
collectively at December 31, 1996.

[13] Employment  and Management Contracts

In May  1998,  the Vice  President  of Trans  Global  entered  into a  five-year
employment  agreement pursuant to which he is to receive annual  compensation of
$135,200. As additional compensation,  he shall receive an annual bonus based on
performance. Bonus shall be determined by the Chief Executive Officer.

In  October  1997,  the  President  of Trans  Global  entered  into a  five-year
employment  agreement,  pursuant to which he  receives  annual  compensation  of
$260,000  subject  to an annual  cost of living  increase.  In  addition,  he is
entitled to an annual bonus of not less than 5% of the net income before tax and
all  non-cash  adjustments  and  expenses,  including  charges  and fees paid to
Consolidated  Technology Group,  Ltd., its subsidiary and associated  companies,
for Trans Global and its wholly or partially owned subsidiaries, currently owned
and acquired  during the terms of the Agreement  provided that such annual bonus
shall not exceed  200% of his  annual  salary.  This  Agreement  supercedes  his
employment agreement of September 1996.

Effective  April 30, 1998,  the Company's  management  services  contract with a
subsidiary of Consolidated  was  terminated.  The Company paid such subsidiary a
management  services fee of $55,000,  $120,000  and $120,000 for 1998,  1998 and
1996, respectively, pursuant to such contract.

[14] Stockholders Equity

At December 31, 1998, the authorized  capital stock of the Company  consisted of
5,000,000  shares of Preferred  Stock,  par value $.01 per share, and 25,000,000
shares of Common Stock, par value $.01 per share. The authorized  shares of both
preferred  and  common  stock  was  reduced  to these  amounts  as a result of a
shareholder  vote.  The Board of Directors has the right to create and to define
the rights,  preferences  and privileges of the holders of one or more series of
Preferred Stock.

At  December  31,  1998,  1997 and 1996  there  were no shares of any  series of
Preferred Stock outstanding.

                                  F-23
<PAGE>     42
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS


At December 31, 1998, there were outstanding warrants to purchase 901,485 shares
of Common  Stock at prices  ranging  from $7.50 - $50.70  per share.

A summary of warrant activity is as follows:

                               1998                  1997                 1996
                               Weighted              Weighted           Weighted
                               Average               Average            Average
                               Exercise              Exercise           Exercise
                    Shares     Price       Shares    Price     Shares   Price
<TABLE>
<S>                 <C>        <C>        <C>       <C>       <C>      <C>
Outstand-Beginning 
 of Years            913,359      9.36    1,137,434  $13.92    320,767   $30.26            
Granted or Sold
 during the years          --                    --      --    816,667     7.50   
Cancelled during
 the years                 --                    --      --         --      --
Expired during 
 the years             11,874    30.95      224,075   32.51         --      --         
Exercised during           
 the years                 --                    --      --         --      --
Outstanding- 
 End of Years         901,485     9.07      913,359    9.36   1,137,434   13.92     
                      =======     ====    =========    =====     =======  =====
Exercisable -
 End of Years         825,835     7.98      837,109    8.31   1,061,784   13.41     
                      =======     ====    =========    =====     =======  =====
</TABLE>
The following table summarizes warrant information as of December 31, 1998

                                             Weighted Avg.       Weighted Avg. 
Range of Exercise Price                      Remaining           Exercise
                            Shares           Contractual Life    Price
<TABLE>
 <S>                        <C>              <C>                 <C>  
  7.50                      816,669          2.3 Years            7.50
 21.00                       75,650            (A)               21.00
 50.70                        9,166           .2 Years           50.70
                            -------
                            901,485
</TABLE>

(A) Registration is assumed to be completed December 31, 1999




                                   F-24






<PAGE>      43
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS

On January 2, 1996 and July 26, 1996,  the Company sold 83,333  shares of common
stock and  833,333  shares of  common  stock  pursuant  to  Regulation  S of the
Securities  Act of 1933 and received  net  proceeds of $375,000 and  $2,000,000,
respectively.

Non-Employee  Directors,  Consultants  and Advisors Stock Plan - During the year
ended  December  31, 1995,  the Company  authorized a stock option plan for Non-
Employee  Directors,  Consultants  and  Advisors  to  provide  compensation  for
services rendered to the Company in lieu of cash payments. At various times, the
Company has registered and granted shares pursuant to the plan.  During the year
ended  December  31, 1995,  127,833  shares were  granted and  exercised,  at an
average price of $5.40 per share,  resulting in  $2,543,536  of deferred  charge
costs computed as follows:

Shares                                                           127,833
Value of Stock at Date of Grant [Weighted Average]      $       25.29885
                                                          ----------------
                                                               3,234,036
Exercise Price                                                  (690,500)
                                                         ----------------
Total Charges Deferred at the Time of Exercise          $      2,543,536
                                                         ================


In accordance  with the  agreements  relating to the various  parties  involved,
amortization of the deferred  portion in the amount of $162,601,  $140,872,  and
$101,000 was charged to income from  operations for the years ended December 31,
1998, 1997 and 1996,  respectively.  The unamortized deferred consulting expense
is recorded in the equity  section of the balance sheet.  Such deferred  charges
are  being  amortized  over  four  years,  based  on the  terms  of the  related
contracts.  All  consulting  fees have been fully  amortized  as of December 31,
1998.

Below Market Stock Options - On August 14, 1995, an option was granted under the
Company's  1995 stock  incentive  plan [See Note 15] to a consultant to purchase
18,333 shares of common stock,  at a price of $6.00 per share.  The market value
of the stock at the date of grant was  $15.75 per share.  The  deferred  charges
amount to:
<TABLE>
<S>                                                  <C>
Shares                                                      18,333
Value of Stock at Date of Grant                      $       15.75
                                                     -------------
                                                           288,750
Exercise Price                                             110,000
                                                     -------------
Total Charges Deferred at the  Time of Exercise      $     178,750
                                                     =============






                                      F-25

<PAGE>   44
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS

The option was  exercised as to 4,166 shares on October 9, 1995.  Such  exercise
was made by a  reduction  in the  Company's  indebtedness  to SISC.  This option
expired on August 14, 1996 with 14,166 shares unexercised.  It was replaced with
a new grant to purchase 14,166 shares at $3.00 per share with an expiration date
of  August  13,  1998.  The  market  value of the stock at the date of grant was
$8.625. The deferred charges amount to:
</TABLE>


<TABLE>
<S>                                                  <C>
Shares                                                     14,166
Value of Stock at Date of Grant                      $      8.625
                                                     ------------
                                                          122,188
Exercise Price                                             42,500
                                                     ------------
Total Charges Deferred at the Time of Exercise       $     79,688
                                                     ============

The option was exercised as to 11,166 shares of the 14,166 shares as of December
31, 1997. The option expired on August 14, 1998 with 3000 shares unexercised.
</TABLE>

[15] Stock Option Plans

The Company has four stock option plans.  In 1993, the Company  adopted the 1993
Stock  Incentive Plan [the "1993 Plan"],  covering an aggregate of 25,000 shares
of Common Stock.  Options to purchase 20,683 shares of Common Stock were granted
at exercise  prices of $18.00 as to 9,083 shares,  $30.00 as to 2,433 shares and
$30.00 as to 9,166 shares. The exercise price of all of such options was reduced
to $13.50 per share in February 1995. As of August 31, 1995, options to purchase
1,691 shares had expired  unexercised.  No options  under the 1993 Plan had been
exercised.  In  January  1995,  the board of  directors  adopted  the 1995 Stock
Incentive  plan [the "1995  Plan"],  pursuant to which  stock  options and stock
appreciation  rights can be  granted  with  respect  to 50,833  shares of Common
Stock. At August 31,1995, options to purchase 48,333 shares of Common Stock were
granted  pursuant to the 1995 Plan, of which  options to purchase  34,166 shares
were  exercised and options to purchase  14,166  shares at an exercise  price of
$6.00 per share were outstanding.  In May 1995, the board of directors  adopted,
and, in March 1996, the stockholders  approved the 1995 Long Term Incentive Plan
[the "1995 Incentive Plan"], initially covering 83,333 shares of Common Stock.

In April and November 1996, the board of directors and stockholders  approved an
amendment to the 1995  Incentive  Plan which  increased  the number of shares of
Common Stock currently subject to the 1995 Incentive Plan to 415,388 shares. The
number  of  shares  of  Common  Stock  subject  to  the  1995   Incentive   Plan
automatically  increases  by 5% of any  shares  of  Common  Stock  issued by the
Company other than shares issued  pursuant to the 1995 Incentive Plan. In August
1995,  the Company  granted to an officer  six-year  incentive  stock options to
purchase an  aggregate  of 41,666  shares of Common  Stock  pursuant to the 1995



                                     F-26

<PAGE>     45
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS

Incentive Plan at an exercise  price of $12.75 per share,  being the fair market
value on the date of grant.  The option is  immediately  exercisable as to 7,833
shares of Common Stock and becomes  exercisable as to an additional 7,833 shares
of Common  Stock on each of  January 1, 1996,  1997,  1998 and 1999 and  becomes
exercisable as to the remaining 2,500 shares of Common Stock on January 1, 2000.

In April 1996,  the Company  issued to each of Messrs.  Lewis S.  Schiller,  the
former CEO and a former director of the Company and Joseph G. Sicinski a warrant
to  purchase  66,666  shares of  Common  Stock at $7.50 per share and to each of
Messrs.  E. Gerald Kay,  Joel S.  Kanter and Norman J.  Hoskin,  all of whom are
former  directors of the Company,  a warrant to purchase 50,000 shares of Common
Stock at $7.50 per share. In connection with such grants, Messrs. Kay and Kanter
agreed to waive the right to receive previously  authorized warrants,  which had
not been issued.

In April 1996,  the committee  granted stock options to purchase an aggregate of
218,333  shares of common stock at $6.75 per share,  being the fair market value
on the date of grant.  Such  options  were  granted to Mr.  Joseph G.  Sicinski,
president of the Company,  who received an option to purchase  133,333 shares of
common  stock,  Mr.  Lewis S.  Schiller,  former  chairman  of the  board of the
Company,  who received an option to purchase 25,000 shares of common stock,  one
other officer, who received an option to purchase 16,666 shares of common stock,
and sixteen  other  employees  who received  options to purchase an aggregate of
43,333 shares of common stock. In connection with the grant to Mr. Sicinski,  he
agreed to the  cancellation of the previously  granted  incentive stock options.
The option  granted to Messrs.  Schiller and Sicinski have a ten year term,  and
the other options have five year terms [See Note 15].

In October 1997, the committee  granted  incentive  stock options to purchase an
aggregate of 216,000 shares of common stock at $3.875 per share,  being the fair
market value on the date of grant.  Such  options were granted to Mr.  Joseph G.
Sicinski,  president of the Company,  who received an option to purchase  90,000
shares of common  stock,  Mr.  Lewis S.  Schiller,  chairman of the board of the
Company,  who received an option to purchase 25,000 shares of common stock,  one
other officer,  who received an option to purchase 20,000 shares of common stock
and twenty  other  employees  who  received  options to purchase an aggregate of
81,000 shares of common stock. All options have a 5 year term.

During the year  ended  December  31,  1998,  the  Company  authorized  the 1998
Long-Term  Incentive Plan (the"1998  Plan"),  covering  350,000 shares of common
stock.  

In June 1998,  the  committee  granted stock options to purchase an aggregate of
215,000  shares of common stock at $4.00 per share,  being the fair market value
on the date of grant. In December 1998 these shares were repriced at $1.25,  the
fair market value on that date.  All options are fully vested as of December 31,
1998. Such options were granted to Mr. Joseph G. Sicinski,  president and CEO of
the Company,  who received an option to purchase  60,000 shares of common stock,
two other  officers  who  received  options to purchase an  aggregate  of 40,000
shares of common stock,  the chairman of the board received  options to purchase
20,000  shares of common  stock,  the three other  directors of the Company each
received  options to  purchase  10,000  shares of common  stock and seven  other
employees  who received  options to purchase an  aggregate  of 65,000  shares of
common stock. All options have a 5 year term.
                                        F-27
                                
<PAGE>     46
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS

No compensation cost was recognized for stock-based employee awards.

A summary of the activity under the Company's stock option plans is as
follows:
<TABLE>
<S>                       <C>             <C>             <C>                         <C>
                             1993 Plan       1995 Plan      1995 Incentive Plan    1998 Incentive Plan

Options Outstanding
 and Exercisable
  - January 1, 1996          18,992          14,167                 41,666                  --
Granted                          --          14,167                220,833                  --
Exercised                        --         ( 8,333)                    --                  --
Canceled                         --         (14,167)              ( 41,666)                 --
                           --------        ---------             ---------
Options Outstanding
 and Exercisable
  - December 31, 1996        18,992           5,833                220,833                  --
Weighted Average Exercise
    Price                 $   13.50       $    5.28            $      6.75                  --                        
Granted                          --              --                216,000                  --               
Exercised                        --              --                     --                  --
Canceled                         --              --                     --                  --

Options Outstanding
 and Exercisable
  - December 31, 1997        18,992           5,833                436,833                  --
Weighted Average Exercise
    Price                 $   13.50       $    5.28            $      5.39                  --             
Granted                          --              --                     --             215,000   
   
Exercised                        --              --                     --                  --
Canceled                         --              --                (65,000)                 --     
        
Options Outstanding and 
  Exercisable
  - December 31, 1998        18,992           5,833                371,833             215,000

Weighted Average Exercise
    Price                 $   13.50       $    5.28            $      5.39            $   1.25

Weighted Average Remaining
   Contractual Life            1.16 years      1.08 years             5.42 years          5.0 years
</TABLE>   
The following table summarizes option information as of December 31, 1998

                                             Weighted Avg.       Weighted Avg. 
Range of Exercise Price                      Remaining           Exercise
                            Shares           Contractual Life    Price
<TABLE>
 <S>                        <C>              <C>                 <C>  
  1.25                      215,000           5.0  Years          1.25
  3.875                     176,000           5.42 Years          3.875
  6.75                      195,833           5.42 Years          6.75
  5.28                        5,833           1.08 Years
 13.50                       18,992           1.16 Years         13.50
</TABLE>                              
                                       F-28
<PAGE>     47
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS

If the Company had  accounted  for the issuance of all options and  compensation
based  warrants  pursuant  to the fair value based  method of SFAS No. 123,  the
Company would have recorded compensation expense totaling $168,439, $538,460 and
$1,724,000 for the years ended December 31, 1998,  1997 and 1996,  respectively,
and the  Company's  net income (loss) and net income (loss) per share would have
been as follows:
                                                 Years ended
                                                 December 31,
                                       1 9 9 8        1 9 9 7       1 9 9 6     
<TABLE>
<S>                                   <C>           <C>           <C>

Net Income(Loss) as Reported          $ 805,261    $1,022,881    $  (681,250)      
                                      ==========     =========     ===========   
Pro Forma Net Income(Loss)           $  636,822       484,421    $(2,405,250)  
                                      ==========     =========     ===========   
Basic Earnings (Loss)
 Per Share as Reported                $     .21           .27     $     (.27)  
                                      ==========     =========     ===========   
Pro Forma Basic Earnings (Loss)
 Per Share                            $     .17    $      .13     $     (.95)  
                                      =========     ===========   ============

The fair  value of  options  and  warrants  [See  Note 14] at date of grant  was
estimated using the fair value based method with the following  weighted average
assumptions:
                                  1998    1997     1996    
Expected Life [Years]                5       5        2       
Interest Rate                     4.67%    6.0%     5.8%     
Annual Rate of Dividends             0%      0%       0%      
Volatility                       71.99%  87.61%    84.0%   
</TABLE>
The weighted average fair value of options at date of grant using the fair value
based method during 1998, 1997, and 1996 is estimated at $0.78 $2.79, and  $1.22
respectively.

[16] Employment Benefit Plans

The Company  sponsors a Qualified  Retirement  Plan under section  401(k) of the
Internal  Revenue  Code.  Employees  become  eligible  for  participation  after
completing  three months of service and  attaining  the age of  twenty-one.  The
Company has the option to make a matching contribution to the Plan for the years
ended December 31, 1998,  1997 and 1996,  however,  it has not made any matching
contributions to the Plan.

[17] New Authoritative Accounting Pronouncements

The Financial  Accounting Standards Board (FASB) has had on its agenda a project
to address certain practice issues regarding  Accounting  Principles Board (APB)
Opinion No. 25,  Accounting  for Stock  Issued to  Employees.  The FASB plans on
issuing various  interpretations  of APB Opinion No.25 to address these practice
issues.  The proposed  effective date of these  interpretations  would be in the
issuance date of the final Interpretation,  which is expected to be in September
1999. If adopted, the Interpretation would be applied prospectively but would be
applied to plan  modification and grants that occur after December 15, 1998. The
FASB's tentative interpretations are as follows:
                                   F-29
<PAGE>     48
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS

APB Opinion No. 25 has been applied in practice to include in its  definition of
employees,   outside   members  of  the  board  of  directors  and   independent
contractors.  The FASB's  interpretation  of APB  Opinion  No. 25 will limit the
definition of an employee to  individuals  who meet the common law definition of
an employee (which also is the basis for the distinction  between  employees and
nonemployees  in the  current  U.S.tax  code).  Outside  members of the board of
directors and  independent  contractors  would be excluded from the scope of APB
Opinion No. 25 unless they qualify as employees  under common law.  Accordingly,
the cost of issuing stock options to board members and  independent  contractors
not meeting the common law  definition of an employee will have to be determined
in  accordance   with  FASB  Statement  No.  123,   Accounting  for  Stock-Based
Compensation, and usually recorded as an expense in the period of the grant (the
service period could be prospective, however, see EITF 96-18).

Options (or other equity instruments) of a parent company issued to employees of
a  subsidiary  should  be  considered  options,   etc  issued  by  the  employer
corporation in the consolidated  financial  statements,  and,  accordingly,  APB
Opinion  No.  25  should  continue  to  be  applied  in  such  situations.  This
interpretation  would apply to subsidiary  companies only; it would not apply to
equity method investees or joint ventures.

If the terms of an  option  (originally  accounted  for as a fixed  option)  are
modified  during the option  term to directly  change the  exercise  price,  the
modified  option should be accounted for as a variable  option.  Variable  grant
accounting  should  be  applied  to the  modified  option  from  the date of the
modification until the date of exercise.  Consequently, the final measurement of
compensation expense would occur at the date of exercise. The cancellation of an
option and the  issuance of a new option  with a lower  exercise  price  shortly
thereafter  (for example,  within six months) to the same  individual  should be
considered in substance a modified (variable) option.

Additional interpretations will address how to measure compensation expense when
a new measurement date is required.

(18)  Subsequent Events

On February 25, 1999, the Company  entered into an agreement  with  Consolidated
and SISC,  pursuant to which SISC is to transfer to the Company 1,150,000 shares
of the  Company's  common stock which are owned by SISC in  satisfaction  of (i)
Consolidated's  obligations  to pay the redemption  price of $2,100,000  payable
with respect to the  Consolidated  Series G 2% Cumulative  Redeemable  Preferred
Stock owned by the Company  together  with accrued  dividends  of  approximately
$140,000 and (ii)  Consolidated's  obligations to pay the Company  $325,952 (the
"Consolidated Payable") in respect of advances made by the Company to certain of
Consolidated's  subsidiaries.  The agreement as amended also gives  Consolidated
the right to retain the 1,150,000  shares if  Consolidated  pays the  redemption
price of  $2,100,000  together with the accrued  dividends and the  Consolidated
Payable by April 30, 1999. The 1,150,000 shares and the Series G Preferred Stock
will be held in  escrow  pending  the  election  by  Consolidated  to make  such
payment. If the 1,150,000 shares are transferred,  Consolidated will own 379,994
shares,  or approximately  14.2% of the Company's common stock, and Consolidated
will have certain registration rights with respect to such shares.


                                  F-30

<PAGE>     49
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS



In March 1999, the Company entered into an agreement with Consolidated,  Arc and
certain  other  parties  who  acquired  Consolidated's  equity  interest in Arc.
Pursuant to such agreement,  the Company agreed,  under certain  conditions,  to
accept a series of preferred  stock as payment for the Arc Note.  The conditions
include the completion of a public offering by the new parent of Arc and certain
net worth tests being met. Such  agreement is presently  held in escrow  pending
receipt of certain regulatory approvals.

On April 15, 1999, the Company entered into an agreement to acquire the stock of
Cad Cam Inc.,  a  computer  aided  design  based  engineering  services  company
primarily servicing the automotive industry.  The Company has agreed to pay $4.1
million in a  combination  of cash ($2.0  million)  and  preferred  stock  ($2.1
million)  plus  contingent  considerations  if  certain  cash flow  targets  are
reached.






































                                    F-31



<PAGE>      50
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.2
FRANK VINCENTI EMPLOYMENT AGREEMENT

This  agreement  made and entered  into this 26th day of May 1998 by and between
Trans Global Services,  Inc. (hereinafter referred to as TGS) and Frank Vincenti
residing at 36 Baltic Avenue,  Staten Island, NY 10304 (hereinafter  referred to
as EMPLOYEE).
                               WITNESSETH
                         
WHEREAS,  TGS is  engaged,  through  its  subsidiary  companies,  in the  highly
competitive  business  of  recruiting  and  providing  specialized   scientific,
engineering,  and  technical,  clerical  or other  staffing  on a  temporary  or
permanent basis to industry throughout the United States, and

WHEREAS,  TGS has expended  substantial  amounts of money, time and expertise in
developing and maintaining  extensive  personnel resources and customer goodwill
throughout  the United States and has, by virtue of such  efforts,  acquired the
continued and  repetitive  business of it industrial  clientele,  as well as its
temporary personnel, and

WHEREAS,  TGS has  expended  substantial  amounts  of money,  time and effort in
developing and  perfecting  its  techniques,  business  methods,  management and
financial expertise,  customer and business accounts,  personnel resources,  and
other data all of which is highly  confidential  information  and which EMPLOYEE
hereby  recognizes and acknowledges to be valuable,  special and unique business
and trade secrets belonging to TGS, and

WHEREAS, EMPLOYEE desires to assume the position of Vice President

in which he/she will become intimately involved with TGS Is business and will be
entrusted  with  said  confidential  information  of TGS,  and by virtue of such
employment  will become  personally  acquainted  with the business  connections,
customers, and trade of TGS, and

WHEREAS,  TGS  desires to be able to impart  said  confidential  information  to
EMLOYEE with the  knowledge  that such  information  will be used solely for its
benefit and not in competition with or to the detriment of TGS.

NOW  THEREFORE,  Inconsideration  of the foregoing  and of the mutual  covenants
herein contained and other valuable  consideration,  the receipt and sufficiency
whereof is hereby  acknowledged,  each of the  parties,  intending to be legally
bounds, hereby agree as follows:

1. AGREEMENT OF EMPLOYMENT

TGS hereby employs Frank  Vincenti as Vice  President  commencing on the date of
this agreement and EMLOYEE agrees to be so employed,  all in accordance with the
terms and provisions of this agreement. Terms of compensation,  as well as scope
of duties, are to be reviewed between parties from time to time.

2. FULL TIME NATURE OF EMPLOYMENT

EMPLOYEE shall devote his/her full time,  attention and energies to the business
of TGS and shall not during the term of this  agreement  be engaged in any other
business  directly  related.  This shall not be construed as preventing  EMLOYEE
from  investing  his/her  assets  in such  form or  manner  as will not  require
his/her, rendering any services to entities in which such investments are made.

<PAGE>      51
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.2
FRANK VINCENTI EMPLOYMENT AGREEMENT (Continued)


3. TERM OF EMPLOYMENT

The  term of this  agreement  shall  be  Five  (5)  years,  and  shall  continue
thereafter until terminated by either party. If TGS terminates  EMPLOYEE without
cause, it shall have the option of giving two weeks notice,  or paying two weeks
base salary in lieu of notice. This Agreement shall terminate automatically upon
the death of the EN2LOYEE or disability to an extent which prevents him/her from
performing  the  duties  assigned  to  him/her  hereunder,  or for  cause;  i.e.
misconduct, inefficiency.

4.  NOTICE OF TERMINATION

Any notice sent  hereunder  shall be sent by registered or certified mail return
receipt requested, postage prepaid, addressed as follows:
         
         Employee
                  To:          Frank Vincenti
                               36 Baltic Avenue
                               Staten Island, NY 10304

         TGS
                  To:          TRANS GLOBAL SERVICES, INC.
                               1393 Veterans Memorial Highway
                               Hauppauge, New York 11788
                               Attn: President


5.  WARRANTY AND INDEMNIFICATION

EMPLOYEE warrants that he/she is not a party to any other restrictive  agreement
limiting  his/her  activities in the field and/or area of his/her  employment by
TGS and that  EMPLOYEE  will hold TGS harmless from any and all suits and claims
arising out of any breach of such restrictive agreements or contracts.


6.  ACKNOWLEDGMENT OF CONFIDENTIAL NATURE OF EMPLOYMENT AND GOODWILL INTERESTS
OF TGS

EMPLOYEE  acknowledges (a) that TGS will expend  considerable  time, effort and,
expense 'n training  EMPLOYEE in the  methods  used by TGS and (b) the  EMPLOYEE
will  be  entrusted  with  confidential  knowledge  and  information  as to  TGS
accounts,  customers and business patrons,  personnel resources, and other data,
as well as  confidential  knowledge and  information  concerning the techniques,
business  methods,  management and financial  expertise of TGS and will.  become
personally  acquainted with and serve as an TGS  representative  to the business
connections,  customers and trade of TGS and (c) that EMPLOYEE will receive such
confidential knowledge and be placed in such a position, that upon leaving TGS's
employment for any reasons,  his/her engaging  directly,  or indirectly,  either
alone or in association  with any other person or firm in a similar  business to
that of TGS or to that of a duly 

         


<PAGE>     52
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.2
FRANK VINCENTI EMPLOYMENT AGREEMENT (Continued)


authorized  licensee of TGS, will cause  irreparable  harm and financial loss to
TGS, its good will, and its organization.  EMPLOYEE,  therefore, agrees, that he
will not while in TGS's employ,  directly or indirectly,  engage in any activity
whatsoever which is competitive to TGS for  himself/herself or in association in
any  capacity  with any other  person or firm  engaged in a similar  business to
TGS's.

7.  AGREEMENT NOT TO COMPETE

As a condition of  employment,  EMPLOYEE  agrees to  coordinate  all  employment
activities  through  the  TGS  organization.  Additionally,  as a  condition  of
employment,  for a 6 month period  following the  termination of employment with
TGS,  EMPLOYEE will not,  directly or indirectly  solicit,  call on or otherwise
deal in any way with any customer or  contractor  of TGS with whom  EMPLOYEE has
dealt  during  the  last 12  months  of  employment  at TGS.  EMPLOYEE  will not
influence or attempt to influence any  customer,  vendor or contractor of TGS to
terminate or modify any written or oral agreement or course of dealing with TGS,
or solicit the  employment  or  engagement  of any TGS  EMPLOYEE or  consultant.
Should there be a change in senior management (CEO/President) during the term of
this Agreement,  EMPLOYEE will have the option  terminating  this Agreement with
agreement not to compete (paragraph 7) limited to not greater than 30 days.

8.  AGREEMENT NOT TO DIVULGE CONFIDENTIAL INFROMATION

EMPLOYEE agrees that he/she will not at any time during his/her  employment with
TGS or within 6 months after leaving its service, for himself/herself or for any
other  person  or  company,  divulge  the  name or  address  or any  information
concerning  any  TGS  accounts,  customer  and  business  patrons  or  technical
personnel.  EMPLOYEE  further  agrees  during said  period not to  disclose  any
confidential  information or knowledge acquired while in the employ of TGS, said
restriction to include TGS's business  methods,  techniques,  and management and
financial  expertise,  as well as its plans  with  respect to  acquisitions  and
future services to be rendered by TGS.

9.  RETURN OF RECORDS AND PAPERS

EMPLOYEE  agrees upon the  termination of his employment with TGS for any reason
whatsoever, to return to the President of TGS all records, copies of records and
papers pertaining to transactions handled by EMPLOYEE while associated with TGS,
and in event  EMPLOYEE  shall  fail to do so,  or in the event  ENTLOY'EE  shall
violate  this instant  Agreement,  EMPLOYEE  shall  forfeit all claims to unpaid
compensation  without  affecting  the right of TGS to compel  the return of said
records and papers.

10  INJUNCTION RELIEF FROM VIOLATIN OF COVENANTS

EMPLOYEE  recognizes that irreparable damage will result to TGS: in the event of
the violation of any covenant contained herein made by him/her,  and agrees that
in the event of such violation,  TGS shall be entitled, in addition to its other
legal or equitable  remedies and damages,  to injunctive relief to restrain such
violation hereof by him/her and by all other persons acting for or with him/her.



<PAGE>      53
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.2
FRANK VINCENTI EMPLOYMENT AGREEMENT (Continued)


11.   DAMAGES

EMPLOYEE  further  recognizes  and  acknowledges  that it would be  difficult to
ascertain  the damages  arising  from a violation  by him/her of the  convenants
herein  contained,  and as damages  for any such  violation  EMPLOYEE  agrees to
forfeit all existing and future rights to remuneration  hereunder whether direct
or indirect,  including but not limited to commissions  earned but not yet paid,
and any so-called  fringe  benefits,  including  severance pay where  applicable
EMPLOYEE also agrees that the damages arising as a consequence of a violation of
the covenants  contained  herein are difficult to ascertain.  Accordingly,  such
damages will be fixed at an amount  equal to the gross  profit,  or  twenty-five
(25%) per cent of the sales,  whichever  is  greater,  resulting  from  business
generated by EMPLOYEE either  directly,  or indirectly on his/her own account or
as agent, stockholder, employer, employee or otherwise competing for accounts or
personnel which became known to him/her through his/her employment with TGS.
        
12.   TERMINATION OF BUSINESS

In the  event the  business  operations  of TGS are  terminated  for any  reason
whatsoever,  this Agreement  shall  automatically  terminate at that time.  This
section  shall not  apply in the event of a  temporary  disruption  of  business
operations,  nor to a corporate reorganization in which the name or ownership of
TGS is  changed  provided  that  operations  do not  terminate.  It shall be the
responsibility of employee to make the appropriate inquiry prior to invoking the
provisions of this section.

13.   INTERPRETATION OF AGREEMENT

This contract  shall be interpreted  and construed  according to the laws of the
State of New York. Any provisions or clause hereof which shall be invalidated by
virtue of the fact that it is  prohibited  by law  shall be  ineffective  to the
extent of such  illegality;  however,  this shall in no way affect the remaining
provisions of the  Agreement,  and this  Agreement  shall be  interpreted  as if
such clause or provision were not contained herein, insofar as is practical.

Wherever  the context  permits in the  Agreement,  any word in one gender  shall
include the other gender.

14.   UNDERSTANDING OF PARTIES

This Agreement  represents the entire  employment  Agreement between the parties
and supersedes any and all prior agreements or  understandings,  oral or written
between  EMPLOYEE  and TGS  pertaining  to the  subject  matter  covered by this
Agreement,  and  may  not be  changed  or  terminated  orally,  and  no  change,
termination or attempted waiver of any of the provisions hereof shall be binding
unless in writing  signed by the President of TGS. It is further agreed that his
contract shall remain in effect  notwithstanding  any changes in job title,  job
assignment,  divisional assignment,  position, or salary.  EMPLOYEE acknowledges
that  the  convenants  and  conditions  of this  Agreement  are  reasonable  and
necessary for the protection of TGS's business.




<PAGE>      54
TRANS GLOBAL SERVICES, INC,
EXHIBIT 10.2
FRANK VINCENTI EMPLOYMENT AGREEMENT (Continued)


15.    ENFORCEABILITY OF AGREEMENT

In the event this Agreement is terminated for any reason, other than as provided
in Section 12 above, the provisions  contained in Section 11 hereinabove,  shall
continue  in full  force  and  effect  from the date of said  termination.  This
Agreement  shall  apply to,  bind,  and enure to the  benefit of the  respective
parties hereto and where applicable, their heirs, successors, administrators and
assigns.

16. EMPLOYEE shall be entitled by way of  remuneration of his/her  services to a
weekly base  salary of $2,600 . This base  salary to be  reviewed at  reasonable
intervals by the Chief Executive Officer of TGS.

17. As additional compensation,  EMPLOYEE shall receive an annual bonus based on
performance.  Bonus shall be determined by the Chief Operating  Officer and will
be payable  within 30 days following the close of the business year (Year End 31
December),  audited  financial  report.  Reference  should  be made to letter of
commitment dated 3 March 1998.

 
18.      a.. TGS will pay 100 percent of authorized  business  related  expenses
upon receipt or documentation of said expense.

         b. TGS will pay  EMPLOYEE  $600.00  monthly for use of  employee  owned
and maintained auto for business use only.
     
19.  TGS offers as benefits the following:
     a.  Participation  in TGS stock option as may be decided by TGS management.
     b.  Hospitalization  insurance (family coverage) as provided by our present
carrier with 100% paid premiums.
     c. EMPLOYEE  shall be entitled to two (2) weeks annual  vacation  after the
first  year of  employment  and  three  (3)  weeks  after  2nd  thru 5th year of
employment  and four (4) weeks after 6th year of  employment.  TGS shall observe
seven (7) paid holidays during year.

         New Year's Day
         Memorial Day
         July 4th
         Labor Day
         Thanksgiving Day
         Christmas Day
         (Floating Holiday)

d. TGS  reserves  the right to amend  these  benefits,  provided  only that such
amendment  shall affect all employees of TGS (entitled to such  benefits) in the
same (or, if appropriate, in a proportionate) manner.

20. In the event of a suit by TGS to enforce  this  agreement or to seek damages
for its breach, TGS shall be entitled to a reasonable attorneys fee.





<PAGE>      55
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.2
FRANK VINCENTI EMPLOYMENT AGREEMENT (Continued)


Signed and executed as a sealed instrument in two identical counterparts each of
which  shall be deemed an original  and  delivery of which has been made in said
State  of New  York as of the  day and  year  hereinabove  written,  each of the
parties retaining an executed counterpart.

                                             TRANS GLOBAL SERVICES, INC.
                                             BY:
                                                                               
                                             Joseph G.Sicinski, President & CEO




                                ACKNOWLEDGMENT

                                                      
I acknowledge  that I have read and  understand  the above  employment  contract
consisting of 9 pages, each of which bears my signature, and I agree to be bound
by its terms, provisions and conditions.

 

                                              Frank Vincenti































<PAGE>      56
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12

                                   AGREEMENT

AGREEMENT  dated  this  23rd day of  March,  1999,  by and  among  Trans  Global
Services,  Inc., a Delaware corporation ("Trans Global"), Arc Networks,  Inc., a
Delaware  corporation  ("Arc"),  Consolidated  Technology Group Ltd., a New York
corporation   ("Consolidated"),   Technology   Acquisitions   Ltd.,   a  Bermuda
corporation  ("TA"),  and Gemini II,  Inc., a Delaware  corporation  ("Gemini"),
Trans Global, Arc, Consolidated, TA and Gemini being referred to collectively as
the "Parties" and each, individually, as a "Party."
   
                            W I T N E S S E T H:
WHEREAS, Trans Global is the holder of Arc's 10% installment promissory note due
August 31, 2003 in the principal amount of $1,216,673 (the "Arc Note"), which is
payable to the order of Trans Global; and

WHEREAS,  the Arc Note is  guaranteed  by  Consolidated  pursuant to a guarantee
dated September 18, 1998 (the "Consolidated Guarantee"); and

WHEREAS, Trans Global and Consolidated are parties to a Subordination  Agreement
dated September 18, 1998 (the "Subordination Agreement"); and

WHEREAS,  pursuant to a certain stock purchase  agreement dated the date of this
Agreement  by and  among  Arc,  Consolidated,  SIS  Capital  Corp.,  a  Delaware
corporation and wholly-owned  subsidiary of Consolidated  ("SISC"),  and TA (the
"Purchase  Agreement"),   SISC  is  selling  to  TA  approximately  67%  of  the
outstanding  common  stock of Arc,  which  represents  all of the  shares of the
common stock of Arc which are owned by SISC,  such sale being referred to as the
"Arc Stock Sale" and

WHEREAS,  following or  contemporaneously  with the  completion of the Arc Stock
Sale, a  wholly-owned  subsidiary of Gemini is to merge with and into Arc, which
merger is referred to as the "Arc Merger"; and

WHEREAS,  following the  completion of the Arc Merger,  Gemini intends to file a
registration  statement with respect to a proposed public offering of its common
stock, par value $.0001 per share ("Gemini Common Stock"); and

WHEREAS,  by the terms of the Arc  Note,  the full  principal  amount of the Arc
Note,  together with accrued interest,  becomes immediately due and payable upon
the occurrence of certain  events,  which include the Arc Stock Sale and the Arc
Merger; and

WHEREAS, Arc, Consolidated, TA and Gemini have requested that Trans Global agree
that the Arc Note not become  immediately  due and  payable  upon either the Arc
Stock Sale or the Arc Merger; and

WHEREAS,  Trans Global is willing to agree that neither the  consummation of the
Arc  Stock  Sale  nor the Arc  Merger  will  result  in the  Arc  Note  becoming
immediately due and payable, on and subject to the terms of this Agreement; and

WHEREAS,  each of the Parties  believes that the execution of this Agreement and
the performance of its terms is in the best interest of such Party;




<PAGE>   57
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12

WHEREFORE, the Parties do hereby agree as follows.

     (a)ab  Trans  Global  hereby  waives  the  provision  of the Arc Note  that
provides that the Arc Note becomes payable in full upon the occurrence of either
the Arc Stock Sale or the Arc Merger.

     (b)ab The waiver granted by Trans Global pursuant to Paragraph 1(a):
     (i)ab is subject to the execution of this  Agreement by Arc,  Consolidated,
TA and Gemini and the  performance by TA and Gemini of all of their  obligations
to be  performed  contemporaneously  with  or  prior  to the  execution  of this
Agreement;
     (ii)ab is  subject  to the  execution  by TA and  Gemini  of the  Purchaser
Guarantee, as hereinafter defined; and
     (iii)ab relates only to the Arc Stock Sale and the Arc Merger and shall not
be deemed to relate in any manner to any other Sale  Transaction,  as defined in
the Arc Note,  or any other  transaction  set  forth in  Paragraph  6(b) of this
Agreement.

2.ab Consolidated hereby confirms that (a) the Consolidated Guarantee is in full
force and effect on the date of this Agreement,  and (b) none of the obligations
of Consolidated  pursuant to the Consolidated  Guarantee will be affected in any
manner by the execution of this Agreement or the performance of any of the terms
of this  Agreement,  including,  but not limited to, the waiver by Trans  Global
pursuant to Paragraph 1 of this Agreement.

3.ab The  Subordination  Agreement  is  hereby  terminated  and of no force  and
effect.  (a)ab Trans Global hereby agrees that it will accept shares of Gemini's
Series A Preferred  Stock in exchange for the  cancellation  of the Arc Note and
the  Consolidated  Guarantee at the time Gemini  receives the proceeds  from its
initial public offering,  as hereinafter defined, if the closing with respect to
Gemini's  initial public offering shall have occurred by December 31, 1999, and,
if, on the closing date of such initial public offering:

     (i)ab Arc shall not be in default of its obligations  pursuant to the Note,
including its  obligations  to pay the principal and interest and to comply with
all of its other obligations pursuant to the Note and this Agreement,  and there
shall have  occurred no event  which,  with the passage of time of the giving of
notice by Trans Global or any other person,  would result in an event of default
as set forth in Paragraph 4 of the Arc Note.
     (ii)ab  Gemini  shall have  issued the  Series A  Preferred  Stock to Trans
Global in exchange  for the  cancellation  of the Arc Note and the  Consolidated
Guarantee, as provided in Paragraph 7 of this Agreement.
     (iii)ab The consolidated  net tangible book value of Gemini,  determined in
accordance with generally accepted accounting principals, shall be not less than
six million dollars ($6,000,000).
     (b)ab  An  "initial   public   offering"   shall  mean  a  firm  commitment
underwritten  initial  public  offering  pursuant  to a  effective  registration
statement under the Securities Act of 1933, as amended (the  "Securities  Act").
The date on which the registration statement relating to Gemini's initial public
offering is declared  effective by the Securities and Exchange  Commission  (the
"Commission") is referred to as the "IPO Date."
     (c)ab Upon the cancellation of the Arc Note,  whether pursuant to Paragraph




<PAGE>   58
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12

4.  (a)  of  this  Agreement  or  otherwise,  the  Consolidated  Guarantee  will
automatically  terminate and be of no further force and effect, and Trans Global
shall return the Consolidated Guarantee to Consolidated.

     (d)ab Trans Global shall give Consolidated prompt notice of any event which
results in the cancellation of the Arc Note.

5.ab TA and Gemini will, contemporaneously with the execution of this Agreement:
     (a)ab Execute their joint and several guarantee (the "Purchaser Guarantee")
of the  obligation  of Arc  pursuant to the Arc Note in the form of Exhibit A to
this Agreement.
     (b)ab  File  or  cause  to be  filed  a  certificate  of  designation  (the
"Certificate  of  Designation")  setting  forth  the  rights,   preferences  and
privileges of the holders of the Series A 10% Convertible  Redeemable  Preferred
Stock, par value $.0001 per share ("Series A Preferred  Stock"),  in the form of
Exhibit B to this Agreement.

6.ab The terms of the Arc Note are hereby modified as follows:
     (a)ab Arc shall  continue to make payments of principal and interest on the
Arc  Note at the  times  set  forth  in the Arc  Note,  subject  to the  further
provisions of this Paragraph 6.
     (b)ab The principal  and interest on the Arc Note shall become  immediately
due and payable as follows:
     (i)ab The sale by TA or Gemini of all or substantially  all of its business
and assets in one transaction or in a series of related transactions, regardless
of whether the  transaction  is structured as a merger,  consolidation,  sale of
assets,  sale of stock or assets of its subsidiary,  sale and leaseback or other
transaction whereby substantially all of the business and assets of TA or Gemini
is conveyed to another  person or entity,  except  that this  Paragraph  6(b)(i)
shall not apply to the Arc Merger.
     (ii)ab The merger of TA or Gemini with another entity where TA or Gemini is
the surviving  entity if, as a result of the merger,  the  stockholders of TA or
Gemini,  as the case may be, prior to the merger  (other than persons who became
stockholders  in anticipation of or in connection with the merger) own less than
fifty percent (50%) of the outstanding  capital stock, either in terms of number
of shares or value of shares, upon the effectiveness of the merger.
     (iii)ab The sale by  stockholders of their capital stock in TA or Gemini in
a transaction or a series of related  transactions which results in the transfer
of at least fifty  percent (50%) of the  outstanding  capital  stock;  provided,
however,  that following a public  offering by Arc or Gemini of its  securities,
sales  by the  public  stockholders  shall  not be an  event  described  in this
Paragraph 6(b)(iii) unless such transfers are made in response to a tender offer
or similar transaction.
     (iv)ab The failure by Gemini to complete an initial public offering by 5:30
P.M., New York City time, on December 31, 1999.
     (v)ab  Any  breach  by TA or Gemini  of its  obligations  pursuant  to this
Agreement  if such breach is not cured  within  thirty (30) days after notice of
such breach is given to TA or Gemini, as the case may be, and Consolidated.
     (vi)ab The  occurrence  of any event (other than the Arc Stock Sale and the
Arc Merger)  which,  pursuant to the terms of the Arc Note,  gives the holder of
the Arc Note the right to demand that the  principal  of and interest on the Arc
Note become immediately due and payable.




<PAGE>  59
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12

7. At the closing of Gemini's  initial  public  offering,  Gemini shall issue to
Trans Global one share of Series A Preferred  Stock for each one dollar  ($1.00)
of  principal on the Arc Note which is  outstanding  on the date of such closing
and pay to Trans  Global the  accrued  interest  on the Arc Note to the date the
Series A Preferred Stock is issued,  and Trans Global shall deliver the Arc Note
to Arc for  cancellation.  The holders of the Series A Preferred Stock will have
the  rights,  preferences  and  privileges  set  forth  in  the  Certificate  of
Designation.  Except for the  issuance of Series A Preferred  Stock  pursuant to
this  Agreement,  Gemini  shall  not  issue  any  additional  shares of Series A
Preferred  Stock except for transfers of the shares of Series A Preferred  Stock
issued to Trans Global pursuant to this Agreement.

8.ab Consolidated and Arc,  severally and not jointly,  represent and warrant to
Trans Global that:
     (a)ab Such Party is a corporation  duly organized,  validly existing and in
good standing under the laws of the state of its incorporation.
     (b)ab Such Party has full power and authority to enter into this  Agreement
and  the  Escrow  Agreement,  as  hereinafter  defined,  and to  carry  out  the
transactions  provided for in this Agreement and the Escrow Agreement,  and this
Agreement  and the Escrow  Agreement  constitute  the legal,  valid and  binding
obligations  of such Party,  enforceable  in  accordance  with their  respective
terms,  except  as  enforceability  may be  limited  by  applicable  bankruptcy,
insolvency, moratorium, or similar laws from time to time in effect which affect
creditors'  rights  generally,  and by legal and  equitable  limitations  on the
enforceability  of specific  remedies,  and that no representation is made as to
the enforceability of the indemnification  provisions  contained in Paragraph 11
of this Agreement.  All necessary  corporate action required to be taken by such
Party for the  consummation of the  transactions  contemplated by this Agreement
has been duly and validly taken.
     (c)ab No  consent,  approval or  agreement  of any  person,  party,  court,
governmental  authority  or entity is  required  to be obtained by such Party in
connection  with the execution and  performance by  Consolidated  or Arc of this
Agreement or the Escrow Agreement.

9. (a) TA and Gemini hereby jointly and severally represent and warrant to Trans
Global that:
     (i)ab TA and Gemini are corporations  duly organized,  validly existing and
in  good  standing  under  the  laws  of  Bermuda  and the  State  of  Delaware,
respectively.
     (ii) TA and  Gemini  have full  power and  authority  to enter  into this
Agreement,  the Escrow Agreement and the Purchaser  Guarantee,  and to carry out
the  transactions  provided for in this Agreement,  the Escrow Agreement and the
Purchaser Guarantee,  and this Agreement, the Escrow Agreement and the Purchaser
Guarantee  constitute the legal, valid and binding obligations of TA and Gemini,
enforceable in accordance with their respective terms,  except as enforceability
may be limited by applicable bankruptcy, insolvency, moratorium, or similar laws
from time to time in effect which affect  creditors'  rights  generally,  and by
legal and equitable limitations on the enforceability of specific remedies,  and
that no representation is made as to the  enforceability of the  indemnification
provisions contained in Paragraph 11 of this Agreement.  All necessary corporate
action  required  to be  taken  by TA and  Gemini  for the  consummation  of the
transactions contemplated by this Agreement has been duly and validly taken.




<PAGE>   60
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12

     (iii) No consent,  approval or  agreement  of any person,  party,  court,
governmental  authority  or entity is required to be obtained by TA or Gemini in
connection with the execution and performance by TA or Gemini of this Agreement,
the Escrow Agreement or the Purchaser Guarantee.
     (iv) The execution and filing of the  Certificate of Designation has been
approved by all necessary corporate action.
     (v)  The Series A Preferred  Stock to be issued pursuant to this Agreement
has  been  duly  and  validly  authorized  and,  when  issued  pursuant  to this
Agreement,  will be validly issued, fully paid and non-assessable and subject to
no  rights  or claims of any third  party.  The  shares of Gemini  Common  Stock
issuable  upon  conversion  of the Series A  Preferred  Stock  (the "Conversion
Shares") are duly and validly authorized and, when issued upon conversion of the
Series A Preferred Stock, will be validly issued,  fully paid and non-assessable
and subject to no rights or claims of any third party.
     (b)ab TA and Gemini jointly and severally  covenant and agree that, without
the prior written  consent of  Consolidated,  they will not take or permit to be
taken  any  action  described  in  Paragraphs  6(b)(i),  (ii) or  (iii)  of this
Agreement.

10. (a)Trans Global represents and warrants to Consolidated,  Arc, TA and Gemini
that:
     (i) Trans Global is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
     (ii) Trans Global owns the Arc Note.
     (iii)  Trans  Global  has full  power and  authority  to enter  into this
Agreement and the Escrow  Agreement and to carry out the  transactions  provided
for in this Agreement,  and this Agreement and the Escrow Agreement  constitute,
the  legal,  valid and  binding  obligations  of Trans  Global,  enforceable  in
accordance with their respective terms,  except as enforceability may be limited
by applicable bankruptcy,  insolvency,  moratorium, or similar laws from time to
time in  effect  which  affect  creditors'  rights  generally,  and by legal and
equitable  limitations on the enforceability of specific  remedies,  and that no
representation  is  made  as  to  the  enforceability  of  the   indemnification
provisions contained in Paragraph 11 of this Agreement.  All necessary corporate
action  required  to be  taken  by  Trans  Global  for the  consummation  of the
transactions contemplated by this Agreement has been duly and validly taken.
     
          (iv) No consent,  approval or agreement of any person,  party,  court,
     governmental authority or entity is required to be obtained by Trans Global
     in connection  with the execution and  performance  by Trans Global of this
     Agreement or the Escrow Agreement.

     (b) Trans Global agrees that, as long as the  Consolidated  Guarantee shall
remain in effect,  it will not,  without  the written  consent of  Consolidated,
amend  the  terms of the Arc Note in a  manner  which  would  (i)  increase  the
interest rate, (ii) accelerate the payment  schedule,  (iii) reduce the time for
any notice or cure, (iv) create any other event of default or other event which,
by its terms,  would result in the  acceleration of the principal  amount of the
Arc Note;  provided,  however,  that this Paragraph 10(b) shall not apply to any
accelerated  payment terms  resulting  from or following a default under the Arc
Note or an event which, with the passage of time of the giving of notice,  would
result in a default  under the Arc Note. In the event that Trans Global fails to
comply with its obligations  pursuant to this Paragraph  10(b), the Consolidated
Guarantee  shall become void, and Trans Global shall have no rights  thereunder,
except  to the  extent  of any  obligations  which  may have  accrued  under the
Consolidated Guarantee prior to the date of such failure.
<PAGE>     61
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12

     (c) Trans Global shall give Consolidated  prompt notice of any amendment to
the Arc Note.

     (d) Trans Global  confirms that, as of the date of this  Agreement,  Arc is
not in default under the Arc Note.

11. (a) At any time during the period  commencing  on the IPO Date ending on the
Registration Termination Date, as hereinafter defined, Gemini shall advise Trans
Global  or any  Transferees,  as  hereinafter  defined  (Trans  Global  and  its
Transferees being referred to herein collectively as the "holders" and each as a
"holder"),  by written  notice at least two (2) weeks prior to the filing of any
registration statement (other than a registration statement on a Form S-8 or S-4
or any  subsequent  form  relating  to  employee  benefit  plans and  mergers or
acquisitions)  under the Securities Act covering  securities of Gemini and will,
upon the request of any holder,  include in any such registration statement such
information as may be required to permit a public offering of any or all of such
holder's Registrable Securities, as hereinafter defined; provided, however, that
Gemini  shall  not be  required  to  include  any  Registrable  Securities  in a
registration  statement  relating  solely to an offering by Gemini of securities
for its own account if the managing  underwriter requests in writing that Gemini
exclude the  Registrable  Securities,  provided that all other proposed  selling
stockholders, if any, are treated in the same manner as the holder. In the event
that  the  managing   underwriter   shall  permit  the  inclusion  in  any  such
registration  statement of a limited  number of  securities  for sale by selling
stockholders,  to the extent  that the  managing  underwriter  permits  any such
shares to be  included  in the  registration  statement,  Gemini  shall  include
securities  to be sold by all persons  (other than  officers  and  directors  of
Gemini or its affiliates)  exercising  piggyback or similar registration rights,
on a  proportional  basis,  based on the number of shares of Gemini Common Stock
which each such person  proposes to include in the  registration  statement.  If
requested by the managing  underwriter in writing,  the holder will agree not to
sell any of the Registrable  Securities included in such registration  statement
without the consent of such  managing  underwriter  during such  period,  not to
exceed six months,  following the effective date of the registration  statement,
as the managing underwriter may request (the "lock-up period"), and Gemini shall
not be required to include Registrable Securities in such registration statement
unless the holder agrees to such lock-up.  Notwithstanding the foregoing,  in no
event shall the holder be required to agree to a lock-up  period longer than any
other  selling  stockholder  whose  shares  are  included  in such  registration
statement or any other  underwritten  registration  statement  being filed at or
about the same  time as such  registration  statement.  Gemini  shall  keep such
registration  statement  current  until the earlier of the date the  Registrable
Securities  included in the  registration  statement shall have been sold or the
Registration Termination Date. It shall be a condition to Gemini's obligation to
include any holder's Registrable Securities in a registration statement pursuant
to  this  Paragraph  11(a)  or to  file a  registration  statement  pursuant  to
Paragraph 11(b) of this Agreement that the holder provide Gemini in writing with
such information as Gemini may reasonably  request concerning the holder and the
holder's  proposed plan of distribution and any other  information  requested by
the  Commission,  the National  Association of Securities  Dealers,  Inc.,  NASD
Regulation,  Inc., any stock exchange or market on which the Gemini Common Stock
is traded and any state securities commission. Gemini shall advise the holder in
writing of the extent to which a managing  underwriter will permit the inclusion
of shares of Gemini Common Stock in a  registration  statement and shall provide
the holder with a copy of any requests by the managing  underwriter  relating to
the inclusion of any Registrable Securities in a registration statement.
<PAGE>   62
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12

(b) If the Registrable  Securities  shall not have been  registered  pursuant to
Paragraph 11(a) of this Agreement  during the twelve month period  commencing on
the IPO Date,  then,  if Trans Global or any other  holder(s) who own 25% of the
Series A Preferred  Stock issued  pursuant to this  Agreement  shall give notice
(the  "Registration  Notice") to Gemini at any time during the period commencing
twelve  months  after the IPO Date and  ending on the  Registration  Termination
Date,  that  such  holders  contemplate  the sale of all or any  portion  of the
Registrable  Securities  under  such  circumstances  that a public  distribution
(within the meaning of the Securities Act) of such  Registrable  Securities will
be involved, then Gemini shall, within forty five (45) days after receipt of the
Registration  Notice, time being of the essence,  file a registration  statement
pursuant to the Securities Act, to the end that all  Registrable  Securities may
be sold publicly under the Securities  Act, and Gemini will use its best efforts
to cause such registration  statement to become  effective.  If the Registration
Notice is not signed by all holders of the Registrable Securities, Gemini shall,
within five days of its receipt of the Registration  Notice,  give notice to the
other holders and, if they so request,  include their Registrable  Securities in
the  registration  statement.  Gemini  shall  keep such  registration  statement
current and  effective  until the all of the  Conversion  Shares shall have been
sold  pursuant  to  the   registration   statement  or  until  the  Registration
Termination  Date.  The  holders  shall  be  entitled  to only  one  (1)  demand
registration  right pursuant to this Paragraph 11(b),  except that, in the event
that such  registration  statement is filed and is either  withdrawn or does not
become  effective  (other  than upon the  written  request of all of the holders
whose Registrable Securities are to be included in such registration statement),
then the holders shall not be deemed to have  exercised the demand  registration
right pursuant to this Paragraph 11(b).

     (c)ab The following  provisions  shall also be applicable to this Paragraph
11:
          (i)ab As used in this Paragraph 11, the following terms shall have the
     meanings set forth below: 

(A)ab "Registration  Termination Date" shall mean the date on which Trans Global
or its Transferees  may sell all of the Conversion  Shares that they then own or
would own on  conversion of the Series A Preferred  Stock  pursuant to Paragraph
(k) of Rule 144 ("Rule 144") of the Commission pursuant to the Securities Act.

(B)  "Registrable  Securities"  shall mean (I) the shares of Series A  Preferred
Stock issued to Trans Global pursuant to this Agreement and held by Trans Global
and its  Transferees  and (II) the  Conversion  Shares  issued or issuable  upon
conversion of such shares of Series A Preferred Stock.  Trans Global understands
that there will not be a public market in the Series A Preferred Stock.

(C)  "Transferees"  shall mean (I) the  persons or  entities to whom or to which
Trans  Global  or  its  transferees   shall  have  transferred  any  Registrable
Securities in a transaction  exempt from the  registration  requirements  of the
Securities Act, other than Rule 144 or any subsequent similar rule.








<PAGE>   63
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12

          (ii)ab   Gemini  shall  bear  the  entire  cost  and  expense  of  any
     registration  of securities  pursuant to  Paragraphs  11(a) and (b) of this
     Agreement.  Any holder  whose  Registrable  Securities  are included in any
     registration  statement pursuant to this Paragraph 11 shall,  however, bear
     the fees of his or its own counsel and  accountants  and any transfer taxes
     or  underwriting  or brokers'  discounts or  commissions  applicable to the
     Registrable Securities sold by him or it pursuant thereto.

          (iii)ab Following the effective date of a registration statement which
     includes Registrable  Securities pursuant to Paragraph 11(a) or (b) of this
     Agreement,  Gemini shall, upon the request of any holder,  forthwith supply
     the holder with such number of prospectuses meeting the requirements of the
     Securities Act as shall be reasonably requested by the holder to permit the
     holder  to make a public  distribution  of all the  registered  Registrable
     Securities  from time to time offered or sold by the holder,  provided that
     the holder  shall from time to time  furnish  Gemini with such  appropriate
     information  (relating  to the  intentions  of the  holder)  in  connection
     therewith as Gemini shall request in writing as provided in said Paragraphs
     11(a) and (b).  Gemini  shall  also use its best  efforts  to  qualify  the
     registered  shares for sale in such states as the securities  being sold by
     Gemini  and  other  selling  stockholders,  if  any,  are  otherwise  being
     registered  or  qualified  and,  in such other  states as the holder  shall
     reasonably request; provided,  however, that Gemini shall not, for any such
     purpose,  be  required  to qualify  generally  to do  business as a foreign
     corporation  in  any  jurisdiction  wherein  it  would  not,  but  for  the
     requirements of this Paragraph 11(c)(iii), be obligated to be so qualified,
     to subject itself to taxation in such jurisdiction or to consent to general
     service of process in any such jurisdiction.

          (iv) Gemini shall prepare and file with the Commission such amendments
     and  supplements to such  registration  statement and any  prospectus  used
     pursuant  this  Paragraph 11 as may be necessary to keep such  registration
     statement  current and effective during the period when the holder may sell
     Registrable Securities pursuant to the registration statement.  Gemini will
     notify  each  holder  whose  Registrable  Securities  are  subject  to  the
     registration  statement  at such time as, for any  reason,  the  prospectus
     relating to the sale of the Registrable Securities is no longer current and
     effective,  and the  holder  shall  not  sell  any  Registrable  Securities
     pursuant to such  registration  statement  until such time as the holder is
     advised by Gemini that the registration statement is current and effective.
     In no event shall  Gemini be required  to keep any  registration  statement
     which includes the Registrable  Securities current and effective subsequent
     to the Registration Termination Date.

          (v) Gemini shall indemnify and hold harmless each holder, its officers
     and  directors,  partners  and  members  and each  underwriter,  within the
     meaning  of  the  Securities  Act,  who  may  purchase  from  or  sell  any
     Registrable  Securities  for the holders and each person who  controls  any
     holder and such underwriter  within the meaning of the Securities Act, from
     and  against  any  and  all  losses,   claims,   damages  and   liabilities
     (collectively,  "Losses")  caused by any untrue statement or alleged untrue
     statement of a material fact contained in any registration  statement under
     the Securities Act or any prospectus  included therein required to be filed
     or furnished by reason of this  Paragraph  11 or any  application  or other
    

<PAGE>   64
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12   

     filing  under  any  state  securities  law or by any  omission  or  alleged
     omissions to state therein a material fact required to be stated therein or
     necessary  to make the  statements  therein  not  misleading,  to which the
     holder or any such underwriter or control person or other indemnified party
     may become subject under the Securities Act, the Securities Exchange Act of
     1934, as amended,  or other Federal or state law,  rule or  regulation,  at
     common law or  otherwise,  except  insofar as such Losses are caused by any
     such untrue  statement or alleged  untrue  statement or omission or alleged
     omission  which is based  upon  information  furnished  or  required  to be
     furnished  to  Gemini  by the  holder  or any  such  underwriter  or  other
     indemnified party expressly for use therein,  which  indemnification  shall
     include each person,  if any, who controls any such underwriter  within the
     meaning of the Securities Act; provided, however, that each holder and such
     underwriter  shall at the same time  indemnify  Gemini,  its  officers  and
     directors, each underwriter and each person, if any, who controls Gemini or
     such  underwriter  within the meaning of the  Securities Act and each other
     person  whose  securities  are  being  offered  or  sold  pursuant  to such
     registration  statement (the "other  holders") and each person who controls
     the other  holders  within the  meaning  of the  Securities  Act,  from and
     against any and all Losses caused by any untrue statement or alleged untrue
     statement of a material fact contained in any registration statement or any
     prospectus  filed or furnished by reason of this  Paragraph 11 or caused by
     any omission or alleged  omission to state therein a material fact required
     to be stated  therein  or  necessary  to make the  statements  therein  not
     misleading,  insofar as such Losses are caused by any untrue  statement  or
     alleged untrue  statement or omission based upon  information  furnished to
     Gemini in  writing  by the  holder or such  underwriter  expressly  for use
     therein; provided,  however, that the holder's liability to Gemini and such
     underwriter or other indemnified party pursuant to this Paragraph  11(c)(v)
     shall not exceed the gross sales price of all  Registrable  Securities sold
     by the holder pursuant to such registration statement.

          (vi) If any action or claim  shall be brought or  asserted by a person
     or entity  entitled to  indemnification  pursuant to Paragraph  11(c)(v) of
     this Agreement (an  "indemnified  party") against Gemini or any underwriter
     engaged  by Gemini or any  person  controlling  Gemini or such  underwriter
     within the  meaning  of the  Securities  Act or  against  the holder or any
     underwriter  engaged by the holder or any person  controlling the holder or
     such  underwriter,  within the meaning of the  Securities Act in respect of
     which  indemnity  may be sought  pursuant  to  Paragraph  11(c)(v)  of this
     Agreement (an "indemnifying  party"),  the indemnified party shall promptly
     notify  the  indemnifying  party in  writing  of the basis for the claim of
     indemnification and provide the indemnifying party with a copy of all legal
     papers  or other  notices  or  communications  served  on it in  connection
     therewith,  and the  indemnifying  party shall assume the defense  thereof,
     including  the  employment  of  counsel  reasonably   satisfactory  to  the
     indemnified  party and the  payment  of all legal  and  other  expenses  in
    

<PAGE>   65
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12   

     connection  therewith.  The failure of the indemnified  party to notify the
     indemnifying party as provided in this Paragraph 11(c)(vi) will not relieve
     the indemnifying  party of any liability for  indemnification  which it may
     have to the  indemnified  party  pursuant  to  Paragraph  11(c)(v)  of this
     Agreement unless the failure to so notify the indemnifying party materially
     prejudices the rights of the  indemnifying  party.  The  indemnified  party
     shall have the right to employ  separate  counsel in any such action and to
     participate  in the  defense  thereof,  but the fees and  expenses  of such
     counsel  shall be at the expense of the  indemnified  party  unless (A) the
     employment  thereof has been  specifically  authorized by the  indemnifying
     party in writing and the indemnifying party shall have agreed in writing to
     pay such fees and  expenses,  or (B) the  indemnifying  party  has  failed,
     either (I) with  reasonable  promptness,  to assume the  defense and employ
     counsel as provided in this Paragraph 11(c)(vi), or (II) to appoint counsel
     to act or  otherwise  respond  to any claim or  action  prior to the date a
     response is due,  after giving effect to any  extensions  obtained by or on
     behalf of the  indemnifying  party,  or (C) the named  parties  to any such
     action (including any impleaded  parties) include both an indemnified party
     and an  indemnifying  party,  and in the  judgment  of the  counsel for the
     indemnified party, it is advisable for the indemnified party or controlling
     person to be represented by separate counsel because of actual or potential
     conflicting  interests  between them (in which case the indemnifying  party
     shall not have the right to assume the  defense of such action on behalf of
     the indemnified  party or such  controlling  person,  it being  understood,
     however, that the indemnifying party shall, in connection with any one such
     action or separate but substantially similar or related actions arising out
     of the  same  general  allegations  or  circumstances,  be  liable  for the
     reasonable  fees and expenses of only one separate firm of attorneys at any
     time in each jurisdiction for all indemnified  parties (whether pursuant to
     this Agreement or any other agreements granting registration rights), which
     firm shall be designated in writing by all the indemnified parties,  except
     that if  Trans  Global  is an  indemnified  party,  such  counsel  shall be
     designated by Trans Global). The indemnifying party shall not be liable for
     any settlement of any such action effected by an indemnified  party without
     the written consent of the indemnifying  party (which shall not be withheld
     unreasonably  in light of all factors of  importance  to such  indemnifying
     party  and such  indemnified  party),  but if  settled  with  such  written
     consent, or if there be a final judgment or decree for the plaintiff in any
     such  action by a court of  competent  jurisdiction  and the time to appeal
     shall  have  expired  or the  last  appeal  shall  have  been  denied,  the
     indemnifying  party agrees to indemnify and hold  harmless the  indemnified
     party from and against any Loss by reason of such settlement or judgment.

          (vii)ab The making of any request for prospectuses hereunder shall not
     impose on the holder any  obligation  to sell any  Registrable  Securities.
     (viii)ab  Gemini's  obligations  pursuant  to this  Paragraph  11  shall be
     applicable to Trans Global and its Transferees.

(d) If either (i) any  holders  shall  have  exercised  the demand  registration
rights  pursuant to  Paragraph  11(b) of this  Agreement  and such  registration
statement  shall not have been  declared  effective  within six months after the
date of the Registration  Notice, or (ii) the Registrable  Securities shall have
been  registered  pursuant to the  Securities  Act,  but,  for any  reason,  the
registration  statement  shall cease to be current and effective for a period of
more than thirty (30) days, then in either of such cases,  any holder shall have
the right to require Gemini to redeem the Preferred Stock held by such holder as
set forth in the Certificate of Designation.
<PAGE> 66
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12   

12.  Pursuant  to the  Purchase  Agreement,  this  Agreement  and the  Purchaser
Guarantee  will be held in escrow and will be  delivered  to Trans Global and an
executed copy of this Agreement shall be delivered to  Consolidated,  Arc and TA
at  such  times  as  the  documents  are  released  from  escrow  pursuant  to a
Distribution Notice, as defined in the Escrow Agreement,  all as provided in the
escrow agreement dated the date of this Agreement among Consolidated, SISC, Arc,
TA, Trans Global and Parker Chapin  Flattau & Klimpl,  LLP, as escrow agent (the
"Escrow  Agreement").  In the event that the Escrow Property,  as defined in the
Escrow Agreement, is distributed pursuant to Paragraph 5 of the Escrow Agreement
as a result of a Termination Notice, as defined in the Escrow Agreement,  or the
failure  of Arc to obtain  the New York  Regulatory  Consent,  as defined in and
pursuant to the Purchase  Agreement,  this Agreement  shall,  automatically  and
without  any action on the part of any Party,  terminate  and be of no force and
effect  and no  party  shall  have  any  right or  obligation  pursuant  to this
Agreement  or the  Purchaser  Guarantee.  Nothing in this  Paragraph 12 shall be
construed to modify or affect in any manner the rights and  obligations of Trans
Global and Arc under the Arc Note and the rights and obligations of Trans Global
and Consolidated  under the  Consolidated  Guarantee during the period when this
Agreement is held in escrow.

13.ab Gemini  agrees that prior to the issuance of the Series A Preferred  Stock
pursuant  to this  Agreement,  it will not  modify or amend the  Certificate  of
Designation.
    
14.  Contemporaneously  with the  execution of this  Agreement,  each Party will
deliver to the other  Parties the  certificate  of the  secretary  of such Party
certifying  as to (a) the  incumbency  of the officers of such Party and (b) the
adoption by the Board of Directors of  resolutions  approving  the  execution of
this Agreement and the performance of its terms.

15. (a) Except for the waiver  granted in Paragraph 1 of this  Agreement and the
provisions of Paragraph 6 of this  Agreement,  the Arc Note shall remain in full
force and effect.

     (b) Nothing in this  Agreement  shall be  construed to modify or affect the
rights of  Consolidated,  SISC and Trans Global pursuant to a certain  agreement
dated February 25, 1999, by and among Consolidated, SISC and Trans Global.

16. (a) This Agreement,  including the Exhibits, which constitute integral parts
of this Agreement,  constitutes the entire agreement of the parties with respect
to the subject matter thereof,  superseding and terminating any and all prior or
contemporaneous oral and prior written agreements,  understandings or letters of
intent  between or among the parties with respect to the subject  matter of this
Agreement.  No part of this  Agreement  may be modified or amended,  nor may any
right be waived,  except by a written  instrument which expressly refers to this
Agreement,  states that it is a modification or amendment of this Agreement or a
waiver under this Agreement and is signed by the parties to this Agreement,  or,
in the case of waiver, by the party granting the waiver. No course of conduct or
dealing or trade usage or custom and no course of performance shall be relied on
or referred to by any party to  contradict,  explain or supplement any provision
of this Agreement,  it being  acknowledged by the parties to this Agreement that
this  Agreement is intended to be, and is, the complete and exclusive  statement
of the agreement with respect to its subject matter. Any waiver shall be limited
to the express terms thereof and shall not be construed as a waiver of any other
provisions  or the  same  provisions  at any  other  time  or  under  any  other
circumstances.
<PAGE>   67
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12  

     (b) If any section, term or provision of this Agreement shall to any extent
be held or determined to be invalid or  unenforceable,  the remaining  sections,
terms and provisions shall nevertheless continue in full force and effect.

     (c) All  notices or other  communications  required  or  permitted  by this
Agreement  shall be in  writing  signed by the party  giving  such  notice,  and
delivered personally against receipt thereof or sent by overnight courier,  mail
or messenger  against  receipt  thereof or sent by registered or certified mail,
return  receipt  requested,  or by facsimile  transmission  or similar  means of
communication  if receipt is  confirmed  or if  transmission  of such  notice is
confirmed by mail as provided in this  Paragraph 16.  Notices shall be deemed to
have been  received on the date of personal  delivery or telecopy or, if sent by
certified or registered mail,  return receipt  requested,  shall be deemed to be
delivered on the fifth (5th) business day after the date of mailing, except that
notice of change in the person,  address or facsimile  number shall be effective
on actual receipt.  Notices shall be addressed to the party for whom intended at
his or its address set forth below or to the  attention  of such other person or
such other  address or  facsimile  number as a party  shall have  designated  by
notice in writing to the other  parties  given in the  manner  provided  by this
Paragraph 16(c):

if to Trans Global to:

                  Trans Global Services, Inc.
                  1393 Veterans Memorial Highway
                  Hauppauge, New York 11788
                  Facsimile: (516) 724-0039
                  Attn: Joseph G. Sicinski, President and CEO

                  with a copy to:

                  Esanu Katsky Korins & Siger, LLP
                  605 Third Avenue
                  New York, New York 10159
                  Facsimile: (212) 953-6899
                  Attn: Asher S. Levitsky P.C.

                  if to Arc, to:

                  Arc Networks, Inc.
                  1770 Motor Parkway
                  Hauppauge, New York 11788
                  Facsimile:  (516) 582-1240
                  Attn: Peter F. Parrinello, President

                  with a copy to:

                  Parker Chapin Flattau & Klimpl, LLP
                  1211 Avenue of the Americas
                  New York, New York 10036
                  Facsimile:  (212) 704-6288
                  Attention: Michael J. Shef, Esq.



<PAGE>   68
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12  



                  if to Consolidated, to:

                  Consolidated Technology Group Ltd.
                  160 Broadway, Suite 901
                  New York, New York 10038
                  Facsimile:  (212) 233-5023
                  Attn: Mr. Seymour Richter, President

                                     and

                  Consolidated Technology Group Ltd.
                  2424 North Federal Highway, Suite 110
                  Boca Raton, Florida 33431
                  Facsimile:  (561) 347-5352
                  Attn: George W. Mahoney, Chief Financial Officer
 
                  with a copy to:

                  Robert L. Blessey, Esq.
                  51 Lyon Ridge Road
                  Katonah, NY 10536
                  Facsimile:  (914) 232-0647

                  If to TA or Gemini, to:

                  Technology Acquisitions, Ltd.
                  c/o Benchmark Equity Group, Inc.
                  700 Gemini Street
                  Houston, TX 77058
                  Facsimile: (281) 488-5353
                  Attn: Mr. Christopher H. Efird
 
                  with a copy to:

                  De Martino Finkelstein Rosen & Virga
                  1818 N Street, N.W., Suite 400
                  Washington, D.C.  20036
                  Facsimile:  (202) 659-1290
                  Attn: Ralph V. De Martino, Esq.


(d)ab This Agreement shall be governed and construed in accordance with the laws
of the State of New York  applicable to agreements  executed and to be performed
wholly within such State,  without regard to any principles of conflicts of law.
Each of the Parties hereby (i) irrevocably consents and agrees that any legal or
equitable  action  or  proceeding  arising  under  or in  connection  with  this
Agreement  shall be brought in the Federal or state courts located in the County
of New York or Suffolk in the State of New York,  (ii) by execution and delivery
of this Agreement,  irrevocably  submits to and accepts the jurisdiction of said
courts,  (iii) waives any defense that such court is not a convenient forum, and
(iv)  consents  to any  service  of  process  made in the  manner  set  forth in



<PAGE>   69
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12  

Paragraph 16(c) of this Agreement (other than by telecopier), in addition to any
other method of service permitted by law. In any action brought pursuant to this
Agreement  based on an alleged breach of this  Agreement,  the prevailing  Party
shall be entitled to  reimbursement  of all costs  incurred by it in  connection
therewith  to the  extent,  if at all,  awarded or allowed by the court or other
tribunal  in which  the  action  or  proceeding  has been  commenced;  provided,
however,  that nothing in this  Paragraph  16(d) shall be construed to affect in
any manner the provisions of Paragraphs 11(c)(v) and (vi) of this Agreement. 

(e)Each of the Parties to this Agreement shall be responsible and liable for its
own expenses  incurred in connection  with the preparation of this Agreement and
the consummation of the transactions  contemplated by this Agreement and related
expenses, except as expressly provided in this Agreement.
                  
(f) Each Party to this Agreement is relying on his or its own tax advisors as to
the tax consequences of this Agreement and the transactions contemplated by this
Agreement,  and no party is making any representations or warranties of any kind
as to such tax consequences to any other Party.

(g) No Party shall make a public announcement  concerning this Agreement without
the  consent  of the other  Parties  except to the  extent  that  disclosure  is
required under applicable laws.
                  
(h) This Agreement shall be binding upon and inure to the benefit of the Parties
and their respective successors and permitted assigns; provided,  however, that,
except  as  expressly  provided  in this  Agreement,  no Party may  assign  this
Agreement or any of its rights under this  Agreement  without the prior  written
consent of the other Parties.
                  
(i) Each Party agrees, without cost or expense to any other Party, to deliver or
cause to be delivered  such other  documents  and  instruments  and to take such
other action as may be reasonably requested by any other party to this Agreement
in order to carry out more  fully  the  provisions  of,  and to  consummate  the
transaction contemplated by, this Agreement.
                  
(j) This Agreement may be executed  simultaneously in two or more  counterparts,
each of which  shall be  deemed  an  original  but all of which  together  shall
constitute one and the same instrument.
                                                

[Signatures on Next Page]















<PAGE>   70
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12  

IN WITNESS  WHEREOF,  the Parties have executed this Agreement on the date first
written above.
                                                 

                                        TRANS GLOBAL SERVICES, INC.


                                        By:                                    
                                          Joseph G. Sicinski, President and CEO

                                         
                                        CONSOLIDATED TECHNOLOGY GROUP LTD.


                                        By:                                     
                                          Seymour Richter, President:

                                
                                        ARC NETWORKS, INC.


                                        By:                                     
                                         Peter F. Parrinello, President and CEO

                                          
                                        TECHNOLOGY ACQUISITIONS LTD.


                                        By:                                     
                                        Name:
                                        Title:

                                
                                        GEMINI II, INC.


                                        By:                                     
                                        Name:
                                        Title:

















<PAGE>   71
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12  
                                                                     Exhibit A
                                       GUARANTEE

     For valuable consideration,  the receipt and sufficiency of which is hereby
acknowledged,  Technology  Acquisitions Ltd., a Bermuda  corporation ("TA"), and
Gemini  II,  Inc.,  a  Delaware  corporation  ("Gemini"),  TA and  Gemini  being
collectively  referred to as the "Guarantors" and each as a "Guarantor,"  hereby
unconditionally  and irrevocably jointly and severally guarantee the payment and
performance by Arc Networks,  Inc., a Delaware corporation (the "Payor"), of all
of the Payor's  obligations  pursuant to the Payor's 10% Installment  Promissory
Note due August 31,  2003 in the  principal  amount of one  million  two hundred
sixteen  thousand six hundred  seventy three dollars  ($1,216,673)  (the "Note")
dated  September  18,  1998 and payable to the order of Trans  Global  Services,
Inc.,  a  Delaware  corporation,  and if the  Payor  fails  to pay  the  Note in
accordance with its terms,  the Guarantors  jointly and severally agree promptly
to pay or perform the Payor's obligations under the Note.

     The  liability  of the  Guarantors  shall be direct and  immediate  and not
conditional  or  contingent  upon the  pursuance  by the  holder  of the Note of
whatever  remedies  it may have,  at law or in equity,  against the Payor or any
other party.  The  Guarantors  hereby  waive  presentment  for payment,  demand,
protest and notice of protest and of nonpayment.

     The  obligations  of the  Guarantors  shall not be impaired,  diminished or
discharged,  in whole or in part, by any extension of time granted by the holder
of the Note,  by any  course of dealing  between  the holder of the Note and the
Payor, by the  unenforceability of the Note, in whole or in part, for any reason
whatsoever,  by the release of any guarantor or other obligor or any collateral,
or by any other act,  omission,  event or  circumstance  which might  operate to
discharge a guarantor  in whole or in part or which might  operate as a defense,
in whole or in part, to any obligation of a guarantor or which might invalidate,
in whole or in part, a guarantee.

     The Guarantors acknowledge and agree that nothing shall discharge,  satisfy
or release the obligations  created under this Guarantee,  except for payment in
full or satisfaction of the Payor's  obligations  with respect to the Note. Such
obligations  shall not be considered fully paid unless and until all payments by
the Payor or any guarantor,  including the Guarantors (or any other party who or
which is now or may hereafter be liable for any  obligations  under the Note) to
the  holder  of the Note are no longer  subject  to any right on the part of any
person whomsoever,  including, without limitation, any trustee in bankruptcy, to
set aside such payments,  or to seek to recoup the amount of such  payments,  or
any part thereof.  The  foregoing  shall  include,  by way of example and not by
limitation,  all rights to recover preferences  voidable under the United States
Bankruptcy  Code. In furtherance of the  foregoing,  the Guarantors  jointly and
severally  agree to pay on demand  any  amount  which the  holder of the Note is
required to pay under any bankruptcy, insolvency or other similar law on account
of any amount  received  by the holder of the Note under or with  respect to the
Note or this guarantee.

     In the event that the holder of this Note commences  litigation against the
Guarantors  or either of them or otherwise  engages  counsel in order to enforce
its rights under this Guarantee,  the Guarantors  shall be jointly and severally
liable for all reasonable costs and expenses of collection,  including,  without
limitation, reasonable attorneys' fees and expenses.


<PAGE>   72
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12  


     The  Guarantors  hereby  represent  to any  holder of the Note that (i) the
execution,  delivery and  performance of this Guarantee has been duly authorized
and approved by all required  corporate action of each Guarantor,  and (ii) this
Guarantee is a valid and binding  obligation of Guarantor,  enforceable  against
Guarantor  in  accordance  with its  terms,  except as such  enforcement  may be
limited by  applicable  bankruptcy,  insolvency,  reorganization,  moratorium or
other similar laws now or hereafter in effect.

     This  Guarantee  shall be governed by and construed in accordance  with the
laws of the State of New York  applicable to contracts  made and to be performed
entirely  within such State  without  regard to  principles of conflicts of law.
Each Guarantor  consents to the  nonexclusive  jurisdiction of the United States
District Court for the Southern or Eastern  District of New York and the Supreme
Court of the  State  of New York in the  County  of New York or  Suffolk  in any
action  relating to or arising out of this  Guarantee  and waives any claim that
any of such forums is not a convenient forum. IN ANY SUCH ACTION, EACH GUARANTOR
WAIVES ANY RIGHT TO A TRIAL BY JURY

     This  Guaranty  shall be  binding  upon  Guarantors  and  their  respective
successors  and  assigns  and inure to the benefit of the holder of the Note and
its successors and assigns.

IN WITNESS  WHEREOF,  the Guarantors have executed this Guarantee this th day of
March, 1999.
                                   TECHNOLOGY ACQUISITIONS LTD.


                                   By:                                          
                                   Name:
                                   Title:

                                   
                                   GEMINI II, INC.


                                   By:                                          
                                   Name:
                                   Title:

















<PAGE>   73
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12  


                                                                      Exhibit B
                          CERTIFICATE OF DESIGNATION OF

                                  GEMINI II, INC.
              Series A 10% Convertible Redeemable Preferred Stock

Pursuant to Section 151(g) of the Delaware  General  Corporation Law, Gemini II,
Inc.,  a  Delaware  corporation  (the "Corporation"),  does  hereby  certify as
follows:

     1. The following  resolution  was duly adopted by the Board of Directors of
the Corporation on March , 1999:

          RESOLVED,  that  pursuant  to  Section  Fourth of the  Certificate  of
     Incorporation  of this  Corporation,  there  be  created  a  series  of the
     Preferred Stock, par value $.0001 per share  ("Preferred  Stock"),  of this
     Corporation  consisting  of one  million  two  hundred  seventeen  thousand
     (1,217,000)  shares,  to be  designated  as the  Series  A 10%  Convertible
     Redeemable  Preferred  Stock  ("Series A  Preferred  Stock"),  and that the
     holders of such shares shall have the rights,  preferences  and  privileges
     set  forth in  Statement  of  Designation  set  forth in  Exhibit I to this
     Resolution; and it was further

          RESOLVED,  that the officers of this  Corporation  be, and they hereby
     are,  authorized  and  empowered to execute and file with the  Secretary of
     State of the State of Delaware,  a certificate of designation setting forth
     the  rights,  preferences  and  privileges  of the  holders of the Series A
     Preferred Stock.

     2. Set forth as Exhibit I to this  Certificate of Designation is a true and
correct copy of the rights,  preferences  and  privileges  of the holders of the
Series A Preferred Stock.

IN WITNESS WHEREOF,  Gemini II, Inc. has caused this certificate to be signed by
the president and attested by its secretary this th day of March, 1999.


ATTEST:
 
                                       By:              , President
                                                       
                 , Secretary













<PAGE>   74
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12  
                            Statement of Designation

The  designation  of,  the  number  of  shares  constituting,  and  the  rights,
preferences,   privileges  and  restrictions  relating  to,  the  Series  A  10%
Convertible Preferred Stock are as follows:

     1. Designation and Number of Shares.  The designation of this series of one
million two hundred seventeen  thousand  (1,217,000)  shares of preferred stock,
par  value  $.0001  per  share  ("Preferred  Stock"),  created  by the  Board of
Directors  of the  Corporation  pursuant to the  authority  granted to it by the
certificate of  incorporation  of the  Corporation is "Series A 10%  Convertible
Redeemable  Preferred Stock," which is hereinafter  referred to as the "Series A
Preferred Stock." In the event of the conversion of shares of Series A Preferred
Stock into this Corporation's  common stock, par value $.0001 per share ("Common
Stock"),  pursuant to Paragraph 4 of this  Statement of  Designation,  or in the
event that the  Corporation  shall redeem any shares of Series A Preferred Stock
pursuant to Paragraph 5 of this  Statement  of  Designation  or shall  otherwise
acquire and cancel any shares of Series A Preferred  Stock, the shares of Series
A Preferred  Stock so  converted,  redeemed or  otherwise  acquired and canceled
shall have the status of  authorized  but unissued  shares of  Preferred  Stock,
without  designation  as to series until such stock is once more  designated  as
part of a particular  series by the  Corporation's  Board of Directors,  and the
number of authorized  shares of Series A Preferred Stock shall be reduced by the
number of shares so converted,  redeemed or otherwise acquired and canceled.  In
addition,  if the  Corporation  shall not issue the maximum  number of shares of
Series A Preferred  Stock, the Corporation may, from time to time, by resolution
of the Board of  Directors,  reduce the  number of shares of Series A  Preferred
Stock  authorized,  provided,  that no such reduction shall reduce the number of
authorized  shares to a number which is less than the number of shares of Series
A Preferred Stock then issued or reserved for issuance.  The number of shares by
which  the  Series A  Preferred  Stock is  reduced  shall  have  the  status  of
authorized but unissued  shares of Preferred  Stock,  without  designation as to
series,  until such stock is once more designated as part of a particular series
by the Corporation's  Board of Directors.  The Board of Directors shall cause to
be filed with the Secretary of State of the State of Delaware  such  certificate
as shall  be  necessary  to  reflect  any  reduction  in the  number  of  shares
constituting the Series A Preferred Stock.

2. Dividend Rights.

     (a) The  holders of the  Series A  Preferred  Stock  shall be  entitled  to
receive,  out of funds of this  Corporation  legally  available  therefor,  cash
dividends  at an annual rate of ten cents ($.10) per share.  Dividends  shall be
payable in annual  installments on the first day of March (the "dividend payment
date") in each  year,  commencing  March 1,  2000,  to  holders of record of the
Series A Preferred Stock as follows. The holders of record of Series A Preferred
Stock on the 15th day of each calendar month, commencing with the first such day
which occurs after the initial issuance of the first share of Series A Preferred
Stock, shall be entitled to a dividend of five-sixth of one cent ($.008 1/3) per
share (the  "monthly  dividend  accrual").  On each dividend  payment date,  the
Corporation  shall pay the monthly dividend  accruals for each month through the
monthly  dividend  accrual for the February  immediately  preceding the dividend
payment date,  regardless of whether the shares of Series A Preferred  Stock are
outstanding on the dividend payment date.



<PAGE>  75
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12  
 
     (b) The  amount  of any  dividends  "accrued"  on any  share  of  Series  A
Preferred Stock at any dividend payment date shall be deemed to be the amount of
any unpaid dividends  accumulated thereon to and including such dividend payment
date, whether or not earned or declared,  and the amount of dividends "accrued"
on any share of  Series A  Preferred  Stock at any date  other  than a  dividend
payment  date  shall  be  calculated  as  the  amount  of any  unpaid  dividends
accumulated  thereon to and including the last preceding  dividend payment date,
whether or not earned or declared, plus an amount calculated on the basis of the
monthly  dividend  accrual at the monthly rate of  five-sixth of one cent ($.008
1/3) per share for the period after such last preceding dividend payment date to
and including the date as of which the calculation is made.

     (c) Except as provided in this Statement of Designation, no dividends shall
be  declared  or paid or set aside for payment on any class or series of capital
stock  ranking on a parity with or junior to the Series A Preferred  Stock as to
dividends  for  any  period  unless  full  cumulative  dividends  have  been  or
contemporaneously  are declared and paid or declared  and a sum  sufficient  for
payment  thereof is set aside for such  payment on the Series A Preferred  Stock
for all dividend periods terminating on or prior to the dividend payment date of
such dividends on any such series or class.  When dividends are not paid in full
upon the shares of Series A Preferred  Stock and any other  series of  Preferred
Stock ranking on a parity as to dividends with the Series A Preferred Stock, all
dividends declared upon shares of Series A Preferred Stock and such other series
of  Preferred  Stock shall be declared  pro rata so that the amount of dividends
declared  per share on the Series A  Preferred  Stock shall in all cases bear to
each other the same ratio that the accrued  dividends per share on the shares of
Series A Preferred  Stock and such other series of Preferred  Stock bear to each
other.  Holders of shares of Series A  Preferred  Stock shall not be entitled to
dividends thereon,  whether payable in cash, property or stock, in excess of the
full cumulative dividends thereon, as provided in this Statement of Designation.
No dividend  on Series A Preferred  Stock shall be declared or paid or set apart
for payment  with respect to any  dividend  payment date unless full  dividends,
including accumulated dividends, if any, on any series or class of capital stock
ranking,  as to dividends,  prior to Series A Preferred  Stock which are to have
been   paid  on  or  prior  to  such   dividend   payment   date  have  been  or
contemporaneously  are declared and paid or declared  and a sum  sufficient  for
payment  thereof has been set aside for all dividend  periods for such series or
class terminating on or prior to such dividend payment date.

     (d) As long as any shares of Series A Preferred Stock are  outstanding,  no
dividends (other than a dividend in any series or class of capital stock ranking
junior to Series A  Preferred  Stock as to both  dividends  and  payments in the
event of voluntary or involuntary dissolution, liquidation or winding up), shall
be declared or paid or set aside for payment and no other  distribution shall be
declared or made upon any such junior series or class of capital  stock,  and no
such junior series or class of capital stock or any series of Preferred Stock on
a parity with Series A Preferred  Stock as to both dividends and payments in the
event of voluntary and involuntary dissolution,  liquidation or winding up shall
be  redeemed,  purchased  or otherwise  acquired  for any  consideration  by the
Corporation  or by any subsidiary  (which shall mean any  corporation or entity,
the  majority of voting power to elect  directors  of which is held  directly or
indirectly by the  Corporation),  except by conversion  into or exchange for any
such junior series or class of capital  stock;  unless,  in each case,  the full
cumulative dividends on all outstanding shares of Series A Preferred Stock shall
have been paid in full for all past dividend  periods or unless the holders of a
majority of the Series A Preferred Stock then outstanding shall consent thereto.
<PAGE>   76
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12  


3. Voting Rights.

     (a)  Except as  otherwise  required  by law,  the  holders  of the Series A
Preferred Stock shall have no voting rights; provided,  however, that, except as
provided in Paragraph 1 of this Statement of Designation, neither this Statement
of  Designation  nor the  Certificate  of Designation of which this Statement of
Designation is a part, may not be modified or amended without the consent of the
holders of a majority of the issued and outstanding shares of Series A Preferred
Stock.  The consent of the holders of the Series A Preferred  Stock may be given
at a meeting  of the  holders of the  Series A  Preferred  Stock or by a written
consent  of the  holders  of a majority  of the  outstanding  shares of Series A
Preferred Stock.

     (b) The Corporation may create other series of Preferred Stock which may be
senior or  junior  to or on a parity  with the  Series A  Preferred  Stock as to
dividends and/or on voluntary or involuntary dissolution, liquidation or winding
up without the consent of the holders of the Series A Preferred Stock.

4. Conversion into Common Stock.

     (a)(i) Each holder of the Series A Preferred  Stock will have the right, at
any time and from time to time,  commencing  ninety (90) days from the IPO Date,
as hereinafter  defined, or earlier with the consent of both the Corporation and
the representative of the underwriters with respect to the Corporation's initial
public  offering,  to convert any shares of Series A Preferred Stock into shares
of Common Stock,  together with, at the election of the holder thereof,  accrued
dividends to the date of  conversion,  at the  Conversion  Rate, as  hereinafter
defined.

     (ii)ab In the event that shares of Series A Preferred Stock are redeemed by
the Corporation  pursuant to Paragraph 5 of this Statement of  Designation,  the
right of the holders of the Series A Preferred Stock to convert such shares into
Common Stock shall,  subject to Paragraph 5(e) of this Statement of Designation,
terminate  at 5:30 P.M.  on the day before the  Redemption  Date,  as defined in
Paragraph 5(b) of this Statement of Designation;  provided,  that the Redemption
Price,  as  defined  in  Paragraph  5(a)  of  this  Statement  of is made on the
Redemption Date.

     (b)(i)  The  "Conversion  Rate"  shall  mean the number of shares of Common
Stock issuable upon conversion of one (1) share of Series A Preferred Stock. The
Conversion Rate shall be determined by dividing one dollar ($1.00) by the lesser
of (A) the IPO  Price,  as  hereinafter  defined,  or (B) the Market  Price,  as
hereinafter defined, subject to adjustment as provided in Paragraph 4(e) of this
Statement  of  Designation;  provided,  however,  that  in no  event  shall  the
Conversion  Rate be less than one dollar ($1.00)  divided by one-third  (1/3) of
the IPO Price (as adjusted pursuant to Paragraph 4(e)(i), (ii) and (iii) of this
Statement of Designation).

     (ii) The "IPO  Date"  shall man the date on which  the  first  registration
statement under the Securities Act of 1933, as amended (the  "Securities  Act"),
relating  to an  offering  by the  Corporation  of its  securities  is  declared
effective by the Securities and Exchange Commission.



<PAGE>   77
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12  

     (iii)  The  "IPO  Price"  shall  mean the  price  per  share  at which  the
Corporation's Common Stock is sold to the public in its initial public offering.
In the event that the initial public offering  consists of units,  which include
both shares of Common Stock and warrants, each warrant shall be valued at 15% of
the initial public  offering price of the units.  The IPO Price shall be subject
to adjustment as provided in Paragraph 4(e) of this Statement of Designation.

     (iv) The "Market Price" shall mean the average of the closing prices during
the five (5) day  period  ending  on the  trading  day prior to the date of such
conversion,  as reported by the principal  stock exchange or market on which the
Common Stock is listed;  provided,  however,  that if, on any of such days there
are no reported  sales of the Common  Stock,  the closing low bid price shall be
used for such day. If the Common  Stock is listed on the Nasdaq Stock Market and
a regional  stock  exchange,  the Nasdaq  Stock  Market  shall be the  principal
market.  If,  during  the  five (5) day  period  referred  to in this  Paragraph
4(b)(iii) there shall be an event requiring an adjustment  pursuant to Paragraph
4(e) of this  Agreement,  the closing or bid price, as the case may be, for each
day prior to such event (a "Pre-Transaction  Market Price") shall be adjusted as
provided in said Paragraph 4(e).

     (c)  Conversion  of the  Series A  Preferred  Stock  shall be  effected  by
surrender of the certificate representing the shares of Series A Preferred Stock
being converted to the transfer agent for the Series A Preferred  Stock,  or, if
none shall have been appointed,  to the  Corporation,  together with the form of
notice  of  election  to  convert  as may be  provided  from time to time by the
Corporation.

     (d)  Shares  of  Series A  Preferred  Stock  shall be  deemed  to have been
converted immediately prior to the close of business on the day of the surrender
for conversion of the certificate therefor,  together with the form of notice of
election provided by the Corporation duly signed by the holder thereof,  and the
person or persons  entitled to receive shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder of such shares
of Common  Stock as of such time.  As  promptly as  practicable  on or after the
conversion  date,  the  Corporation  or its transfer agent shall issue and shall
deliver a certificate or  certificates  for the number of shares of Common Stock
issuable upon such  conversion to the person or persons  entitled to receive the
same.

     (e)ab The IPO Price and any  Pre-Transaction  Market Price (the "Applicable
Prices" and each,  an  "Applicable  Price")  shall be subject to  adjustment  as
follows:

     (i)ab In case the Corporation shall, after the IPO Date, (A) pay a dividend
or make a distribution  on its shares of Common Stock in shares of Common Stock,
(B) subdivide,  split or reclassify its outstanding  Common Stock into a greater
number of shares,  (C) effect a reverse split or otherwise combine or reclassify
its outstanding  Common Stock into a smaller number of shares,  or (D) issue any
shares by  reclassification of its shares of Common Stock, the Applicable Prices
in effect at the time of the record date for such dividend or distribution or of
the effective date of such subdivision, combination or reclassification shall be
proportionately  adjusted to reflect,  in  accordance  with  generally  accepted
accounting   principles,    such   dividend,    subdivision,    combination   or
reclassification.  Such adjustment shall be made successively whenever any event
listed in this Paragraph4(e)(i) shall occur.

<PAGE>  78
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12  


     (ii)ab In case the  Corporation  shall,  subsequent to the IPO Date,  issue
rights  or  warrants  to all  holders  of its  Common  Stock  entitling  them to
subscribe for or purchase shares of Common Stock (or securities convertible into
Common Stock) at a price (or having a conversion  price per share) less than the
current  market price of the Common  Stock (as defined in Paragraph  4(e)(iv) of
this  Statement  of  Designation)  on  the  record  date  mentioned  below,  the
Applicable  Prices  shall be  adjusted  so that the same  shall  equal the price
determined by multiplying the Applicable  Prices in effect  immediately prior to
the date of such  issuance by a fraction,  of which the  numerator  shall be the
number of shares of Common Stock  outstanding on the record date mentioned below
plus the number of shares  determined by multiplying the price or the conversion
price at which  additional  shares of Common  Stock are offered by the number of
shares of Common  Stock  being  offered  by the number of shares  being  issued,
including shares being issued upon conversion of any convertible securities, and
dividing the result so obtained by the current market price of the Common Stock,
and of which the  denominator  shall be the  number  of  shares of Common  Stock
outstanding  on such record date plus the number of additional  shares of Common
Stock  offered for  subscription  or  purchased  (or into which the  convertible
securities  so  offered  are   convertible).   Such  adjustment  shall  be  made
successively  whenever  such  rights or  warrants  are issued  and shall  become
effective   immediately   after  the  record  date  for  the   determination  of
stockholders entitled to receive such rights or warrants; and to the extent that
shares of Common  Stock or  securities  convertible  into  Common  Stock are not
delivered after the expiration of such rights or warrants, the Applicable Prices
shall be readjusted to the  Applicable  Prices which would then be in effect had
the adjustments made upon the issuance of such rights or warrants been made upon
the  basis of  delivery  of only the  number  of  shares  of  Common  Stock  (or
securities convertible into Common Stock) actually
delivered.

     (iii)ab  In  case  the  Corporation  shall,  subsequent  to the  IPO  Date,
distribute  to all holders of Common  Stock  evidences  of its  indebtedness  or
assets  (excluding cash dividends or distributions  paid out of current earnings
and  dividends  or  distributions  referred  to in  Paragraph  4(e)(i)  of  this
Statement of Designation) or subscription  rights or warrants  (excluding  those
referred to in Paragraph  4(e)(ii) of this  Statement of  Designation),  then in
each such case the Applicable Prices in effect thereafter shall be determined by
multiplying  the  Applicable  Prices in effect  immediately  prior  thereto by a
fraction,  of which the numerator  shall be the total number of shares of Common
Stock  outstanding  multiplied  by the current  market price per share of Common
Stock (as defined in Paragraph 4(e)(iv) of this Statement of Designation),  less
the fair market value (as determined in good faith by the Corporation's Board of
Directors) of said assets or evidences of indebtedness so distributed or of such
rights or warrants,  and of which the  denominator  shall be the total number of
shares of Common Stock  outstanding  multiplied by such current market price per
share of Common Stock. Such adjustment shall be made successively  whenever such
a  record  date is  fixed.  Such  adjustment  shall  be made  whenever  any such
distribution  is made and shall become  effective  immediately  after the record
date  for  the   determination   of   stockholders   entitled  to  receive  such
distribution.





<PAGE>   79
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12  

     (iv)ab For the purpose of any  computation  under  Paragraphs  4(e)(ii) and
(iii) of this  Statement of  Designation,  the current market price per share of
Common Stock at any date shall be deemed to be the average of the daily  closing
prices for five (5) consecutive trading days commencing twenty (20) trading days
before such date, as reported by the principal stock exchange or market on which
the Common  Stock is  listed;  provided,  however,  that if, on any of such days
there are no reported sales of the Common Stock, the closing low bid price shall
be used for such day. If the Common Stock is not listed or admitted to listed on
any stock  exchange  or market,  the  closing  low bid prices as reported by the
National  Quotation Bureau,  Inc. or other similar  organization if Nasdaq is no
longer reporting such information, or if not so available, the fair market price
as determined by the Board of Directors.

     (v)ab No increase or decrease in the  Applicable  Prices  shall be required
unless  such  adjustment  would  require an increase or decrease of at least one
percent (1%); provided,  however,  that any adjustments which, by reason of this
Paragraph  4(e)(v),  are not  required  to be made shall be carried  forward and
taken into account in any subsequent  adjustment.  All  calculations  under this
Paragraph 4(e) shall be made to the nearest one-tenth (1/10) of a cent.

     (vi)ab The Corporation may retain a firm of independent  public accountants
of  recognized  standing  selected  by the  Board of  Directors  (who may be the
regular  accountants  employed  by the  Corporation)  to  make  any  computation
required by this Paragraph 4(e), and a certificate  signed by such firm shall be
conclusive evidence of the correctness of such adjustment.

     (vii)ab In the event that at any time,  as a result of an  adjustment  made
pursuant this Paragraph  4(e), the holder of shares of Series A Preferred  Stock
thereafter shall become entitled to receive any shares of the Corporation, other
than Common Stock, thereafter the number of such other shares so receivable upon
conversion of shares of Series A Preferred  Stock shall be subject to adjustment
from time to time in a manner and on terms as nearly  equivalent as  practicable
to the provisions  with respect to the Common Stock  contained in this Paragraph
4.

     (viii)ab In  addition to the  adjustments  provided  for in this  Paragraph
4(e),  the  Corporation  may modify the  Conversion  Rate in a manner which will
increase the number of shares of Common Stock  issuable  upon  conversion of the
Series A Preferred  Stock if the  Corporation  believes that such  adjustment is
necessary or desirable in order to avoid adverse Federal income tax consequences
to the holders of the Common Stock.

     (f) Whenever any adjustment is required by the provisions of Paragraph 4(e)
of this Statement of Designation,  the  Corporation  shall forthwith file in the
custody of its Secretary or an Assistant  Secretary at its principal  office and
with its stock  transfer  agent,  if any, an officer's  certificate  showing the
adjustment  and the adjusted IPO Price,  setting forth in reasonable  detail the
facts requiring such adjustment.  Each such officer's  certificate shall be made
available  at all  reasonable  times for  inspection  by any holder of shares of
Series A Preferred Stock, and the Corporation  shall,  forthwith after each such
adjustment, mail a copy of such certificate by first class mail to the holder of
Series  A  Preferred  Stock  at  such  holders'   addresses  set  forth  in  the
Corporation's books and records.



<PAGE>  80
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12  


     (g)In  case: 

     (i)ab the Corporation  shall pay any dividend or make any distribution upon
Common  Stock  (other  than a regular  cash  dividend  payable  out of  retained
earnings or cash surplus);  or 

     (ii)ab the  Corporation  shall  offer to the  holders  of Common  Stock for
subscription or purchase by them any shares of any class or any other rights, or

     (iii)ab  any  reclassification  of the  capital  stock of the  Corporation,
consolidation  or merger of the  Corporation  with or into another  corporation,
sale, lease or transfer of all or  substantially  all of the property and assets
of  the  Corporation  to  another  corporation,   or  voluntary  or  involuntary
dissolution, liquidation or winding up of the Corporation shall be effected;
then in any such case, the  Corporation  shall cause to be mailed by first class
mail to the record  holders of Series A  Preferred  Stock at least ten (10) days
prior to the date  specified in (A) and (B) below,  as the case may be, a notice
containing a brief  description  of the proposed  action and stating the date on
which (A) a record is to be taken for the purpose of such dividend, distribution
or rights,  or (B) such  reclassification,  consolidation,  merger,  conveyance,
lease, dissolution,  liquidation or winding up is to take place and the date, if
any is to be fixed, as of which the holders of Common Stock or other  securities
shall receive cash or other  property  deliverable  upon such  reclassification,
reorganization,  consolidation,  merger, conveyance, dissolution, liquidation or
winding up.

     (h)ab  In case of any  reclassification,  capital  reorganization  or other
change of outstanding  shares of Common Stock of the Corporation,  or in case of
any consolidation or merger of the Corporation into another  corporation  (other
than a  merger  with  a  subsidiary  in  which  merger  the  Corporation  is the
continuing  corporation  and  which  does not  result  in any  reclassification,
capital  reorganization or other change of outstanding shares of Common Stock or
the class  issuable upon  conversion of Series A Preferred  Stock) or in case of
any sale,  lease or  conveyance  to another  corporation  of the property of the
Corporation as an entirety,  the Corporation shall, as a condition  precedent to
such  transaction,  cause effective  provisions to be made so that the holder of
the Series A Preferred  Stock shall have the right  thereafter by converting the
Series A Preferred  Stock, to receive the kind and amount of shares of stock and
other  securities and property  receivable upon such  reclassification,  capital
reorganization and other change, consolidation,  merger, sale or conveyance by a
holder of the number of shares of Common  Stock which  might have been  received
upon  conversion  of the  Series A  Preferred  Stock  immediately  prior to such
reclassification,  change,  consolidation,  merger, sale or conveyance. Any such
provision  shall  include  provision  for  adjustments  which shall be as nearly
equivalent  as may  be  practicable  to the  adjustments  provided  for in  this
Statement of Designation.  The foregoing provisions of this Paragraph 4(h) shall
similarly apply to successive  reclassifications,  capital  reorganizations  and
changes of shares of Common  Stock and to  successive  consolidations,  mergers,
sales or conveyances. The provisions of this Paragraph 4(h) shall not apply with
respect to any merger,  consolidation,  sale, conveyance or other transaction if
such  transaction  would be deemed a  liquidation  as  provided  in, and for the
purpose of, Paragraph 6 of this Statement of Designation.



<PAGE> 81
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12   

     (i) No fractional shares or script representing  fractional shares shall be
issued  upon the  conversion  of shares of Series A  Preferred  Stock.  If, upon
conversion of any shares of Series A Preferred Stock,  any holder would,  except
for the provisions of this  Paragraph  4(i), be entitled to receive a fractional
share of Common Stock,  then the number of shares of Common Stock  issuable upon
such conversion shall be rounded up to the next higher whole number of shares.

     (j) The  Corporation  shall at all times reserve and keep  available,  free
from preemptive rights, out of its authorized but unissued Common Stock the full
number of shares of Common Stock then issuable upon the conversion of all shares
of Series A Preferred Stock then outstanding.

     (k) The Common Stock  issuable  upon  conversion  of the Series A Preferred
Stock shall,  when so issued, be duly and validly  authorized and issued,  fully
paid and non-assessable.

5. Redemption.

     (a) The Corporation may redeem the Series A Preferred Stock in whole at any
time or in part  from  time to time  upon not less  than  five (5) nor more than
fifteen (15) days' prior written notice at the redemption  price per share equal
to one and  no/100  dollars  ($1.00),  plus  accrued  dividends  to the  date of
redemption (the "Redemption  Price"). The Corporation is not required to provide
for the  redemption  of any  shares  of Series A  Preferred  Stock  through  the
operation of a sinking fund.

     (b) The date on which the  Corporation  is to redeem any Series A Preferred
Stock pursuant to Paragraph 5(a) of this Statement of Designation is referred to
as the "Redemption  Date" with respect to the shares of Series A Preferred Stock
to be  redeemed  on such  date.  From and  after the  close of  business  on the
business day immediately  preceding the Redemption  Date, any shares of Series A
Preferred  Stock as to which the  Corporation  shall have exercised its right of
redemption  shall cease to have any voting,  dividend or other  rights,  and the
holder  of such  shares  shall  only have the right to  receive  payment  of the
Redemption Price; provided, however, that this Paragraph 5(b) shall not apply if
the Corporation shall default in the payment of the Redemption Price.

     (c) In the event that the Corporation  redeems only a portion of the Series
A Preferred  Stock,  the Corporation  shall redeem such shares in a manner which
approximates  a prorata  redemption  of the  holders of the  Series A  Preferred
Stock, and, in making such redemption,  the Corporation may fully redeem holders
of Series A Preferred  Stock whose  holdings are  insubstantial  relative to the
number of Series A Preferred Stock being redeemed.

     (d) (i) In the event that, for any period of five (5)  consecutive  trading
days (a "Low Price  Period")  commencing  after the IPO Date,  the average  last
reported  price of the  Common  Stock (or the low bid price for any day on which
there are no reported sales of Common Stock) is less than one-third (1/3) of the
IPO Price (as  adjusted  pursuant to Paragraph  4(e)(i),  (ii) and (iii) of this
Statement of Designation), then either

               (A) The  Corporation  may, within five (5) trading days after the
          end of any Low Price Period, redeem all, and not less than all, of the
          then  outstanding  shares  of Series A  Preferred  Stock  pursuant  to
          Paragraph 5(a) of this Statement of Designation, or


<PAGE>  82
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12   


               (B)ab Any  holder of Series A  Preferred  Stock  may,  on written
          notice (the "Holder Notice") to the Corporation  given within five (5)
          trading  days  after  the end of any Low  Price  Period,  require  the
          Corporation  to  redeem  all of  such  holder's  shares  of  Series  A
          Preferred Stock at the Redemption Price.

     (ii) If any holder of Series A Preferred Stock shall give the Holder Notice
pursuant  to  Paragraph  5(d)(i)(B)  of  this  Statement  of  Designation,   the
Corporation shall redeem all of such holder' shares of Series A Preferred Stock
not later than fifteen (15) days after the Holder Notice is given.

     (iii)ab The right of the Corporation to redeem the Series A Preferred Stock
pursuant to Paragraph  5(d)(i)(A) of this Statement of  Designation  shall be in
addition  to its  right to redeem  the  Series A  Preferred  Stock  pursuant  to
Paragraph 5(a) of this Statement of Designation.

     (iv)ab In the event that the  Corporation  redeems  the Series A  Preferred
Stock pursuant to this Paragraph  5(d), the right of the holders of the Series A
Preferred  Stock to  convert  their  shares of Series A  Preferred  Stock  shall
terminate  on the date the holders  receive  such notice of  redemption.  In the
event that any holder of Series A Preferred  Stock shall give the Holder Notice,
such holder's right to convert the Series A Preferred  Stock shall  terminate on
the date the Holder Notice is given.

     (v)ab In the event that the Corporation  fails to pay the Redemption  Price
with  respect  to  any  redemption   pursuant  to  this   Paragraph   5(d),  the
Corporation's  right to redeem the Series A  Preferred  Stock  shall  terminate;
however,  the  right of the  holders  of the  Series A  Preferred  Stock and the
obligations  of the  Corporation  to redeem  shares of Series A Preferred  Stock
following any Holder Notice shall continue as provided in this  Paragraph  5(d).
Such  right  shall be in  addition  to any  other  right  any  holder  may have,
including  the right to enforce  payment by the  Corporation  of the  Redemption
Price.

     (e) If (i) any holder of Series A Preferred  Stock has demand  registration
rights with respect to the shares of Series A Preferred  Stock and/or the Common
Stock issued or issuable upon conversion  thereof (the "Conversion  Shares") and
the  Corporation  shall have  failed to  register  such  shares  pursuant  to an
effective registration statement under the Securities Act, within six (6) months
after a  demand  for  registration  has  been  made by the  holder  or (ii)  the
Corporation shall have registered such shares of Series A Preferred Stock and/or
Conversion  Shares  pursuant to the  Securities  Act,  but, for any reason,  the
registration  statement  shall cease to be current and effective for a period of
more than  thirty (30) days,  then in either of such  cases,  any holder may, on
thirty (30) days written notice ("Redemption Demand Notice") to the Corporation,
require the Corporation to redeem the Series A Preferred Stock at the Redemption
Price.  The  Corporation  shall pay the  Redemption  Price with  respect to such
shares of Series A Preferred Stock within fifteen (15) days after the Redemption
Demand Notice is given.





<PAGE>  83
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12   


     (f) In the event that the  Corporation  fails to pay the  Redemption  Price
when due pursuant to this Paragraph 5, if any holder of Series A Preferred Stock
commences  litigation  against the  Corporation or otherwise  engages counsel in
order to enforce payment of the Redemption  Price, the Corporation shall pay for
all reasonable costs and expenses of collection,  including, without limitation,
reasonable attorneys' fees and expenses.

     (g) If any  dividends  on  Series A  Preferred  Stock  are in  arrears,  no
purchase  or  redemption  shall be made of any stock  ranking  junior to or on a
parity with Series A Preferred Stock as to dividends or upon liquidation  (other
than a purchase  or  redemption  made by  issuance  for  delivery of such junior
stock); provided,  however, that any monies theretofore deposited in any sinking
fund with respect to any Preferred  Stock of the  Corporation in compliance with
the provisions of such sinking fund thereafter may be applied to the purchase or
redemption of such Preferred  Stock in accordance with the terms of such sinking
fund  regardless  of whether  at the time of such  application  full  cumulative
dividends upon shares of Series A Preferred Stock  outstanding to the end of the
last  completed  dividend  period shall have been paid or declared and set aside
for payment;  and  provided,  further,  however,  that the  foregoing  shall not
prevent  the  purchase  of shares of  Preferred  Stock  ranking on a parity with
Series A Preferred  Stock as to dividends and upon  liquidation,  dissolution or
winding up pursuant  to a purchase  or exchange  offer made on the same terms to
the holders of all the  outstanding  Preferred Stock so ranking on a parity with
Series A Preferred Stock, including the holders of the Series A Preferred Stock,
as to dividends and upon liquidation, dissolution of winding up.

6. Liquidation Rights.

     (a) In the  event of the  liquidation,  dissolution  or  winding  up of the
Corporation, whether voluntary or involuntary, holders of the Series A Preferred
Stock  shall be  entitled  to receive  out of the assets of the  Corporation  an
amount per share equal to one and no/100 dollars  ($1.00) per share,  plus a sum
equal to all unpaid accrued dividends on the Series A Preferred Stock before any
payment or  distribution  upon  dissolution,  liquidation or winding up shall be
made on any  series  or  class of  capital  stock  ranking  junior  to  Series A
Preferred Stock as to such payment or distribution,  and after all such payments
or distributions  have been made on any series or class of capital stock ranking
senior to the Series A Preferred Stock as to such payment or distribution.

     (b) After payment of the preference set forth in Paragraph  6(a)(i) of this
Statement of Designation, the holders of the Series A Preferred Stock shall have
no right to any  further  payment  with  respect  to their  shares  of  Series A
Preferred Stock.

     (c) The sale, conveyance,  exchange or transfer (for cash, shares of stock,
securities or other  consideration)  of all or substantially all of the property
and  assets  of  the  Corporation  shall  be  deemed  a  voluntary  dissolution,
liquidation or winding up of the  Corporation  for purposes of this Paragraph 6.
The merger of another corporation into the Corporation, where the Corporation is
the  surviving  corporation  shall  not  be  deemed  a  voluntary   dissolution,
liquidation or winding up. The merger or  consolidation  of the Corporation into
any  other  corporation  shall be  deemed to be a  dissolution,  liquidation  or
winding up,  voluntary  or  involuntary,  for the  purposes of this  Paragraph 6
unless such merger or consolidation shall have been approved by the holders of a
majority of the then outstanding shares of Series A Preferred Stock.
<PAGE>   84
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12   

                 
     (d)ab In the event the assets of the Corporation available for distribution
to the  holders  of  shares  of  Series  A  Preferred  Stock  upon  dissolution,
liquidation or winding up of the Corporation,  whether voluntary or involuntary,
shall be  insufficient  to pay in full all  amounts  to which such  holders  are
entitled  pursuant to Paragraph 6(a) of this Statement of  Designation,  no such
distribution shall be made on account of any shares of any other class or series
of  capital  stock of the  Corporation  ranking  on a parity  with the shares of
Series A Preferred Stock upon such dissolution, liquidation or winding up unless
proportionate  distributive  amounts  shall be paid on  account of the shares of
Series A Preferred  Stock,  ratably,  in  proportion  to the full  distributable
amounts for which  holders of all such parity shares are  respectively  entitled
upon such dissolution, liquidation or winding up.

     (e)ab Upon the  dissolution,  liquidation or winding up of the Corporation,
the  holders of shares of Series A  Preferred  Stock then  outstanding  shall be
entitled  to be  paid  out  of  the  assets  of the  Corporation  available  for
distribution to its  stockholders all amounts to which such holders are entitled
pursuant  to  Paragraph  6(a)(i) of this  Statement  of  Designation  before any
payment  shall  be made to the  holders  of any  class of  capital  stock of the
Corporation ranking junior upon liquidation to Series A Preferred Stock.

7.  Notice.  Each notice or other  communication  pursuant to this  Statement of
Designation  shall be in writing  signed by the party  giving such  notice,  and
delivered  personally or sent by overnight  courier,  mail or messenger  against
receipt  thereof  or  sent by  registered  or  certified  mail,  return  receipt
requested, to the Corporation at its executive offices,  presently c/o Benchmark
Equity Group, Inc., 700 Gemini,  Houston, TX 77058,  Attention:  Chief Executive
Officer,  or to such other address or person as the  Corporation  may advise the
holders of the Series A Preferred Stock by like notice,  or to any holder at his
address set forth on the Corporation's records.  Notices shall be deemed to have
been  received  on the date of personal  delivery  or, if sent by  certified  or
registered mail,  return receipt  requested,  shall be deemed to be delivered on
the fifth (5th)  business  day after the date of mailing,  except that notice of
change in the person or address shall be effective on actual receipt.

8. Rank of Series.  For purposes of this Statement of Designation,  any stock of
any series or class of the Corporation shall be deemed to rank:

     (a)ab prior to the shares of Series A Preferred  Stock,  as to dividends or
upon liquidation,  dissolution or winding up, as the case may be, if the holders
of such class or classes  shall be entitled to the  receipt of  dividends  or of
amounts  distributable  upon  dissolution,  liquidation  or  winding  up of  the
Corporation,  as the case may be, in  preference  or  priority to the holders of
shares of Series A Preferred Stock;

     (b)ab on a parity with shares of Series A Preferred  Stock, as to dividends
or upon  liquidation,  dissolution or winding up, as the case may be, whether or
not the dividend  rates,  dividend  payment dates or  redemption or  liquidation
prices per share or sinking fund provisions,  if any, be different from those of
Series A Preferred  Stock, if the holders of such stock shall be entitled to the
receipt of dividends or of amounts  distributable upon dissolution,  liquidation
or winding up of the  Corporation,  as the case may be, in  proportion  to their
respective dividend rates or liquidation prices, without preference or priority,
one over the other,  as  between  the  holders of such stock and the  holders of
shares of Series A Preferred Stock;

<PAGE>  85
TRANS GLOBAL SERVICES, INC.
EXHIBIT 10.12   


     (c)ab junior to shares of Series A Preferred  Stock as to dividends or upon
liquidation,  dissolution or winding up, as the case may be, if such class shall
be Common Stock or if the holders of shares of Series A Preferred Stock shall be
entitled to receipt of dividends or of amounts  distributable  upon dissolution,
liquidation or winding up of the Corporation,  as the case may be, in preference
or priority to the holders of shares of such class or classes.

9. Transfer Agent and Registrar.  The  Corporation  may appoint a transfer agent
and  registrar  for the  issuance,  transfer  and  conversion  of the  Series  A
Preferred  Stock and for the payment of dividends to the holders of the Series A
Preferred Stock.











































<PAGE>  86
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
EXHIBIT 11.1 - COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
<S>                                <C>              <C>                <C>
                                           Years ended December 31,       
                                         1998           1997              1996              
 
Average shares outstanding          3,819,716      3,819,574         2,530,495         
 
Dilutive effect of stock 
 options and warrants computed
 by use of treasury stock
 method                                11,500         69,415                 0             

Computation of Earnings Per
 Share=Net Income/Average
 common and common share
 equivalent shares                    805,261      1,022,881          (681,252)     
outstanding                         3,831,216      3,888.989         2,530,495         
                                    ---------      ---------         ---------         
Earnings Per Share                       0.21           0.26             (0.27)         



</TABLE>