SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A

/X/      Annual Report under Section 13 or 15 (d) of the Securities Exchange Act
         of 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

/  /     Transition Report under Section 13 or 15 (d) of the Securities Exchange
         Act of 1934

For the transition period from  _______________  to _________________

Commission file number                      1-13381

                      HOSPITALITY WORLDWIDE SERVICES, INC.
             (Exact name of registrant as specified in its charter)


             NEW YORK                                  11-3096379
  State or other jurisdiction of                     (IRS Employer
   incorporation or organization                  Identification No.)



450 PARK AVENUE, SUITE 2603, NEW YORK, NY              10022
(Address of principal executive offices)             (Zip Code)



Registrant's telephone number, including area code 212-223-0699

    Securities registered under
    Section 12 (b) of the Exchange Act:   COMMON STOCK, PAR VALUE $.01
                                          PER SHARE

    Name of Exchange on which registered: AMERICAN STOCK EXCHANGE

    Securities registered under Section 12 (g) of the Exchange Act:   NONE

         Check whether the Issuer: (1) filed all reports required to be filed by
Section 13 or 15 (d) of the  Exchange Act during the past 12 months (or for such
shorter period that the  Registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

                                [ X ] YES [ ] NO

         Indicate by 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  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in  Part  III of the  Form  10-K or any
amendment to this Form 10-K. [ ]

         The  aggregate  market  value of the Common  Stock,  $.01 par value per
share (the "Common  Stock"),  held by  non-affiliates  of the  Registrant  as of
September  14, 1998 (based upon the last sale price for the Common  Stock on the
American Stock Exchange) was approximately $42,547,920.

         The number of shares of Common Stock  outstanding  as of September  14,
1998 was 12,113,856.

<PAGE>
                SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER
                  THE SECURITIES LITIGATION REFORM ACT OF 1995

         Except for historical  information contained herein, this Annual Report
on Form 10-K  contains  forward-  looking  statements  within the meaning of the
Private Securities Litigation Reform Act of 1995 which involve certain risks and
uncertainties.  The Company's  actual results or outcomes may differ  materially
from those anticipated.  Important factors that the Company believes might cause
such  differences are discussed in the cautionary  statements  accompanying  the
forward-looking  statements  in this Annual  Report on Form 10-K.  In  assessing
forward-looking statements contained herein, readers are urged to carefully read
those  statements.  When  used in the  Annual  Report  on Form  10-K,  the words
"estimate,"  "anticipate,"  "expect,"  "believe,"  and similar  expressions  are
intended to identify forward-looking statements.

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

         Hospitality Worldwide Services, Inc. (the "Company"), formerly known as
Light Savers U.S.A., Inc., was formed under the laws of the State of New York in
October  1991.  In January  1994,  the  Company  consummated  an initial  public
offering of its common  stock.  At such time,  the Company's  principal  line of
business was to design and market decorative, energy efficient lighting fixtures
for the hotel and hospitality industry. The Company's primary marketing tool was
the  utilization  of  Con  Edison's   Applepower  Rebate  Program  (the  "Rebate
Program"),  under which Con Edison offered  rebates to those who utilized energy
saving devices,  such as the Company's  lighting  fixtures.  In 1994, Con Edison
substantially reduced the Con Edison Rebate Program, making it less advantageous
for the Company to use the Rebate Program as a marketing tool. As a result,  the
Company's revenues were substantially reduced.

         In August 1995, the Company  acquired  substantially  all of the assets
and business and assumed  certain  liabilities  of AGF Interior  Services Co., a
Florida   Corporation   ("AGF"),   a  company  that,  through  its  wholly-owned
subsidiary,  Hospitality  Restoration & Builders,  Inc., a New York  Corporation
("HRB") provided  renovation services to the hospitality  industry.  In December
1995, the Company's Board of Directors,  in response to Con Edison's decision to
reduce substantially the Con Edison Rebate Program, determined to dispose of the
Company's  lighting business and concentrate the Company's efforts on renovation
services.  In February  1996,  the Company,  AGF, Tova  Schwartz,  the Company's
former President and Chief Executive Officer,  and certain other parties thereto
entered  into  a  Divestiture,  Settlement  and  Reorganization  Agreement  (the
"Divestiture  Agreement") pursuant to which, among other things, (i) the Company
sold its lighting business to Tova Schwartz; (ii) Ms. Schwartz resigned from her
positions  as a director  and  officer of both the  Company  and HRB;  (iii) the
Company  repurchased  500,000  shares  of  Common  Stock,  $.01 par value of the
Company (the "Common  Stock") from Ms.  Schwartz for $250,000 (which shares were
subsequently  sold by the  Company in a private  placement  offering);  (iv) Ms.
Schwartz  granted to the Company an option to purchase an  additional  1,000,000
shares  of Common  Stock  (all of which  were  subsequently  repurchased  by the
Company  and  placed  into  treasury);  and (v) the  Company  agreed  to pay Ms.
Schwartz consulting fees for a period of three years of $100,000 per year.

         In October  1996,  the  Company  changed  its name from  Light  Savers,
U.S.A.,  Inc.,  to  Hospitality  Worldwide  Services,  Inc.  The  change  of the
corporate  name is more  indicative of the nature of the  Company's  business in
view of the  significant  change in the character and strategic  focus resulting
from the  acquisition  of AGF and disposal of the Company's  lighting  business.
These  transactions  were part of a strategic  corporate  program to refocus the
Company's business operations into areas with higher growth potential.

                                       -2-
<PAGE>
         Until January 1997, the Company's only line of business was to provide,
through  HRB, a complete  package of  renovation  resources  to the  hospitality
industry  ranging  from  pre-planning  and scope  preparation  of a  project  to
performing  the renovation  requirements  and delivering  furnished  rooms.  HRB
offers  hospitality  maintenance  services to hotels and hotel chains throughout
the  continental  United  States.  For over 18 years  the  Company's  renovation
division has provided to the hospitality  industry  renovation and  improvements
such as vinyl, paint, wallpaper,  carpet,  installation of new furniture,  light
carpentry,  and masonry work. HRB generally provides its renovation  services in
an on time,  on budget  manner,  while  causing  little or no  disruption to the
ongoing  operation  of a hotel.  HRB has  successfully  responded  to the  hotel
industry's  efforts to increase  occupancy,  room rates and market share through
cosmetic upgrades, which are generally required every four to seven years.

         In January 1997, the Company  completed the  acquisition of The Leonard
Parker Company, ("LPC") and its subsidiary,  Parker Reorder Corporation ("Parker
Reorder").  LPC,  founded  in 1969,  is a  leading  purchasing  company  for the
hospitality  industry  which acts as an agent or  principal  for the purchase of
goods and services for its customers  which  include major hotel and  management
companies worldwide.  LPC purchases furniture,  fixtures and equipment,  kitchen
supplies,  linens and uniforms,  guestroom amenities, and other supplies to meet
its customers' requirements for new hotel openings and major renovations. In its
role as purchasing agent, LPC purchases  annually  approximately $250 million of
goods and  services  for its  customers.  Parker  Reorder has  developed  and is
marketing a new proprietary software product, Parker FIRST, which allows clients
to  reorder  operating  supplies  and  equipment  ("OS & E") and other  products
on-line and will provide such  clients  with access to  forecasting  and product
evaluation  capabilities.  Parker Reorder offers hotel properties the ability to
order,  on an as  needed  basis,  any  and  all OS & E  products  used  by  such
properties.  Parker  Reorder  does not plan to sell or lease  its  Parker  FIRST
software to customers.  Instead, commencing in 1998, Parker Reorder will install
the  Parker  FIRST  software  at the  hotel  properties  and  charge  the  hotel
properties  an annual  licensing  fee as well as a  management  fee based on the
volume of transactions.  The purchase price of LPC and Parker Reorder, including
acquisition costs and after final  adjustments,  was  approximately  $12,140,000
which  consisted  primarily of 1,250,000 newly issued shares of Common Stock and
$5 million  stated value of newly issued 6% convertible  preferred  stock of the
Company (the "LPC Preferred"). The LPC Preferred is convertible, at any one time
during the period from January 10, 1998 to January 10, 2000,  into (i) 1,000,000
shares of the  Company's  common stock,  subject to an upward  adjustment in the
event that the market price of the Company's  common stock is below $5.00 at the
time of conversion,  based on a defined conversion  formula,  up to a maximum of
4,000,000  shares,  or (ii)  9.80% of the  outstanding  capital  stock of Parker
Reorder.  The conversion  formula  related to the conversion  into the Company's
common  stock is defined as the  number of shares of common  stock  equal to the
product of 25 (which represents the stated value per share of the LPC Preferred)
and the number of shares of LPC Preferred,  divided by the average  closing sale
price for the common stock for the 20 trading days immediately prior to the date
written  notice of the  intention  to exercise the  conversion  option is given,
provided,  however,  that in no case shall the number of shares of common  stock
into  which  each  share of LPC  Preferred  may be  converted  be less than 5 or
greater than 20. At any time after January 10, 2000,  the Company shall have the
option to redeem the LPC  Preferred  at a  redemption  price equal to the Stated
Value for each such share of LPC Preferred,  plus an amount equal to all accrued
and unpaid Preferred  Dividends and interest thereon, if any.The acquisition has
been  accounted  for as a  purchase  with the  results  of LPC  included  in the
consolidated financial statements of the Company from the acquisition date.

         In May 1997,  the Company  entered into a joint venture  ("Apollo Joint
Venture")  with Apollo Real Estate  Advisors II, L.P.  ("Apollo")  and Watermark
Limited LLC  ("Watermark"),  an affiliate  of the Company to identify,  acquire,
renovate,  refurbish and sell hotel properties.  The Company will perform all of
the renovation and procurement  services for each of the properties purchased by
the Apollo Joint Venture.  In addition,  the Company will receive a five percent
equity  interest in each of the entities  formed to purchase such  properties in
exchange for its  contribution  of five percent of the total equity  required to
acquire, renovate and sell such properties.  The Apollo Joint Venture intends to
own and operate the properties only for the time necessary to upgrade and market
them for resale. As an inducement to enter into the Joint Venture Agreement, the
Company  issued to Apollo a  seven-year  warrant to purchase  750,000  shares of
Common Stock at $8.115 per share (the average  closing price of the Common Stock
for the 20 trading days prior to  issuance).  The warrant  expires in 2004.  The
warrant is currently exercisable as to 350,000 shares and becomes exercisable as
to the remaining 400,000 shares in increments of 100,000 shares

                                       -3-

<PAGE>
for every  $7,500,000  of  incremental  revenue  earned  and to be earned by the
Company  from the Apollo Joint  Venture.  In  September  1997,  the Apollo Joint
Venture  acquired the Warwick Hotel in Philadelphia,  Pennsylvania.  As of March
30, 1998, the Company  contributed  approximately  $308,000 to the joint venture
operating  entity  that was  formed  to  purchase  the  property.  There  are no
additional  material capital  commitments to be made by the Company with respect
to this project.  The joint venture operating entity is owned 95% by the general
partner,  which is owned by Apollo  and  Watermark,  and 5% by the  Company as a
limited  partner.  The Company is  accounting  for this  investment  on the cost
method as all decisions are made by the general partner. In addition, the Apollo
Joint Venture has entered into a letter of intent to acquire the Historic Inn in
Richmond,  Virginia.  As of March 30, 1998, the Company has not made any capital
contributions  with respect to this project.  The Company  anticipates that upon
the  acquisition of the Historic Inn,  capital  contributions  will  approximate
$135,000.  The  Company  will fully  renovate  and  refurbish  these  properties
pursuant to a contract with the Apollo Joint Venture operating entity,  which is
expected  to  generate  approximately  $18 million of revenue for the Company in
1998.

         In  November  1997,  the  Company  formed  a wholly  owned  subsidiary,
Hospitality Construction Corporation ("HCC") which is based in Atlanta, Georgia.
HCC  specializes  in projects such as new  construction  or  "footprint"  moving
(redesignation of walls and related remodeling), unlike HRB which specializes in
renovation  and  upgrading  existing  facilities.   HCC  will  also  manage  the
renovation projects under the Apollo Joint Venture and other properties in which
the Company may acquire an  ownership  interest.  HCC has  retained a management
team with  significant  related  experience in the  construction  industry.  The
building construction industry is highly competitive and HCC competes with large
and  small  contractors.  Industry  competition  occurs  in a number  of  forms,
including fee levels,  quality of service and degree of risk  assumption.  There
can be no assurance that any construction  project will be completed in a timely
manner or within budget.

         On January 6, 1998,  the Company  reached an  agreement in principle to
enter into a master development agreement with Prime Hospitality Corp. ("Prime")
to develop 20 hotel  properties  over a two-year  period  under the  AmeriSuites
brand name. Under the proposed agreement, the Company will perform the front-end
construction  for  the  20  AmeriSuites   properties.   Front-end   construction
responsibilities  include  identification  of  target  markets,   specific  site
identification  through its  wholly-owned  subsidiary  HWS Real Estate  Advisory
Group, Inc. ("HWS REAG"),  negotiation,  due diligence,  entitlement,  planning,
zoning and other approval requirements, selection of contractors, and design and
construction of new hotels, as well as development,  construction and purchasing
services  required  for  each  project.   Prime  will  provide  project  design,
management  and franchise  services once each property is complete.  The Company
and Prime will be equally responsible for the financing  requirements (up to $30
million  each) and will each have a 50% equity  interest in the new  hotels.  In
December  1997,  the  Company  formed  a  wholly-owned  subsidiary,  Hospitality
Development Services Corporation ("HDS"), based in New York, New York, to manage
the Prime project and any other hotel  development  projects in the future.  HDS
has  retained a  management  team with  significant  related  experience  in the
development  industry.  New project development is subject to a number of risks,
including  risks of  construction  delays or cost  overruns  which may  increase
project  costs;  receipt  of zoning,  occupancy  and other  required  regulatory
permits and authorizations;  and the incurring of development costs that are not
pursued to completion.  There can be no assurance that any  development  project
will be completed in a timely manner or within budget.

         On January 9, 1998,  the Company  completed the  acquisition  of Bekins
Distribution  Services,  Inc. ("Bekins"),  a leading provider of transportation,
warehousing  and  installation  services  to a variety of  customers  worldwide.
Founded in 1969, Bekins is a logistical services company that serves clients who
are opening,  renovating  or relocating  facilities by assuring that  materials,
fixtures,  furniture and merchandise are moved from multiple vendor locations to
their ultimate  destinations in a controlled  orderly sequence so that each item
can be  installed on schedule.  The  purchase  price of Bekins of  approximately
$11,000,000  consisted of 514,117  shares of Common Stock and the  assumption of
certain Bekins' debt. The  acquisition  will be accounted for as a purchase with
the results of Bekins included in the consolidated  financial  statements of the
Company from the acquisition date.

         On February 9, 1998,  the  Company,  through  HWS REAG,  purchased  the
assets of Watermark's  real estate advisory  business,  consisting  primarily of
development contracts. Watermark is an international management company

                                       -4-
<PAGE>
that is the general partner and manages Watertone  Holdings LP, a shareholder of
the Company. The purchase price for such business was $1,500,000 and its results
will be included in the  consolidated  financial  statements of the Company from
the acquisition date.

         On March 6, 1998,  the Company  entered  into a joint  venture with ING
Realty Partners ("ING Joint  Venture"),  to acquire the Clarion Quality Hotel in
Chicago,  Illinois.  The Company  anticipates that its capital commitment to the
ING Joint  Venture will  approximate  $2.1 million.  In addition,  the ING Joint
Venture  obtained  financing for $38 million to fund the purchase of the Clarion
as well as the renovation and  refurbishment  costs. HCC will fully renovate and
refurbish this property pursuant to a contract with the ING Joint Venture, which
is expected to generate  approximately $17 million of revenue for the Company in
1998.

         Financial  information about the Company's business segments appears in
Footnote 16 to the Consolidated  Financial Statements in Part II, Item 8 of this
report.

SALES AND MARKETING

         The Company's  sales and  marketing  strategy is to obtain and maintain
strategic  alliances  with hotel chains and  franchises and to focus on customer
needs to upscale full service hotels with a global presence.

         The Company's  sales and marketing  efforts are  coordinated  by senior
executives of the Company,  together with  salespersons who contact and maintain
relationships  with  appropriate  hotel  personnel.  Because  of  the  Company's
commitment to service and customer relationships,  the majority of the Company's
business comes from referrals and repeat customers.

COMPETITION

         Servicing the hospitality  industry is a highly  competitive  business,
with  competition  based  largely  on  price  and  quality  of  service.  In its
renovation business,  the Company primarily competes with small, closely held or
family owned businesses.  In its purchasing and reorder businesses,  the Company
competes  with  other  independent   procurement  companies,   hotel  purchasing
companies and food service distribution companies. With respect to Parker FIRST,
the Company expects  competition  from a number of hotel  management  companies,
hotel  companies,  franchise  operators and other  entities who are pursuing the
development  of software  systems  that attempt to provide  on-line  procurement
services.  There is no single  competitor or small number of competitors that is
or are dominant in the Company's business areas.  However, some of the Company's
competitors and potential  competitors possess  substantially greater financial,
personnel, marketing and other resources than the Company.

REGULATION

         The Company's renovation business is subject to various federal,  state
and local laws and regulations, pursuant to which it is required to, among other
things,  obtain licenses and general liability  insurance,  workers compensation
insurance  and surety  bonds.  The  Company  believes  that it is  currently  in
compliance with these laws and regulations in those states in which it currently
operates.  There are a number of states in which the  Company  operates  where a
license is not required. The Company's renovation business currently operates in
27  states  and has  applications  pending  in an  additional  9 states  and the
District of Columbia.

         The Company's  procurement business is subject to regulation by various
state laws and regulations and international  customs,  duties, taxing and other
authorities  that regulate the import and  distribution of goods.  Domestically,
the freight carrier provides bills of lading and other documentation that record
the pick-up,  shipping and delivery of  merchandise  purchased by the Company on
behalf  of its  clients.  Internationally,  the  Company  must  comply  with the
individual county's requirements as they relate to commercial documentation. The
Company  believes  that  it  is  currently  in  compliance  with  the  laws  and
regulations in those states and countries in which it currently operates.

                                       -5-

<PAGE>
DEPENDENCE ON CUSTOMERS

         Most of the Company's  customers are in the  hospitality  industry with
few of  them  accounting  for a  substantial  portion  of the  Company's  annual
revenues.  During the year ended December 31, 1997, one customer, a high-ranking
government  official  of the  United  Arab  Emirates,  accounted  for 14% of the
Company's net revenues.  During the year ended  December 31, 1996, two customers
accounted for 49% and 31% of the Company's net revenues. In 1995, four customers
accounted for 23%, 19%, 18% and 14% of net revenues. As the Company continues to
grow and expand its  renovation  business and diversify  its  offerings  through
acquisitions,  the Company believes its dependence on significant customers will
decrease.  There are no  assurances  that either  continued  growth or decreased
dependence on significant customers will occur.

EMPLOYEES

         As of December 31, 1997, the Company employed 257 employees.  A typical
renovation  project is staffed by a field supervisor,  who hires  subcontractors
and laborers specifically for the particular project. Each project is staffed by
trade  subcontractors  that may or may not be unionized.  The Company  purchases
workman's compensation insurance for each of its projects.  Every contractor and
subcontractor is required to sign the Company's standard contract before working
on a project.  None of the Company's  employees are  represented by labor unions
and the Company believes that its relationship with its employees is good.

ITEM 2.  DESCRIPTION OF PROPERTIES

         The Company  maintains its executive  office at 450 Park Avenue,  Suite
2603, New York,  New York 10022,  where it occupies  approximately  6,000 square
feet in a multi-story  office  complex.  The Company has entered into a ten-year
lease,  which expires in January 2007, with an  unaffiliated  lessor pursuant to
which it currently pays an annual fixed rental of $278,000.

         HRB  maintains  offices at 1840  Century  Park East,  10th  Floor,  Los
Angeles, California, 90067, where it occupies approximately 7,400 square feet in
a multi-story  office  complex.  HRB has entered into a five-year  lease,  which
expires  in  March  2003,  with an  unaffiliated  lessor  pursuant  to  which it
currently  pays an annual  fixed  rental  of  approximately  $208,000.  HRB also
maintains a satellite office in Coral Springs, Florida.

         LPC and Parker Reorder maintain their executive offices at 550 Biltmore
Way, Coral Gables, Florida, 33134. LPC occupies approximately 18,400 square feet
under a lease which expires in August 2002 at an annual fixed rental of $412,000
(exclusive of rent  adjustments).  LPC also maintains  satellite  offices in Los
Angeles,  California,  Singapore  and  South  Africa.  Parker  Reorder  occupies
approximately 7,300 square feet under a lease which expires in September 2001 at
an annual fixed rental of $199,500.

         HCC maintains its executive offices at 1780 Riverwood,  3350 Cumberland
Circle,  Atlanta,  Georgia where it occupies approximately 3000 square feet in a
multi-story  office  complex.  HCC has entered  into a  five-year  lease with an
unaffiliated  lessor that  expires in October  2002 at an annual fixed rental of
approximately $78,000.

         HDS maintains its executive offices at 711 Third Avenue,  New York, New
York where it occupies  approximately  4,600 square feet under a five-year lease
which  expires  in  December  2002 at an annual  fixed  rental of  approximately
$145,000.

         Bekins  maintains its executive  offices at 7711 Bonhomme  Avenue,  St.
Louis,  Missouri 63105 and warehouse locations in Las Vegas, Nevada and Orlando,
Florida. HWS REAG maintains its executive offices at 225 West Washington Street,
Chicago, Illinois 60606 with satellite offices in Denver, Colorado and Stamford,
Connecticut.

                                       -6-

<PAGE>
ITEM 3.  LEGAL PROCEEDINGS

         The Company is a defendant in various  litigation  in the normal course
of  business.  Although  the  outcome of  litigation  cannot be  predicted  with
certainty,  in the opinion of management  based on the facts known at this time,
the resolution of such litigation is not anticipated to have a material  adverse
effect on the financial position or results of operations of the Company.

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

         NONE


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         (a) MARKET  INFORMATION.  The Common  Stock has traded on the  American
         Stock  Exchange  under the symbol  "HWS" since  September  18, 1997 and
         prior  thereto  traded on the NASDAQ  SmallCap  Market under the symbol
         "ROOM." The following table sets forth, for the periods indicated,  the
         range of high and low bid  prices of the  Common  Stock for the  fiscal
         periods specified.

                                               HIGH                      LOW

FISCAL 1996
First Quarter..............................  $ 1-11/16                $   5/8
Second Quarter.............................      2-1/8                 1-9/16
Third Quarter..............................     3-3/16                  1-5/8
Fourth Quarter.............................      6-7/8                  2-5/8

FISCAL 1997
First Quarter..............................  $ 8-11/16               $5-15/16
Second Quarter.............................      9-3/8                  5-3/8
Third Quarter..............................    14-3/16                  7-3/8
Fourth Quarter.............................   13-15/16                  8-1/2

         On September  14,  1998,  the last  reported  sales price of the Common
         Stock on the American Stock Exchange was $4.00 per share.

         (B) HOLDERS.  As of September  14, 1998,  there were  approximately  99
         record holders and approximately 1,900 beneficial holders of the Common
         Stock.

         (C) DIVIDENDS.  The Company has not paid or declared any dividends upon
         its Common  Stock  since its  inception  and does not intend to pay any
         dividends upon its Common Stock in the foreseeable  future. The payment
         by the Company of  dividends,  if any, in the future  rests  within the
         discretion  of its Board of  Directors  and will  depend,  among  other
         things, upon the Company's earnings,  its capital  requirements and its
         financial condition, as well as, other relevant factors.


                                       -7-
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA (A)

<TABLE>
<CAPTION>

                                                           YEARS ENDED DECEMBER 31,
                                                                (IN THOUSANDS)
                                              1993              1994              1995              1996               1997
                                              ----              ----              ----              ----               ----
<S>                                         <C>             <C>              <C>              <C>             <C>     
Net Revenues                                $  2,354        $    524         $  4,980         $ 24,367        $ 85,442
Income (loss) from continuing
   operations                                    526          (1,285)            (380)           1,907            (844)
Basic earnings (loss) from
   continuing operations per
   common share                                  .17            (.28)            (.07)             .27            (.13)
Diluted earnings (loss) from
   continuing operations per
   common share                                  .17             (b)              (b)              .27             (b)
Total assets                                   2,565           4,492           10,031           12,750          84,268
Long-term debt                                   450            --               --               --              --
Preferred Stock                                 --              --               --               --             5,000
</TABLE>

(a)      No cash dividends were declared during the five-year  period  presented
         above.  See Item 1.  DESCRIPTION  OF BUSINESS for a description  of all
         acquisitions  during the  five-year  period.  All amounts  presented in
         thousands except for earnings (loss) per common share.
(b)      Antidilutive.

ITEM 7.  MANAGEMENT  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS
         OF OPERATIONS

OVERVIEW

         From its inception in 1991 to August 1995, the Company's only source of
revenues  was  its  decorative   energy-efficient   lighting   fixture   design,
manufacturing  and  installation  business.  The Company acquired its renovation
business in August 1995 and disposed of its lighting  business in February 1996.
As part of its strategy to further its position as one of the leading  providers
of renovation and procurement  services for the hospitality industry on a global
basis,  the Company  acquired its procurement and reorder  businesses in January
1997. As a result of this  significant  change in the company's  business focus,
period to period historical comparisons are not considered meaningful.

         Additionally,  historical  comparisons  are not  considered  meaningful
because revenue recognition  methodologies vary across the Company's businesses.
The Company  recognizes all revenues  associated with a renovation  project on a
percentage of completion basis, as if the Company were a general contractor.  As
part of this  process,  the  Company  develops  a  complete  scope of work to be
performed and invoices its clients on a monthly or  bi-monthly  basis as work is
performed.  The Company's cost of renovation services has been relatively stable
over the past two years. In contrast to the Company's  recognition of renovation
revenues,  the Company recognizes  procurement  revenues in three ways: (i) when
the  Company is a  principal,  during  which it  functions  as a  purchaser  and
reseller of products,  the Company  recognizes all revenues  associated with the
products it purchases at the time of shipment of the  respective  product,  (ii)
when the Company  acts as an agent only,  service  fee income is  recognized  as
revenue at the time the service is provided, and (iii) when the Company provides
these  services under  long-term  contracts,  earnings are recognized  under the
percentage of completion method,  based on efforts expended over the life of the
contract.  In each case, the Company charges its clients a procurement fee based
upon the amount of time and effort it expects to spend on a project. The Company
intends to continue to expand its role as a purchaser  and reseller  because the
Company believes that it can enter into more advantageous  arrangements with its
vendors  when  acting as  principal  rather than agent.  Customer  deposits  and
advances to vendors increased during 1997 due to the

                                       -8-

<PAGE>
acquisition of LPC. In addition,  such amounts  increased over historical levels
realized by LPC and are likely to  continue  to increase as the Company  expands
its  role  as a  principal  rather  than  as an  agent.  Under  each  method  of
procurement  revenue  recognition,  profits  primarily  include only procurement
service fees. The Company  realizes reorder revenue based on the fees it charges
its clients for services rendered.

RESULTS OF OPERATIONS: FISCAL 1997 COMPARED TO FISCAL 1996.

         Revenues  for the  year  ended  December  31,  1997  were  $85,441,712,
compared to  $24,367,112  for 1996. The increase in revenue  resulted  primarily
from the acquisition of LPC and Parker Reorder in January 1997.

         Gross profit for the year ended December 31, 1997 was  $13,960,717,  or
16.3% of revenues,  compared to $6,077,188,  or 24.9% of revenues, for 1996. The
decrease  in  gross  profit  as a  percent  of  revenues  in 1997 was due to the
addition of LPC and Parker Reorder,  whose  purchasing  operations  operate at a
lower  gross  profit  percentage  than  the  Company's  renovation  business.  A
significant  portion of its purchasing revenues and costs included the resale of
furniture and fixtures at little or no markup.  The Company's  purchasing income
is the result of fees  charged to its clients  based upon the amount of time and
effort it expects to spend on projects.

         Selling,  general and  administrative  ("SG&A")  expenses  for the year
ended  December 31, 1997 were  $13,776,081,  or 16.1% of  revenues,  compared to
$3,218,520,  or 13.2% of revenues,  for 1996.  Included in SG&A expenses for the
years ended December 31, 1997 and 1996 were $778,825 and $383,922, respectively,
of amortization of goodwill and other  intangible  assets on  acquisitions.  The
increase  in SG&A  expenses  in 1997 was due to the  addition  of LPC and Parker
Reorder  as well  as the  development  of an  administrative  infrastructure  to
control future growth.

         Income  from  operations  for the  year  ended  December  31,  1997 was
$184,636,  compared to $2,858,668, for 1996. Operating profits decreased in 1997
due to an increase in SG&A  expenses and a decrease in gross profit  percentage.
As an inducement to enter into the Apollo Joint  Venture,  the Company issued to
Apollo a warrant to purchase  750,000  shares of common stock,  of which 250,000
shares were  exercisable  upon  entering  into the agreement in May 1997 and the
remaining shares become exercisable based on incremental revenue to the Company.
The fair value of the warrants for the 250,000 shares were recognized as warrant
expense in 1997 in the amount of $1,287,500.

         The provision for income taxes for the year ended December 31, 1997 was
$227,988,  compared to $926,325  for the same period last year.  The decrease in
the  provision  for income taxes was  primarily due to decrease in income (loss)
before income taxes.  For 1997,  although the Company had a loss from continuing
operations  before income taxes, an income tax provision was recorded  primarily
due to the  non-deductibility of goodwill amortization and state and local taxes
payable.

         The net  loss for the  year  ended  December  31,  1997  was  $843,649,
compared to net income of  $1,842,678,  for 1996. As disclosed in Note 14 to the
consolidated financial statements,  if the Company accounted for its stock-based
employee  compensation plans using the fair value-based method,  rather than the
permitted   intrinsic   value-based   method,  the  net  loss  would  have  been
approximately  $2,031,000 as compared to the reported net loss of  approximately
$844,000.

RESULTS OF OPERATIONS: FISCAL 1996 COMPARED TO FISCAL 1995
(PERIOD FROM AUGUST 1, 1995 TO DECEMBER 31, 1995).

         Revenues  for the  year  ended  December  31,  1996  were  $24,367,112,
compared  to  $4,980,291,   for  1995.   Revenues  for  the  Company   increased
significantly  due to the  growth  in the  Company's  renovation  business  from
increased  sales and marketing  efforts and the  establishment  of the Company's
name in the  hospitality  industry.  The 1995  revenues were for the five months
ended  December  31,  1995,  the  period  for  which the  Company  owned the HRB
business.

                                       -9-

<PAGE>
         Gross profit for the year ended  December 31, 1996 was  $6,077,188,  or
24.9% of revenues, compared to $1,156,512, or 23.2% of revenues, for 1995.

         SG&A expenses for the year ended December 31, 1996 were $3,218,520,  or
13.2% of  revenues,  compared to  $1,619,189,  or 32.5% of  revenues,  for 1995.
Included in the SG&A expenses for the years ended December 31, 1996 and December
31, 1995 was $383,922 and $166,048,  respectively,  of  amortization of goodwill
for the acquisition of HRB. The Company  believes that these costs will continue
to increase as its business grows and as it develops a larger  infrastructure to
handle  future  growth.  However,  due to  rapidly  increasing  revenues,  and a
majority of the Company's resources dedicated to operations,  these costs should
continue to decline as a percentage of revenues.

         Income (loss) from  operations for the year ended December 31, 1996 was
$2,858,668,  compared  to  ($462,677)  for the same  period  in 1995.  Operating
profits  increased in 1996 due to larger revenues and the ability of the Company
to maintain low SG&A expenses as a percentage of sales. The loss from operations
for 1995 is the result of increased overhead in an unsuccessful  attempt to grow
the lighting business that was subsequently discontinued.

         Income tax expense for the year ended  December 31, 1996 was  $926,325,
compared to $25,000 for the same period in 1995.  The 1996  expense is below the
federal and state statutory tax rates due mainly to a reduction in the valuation
allowance.

         Net  income  for the year  ended  December  31,  1996  was  $1,842,678,
compared to a net loss of $1,115,969 for the period ended December 31, 1995.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's short-term and long-term liquidity requirements generally
consist of operating  capital for its purchasing  and renovation  businesses and
SG&A  expenses.  The Company  continues to satisfy its  short-term and long-term
liquidity  requirements  with cash  generated  from  operations and funds from a
public  offering of its Common Stock in September 1997. Due to the nature of the
Company's  businesses,  with a majority of its resources  allocated to personnel
for performance of its services, capital requirements are insignificant.

         Net cash provided by operating  activities  was $3,279,325 for the year
ended  December 31, 1997,  compared to net cash used of $1,120,028  for the same
period  last year.  During the year  ended  December  31,  1997,  the  Company's
accounts  receivable  and costs in excess of billing  increased by  $13,543,701.
This  increase  was  partially  offset by an increase  of  accounts  payable and
accrued  liabilities  of  $10,896,395.   Due  to  the  Company's  rapid  growth,
acquisitions,  and the additional work performed on numerous projects,  accounts
receivable  increased  significantly  at  December  31,  1997 when  compared  to
December 31, 1996.  The Company  expects to collect these  receivables  fully in
1997.

         Net cash used by investing  activities  for the year ended December 31,
1997 was  $21,131,147,  compared to net cash  provided of $649,318  for the same
period  last  year.  The  change is  primarily  the  result of the  purchase  of
marketable  securities  with the proceeds of the public  offering in  September,
1997 and the purchase of software for the Parker FIRST system.

         Net cash provided by financing  activities  increased to $29,539,760 in
1997 primarily as a result of the Company's public offering in September, 1997.

         In September 1997, the Company repaid all outstanding  borrowings under
its secured  line of credit with Marine  Midland Bank of New York  ("Bank").  In
March 1998, the Company obtained a $7,000,000 unsecured line of credit.


                                      -10-
<PAGE>
         In January 1997, the Company  acquired 100% of the outstanding  capital
stock  of  LPC.  The  purchase  price  for  LPC,  after  final  adjustments,  of
approximately  $11.65  million  consisted  of 1,250,000  newly issued  shares of
Common Stock and 200,000  shares of 6% convertible  preferred,  $25 stated value
per share,  which are convertible,  on a formula basis, into 1,000,000 shares of
Common Stock (subject to upward  adjustment to a maximum of 4,000,000  shares in
the event that the market  price of the Common  Stock is below $5.00 at the time
of conversion) during the period from January 10, 1998 to January 10, 2000.

         In May 1997, the Company borrowed $2.2 million from Findim  Investments
S.A.  at an interest  rate of 12% per annum in order to  exercise  its option to
purchase 500,000 shares of Common Stock from Tova Schwartz, the Company's former
President and Chief Executive  Officer.  This note was paid in full in September
1997.

         Since January 1, 1996,  the Company has issued 940,750 shares of Common
Stock in private  placements  and through the exercise of options and  warrants,
raising an aggregate of 1,587,755.  During such time, the Company repurchased an
aggregate  of  1,500,000  shares  of Common  Stock  from  Tova  Schwartz  for an
aggregate purchase price of $3,362,500.

         As the  Company  grows  and  continues  to  explore  opportunities  for
strategic alliances and acquisitions,  investment in additional support systems,
including infrastructure and personnel, will be required. The Company expects to
increase  its  costs  and  expenses  in 1998 as it  continues  to  invest in the
development  of  its  businesses.  Although  these  increases  may  result  in a
short-term  reduction in  operating  margin as a  percentage  of  revenues,  the
Company  anticipates that its investments will have a positive impact on its net
revenues  on a  long-term  basis.  The Company  anticipates  making  substantial
expenditures as it continues to explore expansion though strategic alliances and
acquisitions.  The Apollo  Joint  Venture  has  acquired  the  Warwick  Hotel in
Philadelphia,  Pennsylvania, and has entered into a letter of intent to purchase
a hotel property in Richmond,  Virginia.  The Company does not anticipate having
to make  additional  capital  commitments  related to these Apollo Joint Venture
acquisitions.  The ING Joint  Venture has acquired the Clarion Hotel in Chicago,
Illinois  and the Company  anticipates  that its capital  commitment  to the ING
Joint Venture will approximate $2.1 million. In addition, the Company reached an
agreement in principle to enter into a master development  agreement with Prime,
for which the  Company  and Prime  will be  equally  responsible  for  financing
requirements  of up to $30 million  each.  While the Company does not  presently
have  sufficient  resources to fund its  commitment,  it believes that resources
will be available at reasonable terms.

         To  support  the  Company's  growth,  as well as to  support  potential
acquisitions  of  hospitality-related  businesses and the formation of strategic
alliances,  the  Company  completed  a  public  offering  in  September  1997 of
3,450,000  shares of Common  Stock.  The net  proceeds  of the  offering,  after
deducting applicable issuance costs and expenses were $32,126,630.  A portion of
the  proceeds  was  used to repay  short-term  indebtedness  with the  remainder
available  for general  corporate  purposes,  including the financing of working
capital needs and business development. In conjunction with the public offering,
the underwriter was granted a warrant to purchase 356,723 shares of Common Stock
at an exercise  price of $12.00 per share.  The warrant is  exercisable  in full
after one year  (September  17,  1998) and expires on September  17,  2002.  The
number of shares  issuable under this warrant are subject to change upon certain
events, among them, the declaration of dividends,  stock splits or reverse stock
splits.

         The Company believes its present cash position,  including  anticipated
increasing  revenues  and cash on hand,  and its  ability  to obtain  additional
financing as necessary,  will allow the Company to meet its anticipated  capital
commitments  and its  short-term  operating  needs for at least the next  twelve
months.

                                      -11-

<PAGE>
INFLATION

         Inflation and changing  prices  during the current  fiscal year did not
significantly  affect  the major  markets  in which  the  Company  conducts  its
business. In view of the moderate rate of inflation, its impact on the Company's
business has not been significant.

ACCOUNTING PRONOUNCEMENTS

         The Financial  Accounting  Standards Board has issued Statement No. 130
"Reporting  Comprehensive  Income"  and  Statement  No. 131  "Disclosures  about
Segments of an Enterprise  and Related  Information",  both of which the Company
will adopt in 1998 and require restatement of prior periods presented.

         Statement  No. 130  establishes  standards for reporting and display of
comprehensive  income  and its  components  in a separate  financial  statement.
Comprehensive  income  generally  includes net income as reported by the Company
adjusted for foreign currency  translation  adjustments and unrealized gains and
losses  on  marketable  securities  that are  "available  for  sale,"  which are
currently reported in the stockholders equity section of the balance sheet.

         Statement  No. 131  requires  that the  company  report  financial  and
descriptive  information  about its reportable  operating  segments in financial
statements issued to shareholders for interim and annual periods.  The Statement
also establishes  standards for related disclosures about products and services,
geographic areas and major customers.  Under this Statement,  operating segments
are components of an enterprise  about which separate  financial  information is
available  that is regularly  evaluated by the  enterprise's  chief  operational
decision-maker   in  deciding  how  to  allocate   resources  and  in  assessing
performance.  While the Company  continues  to evaluate  the adoption of the new
standard,  it is  likely  that  its  currently  reported  business  segments  of
Renovation,  Purchasing and General  Corporate will be maintained with additions
for any acquisitions.

         The Company does not maintain sophisticated data processing support and
management  information  systems.  Parker FIRST,  the Company's new  proprietary
software  product,  has been  developed and  maintained by Parker  Reorder.  The
Company has made a  comprehensive  assessment  of the impact of the Year 2000 on
its business  operations.  The Parker FIRST software was designed to account for
the Year 2000 and beyond.  This software  product is anticipated to be in use by
hotel  companies  during the  second  quarter of 1998.  Other  software  systems
currently in use by the Company will be upgraded,  as  necessary,  over the next
year. The Company does not expect that the cost of ensuring Year 2000 compliance
will have a material  adverse  impact on its  financial  position  or results of
operations in the current year or in the future years.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         NONE

ITEM 8.  FINANCIAL STATEMENTS

         See Index to Financial Statements.

ITEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

         On  March  14,  1996,  the  Company   dismissed   Arthur  Andersen  LLP
("Andersen")  as its independent  accountants.  The Company's Board of Directors
approved  such  dismissal.  Andersen's  accountant's  report  on  the  financial
statements  of the  Company  for the two prior  years did not contain an adverse
opinion or a  disclaimer  of opinion  and was not  qualified  or  modified as to
uncertainty,  audit  scope,  or  accounting  principles.  There  were  no  other
reportable  events or disagreements  with Andersen to report in response to Item
304 of Regulation S-K.


                                      -12-
<PAGE>
         On March  15,  1996,  BDO  Seidman,  LLP  ("BDO")  was  engaged  as new
independent  accountants  to the  Company.  On November  19,  1997,  the Company
dismissed BDO as its independent  accountants.  The Company's Board of Directors
approved such dismissal.  BDO's accountant's report on the financial  statements
of the Company  for the past two years did not  contain an adverse  opinion or a
disclaimer of opinion and was not qualified or modified as to uncertainty, audit
scope,  or  accounting  principles.  There  were no other  reportable  events or
disagreements with BDO to report in response to Item 304 of Regulation S-K.

         On November 20, 1997,  Andersen was engaged as independent  accountants
to the Company.

                                      -13-

<PAGE>
                                     PART IV

ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K.

(a)      Financial Statements:
         *        Hospitality Worldwide Services, Inc. and Subsidiaries
         *        Report of Independent Public Accountants
         *        Consolidated Financial Statements

(b)      Exhibits

         EXHIBIT
          NUMBER                           EXHIBITS
            3.1        Certificate of Incorporation,  as amended, of the Company
                       (Incorporated   by   reference  to  Exhibit  3.1  to  the
                       Company's Form 10-Q for the quarter ended June 30, 1998).
            3.2        Amended and Restated By-laws of the Company (Incorporated
                       by  reference to Exhibit 3.2 to the  Company's  Form 10-Q
                       for the quarter ended June 30, 1998).
            4.1        Specimen  Common  Stock   Certificate   (Incorporated  by
                       reference  to Exhibit 4.1 to the  Company's  Registration
                       Statement on Form SB-2, No. 33-7094-NY).
            4.2        Rights  Agreement  dated as of November 24, 1997,  by and
                       between  the  Company and  Continental  Stock  Transfer &
                       Trust Company,  as rights agent (the "Rights  Agreement")
                       (Incorporated by reference to the Company's  Registration
                       Statement  on Form  8-A  filed  with  the  Commission  on
                       December 2, 1997).
            4.3        Amendment  to  Rights  Agreement  dated  January  7, 1998
                       (Incorporated   by   reference  to  Exhibit  4.3  of  the
                       Company's  Form  10-K for the  year  ended  December  31,
                       1997).
           10.1        Asset  Purchase  Agreement  dated as of April 1, 1995, by
                       and   among  AGF   Interior   Services   Co.,   Watermark
                       Investments  Limited  (Bahamas),   Watermark  Investments
                       Limited  (Delaware),  HRB, the Company and Tova  Schwartz
                       (Incorporated  by  reference  to  the  Company's  Current
                       Report on Form 8-K dated August 22, 1995).
           10.2        Divestiture,   Settlement  and  Reorganization  Agreement
                       dated as of February 26, 1996,  by and among the Company,
                       HRB, Watermark  Investments Limited (Bahamas),  Watermark
                       Investments  Limited  (Delaware),  AGF Interior  Services
                       Co.,  Tova  Schwartz,  Alan G.  Friedberg  and  Guillermo
                       Montero (Incorporated by reference to Exhibit 10.2 of the
                       Company's  Form  10-KSB for the year ended  December  31,
                       1995).
           10.3        Memorandum Agreement dated April 12, 1996, by and between
                       the Company and Watermark  (Incorporated  by reference to
                       Exhibit  10.3 of the  Company's  Form 10-KSB for the year
                       ended December 31, 1995).
           10.4        Bill of Sale and Assumption  Agreement dated February 26,
                       1996,  by and  between  the  Company  and  Tova  Schwartz
                       (Incorporated   by  reference  to  Exhibit  10.4  of  the
                       Company's  Form  10-KSB for the year ended  December  31,
                       1995).
           10.5        Consulting  Agreement  dated  February 28,  1996,  by and
                       between  to  Company  and  Resource  Holdings  Associates
                       (Incorporated   by  reference  to  Exhibit  10.6  of  the
                       Company's  Form  10-KSB for the year ended  December  31,
                       1995).
           10.6        Employment  Agreement dated April 1, 1996, by and between
                       the  Company  and  Howard  G.  Anders   (Incorporated  by
                       reference  to Exhibit 10.7 of the  Company's  Form 10-KSB
                       for the year ended December 31, 1995).
           10.7        1996 Stock  Option Plan  (Incorporated  by  reference  to
                       Exhibit 4(a) to the Company's  Registration  Statement on
                       Form S-8 filed on February 12, 1997, File No. 333-21689).
           10.8        Form of Option Agreement for the 1996 Plan  (Incorporated
                       by   reference   to   Exhibit   4(b)  to  the   Company's
                       Registration  Statement on Form S-8 filed on February 12,
                       1997, File No.
                       333-21689).


                                      -14-

<PAGE>
           10.9        Form of Stock  Agreement for the Outside  Directors' Plan
                       (Incorporated   by  reference  to  Exhibit  4(c)  to  the
                       Company's  Registration  Statement  on Form S-8  filed on
                       February 12, 1997, File No. 333-21689).
           10.10       Form of  Option  Granted  to  Officers  (Incorporated  by
                       reference to Exhibit 4(d) to the  Company's  Registration
                       Statement on Form S-8 filed on February  12,  1997,  File
                       No. 333- 21689).
           10.11       Agreement and plan of Merger dated as of January 9, 1997,
                       by and among  Leonard  Parker  Company,  LPC  Acquisition
                       Corp.,  and the Company  (incorporated  by  reference  to
                       Exhibit 2.1 of the Company's  Current  Report on Form 8-K
                       filed January 24, 1997).
           10.12       Employment Agreement, dated as of January 9, 1997, by and
                       among The Leonard Parker Company, the Company and Leonard
                       Parker (Incorporated by reference to Exhibit 10.13 to the
                       Company's  Registration Statement on Form SB-2 filed July
                       22, 1997, No. 333- 31765).
           10.13       Employment Agreement, dated as of January 9, 1997, by and
                       among The Leonard Parker Company, the Company and Douglas
                       Parker (Incorporated by reference to Exhibit 10.14 to the
                       Registration  Statement on Form SB-2 filed July 22, 1997,
                       No. 333-31765).
           10.14       Registration  Rights  Agreement,  date as of  January  9,
                       1997, by and among the Company,  Leonard Parker,  Douglas
                       Parker,  Bradley Parker,  Philip Parker, Gregg Parker and
                       Mitchell  Parker  (Incorporated  by  reference to Exhibit
                       10.18 to the  Company's  Registration  Statement  on Form
                       SB-2 filed July 22, 1997, No. 333-31765).
           10.15       Agreement to Joint Venture,  dated as of May 12, 1997, by
                       and among  Apollo  Real Estate  Advisors  II,  L.P.,  the
                       Registrant  and  Watermark   Investments  Limited,   LLC.
                       (Incorporated  by  reference  to  Exhibit  10.19  to  the
                       Company's  Registration Statement on Form SB-2 filed July
                       22, 1997, No. 333-31765).
           10.16       Warrant  dated May 12,  1997 issued to Apollo Real Estate
                       Advisors II, L.P.  (Incorporated  by reference to Exhibit
                       10.20 to the  Company's  Registration  Statement  on Form
                       SB-2 filed July 22, 1997, No. 333-31765).
           10.17       Agreement  and Plan of  Merger,  dated as of  January  1,
                       1998, by and among the Company,  HWS Acquisition Corp., a
                       Delaware  corporation,  Bekins Distribution Services Co.,
                       Inc.  and the  Sellers  named  therein  (Incorporated  by
                       reference to Exhibit 2.1 the Company's  Current Report on
                       Form 8-K dated January 9, 1998).
           10.18       Registration  Rights  Agreement  dated as of  January  1,
                       1998,  by and among the Company  and the  various  Bekins
                       Shareholders  (Incorporated  by reference to Exhibit 10.1
                       to the  Company's  Current  Report on Form 8-K/A filed on
                       September 16, 1998)
           10.19       Financial Advisory Agreement dated April 10, 1997, by and
                       between  the  Company and  Resource  Holdings  Associates
                       (Incorporated by reference to the Company's  Registration
                       Statement on Form SB-2, No. 333-31765).
           10.20       Master Development Agreement,  dated June 5, 1998, by and
                       between   the  Company   and  Prime   Hospitality   Corp.
                       (Incorporated by reference to Exhibit 10 to the Company's
                       Form 10-Q for the quarter ended June 30, 1998).
            11         Computation of earnings per share (Incorporated herein by
                       reference  to  Note  15  to  the  Company's  Consolidated
                       Financial Statements).
           16.1        Letter  from  Arthur  Andersen  LLP dated  March 19, 1996
                       (Incorporated  by  reference  to  the  Company's  Current
                       Report on Form 8-K/A filed March 25, 1996).
           16.2        Letter  from BDO  Seidman,  LLP dated  November  19, 1997
                       (Incorporated  by  reference  to  the  company's  Current
                       Report on Form 8-K dated November 12, 1997).
            21         Subsidiaries of the Company (Incorporated by reference to
                       Exhibit 21 to the Company's  Form 10-K for the year ended
                       December 31, 1997).
           *27         Financial Data Schedule

---------------
*Filed herewith.


                                      -15-

<PAGE>
(c)      Reports on Form 8-K

Form 8-K dated November 11, 1997, filed with the Commission on December 2, 1997,
reporting Item 5, Other Events.

Form 8-K dated  November 12,  1997,  filed with the  Commission  on December 19,
1997, reporting Item 4, Changes in Registrant's Certifying Accountant.

                                      -16-

<PAGE>
                                   SIGNATURES

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

                                HOSPITALITY WORLDWIDE SERVICES, INC.


Dated: September 15, 1998       By: /S/ ROBERT A. BERMAN
                                    ------------------------------------------
                                Robert A. Berman, Chairman of the Board, Chief
                                Executive Officer, (principal executive officer)
                                and Director

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>

      SIGNATURE                     TITLE                                                 DATE
      ---------                     -----                                                 ----

<S>                           <C>                                             <C> 
/S/ ROBERT A. BERMAN          Chairman of the Board, Chief                    September 15, 1998
------------------------      Executive Officer (principal
Robert A. Berman              executive officer) and Director

/S/ LEONARD F. PARKER         Chairman Emeritus of the Board                  September 15, 1998
------------------------      and Director
Leonard F. Parker             

/S/ DOUGLAS A. PARKER         President and Director                          September 15, 1998
------------------------
Douglas A. Parker

/S/ HOWARD G. ANDERS          Executive Vice President, Howard G.             September 15, 1998
------------------------      Anders Chief Financial Officer,
Howard G. Anders              (principal financial officer, principal
                              accounting officer) and Secretary

/S/ SCOTT A. KANIEWSKI        Director                                        September 15, 1998
------------------------
Scott A. Kaniewski

/S/ LOUIS K. ADLER            Director                                        September 15, 1998
------------------------
Louis K. Adler

/S/ GEORGE ASCH               Director                                        September 15, 1998
------------------------
George Asch

/S/ RICHARD A. BARTLETT       Director                                        September 15, 1998
------------------------
Richard A. Bartlett
</TABLE>


                                      -17-

<PAGE>
ITEM 8.  FINANCIAL STATEMENTS

                          INDEX TO FINANCIAL STATEMENTS

                                                                        PAGE NO.
                                                                        --------

HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARIES

REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                   F-2, F-3

         CONSOLIDATED FINANCIAL STATEMENTS:
                  Balance sheets                                           F-4
                  Statements of operations                                 F-5
                  Statement of stockholders' equity                        F-6
                  Statements of cash flows                            F-7, F-8
                  Notes to consolidated financial statements          F-9-F-23


                                       F-1

<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of
Hospitality Worldwide Services, Inc.


We have  audited the  accompanying  consolidated  balance  sheet of  Hospitality
Worldwide  Services,  Inc.  (a New  York  Corporation)  and  subsidiaries  as of
December  31,  1997,  and the related  consolidated  statements  of  operations,
stockholders'  equity and cash flows for the year then  ended.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Hospitality Worldwide Services,
Inc.  and  subsidiaries  as of  December  31,  1997,  and the  results  of their
operations  and their cash flows for the year then  ended,  in  conformity  with
generally accepted accounting principles.


/s/ Arthur Andersen LLP
-----------------------
Arthur Andersen LLP


New York, New York
March 30, 1998

                                       F-2
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors
Hospitality Worldwide Services, Inc.
New York, New York

We have  audited the  accompanying  consolidated  balance  sheet of  Hospitality
Worldwide Services,  Inc. (formerly Light Savers U.S.A.,  Inc.) and subsidiaries
as of December 31, 1996, and the related consolidated  statements of operations,
stockholders'  equity  and cash  flows for each of the two  years in the  period
ended December 31, 1996. These financial  statements are the  responsibility  of
the Company's  management.  Our responsibility is to express an opinion on these
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 financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
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  financial  position  of  Hospitality
Worldwide Services, Inc. and subsidiary as of December 31, 1996, and the results
of its  operations  and its cash  flows for each of the two years in the  period
ended  December 31, 1996,  in  conformity  with  generally  accepted  accounting
principles.



/s/ BDO Seidman, LLP
--------------------
BDO Seidman, LLP


New York, New York
March 21, 1997

                                       F-3

<PAGE>
              HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                         DECEMBER 31,
                                                                                   1997                        1996
                                                                                   ----                        ----
CURRENT ASSETS:
<S>                                                                             <C>                        <C>        
Cash and cash equivalents                                                       $11,964,129                $   276,191
Marketable securities                                                            18,915,686                         --
Accounts receivable, net of allowance for doubtful
    accounts of $267,595 and $50,000 (Notes 5 and 10)                            21,932,667                  3,134,841
Current portion of note receivable (Note 3)                                         342,144                     70,000
Costs and estimated earnings in excess of billings (Note 6)                       3,420,829                  2,176,907
Advances to vendors                                                               4,255,181                         --
Prepaid and other current assets                                                  1,037,480                    421,303
                                                                                 ----------                 ----------
                  Total current assets                                           61,868,116                  6,079,242
Note receivable, less current portion (Note 3)                                           --                    280,000
Property and equipment, less accumulated depreciation of
    $337,873 and $61,711 (Note 7)                                                 3,547,712                    142,877
Goodwill and other intangibles, less accumulated
    amortization of $1,489,855 and $549,970 (Note 3)                             17,078,180                  6,049,669
Deferred taxes (Note 9)                                                             739,088                     65,280
Other assets                                                                      1,034,595                    133,022
                                                                               ------------               ------------

                                                                                $84,267,691                $12,750,090
                                                                                -----------                -----------
                                          LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable (Note 5)                                                       $16,374,426                 $1,175,068
Accrued and other liabilities                                                     2,540,222                  1,897,389
Billings in excess of costs and estimated earnings (Note 6)                         295,967                    200,802
Customer deposits                                                                13,323,571                         --
Loan payable  (Note 8)                                                                   --                  1,400,000
Income taxes payable                                                                  7,669                    297,860
                                                                                 ----------               ------------
                           Total current liabilities                             32,541,855                  4,971,119

Commitments and contingencies (Note 11)

STOCKHOLDERS' EQUITY (Notes 13, 14 and 17) 
Convertible preferred stock, $.01 par value, $25 stated value,
    3,000,000 shares authorized,200,000 issued and
    outstanding in 1997, $5,000,000 liquidation preference                        5,000,000                          --
Common stock, $.01 par value, 20,000,000 shares authorized,
    11,345,572 and 7,225,655 issued                                                 113,456                     72,257
Additional paid-in capital                                                       47,519,725                  8,185,410
Treasury stock, 500,000 common shares in 1996                                            --                   (715,000)
Retained earnings (deficit)                                                        (907,345)                   236,304
                                                                              -------------                -----------
                  Total stockholders' equity                                     51,725,836                  7,778,971
                                                                               ------------                -----------
                                                                                $84,267,691                $12,750,090
                                                                                -----------                -----------
</TABLE>

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

                                       F-4

<PAGE>
              HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                          YEAR ENDED DECEMBER 31,
                                                                   1997                1996              1995
                                                                   ----                ----              ----
<S>                                                           <C>                 <C>              <C>
Net revenues (Note 12)                                        $ 85,441,712        $24,367,112      $  4,980,291
Cost of revenues (Notes 10 and 12)                              71,480,995         18,289,924         3,823,779
                                                                ----------         ----------        ----------
         Gross profit                                           13,960,717          6,077,188         1,156,512
Selling, general and administrative expenses                    13,776,081          3,218,520         1,619,189
                                                                ----------          ---------         ---------
         Income (loss) from operations                             184,636          2,858,668          (462,677)
                                                                ----------          ---------        ----------
Other income (expense):
    Interest expense                                              (287,633)           (26,101)          (13,007)
    Interest income                                                774,836              1,141           120,257
    Warrant expense                                             (1,287,500)                --                --
                                                               -----------         ----------        ----------
         Total other income (expense)                             (800,297)           (24,960)          107,250
                                                               -----------        -----------        ----------
         Income (loss) before income taxes                        (615,661)         2,833,708          (355,427)
Provision for income taxes (Note 9)                                227,988            926,325            25,000
                                                                ----------         ----------        ----------
         Income (loss) from continuing operations                 (843,649)         1,907,383          (380,427)
                                                               -----------         ----------       -----------
Discontinued operations:  (Note 4)
    Loss from discontinued operations                                   --            (64,705)         (336,736)
    Loss on disposal of discontinued operations,                        --                 --          (398,806)
                                                                ----------          ---------        ----------
       including provision of $46,000 for operating
       losses during the phase out period
    Loss from discontinued operations                                   --            (64,705)         (735,542)
                                                                ----------         ----------        ----------
Net income (loss)                                             $   (843,649)      $  1,842,678     $  (1,115,969)
                                                              ------------       ------------     -------------
Basic earnings (loss) per common share:
    Income (loss) from continuing operations                  $      (0.13)      $       0.27     $       (0.07)
                                                              ------------       ------------     -------------
    Discontinued operations:
       Loss from operations                                             --              (0.01)            (0.06)
       Loss on disposal                                                 --                 --             (0.07)
                                                               -----------       ------------      ------------
                                                                        --              (0.01)            (0.13)
                                                              ------------     --------------     -------------
    Net income (loss)                                        $       (0.13)     $         .26     $       (0.20)
                                                             -------------      -------------     -------------
Diluted earnings (loss) per common share:
    Income (loss) from continuing operations                           (a)      $        0.27               (a)
                                                             -------------      -------------     -------------
    Discontinued operations:
       Loss from operations                                              --             (0.01)               (a)
       Loss on disposal                                                  --                 --               (a)
                                                                         --             (0.01)               (a)
    Net income (loss)                                                   (a)     $        0.26                (a)
                                                               ------------      -------------     -------------

Weighted average common shares outstanding                       8,885,570          6,983,333         5,673,600 
                                                               ------------      ------------      ------------
Weighted average common and common equivalent                    9,876,802          7,131,915         5,700,324
    shares outstanding                                           ---------          ---------         ---------
</TABLE>

(a)      Antidilutive

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

                                       F-5

<PAGE>
              HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
                            PREFERRED STOCK             COMMON STOCK
                          ------------------         -----------------
                                                                                               Unrealized
                          Number                Number                              Additional   Loss on      Retained    Total
                            of       Stated       of         Par       Treasury       Paid in   Marketable   Earnings  Stockholders'
                          Shares      Value     Shares      Value        Stock        Capital   securities   (Deficit)   Equity
------------------------------------------------------------------------------------------------------------------------------------
BALANCE,
<S>                    <C>      <C>         <C>          <C>             <C>      <C>               <C>      <C>         <C>        
 JANUARY 1, 1995            --       $  --   4,625,655    $46,257        $  --     $4,590,285    $(52,938)   $(490,405)  $4,093,199
Issuance of 2.5
 million shares in
 connection with
 acquisition                --          --   2,500,000     25,000           --      3,275,000          --           --    3,300,000
Sale of available-for-
  sale securities           --          --          --         --           --             --      52,938           --       52,938
Net loss                                                                                                    (1,115,969)  (1,115,969)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE,
 DECEMBER 31,
1997                        --          --   7,125,655     71,257           --      7,865,285          --   (1,606,374)   6,330,168
Purchase of treasury
  stock                     --          --  (1,000,000)        --   (1,152,500)           --           --           --   (1,152,500)
Sale of treasury
stock                       --          --     500,000         --      437,500         62,500          --           --      500,000
Stock issued in
  settlement of
  service agreements        --          --      75,000        750           --        149,250          --           --      150,000
Stock options issued
  for services              --          --          --         --           --         44,000          --           --       44,000
Exercise of stock
  options and
  warrants                  --          --      25,000        250           --         64,375          --           --       64,625
Net income                                          --         --           --             --                1,842,678    1,842,678
------------------------------------------------------------------------------------------------------------------------------------
BALANCE,
 DECEMBER 31,
1996                        --          --   6,725,655     72,257     (715,000)     8,185,410          --      236,304    7,778,971
Purchase of treasury
  stock                     --          --    (500,000)        --   (2,210,000)            --          --           --   (2,210,000)
Exercise of stock
  option and
  warrants                  --          --     419,917      4,199           --      1,018,931          --           --    1,023,130
Issuance of shares in
  connection with
  acquisition          200,000   5,000,000   1,250,000     12,500           --      6,940,000          --           --   11,952,500
Stock issued in
  connection with
  offering, net of
  expenses                  --          --   3,450,000     24,500    2,925,000     27,379,246          --           --   30,328,746
Income tax benefit
  from warrants
  exercised                 --          --          --         --           --        360,349          --           --      360,349
Warrants issued for
  services                  --          --          --         --           --      3,635,789          --           --    3,635,789
Net income                  --          --          --         --           --             --          --     (843,649)    (843,649)
Preferred dividends         --          --          --         --           --             --          --     (300,000)    (300,000)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE,
 DECEMBER 31,
1997                   200,000  $5,000,000  11,345,572   $113,456        $  --    $47,519,725       $  --    $(907,345) $51,725,836
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

                                       F-6
<PAGE>
              HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                YEAR ENDED DECEMBER 31,
                                                                        1997                   1996                 1995
                                                                        ----                   ----                 ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                 <C>                   <C>                 <C>
  Net income (loss)                                                 $ (843,649)           $ 1,842,678         $(1,115,969)
  Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:
    Depreciation and amortization                                    1,114,001                404,114             178,801
    Provision for losses on accounts receivable                             --                     --             125,366
    Loss on disposal of discontinued operations                             --                     --             398,806
    Realized loss on sale of securities                                     --                     --              52,938
    Stock based compensation charge                                  1,593,420                 44,000                  --
    Deferred income tax provision                                     (668,422)               (65,280)                 --
  (Increase) decrease in current assets:
    Accounts receivable                                            (12,299,779)            (1,548,005)           (539,439)
    Current assets of discontinued operations                               --                145,317            (145,317)
    Costs in excess of billings                                     (1,243,922)            (2,047,173)           (129,734)
    Advances to vendors                                             (4,255,181)                     --                 --
    Prepaid and other current assets                                    36,528               (290,632)            182,029
    Increase in other assets                                          (901,573)               (81,014)             (9,632)
  Increase (decrease) in current liabilities:
    Accounts payable                                                10,579,593                134,481             495,158
    Accrued and other liabilities                                      316,802                862,204             360,172
    Billings in excess of costs                                         95,165               (419,772)           (640,175)
    Customer deposits                                               10,046,533                     --                  --
    Accrued loss on disposal of discontinued operations                     --               (398,806)                 --
    Income taxes payable                                              (290,191)               297,860                  --
                                                                    ----------             ----------           ---------
    Net cash provided by (used in) operating activities              3,279,325             (1,120,028)           (786,996)
                                                                     ---------            -----------          ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Sale of marketable securities                                           --                     --           3,047,243
    (Purchase) sale of short term marketable securities            (18,915,686)               715,000            (715,000)
    Cash acquired upon acquisition, net of acquisition costs           479,061                     --             125,966
    Purchase of property and equipment                              (2,694,522)               (65,682)            (40,819)
                                                                   -----------           ------------          ----------
    Net cash provided by (used in) investing activities            (21,131,147)               649,318           2,417,390
                                                                  ------------            -----------           ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from borrowings on loan payable                         3,180,000              1,400,000             455,926
    Repayment of loan payable                                       (4,580,000)              (455,926)                 --
    Purchase of treasury stock                                      (2,210,000)            (1,152,500)                 --
    Proceeds from sale of treasury stock                                    --                500,000                  --
    Note receivable                                                         --                     --          (2,574,521)
    Proceeds from stock offering                                    32,126,630                     --                  --
    Proceeds from exercise of stock options and warrants             1,023,130                 64,625                  --
                                                                   -----------             ----------          ----------
    Net cash provided by (used in) financing activities             29,539,760                356,199          (2,118,595)
                                                                    ----------            -----------         -----------
NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                                       11,687,938               (114,511)           (488,201)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                         276,191                390,702             878,903
                                                                   -----------             ----------         - ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD                           $11,964,129            $   276,191         $   390,702
                                                                   -----------            -----------         -----------
</TABLE>


                                       F-7

<PAGE>
              HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                YEAR ENDED DECEMBER 31,
                                                                    1997                   1996                 1995
                                                                    ----                   ----                 ----
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW
INFORMATION:
Cash paid during the period for:
<S>                                                                  <C>                  <C>                 <C>        
    Interest                                                         $ 178,113            $    26,101         $    12,486
    Income taxes                                                       785,127                696,324                  --
NON-CASH INVESTING & FINANCING
ACTIVITIES:
Fair value (including goodwill) of net assets acquired              11,166,229                     --           5,450,000
Stock issued for assets acquired                                    11,952,500                     --          (3,300,000)
Note payable for assets acquired                                            --                     --          (2,150,000)
Issuance of stock for repayment of debt                                     --                150,000                  --
Repayment of debt from issuance of stock                                    --               (150,000)                 --
Preferred stock dividends not paid in lieu of purchase
  price reduction for LPC acquisition                                  300,000                     --                  --
Warrants granted and exercisable by Apollo                           1,837,527                     --                  --
Warrants granted to underwriters for stock offering                  1,798,262                     --                  --
</TABLE>



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

                                       F-8

<PAGE>
                      HOSPITALITY WORLDWIDE SERVICES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       ORGANIZATION

         Hospitality  Worldwide  Services,  Inc., formerly known as Light Savers
U.S.A.,  Inc.  (the  "Company"),  was  incorporated  in the State of New York on
October 10, 1991. Through its wholly owned operating  subsidiaries,  the Company
provides interior and exterior cosmetic  renovations and maintenance and acts as
a purchasing  agent and principal for leading  hotel and  hospitality  customers
nationwide.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         PRINCIPLES OF CONSOLIDATION

         The  consolidated  financial  statements  include  the  accounts of the
Company and its wholly owned subsidiaries. The Company also has an investment in
a real estate joint venture,  which is accounted for under the cost method.  All
significant intercompany balances and transactions have been eliminated. Certain
prior  year  balances  have  been  reclassified  in the  consolidated  financial
statements in order to provide a presentation consistent with the current year.

         USE OF ESTIMATES

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  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.  Management  believes that the estimates utilized in preparing
the Company's financial statements are reasonable and prudent,  however,  actual
results could differ from those estimates.

         REVENUE RECOGNITION

RENOVATION

         The Company  determines  renovation  earnings  under the  percentage of
completion  method.  Under this method,  the Company recognizes as earnings that
portion of the total earnings  anticipated from a contract which the cost of the
work  completed  bears to the  estimated  total cost of the work  covered by the
contract. To the extent that contracts extend over more than one year, revisions
in costs and earnings  estimates  during the course of the work are reflected in
the year in which the facts which  require the  revision  become  known.  Due to
uncertainties inherent in the estimation process, it is reasonably possible that
such estimates will be revised over the next year. When a loss is forecasted for
a contract,  the full amount of the anticipated loss is recognized in the period
in which it is  determined  that a loss  will  occur.  Claims  are  included  in
earnings from  renovation  contracts at an amount based on the related  contract
costs when realization is probable and the amount can be reliably estimated.

         The Company  continuously  reviews  estimated  earnings from renovation
contracts and makes necessary  adjustments  based on current  evaluations of the
indicated outcome.

         Cost of renovation  contracts  include all direct  material,  labor and
subcontracting  costs, and those indirect costs related to contract  performance
that are identifiable with or allocable to the contracts.


                                       F-9

<PAGE>
PROCUREMENT

         Revenues  are  recognized  three  ways:  (i)  when  the  Company  is  a
principal,  during which it  functions as a purchaser  and reseller of products,
the Company recognizes all revenues associated with the products it purchases at
the time of shipment of the respective product, (ii) when the Company acts as an
agent,  revenue is  recognized  as service fee income at the time the service is
provided,  and (iii) when the Company  provides these  services under  long-term
contracts,  earnings are recognized  under the  percentage of completion  method
based  on  efforts  expended  over  the  life  of the  contract.  Revenues  from
procurement contracts include both resale of product and service fee income.

         Customer  deposits  consist  of  amounts  remitted  to the  Company  by
customers  as  deposits on specific  contracts.  Advances to vendors  consist of
amounts paid by the Company to vendors on specific contracts.

         DEPRECIATION AND AMORTIZATION

         The Company  calculates  depreciation  on property and equipment on the
straight-line method. Estimated useful lives are as follows: office equipment, 5
years; and furniture and fixtures, 10 years.  Leasehold improvements to property
used in the Company's operations are amortized on a straight-line basis over the
lease terms. Maintenance and repairs are expensed currently,  while expenditures
for betterments are capitalized.

         GOODWILL

         Goodwill  is  amortized  on a  straight-line  basis over its  estimated
useful life of 17-30 years.  Goodwill  represents  the costs of  acquisition  in
excess of the fair value of net assets acquired at the date of acquisition.

         EARNINGS PER SHARE OF COMMON STOCK

         In 1997, the Company adopted SFAS No. 128,  "Earnings Per Share," which
replaced the  calculation  of primary and fully diluted  earnings per share with
basic and diluted earnings per share.  Unlike primary earnings per share,  basic
earnings  per share  excludes  any  dilutive  effects of options,  warrants  and
convertible  securities.  Diluted  earnings  per share are very  similar  to the
previously  reported  fully diluted  earnings per share.  All earnings per share
amounts for prior periods have been restated to conform to the new requirements.

         Basic  earnings per common share are based on net income less preferred
stock  dividends  divided  by the  weighted  average  number  of  common  shares
outstanding.  Diluted  earnings  per common  share are  adjusted  to reflect the
assumed  conversion of convertible  preferred  stock and the  elimination of the
preferred  stock  dividends,  if such  conversion is dilutive,  and the weighted
average number of common share equivalents from stock options and warrants.

         INCOME TAXES

         Deferred  income tax assets or  liabilities  are computed  based on the
difference  between the  financial  reporting and income tax bases of assets and
liabilities using the enacted marginal tax rate. Deferred income tax expenses or
benefits  are based on the  changes  in the asset or  liability  from  period to
period.

         CASH EQUIVALENTS

         The Company  considers all highly  liquid  investments  purchased  with
maturities of 90 days or less to be cash equivalents.


                                      F-10
<PAGE>
         MARKETABLE SECURITIES

         Marketable  securities  which consist of commercial  paper and treasury
notes maturing in six months or less are classified as  available-for-sale or as
held-to-maturity,  based on the Company's  intended  holding period.  Available-
for-sale investments are reported at fair value with unrealized gains or losses,
if  any,   reported   as  a  separate   component   of   stockholder's   equity.
Held-to-maturity  investments  are reported at amortized cost. The cost basis of
securities is determined on a specific identification basis in calculating gains
and losses.

         LONG-LIVED ASSETS

         In  1996,  the  Company  adopted  Statement  of  Financial   Accounting
Standards ("SFAS") No. 121,  "Accounting for the Impairment of Long-Lived Assets
and for  Long-Lived  Assets to be Disposed  Of." This  statement  requires  that
long-lived assets to be held and used be reviewed for impairment whenever events
or changes in  circumstances  indicate that the carrying  amount of an asset may
not be recoverable.  If such review indicates that the asset is impaired,  given
that the carrying amount of an asset exceeds the sum of its expected future cash
flows, on an undiscounted  basis,  the asset's carrying amount should be written
down to fair value. In addition, SFAS No. 121 requires that long-lived assets to
be disposed  of be  reported at the lower of carrying  amount or fair value less
cost to sell.  The effect of the  adoption of this  standard was not material to
the consolidated financial statements.

         STOCK -BASED COMPENSATION

         The Company accounts for its stock-based  employee  compensation  plans
using the  intrinsic  value  based  method,  under  which  compensation  cost is
measured  as the excess of the stock's  market  price at the grant date over the
amount an  employee  must pay to acquire  the stock.  Expenses  related to stock
options and warrants  issued to  non-employees  are accounted for using the fair
value of the security at the date of grant based on option-pricing models.

         FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying amounts of financial  instruments  including cash and cash
equivalents, accounts receivable, note receivable, accounts payable, and accrued
and other  liabilities  approximate the fair values as of December 31, 1997, due
to the  short-term  maturity of these  instruments.  The carrying  amounts as of
December  31,  1997 of costs and  estimated  earnings  in  excess  of  billings,
advances to  vendors,  billings in excess of costs and  estimated  earnings  and
customer  deposits  approximate  fair value as these  amounts are due or payable
within the Company's operating cycle. The fair value of marketable securities is
based on  quoted  market  prices  for such  instruments  and  approximate  their
carrying amounts as of December 31, 1997.

         SOFTWARE COSTS

         The costs  incurred  in  creating  Parker  FIRST,  a computer  software
product,   have  been  capitalized  since  the  establishment  of  technological
feasibility.  Upon Parker FIRST being  available to customers,  the Company will
amortize such costs over the estimated economic useful life.

         COMPREHENSIVE INCOME

         In July 1997, the Financial  Accounting Standards Board issued SFAS No.
130, "Reporting  Comprehensive Income." This statement establishes standards for
reporting and display of  comprehensive  income and its components in a separate
financial  statement.  Comprehensive  income  generally  includes  net income as
reported by the Company adjusted for cumulative foreign translation  adjustments
and   unrealized   gains  and   losses  on   marketable   securities   that  are
available-for-sale,  which are currently  reported in the  stockholders'  equity
section of the balance  sheet.  The  statement  is  effective  for fiscal  years
beginning  after  December 15, 1997.  The Company will adopt the standard at the
beginning of 1998, and will restate prior periods presented.


                                      F-11
<PAGE>
3.       ACQUISITION OF BUSINESSES

         On August 1, 1995, the Company acquired substantially all of the assets
and  business  and assumed  certain  liabilities  of AGF  Interior  Services Co.
("AGF") through its wholly owned subsidiary,  Hospitality Restoration & Builders
("HRB"). HRB provides interior and exterior cosmetic renovations and maintenance
for  leading  hotel  and  hospitality   customers   nationwide.   The  aggregate
consideration  for the acquisition was $5,450,000.  The purchase price consisted
of a $2,150,000 promissory note payable to AGF over five years, bearing interest
at 8% per annum and 2,500,000 shares of the Company's common stock issued in the
name of AGF's sole stockholder, Watermark Investments Limited ("Watermark"). The
acquisition  resulted in goodwill of  approximately  $6,600,000,  which is being
amortized on a straight-line  basis over its estimated  useful life of 17 years.
The acquisition was accounted for as a purchase with the results of HRB included
in the consolidated  financial  statements from the acquisition date. On May 23,
1995, the Company loaned AGF $2,500,000,  secured by a promissory note,  payable
over five years and bearing  interest at 8% per annum.  On April 12,  1996,  the
Company  and  Watermark  agreed to offset the  $2,150,000  note  payable and the
$2,500,000  note  receivable,  with a net balance of $350,000  receivable  in 60
equal  monthly  installments  at 7% per annum with payments  commencing  January
1997. This note was paid in full in February 1998.

         In January  1997,  the Company  completed  the  acquisition  of Leonard
Parker Company ("LPC") and Parker Reorder Corporation ("Parker Reorder"). LPC, a
leading  purchasing  company for the hospitality  industry,  acts as an agent or
principal for the purchase of goods and services for its customers which include
major hotel and management companies worldwide. Parker Reorder has developed and
is marketing a new  proprietary  software  product,  Parker FIRST,  which allows
clients to reorder operating  supplies and equipment ("OS&E") and other products
on-line and will provide such  clients  with access to  forecasting  and product
evaluation capabilities. The purchase price of LPC and Parker Reorder, including
acquisition costs and after final  adjustments,  was  approximately  $12,140,000
which  consisted  primarily of 1,250,000 newly issued shares of Common Stock and
$5 million  stated value of newly issued 6% convertible  preferred  stock of the
Company.  The acquisition  resulted in goodwill and other  intangible  assets of
approximately  $11,400,000,  which are being amortized on a straight-line  basis
over their estimated  useful life of 30 years. The acquisition was accounted for
as a  purchase  with the  results  of LPC and  Parker  Reorder  included  in the
consolidated financial statements of the Company from the acquisition date.

   The following pro forma consolidated  financial information has been prepared
to reflect the  acquisition  of the assets and  business of AGF,  LPC and Parker
Reorder.  The  pro  forma  financial  information  is  based  on the  historical
financial  statements of the Company and AGF, LPC and Parker Reorder, and should
be read in conjunction  with the  accompanying  footnotes.  The accompanying pro
forma  operating  statements  are presented as if the  acquisitions  occurred on
January 1, 1995.  The pro forma  financial  information  is unaudited and is not
necessarily  indicative of what the actual  results of operations of the Company
would have been assuming the  transactions  had been  completed as of January 1,
1995, and neither is it necessarily  indicative of the results of operations for
future periods.

<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31                                                           1996                     1995
-------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
<S>                                                                              <C>                     <C>
Net sales                                                                        $83,067,724             $ 52,302,744
Net income (loss) from continuing operations applicable to common shares           1,435,165               (1,537,048)
Diluted loss per share from continuing operations                                       0.17                    (0.15)
-------------------------------------------------------------------------------------------------------------------------
</TABLE>


         The above unaudited pro forma  statements have been adjusted to reflect
the  amortization  of goodwill and other  intangible  assets as generated by the
acquisitions  over 17 and 30  year  periods,  interest  income  on the  $350,000
Watermark note receivable,  elimination of the interest income on the $2,500,000
loan  to  AGF,  dividends  of 6% on  $5,000,000  preferred  shares  in  the  LPC
transaction,  LPC's officers compensation based on employment agreements entered
into at the date of acquisition, additional income taxes on pro forma income and
the  3,750,000   common  shares  and  $5,000,000   preferred  shares  issued  as
consideration in the transactions.


                                      F-12

<PAGE>
4.       DISCONTINUED OPERATIONS

         In December 1995, the Company  determined to focus its resources on its
hospitality and restoration  business and discontinue its lighting business.  On
February 26, 1996,  the Company  entered into a divestiture  agreement  with its
former President. In accordance with the agreement,  the Company disposed of the
lighting business,  together with its accounts  receivable,  inventory and fixed
assets  to  the  former  President,   who  also  assumed  certain   liabilities.
Additionally,  in accordance with the agreement, the following occurred: (i) the
Company repurchased 500,000 shares of common stock from the former President for
$250,000 with a market value of $437,500;  (ii) the Company  retained the former
President  as a  consultant  for a three  year  period  at an  annual  salary of
$100,000,  (iii) the  former  President  granted  to the  Company  the option to
purchase an additional  1,000,000  shares of common stock over a two year period
at a 33% discount  from the average  trading price for the 20 trading days prior
to purchase,  but not below certain minimum set prices. The Company  repurchased
500,000 of the optioned  shares in October 1996 for $715,000 and repurchased the
remaining 500,000 shares in May 1997 for $2,210,000.

         In 1995,  the  Company  incurred  a loss on  disposal  of  discontinued
operations  of  $398,806,  which  primarily  includes  the present  value of the
consulting  fees payable to the former  President and a provision of $46,000 for
operating losses during the phase out period.  Revenues of the lighting business
segment for 1995 was $530,000.  In 1996, the Company incurred  additional losses
from discontinued operations of $64,705.

5.       ACCOUNTS RECEIVABLE/ACCOUNTS PAYABLE

         Accounts receivable include retainages of $636,577 at December 31, 1997
and $585,149 at December 31, 1996, on contracts which are  collectible  upon the
acceptance by the owner. All amounts at December 31, 1996 were collected in 1997
and  amounts at December  31,  1997 are  anticipated  to be  collected  in their
entirety in 1998.

         The  Company  withholds  a portion of payments  due  subcontractors  as
retainages,  which  amounted to $212,278  at December  31, 1997 and  $181,528 at
December 31, 1996. The subcontractor balances are paid when the Company collects
its retainages receivable.

6.       COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

         Costs and  estimated  earnings  in excess of  billings  on  uncompleted
contracts represent unbilled  receivables.  Billings on uncompleted contracts in
excess of costs and estimated earnings  represent deferred revenue,  and consist
of:

<TABLE>
<CAPTION>

                                                                                          DECEMBER 31,
                                                                                 1997                      1996
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>                     <C>         
Costs incurred on uncompleted contracts                                           $15,629,620             $ 19,962,133
Estimated earnings                                                                  7,333,524                7,027,729
Billings to date                                                                  (19,838,282)             (25,013,757)
--------------------------------------------------------------------------------------------------------------------------
Costs and estimated earnings on uncompleted contracts in excess
   of billings                                                                     $3,124,862             $  1,976,105
--------------------------------------------------------------------------------------------------------------------------
Included in the  accompanying  consolidated  balance  sheet under the  following
   captions:
Costs and estimated earnings in excess of billings                                 $3,420,829             $  2,176,907
Billings in excess of costs and estimated earnings                                   (295,967)                (200,802)
--------------------------------------------------------------------------------------------------------------------------
                                                                                   $3,124,862               $1,976,105
--------------------------------------------------------------------------------------------------------------------------
</TABLE>



                                      F-13

<PAGE>
7.                PROPERTY AND EQUIPMENT

      Property and equipment consist of the following:

<TABLE>
<CAPTION>

                                                                                          DECEMBER 31,
                                                                                 1997                      1996
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>                      <C>     
Furniture and fixtures                                                             $347,769                 $ 52,048
Office equipment                                                                  1,068,352                  134,153
Leasehold improvements                                                              245,297                   18,387
Software                                                                          2,224,167                       --
--------------------------------------------------------------------------------------------------------------------------
                                                                                  3,885,585                  204,588
Less: Accumulated depreciation and amortization                                    (337,873)                 (61,711)
--------------------------------------------------------------------------------------------------------------------------
                                                                                 $3,547,712                $ 142,877
--------------------------------------------------------------------------------------------------------------------------
</TABLE>


8.                LOAN PAYABLE

      In 1996,  the  Company  secured  a line of  credit  with a bank.  The line
provided for borrowings of up to $2.5 million,  with interest at prime plus 1/2%
(8.75% at December 31, 1996) and was  collateralized  by all Company  assets and
was  guaranteed  by HRB.  At December  31,  1996 the Company had an  outstanding
balance of $1.4 million on the line. In September  1997,  the Company repaid all
outstanding  borrowings  under the line. The weighted  average interest for 1997
was 8.92%.

      In May 1997, the Company  borrowed $2.2 million at an annual interest rate
of 12%. The proceeds of the  borrowing  were used to repurchase  500,000  shares
from the  Company's  former  President  (Note  4).  The note was paid in full in
September 1997.


9.                INCOME TAXES

      The provision for income taxes consists of the following:

<TABLE>
<CAPTION>

                                                                               YEAR ENDED DECEMBER 31,
                                                                    1997                   1996                1995
----------------------------------------------------------------------------------------------------------------------------
Current:
<S>                                                                   <C>                   <C>                  <C>    
   Federal                                                            $360,349              $620,929             $25,000
   State and Local                                                     536,061               370,676                  --
----------------------------------------------------------------------------------------------------------------------------
                                                                       896,410               991,605              25,000
----------------------------------------------------------------------------------------------------------------------------

Deferred:
   Federal                                                            (465,547)              (65,280)                  --
   State and Local                                                    (202,875)                   --                  --
----------------------------------------------------------------------------------------------------------------------------
                                                                      (668,422)              (65,280)                  --
----------------------------------------------------------------------------------------------------------------------------
   Total                                                              $227,988              $926,325             $25,000
----------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      F-14

<PAGE>
      The following is a  reconciliation  of the Company's income taxes based on
the statutory rate and the actual provision for income taxes:

<TABLE>
<CAPTION>

                                                                               YEAR ENDED DECEMBER 31,
                                                                    1997                   1996                1995
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                    <C>                 <C>       
Statutory federal income tax at 34%                                $  (209,325)           $  963,640           $(120,845)
Increase (decrease) resulting from:
   Reduction (increase) of valuation allowance                              --              (339,120)            101,345
   State and local taxes, net of federal tax benefit                   219,903               239,027              16,500
   Nondeductible goodwill amortization and
   expenses                                                            217,410                62,778              28,000
----------------------------------------------------------------------------------------------------------------------------
Provision for income taxes                                            $227,988              $926,325             $25,000
----------------------------------------------------------------------------------------------------------------------------
</TABLE>


      Deferred  income  taxes  result  from  temporary  differences  between the
financial   reporting   carrying  amounts  and  the  tax  bases  of  assets  and
liabilities.  The source of these differences and tax effect of each at December
31, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>

DEFERRED INCOME TAX LIABILITY (ASSET)                                            1997                      1996
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>                    <C>          
Warrant expense                                                                   $  (735,016)              $       --
Rent expense                                                                          (52,800)                      --
Goodwill amortization                                                                  50,017                   22,000
Allowance for doubtful accounts                                                       (64,881)                      --
Other                                                                                  63,592                  (87,280)
                                                                                       ------                 --------
                                                                                  $  (739,088)              $  (65,280)
                                                                                  -----------              -----------
</TABLE>

      The Company has  recorded net deferred tax assets at December 31, 1997 and
1996 primarily representing expenses recognized for financial reporting purposes
that will be deductible in future years for tax  purposes.  Management  believes
that no valuation allowance is required for these assets due to future reversals
of existing taxable  temporary  differences and the expectation that the Company
will generate taxable income in future years.


10.  RELATED PARTY TRANSACTIONS

(a)      The Company hired  Interstate  Interior  Services  ("Interstate")  as a
         subcontractor  on certain of its projects.  The President of Interstate
         is the sister of one of the Company's  officers.  During 1997, 1996 and
         from August 1, 1995 through December 31, 1995, the Company paid fees of
         $0, $172,786 and $712,137, respectively, to Interstate.

(b)      During 1997 and 1996,  the Company  performed  renovation  services for
         Watermark  LLC.  Watermark  LLC is the  general  partner  of  Watertone
         Holdings  LP,  which is a  shareholder  of  Company  common  stock.  In
         addition,  the Chief Executive Officer of the Company was a director of
         Watermark LLC. During 1997, the Company and Watermark LLC  renegotiated
         the  renovation  contract  to provide for fees more  consistent  with a
         project  of  similar  scope  and   complexity.   As  a  result  of  the
         renegotiations, the Company recognized additional revenues for the year
         ended December 31, 1997 of $780,183 without an accompanying increase in
         costs.  As of December 31, 1997 and December 31, 1996 the Company had a
         receivable balance of $0 and $492,124, respectively, from Watermark.


                                      F-15
<PAGE>
      The  following  revenues  and  gross  profit  have been  reflected  in the
consolidated financial statements:

                                    YEAR ENDED                YEAR ENDED
                                DECEMBER 31, 1997          DECEMBER 31, 1996
--------------------------------------------------------------------------------
Net revenues                       $   780,183                $   526,743
Cost of revenues                            --                    492,283
--------------------------------------------------------------------------------
Gross profit                       $   780,183                $    34,460
--------------------------------------------------------------------------------

(c)      In connection with the Apollo Joint Venture (see Note 13), on April 10,
         1997,  the  Company  and  Resource  Holdings  entered  into a financial
         advisory agreement pursuant to which Resource Holdings agreed to assist
         the  Company in  connection  with  negotiations  relating to the Apollo
         Joint  Venture and to provide  general  financial  advisory,  strategic
         planning and acquisition  advice to the Company.  In consideration  for
         those services,  the Company agreed to pay Resource Holdings 16 1/2% of
         certain  distributions  received by the Company  from the Apollo  Joint
         Venture (after certain  distributions  to the joint venture parties and
         returns on capital  invested in each  project in which the Apollo Joint
         Venture  participates)  and such  additional fees to be mutually agreed
         upon between Resource Holdings and the Company.  No distributions  were
         received by the Company from Apollo in 1997.

11.      COMMITMENTS AND CONTINGENCIES

(A)      LEASE COMMITMENTS

      The  Company  leases  office  space in New York,  California,  Atlanta and
Florida which expire at various dates  through  2007.  In  conjunction  with the
acquisition  of Bekins in January,  1998 (see Note 17),  the  Company  assumed a
ground lease on a building in Orlando,  Florida  which  expires in 2085,  with a
minimum annual payment of $6,489.

      The aggregate future minimum lease payments due under operating leases are
as follows:

DECEMBER 31
------------------------------------------------------------
1998                                             $1,729,608
1999                                              1,626,705
2000                                              1,354,771
2001                                              1,107,004
2002                                                797,168
Thereafter                                        1,733,129
                                                 ----------
                                                 $8,348,385

      Rent expense for 1997, 1996 and 1995 was $1,093,686, $120,534 and $88,000,
respectively.

(B)   EMPLOYMENT AGREEMENTS

      The Company  currently has  employment  agreements  with twelve members of
management  personnel  that  expire  from  April  1998  to  December  2000 at an
aggregate annual compensation of $2,025,000.

(C)   LITIGATION

      The Company is a defendant in various  litigation  in the normal course of
business. Although the outcome of litigation cannot be predicted with certainty,
in the  opinion  of  management,  based on the  facts  known at this  time,  the
resolution of such  litigation  is not  anticipated  to have a material  adverse
effect on the financial position or results of operations of the Company.

                                      F-16
<PAGE>
12.   MAJOR CUSTOMERS AND SUBCONTRACTOR

      Most of the Company's customers are in the hospitality industry with a few
of them accounting for a substantial  portion of annual  revenues.  As a result,
the trade  accounts  receivable  and costs and  estimated  earnings in excess of
billings subject the Company to concentration of credit risk. As of December 31,
1996,  two  customers  accounted  for  approximately  80%  and  65% of  accounts
receivable and costs and estimated earnings in excess of billings, respectively.

      The largest  customer of the Company for 1997, a  high-ranking  government
official of the United Arab  Emirates,  accounted  for 14% of the  Company's net
revenues.  The two largest  customers of the Company for 1996  accounted for 49%
and 31% of net revenues,  and the four largest  customers for 1995 accounted for
23%, 19%, 18%, and 14% of net revenues.

      During 1997,  no  subcontractors  accounted  for over 10% of the Company's
cost  revenues.  During 1996,  35% of the Company's  cost of revenues were costs
charged by one subcontractor.

13.   STOCKHOLDERS' EQUITY

      In January  1997,  in connection  with the  acquisition  of LPC and Parker
Reorder,  the Company issued 200,000  shares of 6% Convertible  Preferred  Stock
("LPC  Preferred").  The holders of LPC  Preferred  are entitled to receive cash
dividends  at the rate of six  percent  (or  $1.50)  per  annum per share of LPC
Preferred  (the  "Preferred  Dividend"),  accruing from the date of issuance and
payable  commencing  March 31, 1998. If the Company is legally capable of paying
the Preferred Dividend and elects to accrue such amount,  such accrued dividends
shall bear interest at the rate of 13 1/2% per annum until paid.  The holders of
the LPC Preferred are also entitled to receive out of the cumulative net profits
of Parker Reorder (the  "Cumulative  Net Profits"),  an annual cash payment (the
"Participating  Dividend")  equal to 20% of (i) the  Cumulative  Net  Profits of
Parker  Reorder  measured  from  January  1, 1997,  less (ii) all  Participating
Dividends  previously  made to the holders of the LPC Preferred.  The holders of
the LPC Preferred are also entitled to a liquidation preference of $5,000,000.

      The LPC Preferred is  convertible,  at any one time during the period from
January 10, 1998 to January 10, 2000, into (i) 1,000,000 shares of the Company's
common stock, subject to an upward adjustment in the event that the market price
of the Company's common stock is below $5.00 at the time of conversion, based on
a defined conversion formula, up to a maximum of 4,000,000 shares, or (ii) 9.80%
of the  outstanding  capital stock of Parker  Reorder.  The  conversion  formula
related to the  conversion  into the  Company's  common  stock is defined as the
number of shares of common  stock equal to the  product of 25 (which  represents
the stated value per share of the LPC Preferred) and the number of shares of LPC
Preferred,  divided by the average  closing  sale price for the common stock for
the 20  trading  days  immediately  prior  to the  date  written  notice  of the
intention to exercise the conversion option is given, provided, however, that in
no case shall the number of shares of common  stock into which each share of LPC
Preferred  may be converted be less than 5 or greater than 20. At any time after
January 10, 2000,  the Company shall have the option to redeem the LPC Preferred
at a  redemption  price  equal to the  Stated  Value for each such  share of LPC
Preferred,  plus an amount equal to all accrued and unpaid  Preferred  Dividends
and interest thereon, if any.

      The holders of LPC Preferred are entitled to vote on all matters submitted
to the holders of the Common  Stock and each share of LPC  Preferred is entitled
to 4.17 votes.  The holders of record of the LPC  Preferred,  voting as a class,
are entitled to elect two directors to the  Company's  Board of Directors at any
time that any of the LPC Preferred is outstanding.

      The Company  cannot pay or declare  dividends  on any capital  stock other
than the LPC Preferred, so long as such LPC Preferred is outstanding, unless all
accrued  and unpaid  dividends  on the LPC  Preferred  for all prior  applicable
periods have been declared and paid and the dividends on the LPC Preferred Stock
for the current and

                                      F-17
<PAGE>
applicable  period has been  declared and set apart for payment.  The Company is
not  otherwise   restricted   from   declaring  and  paying   dividends  to  its
shareholders.

      In May 1997,  the  Company  entered  into an  Agreement  to Joint  Venture
("Apollo Joint  Venture") with Apollo Real Estate  Advisors II, L.P.  ("Apollo")
and Watermark  Limited LLC to identify,  acquire,  renovate,  refurbish and sell
hotel properties. The Company will perform all of the renovation and procurement
services for each of the properties  purchased by the Apollo Joint  Venture.  In
addition, the Company will receive a five percent equity interest in each of the
joint venture  entities  formed to purchase such  properties in exchange for its
contribution of five percent of the total equity  required to acquire,  renovate
and sell such  properties.  The joint  venture  intends to own and  operate  the
properties only for the time necessary to upgrade and market them for resale. In
September  1997,  the  Apollo  Joint  Venture  acquired  the  Warwick  Hotel  in
Philadelphia,  Pennsylvania.  As of December 31, 1997,  the Company  contributed
approximately  $293,000 to the joint venture operating entity that was formed to
purchase the property. As of December 31, 1997, there are no additional material
capital  commitments  to be made by the  Company.  The joint  venture  operating
entity  is owned  95% by the  general  partner,  which is  owned by  Apollo  and
Watermark, and 5% by the Company as a limited partner. The Company is accounting
for this  investment on the cost method as all decisions are made by the general
partner.  As an inducement to enter into the Apollo Joint  Venture,  the Company
issued to Apollo a seven-year warrant to purchase 750,000 shares of Common Stock
at $8.115 per share.  The  warrant  expires in 2004.  The  warrant is  currently
exercisable  as to 350,000  shares and becomes  exercisable  as to the remaining
400,000  shares  in  increments  of  100,000  shares  for  every  $7,500,000  of
incremental  revenue  earned  and to be  earned  by the  Company  from the joint
venture. The costs associated with the warrants for the 100,000 share increments
earned and  anticipated  to be earned by Apollo are  recognized as an additional
cost of the related renovation and procurement  contract.  The fair value of the
warrant for 250,000  shares was  $1,287,500 (or $5.15 per share) and the warrant
for  100,000  shares was  $550,000  (or $5.50 per share).  In 1997,  the Company
recognized  an expense  of  approximately  $1,593,400,  of which  $1,287,500  is
reflected as Warrant Expense and $305,900 is included in Cost of Revenues on the
accompanying consolidated Statement of Operations.

      The Company  completed a secondary  public  offering in September  1997 of
3,450,000  shares  of  Common  Stock  (inclusive  of  1,000,000  shares  held in
treasury) at $10.25 per share. The net proceeds of the offering, net of issuance
costs and  expenses,  were  $32,126,630.  A portion of the  proceeds was used to
repay short-term indebtedness with the remainder available for general corporate
purposes,  including  the  financing  of  working  capital  needs  and  business
development.  In conjunction  with the offering,  the  underwriter was granted a
warrant to purchase  356,723 shares of the Company's common stock at an exercise
price of $12.00 per share. The fair value of the warrants was $5.04. The warrant
is  exercisable  in full  after one year  (September  17,  1998) and  expires on
September 17, 2002. The number of shares  issuable under this warrant is subject
to change upon certain events,  among them, the declaration of dividends,  stock
splits or reverse stock splits.

14.   STOCK OPTION PLAN

      At  December  31,  1997,  the Company has three  stock  option  plans.  As
permitted by Statement of Financial  Accounting  Standards No. 123 ("SFAS 123"),
when the exercise  price of the  Company's  employee  stock  options  equals the
market price of the underlying stock on the date of grant, no compensation  cost
is recognized.

      During 1994,  the  Company's  Board of Directors  adopted a  non-statutory
stock  option plan for  purposes of issuance of shares of the  Company's  common
stock to certain key employees or consultants.  With respect thereto, options to
purchase a total of 160,000 shares were granted.  The stock option plan has been
retired, and there are no shares available for grant.

      On September 26, 1996, the Company's  Board of Directors  adopted the 1996
Stock  Option Plan (the  "Plan") for the purpose of  providing  incentive to the
officers and  employees  of the Company who are  primarily  responsible  for the
management and growth of the Company.  Each option granted  pursuant to the Plan
shall be designated  at the time of grant as either an "incentive  stock option"
or as a "non-qualified stock option". The term for each option

                                      F-18

<PAGE>
granted is determined by the Stock Option Committee, which is composed of two or
more members of the Board of Directors,  provided the maximum length of the term
of each option granted will be no more than ten years.
Options granted vest over two years.

      On September 26, 1996, the Company's Board of Directors  adopted,  and the
shareholders  approved,  the 1996  Outside  Directors  Stock  Option  Plan  (the
"Outside  Directors'  Plan") for the purpose of securing for the Company and its
shareholders the benefits arising from stock ownership by its outside directors.
Subject to shareholder  approval,  each outside  director who becomes an outside
director  after  March 1, 1996 shall  receive the grant of an option to purchase
15,000 shares of common stock.  To the extent that shares of common stock remain
available for the grant of options under the Outside  Directors  Plan on April 1
of each year, beginning on April 1, 1997, each outside director shall be granted
an option to purchase  10,000 shares of common stock.  Options granted under the
Outside  Directors  Plan vest over two years and shall be  exercisable  in three
equal installments beginning on the first anniversary of the grant date.

      SFAS 123 requires the Company to provide pro forma  information  regarding
net income and  earnings  per share as if  compensation  cost for the  Company's
stock option plans had been  determined in accordance with the fair value- based
method  prescribed  in SFAS 123.  The Company  estimates  the fair value of each
stock option at the grant date by using the Black-Scholes  option-pricing  model
with the following  weighted-average  assumptions  used for grants in 1997, 1996
and 1995, respectively:  no dividends paid for all years; expected volatility of
49%,  40% and 40%;  risk-free  interest  rate of  6.04%,  6.41% and  6.41%;  and
expected lives of 5.3 years, 2 years and 2 years.

      Under the accounting  provisions of SFAS 123, the Company's net income and
earnings  per share would have been reduced to the pro forma  amounts  indicated
below.

                                       1997           1996             1995
--------------------------------------------------------------------------------
Net income (loss)(in thousands)
      As reported                   $  (844)         $1,843         $ (1,116)
      Pro forma                     $(2,031)         $1,583         $ (1,182)
Basic earnings per share
      As reported                   $ (0.13)         $ 0.26         $  (0.20)
      Pro forma                     $ (0.23)         $ 0.23         $  (0.21)
Diluted earnings per share
      As reported                        (a)         $ 0.26               (a)
      Pro forma                          (a)         $ 0.22               (a)

(a)      Antidilutive

                                      F-19

<PAGE>
      The following  table  contains  information on stock options for the three
year period ended December 31, 1997.
                                                               WEIGHTED
                                                           AVERAGE EXERCISE
                                       OPTION SHARES            PRICE
-------------------------------------------------------------------------------
Outstanding, December 31, 1994             85,000              $1.275
Granted                                    75,000               1.275
Exercised                                      --               --
Canceled                                       --               --
-------------------------------------------------------------------------------
Outstanding, December 31, 1995            160,000               1.275
Granted                                   984,000                2.50
Exercised                                 (12,500)               1.57
Canceled                                       --               --
-------------------------------------------------------------------------------
Outstanding, December 31, 1996          1,131,500                2.38
Granted                                   738,000                9.29
Exercised                                (122,250)               2.15
Canceled                                  (19,250)               3.27
-------------------------------------------------------------------------------
Outstanding, December 31, 1997          1,728,000               $5.58
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                    EXERCISE PRICE       EXERCISE PRICE           TOTAL
                                   LESS THAN MARKET      EQUAL TO MARKET          OPTIONS
------------------------------------------------------------------------------------------
Weighted-average fair value of:
<S>                   <C>                                  <C>                    <C>  
   Options granted in 1995               --                $0.60                  $0.60
   Options granted in 1996               --                $0.82                  $0.82
   Options granted in 1997               --                $4.88                  $4.88
</TABLE>

                                      F-20

<PAGE>
      The following table summarizes information about stock options outstanding
at December 31, 1997.
<TABLE>
<CAPTION>

                                      OPTIONS OUTSTANDING                                       OPTIONS EXERCISABLE
----------------------------------------------------------------------------------------------------------------------------
                                 WEIGHTED
                                 AVERAGE                                 WEIGHTED                               WEIGHTED
                                REMAINING                                AVERAGE                                AVERAGE
          AMOUNT               CONTRACTUAL           RANGE OF            EXERCISE            AMOUNT             EXERCISE
        OUTSTANDING            LIFE (YEARS)       EXERCISE PRICE          PRICE            EXERCISABLE           PRICE
------------------------------------------------------------------------------------------------------------------------------
<S>            <C>                       <C>        <C>                       <C>               <C>                  <C> 
                 992,500                 1.80        $1.275-2.75              $2.80                759,875             $2.73
                 300,000                 2.87         6.125-6.75               6.67                  --                 --
                 435,500                 5.87        10.25-12.00              11.15                  --                 --
------------------------------------------------------------------------------------------------------------------------------
               1,728,000                 3.01       $1.275-12.00              $5.58                759,875             $2.73
</TABLE>

15.   EARNINGS PER SHARE

      The  following  table  reconciles  the  components  of basic  and  diluted
earnings per share for income (loss) from  continuing  operations  for the years
ended December 31, 1997, 1996 and 1995.

<TABLE>
<CAPTION>

                                                          1997                  1996                      1995
-----------------------------------------------------------------------------------------------------------------------------
Numerator:
<S>                                                     <C>                  <C>                       <C>       
   Income (loss) from continuing
   operations                                           $(843,649)           $1,907,383                $(380,427)
   Preferred stock dividends                             (300,000)                   --                       --
-----------------------------------------------------------------------------------------------------------------------------
   Basic earnings (loss) per common
   share-
      Income (loss) available to common
      stockholders from continuing
      operations                                       (1,143,649)            1,907,383                 (380,427)
-----------------------------------------------------------------------------------------------------------------------------
   Effect of dilutive securities (a):
      Preferred stock dividends                                --                    --                        --
-----------------------------------------------------------------------------------------------------------------------------
   Diluted earnings (loss) per common
   share-
      Income (loss) available to common
      stockholders from continuing
      operations                                      $(1,143,649)           $1,907,383                $(380,427)
-----------------------------------------------------------------------------------------------------------------------------
Denominator:
   Basic earnings per common share-
      weighted average common shares
      outstanding                                       8,885,570             6,983,333                5,673,600
-----------------------------------------------------------------------------------------------------------------------------
   Effect of dilutive securities(a):
      Stock-based compensation plans                           --               148,582                       --
      Preferred stock                                          --                    --                       --
-----------------------------------------------------------------------------------------------------------------------------
   Diluted earnings (loss) per common
      share- weighted average common
      and common equivalent shares
      outstanding                                       8,885,570             7,131,915                5,673,600
-----------------------------------------------------------------------------------------------------------------------------
Basic earnings (loss) per common share
   from continuing operations                              $(0.13)                $0.27                   $(0.07)
</TABLE>


                                      F-21
<PAGE>
<TABLE>
<CAPTION>

<S>                                                            <C>                <C>                            
Diluted earnings (loss) per common share
   from continuing operations                                  (a)                $0.27                       (a)
</TABLE>


(a)      The common  stock  equivalent  shares for the years ended  December 31,
         1997 and 1995 were 991,232 and 26,724 for the Stock-based  compensation
         plans;  and 1,000,000  shares for the  convertible  preferred  stock in
         1997. The common stock  equivalents  for these shares were not included
         in the calculation of diluted  earnings (loss) per common share because
         the effect would be antidilutive.

16.               BUSINESS SEGMENTS

<TABLE>
<CAPTION>

                                                                 1997              1996                      1995
-----------------------------------------------------------------------------------------------------------------------------
Sales to Unaffiliated Customers
<S>                                                       <C>                       <C>                        <C>       
   Renovation                                             $19,394,593               $24,367,112                $4,980,291
   Purchasing                                              64,886,119                        --                        --
   General Corporate                                        1,161,000                        --                        --
                                               ------------------------------------------------------------------------------
                                                          $85,441,712               $24,367,112                $4,980,291
                                               ------------------------------------------------------------------------------

Inter-segment Sales
   Renovation                                             $        --               $        --                $       --
   Purchasing                                                 165,000                        --                        --
   General Corporate                                               --                   115,980                        --
                                               ------------------------------------------------------------------------------
                                                             $165,000                  $115,980                $       --
                                               ------------------------------------------------------------------------------

Operating Profit (Loss)
   Renovation                                             $   842,539                $3,309,399                $ (160,688)
   Purchasing                                                 190,314                        --                        --
   General Corporate                                         (848,217)                 (450,731)                 (301,989)
                                               ------------------------------------------------------------------------------
                                                          $   184,636               $ 2,858,668                $ (462,677)
                                               ------------------------------------------------------------------------------

Identifiable Assets at Year End
   Renovation                                             $10,287,288               $12,636,374                $8,651,800
   Purchasing                                              39,437,337                        --                        --
   General Corporate                                       34,543,066                   113,716                 1,379,446
                                               ------------------------------------------------------------------------------
                                                          $84,267,691               $12,750,090               $10,031,246
                                               ------------------------------------------------------------------------------
</TABLE>

      In June 1997,  the Financial  Accounting  Standards  Board issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information." This
statement requires that the Company report financial and descriptive information
about its  reportable  operating  segments  in  financial  statements  issued to
shareholders  for interim and annual  reports.  The Statement  also  establishes
standards for related disclosures about products and services,  geographic areas
and major customers. Under this Statement,  operating segments are components of
an enterprise  about which separate  financial  information is available that is
regularly  evaluated by the enterprise's  chief  operational  decision-maker  in
deciding  how to allocate  resources  and in  assessing  performance.  While the
Company  continues to evaluate the  adoption of the new  standard,  it is likely
that its current  reported  business  segments  of  Renovation,  Purchasing  and
General  Corporate will be maintained with additions for any  acquisitions.  The
Statement is effective for fiscal years  beginning  after December 15, 1997. The
Company will adopt the standard at the beginning of 1998.

                                      F-22

<PAGE>
17.   SUBSEQUENT EVENTS

      On January 6, 1998, the Company reached an agreement in principle to enter
into a master  development  agreement with Prime Hospitality Corp.  ("Prime") to
develop twenty hotel  properties  over a two-year  period under the  AmeriSuites
brand name.  Under the  proposed  agreement,  the Company  will provide the site
identification,  development,  construction and purchasing services required for
each project and Prime will provide  project design and management and franchise
services once each  property is complete.  The Company and Prime will be equally
responsible  for the  financing  requirements  (up to $30 million each) and will
each have a 50% interest in the new hotels.

      On  January 9, 1998,  the  Company  completed  the  acquisition  of Bekins
Distribution  Services,  Inc. ("Bekins"),  a leading provider of transportation,
warehousing  and  installation  services  to a variety of  customers  worldwide.
Founded in 1969, Bekins is a logistical services company that serves clients who
are opening,  renovating  or relocating  facilities by assuring that  materials,
fixtures,  furniture and merchandise are moved from multiple vendor locations to
their ultimate  destinations in a controlled  orderly sequence so that each item
can be  installed on schedule.  The  purchase  price of Bekins of  approximately
$11,000,000  consisted of 514,117  shares of Common Stock and the  assumption of
certain Bekins' debt. The purchase  agreement  contains a make-whole  adjustment
whereby, on a formula-basis,  additional shares will be transferred if the price
of the Company's  common stock for the 20 days prior to the one year anniversary
date is less  than  85% of the  share  price  on the  date of  acquisition.  The
acquisition  will be  accounted  for as a  purchase  with the  results of Bekins
included  in the  consolidated  financial  statements  of the  Company  from the
acquisition date.

      On February 9, 1998,  the Company  purchased the assets of the real estate
advisory  business from  Watermark  Limited,  LLC, an  international  management
company  that is the  general  partner  and  manages  Watertone  Holdings  LP, a
shareholder of the Company. The resulting wholly owned subsidiary of the Company
will be named HWS Real Estate  Advisory Group,  Inc. ("HWS REAG").  The purchase
price of HWS REAG was  $1,500,000  and their  results  will be  included  in the
consolidated financial statements of the Company from the acquisition date.

      In March 1998, the Company obtained a $7,000,000  unsecured line of credit
with a bank at an interest  rate of prime.  The Company drew down on the line of
credit for $3,500,000 in March 1998.

      On March 6, 1998,  in  conjunction  with a joint  venture  formed with ING
Realty Partners ("ING Joint Venture"),  the Company acquired the Clarion Quality
Hotel in Chicago,  Illinois. The Company anticipates that its capital commitment
to the ING Joint Venture will  approximate  $2.1 million.  In addition,  the ING
Joint  Venture  obtained  financing  for $38 million to fund the purchase of the
Clarion  as well as the  renovation  and  refurbishment  costs.  A  wholly-owned
subsidiary  of the Company  will fully  renovate  and  refurbish  this  property
pursuant to a contract with the ING Joint Venture, which is expected to generate
approximately $17 million of revenue for the Company in 1998.

18.               QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (A)

<TABLE>
<CAPTION>

1997 QUARTER ENDED                           MARCH 31               JUNE 30             SEPTEMBER 30           DECEMBER 31
--------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                   <C>                      <C>                 <C>    
Net revenues                                    $18,196               $19,513                  $16,532             $31,201
Gross profit                                      3,459                 4,555                    4,656               1,291
Income (loss) from operations                       815                   938                    1,308              (2,876)(d)
Net income (loss)                                   397                   430                      719              (2,390)
Basic earnings per common share (b)                 .04                   .04                      .08                (.22)
Diluted earnings per common share (b)               .04                   .04                      .07                  (c)


1996 QUARTER ENDED                           MARCH 31               JUNE 30             SEPTEMBER 30           DECEMBER 31
--------------------------------------------------------------------------------------------------------------------------------
Net revenues                                     $1,993                $7,423                   $8,240              $6,711
Gross profit                                        316                 2,110                    1,988               1,663
Income (loss) from operations                      (124)                1,131                    1,126                 726
Net income (loss)                                  (121)                  827                      831                 306
</TABLE>


                                      F-23
<PAGE>
<TABLE>
<CAPTION>


<S>                                               <C>                     <C>                      <C>                 <C>
Basic earnings per common share (b)               (.02)                   .12                      .12                 .06
Diluted earnings per common share (b)             (.02)                   .12                      .12                 .05
   Income from continuing operations                (c)                   .12                      .11                 .05
   Net income (loss)                                (c)                   .12                      .11                 .04
</TABLE>

(a)      ALL AMOUNTS EXCEPT PER SHARE DATA PRESENTED IN THOUSANDS.
(b)      THE QUARTERLY PER SHARE  AMOUNTS ARE COMPUTED  INDEPENDENTLY  OF ANNUAL
         AMOUNTS.
(c)      ANTIDILUTIVE
(d)      THE FOURTH QUARTER  INCLUDES A NON CASH CHARGE OF $1,434 RELATED TO THE
         RECOGNITION  OF WARRANTS  ISSUED IN  CONNECTION  WITH THE APOLLO  JOINT
         VENTURE.


                                      F-24