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, 1998

[ ]      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 March
26, 1999 (based  upon the last sale price for the Common  Stock on the  American
Stock Exchange) was approximately $42,052,084.

            The  number of shares of Common  Stock  outstanding  as of March 26,
1999 was 13,354,164.

DOCUMENTS  INCORPORATED  BY  REFERENCE.  Certain  portions  of the  Registrant's
definitive proxy statement to be filed not later than April 30, 1999 pursuant to
Regulation 14A are  incorporated by reference in Items 10 through 13 of Part III
of this Annual Report on Form 10-K
<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  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 later sold by the Company); 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 the  renovation  business 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.

            Until  January  1997,  the  Company's  only line of business  was to
provide,  through  HRB,  a  complete  package  of  renovation  services  to  the
hospitality  industry  ranging  from  pre-planning  and scope  preparation  of a
project to

                                       2
<PAGE>

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 19 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  Online
("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.  LPC
purchases  annually  approximately  $350  million of goods and  services for its
customers.  Parker  Reorder has  developed  and is  marketing a new  proprietary
software  product,  Parker Fully Integrated  Reorder Systems  Tracking  ("Parker
FIRST"),  which  allows  clients to reorder  operating  supplies  and  equipment
("OS&E") and other  products  on-line and  provides  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.  Commencing  in  1998,  Parker  Reorder  has
installed the Parker FIRST  software at hotel  properties  and charges the hotel
properties a service 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
200,000 newly issued  shares of 6%  convertible  preferred  stock of the Company
(the "LPC  Preferred").  In October 1998,  80,000  shares of LPC Preferred  were
converted into an aggregate of 584,800 shares of Common Stock. The remaining LPC
Preferred is convertible, until January 10, 2000, into (i) 600,000 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 2,400,000
shares,  or (ii) 5.88% 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 and  Parker  Reorder  included  in the
consolidated financial statements of the Company from the acquisition date. With
the consent of the Company, Watermark Investments Limited, LLC ("Watermark"), an
affiliate of Robert Berman,  Chairman and Chief Executive Officer of the Company
has entered into a Stock Purchase Agreement dated March 30, 1999 to purchase the
LPC Preferred, no later than April 26, 1999.

            In May 1997, the Company entered into a joint venture ("Apollo Joint
Venture") with Apollo Real Estate Advisors II, L.P.  ("Apollo") and Watermark 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 an equity  interest  in each of the  entities  formed to  purchase  such
properties  equal to its  contribution  to 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 up to 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
for every  $7,500,000 of  incremental  renovation  revenue and  purchasing  fees

                                       3
<PAGE>
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,  1999,  the  Company  contributed
approximately  $875,000 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,  in March 1998 the Apollo  Joint  Venture  acquired  the
Historic Inn in Richmond,  Virginia.  As of March 30, 1999, the Company has made
capital  contributions  totaling  $275,000 to the joint venture operating entity
that was formed in connection  with the purchase of 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 57% by Apollo, 3%
by the Company and 40% by the former sole owner.  The Company is accounting  for
this  investment  on the  cost  method.  The  Company  is fully  renovating  and
refurbishing  these  properties  pursuant  to  contracts  with the Apollo  Joint
Venture operating entity.

            In November 1997, the Company formed a new wholly owned  subsidiary,
Hospitality  Construction  Corporation  ("HCC"),  to  specialize  in  new  hotel
construction   projects  and  major  hotel  upgrades  with  "footprint"   moving
(redesignation of walls and related remodeling).  In addition, HCC was to manage
the  renovation  projects  under the Apollo Joint  Venture and any other similar
ventures. HCC's operations commenced in 1998 and related solely to hotel upgrade
and  renovation  projects,  and  did not  include  any  new  hotel  construction
projects.  Accordingly,  in an effort to  consolidate  operations,  the  Company
transferred the HCC operations to HRB in 1998.

            In December 1997, the Company formed a new wholly owned  subsidiary,
Hospitality  Development  Services Corporation ("HDS"). HDS was to provide hotel
development  services involving managing and overseeing the development  process
related to new hotel  construction,  to earn a  developers  fee.  HDS  commenced
operations  in 1998.  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 up to 20 hotel  properties  over a two-year  period
under the  AmeriSuites  brand name. In June 1998, the Company and Prime executed
the  master  development  agreement.   Under  the  agreement,  the  Company  was
responsible for identification of target markets,  specific site identification,
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 was  responsible  for project  design,  management  and
franchise  services once each property was complete.  The Company and Prime were
to be equally  responsible  for the  financing  requirements  (up to $30 million
each) and were to have a 50% equity  interest in the new  hotels.  In late 1998,
the Company was  informed by Prime that Prime was no longer  going to pursue new
development  opportunities and that Prime was abandoning their  responsibilities
under the master  development  agreement,  even though the Company had  incurred
significant costs up to such time. The Company is pursuing recovery of its costs
and lost  profits from Prime under a demand for  arbitration  as provided for in
the master  development  agreement.  As a result,  in December 1998,  management
decided to discontinue its hotel development  business.  The Company anticipates
ceasing operations by April 1999,  although the resolution date to recover costs
and lost profits from Prime is uncertain.  The Company has reflected the current
year operating results associated with its development  business, as well as the
estimated  loss on disposal,  as  discontinued  operations on the  statements of
operations.

            In January 1998, the Company acquired Bekins Distribution  Services,
Inc.  ("Bekins"),  a 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,  including  acquisition  costs,  of
approximately  $11,400,000  consisted of 514,117  shares of Common Stock and the
assumption  of  certain  Bekins'  debt.  Additionally,  under  the  terms of the
purchase  agreement,  the Company was  required to issue an  additional  639,512
shares of Common  Stock in  January  1999 as a post  closing  adjustment  to the
purchase price based on the price of the Company's  common stock on the one year
anniversary of the date of  acquisition.  The acquisition has been accounted for
as a purchase with the results of Bekins included in the consolidated  financial
statements of the Company from the acquisition date.


<PAGE>
            In February 1998, the Company formed a new wholly owned  subsidiary,
HWS Real Estate  Advisory  Group,  Inc.  ("HWS  REAG") to purchase the assets of
Watermark's real estate advisory business,  consisting primarily of contracts to
perform  future  asset  management  and  advisory  services.   Watermark  is  an
international  management  company  that is the  general  partner of and manages
Watertone Holdings LP, a shareholder of the Company. The purchase price for such
business was  $1,500,000 of cash.  The  acquisition  has been accounted for as a
purchase with the results included in the consolidated  financial  statements of
the Company from the acquisition date.

            In March 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 ING Joint Venture intends to own and operate the property
only for the time  necessary to renovate and upgrade the hotel and market it for
resale. As of March 30, 1999, the Company contributed approximately $2.1 million
to the ING Joint Venture.  There are no additional  material capital commitments
to be made by the Company with  respect to this  project.  In addition,  the ING
Joint Venture obtained  financing for $38.65 million to fund the purchase of the
hotel as well as the  renovation  and  refurbishment  costs.  The Company has an
approximately  18% interest in the ING Joint Venture.  The other partners in the
ING Joint  Venture are  entitled to  specified  preferred  returns and  priority
distributions of capital. In addition,  the joint venture agreement provides ING
Realty Partners with the right to have the joint venture sell the property after
March 2000,  and  certain  buy/sell  provisions  which may be  exercised  by any
partner.  The Company is accounting for this investment under the equity method.
The Company is fully  renovating and  refurbishing  this property  pursuant to a
contract with the ING Joint Venture.

            On March 30, 1999 the Company,  Watermark  Investments  Limited, LLC
("Watermark"),  an affiliate of Robert  Berman,  Chairman of the Board and Chief
Executive  Officer of the Company,  Leonard  Parker,  a Director of the Company,
Douglas  Parker,  President of the Company and a Director and certain members of
the family of Leonard  Parker and  Douglas  Parker  (collectively,  the  "Parker
Family")  entered into an agreement (the "Parker  Agreement")  pursuant to which
members of the Parker Family agreed to sell to Watermark all remaining shares of
the LPC Preferred  held by members of the Parker Family and 1,397,000  shares of
Common Stock of the Company,  constituting substantially all of the Common Stock
held by members of the Parker Family,  no later than April 26, 1999.  Also under
the  Parker  Agreement  and  effective  upon  the  closing  of the  transactions
contemplated under the Parker Agreement,  Leonard Parker and Douglas Parker have
agreed to resign as Directors of the Company, and Douglas Parker will relinquish
his position as President of the Company. Leonard Parker and Douglas Parker will
remain executive officers of the Company in different  capacities.  Consummation
of the  transactions  contemplated by the Parker Agreement are subject to, among
other  things,  financing  of the  purchase of the shares of LPC  Preferred  and
Common Stock.

            Financial  information about the Company's business segments appears
in Footnote 17 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


<PAGE>

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. In its logistics business,  the Company
competes with national,  regional and local trucking and installation companies.
There is no single  competitor or small number of competitors  that 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  and logistics  businesses  are 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 22 states and has  applications  pending in an
additional 6 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  country'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.

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,  1998,  two  customers,  a major
lodging  company and a major hotel  development  company,  accounted for 15% and
10%, respectively, of the Company's 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  revenues.  During the year ended
December 31, 1996,  two  customers  accounted  for 49% and 31% of the  Company's
revenues.  As the  Company  continues  to grow and  expand  its  businesses  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, 1998,  the Company  employed  385  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.  Other than Bekins  employees at the Las
Vegas warehouse, 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 in New York,  New York,
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.


<PAGE>
            HRB  maintains  its  office  in Los  Angeles,  California,  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.

            LPC and Parker  Reorder  maintain  their  offices  in Coral  Gables,
Florida.  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,  Singapore,
The Netherlands 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.

            HDS  maintained  its office in New York,  New York where it occupied
approximately  4,600  square  feet  under a  five-year  lease  which  expires in
December 2002 at an annual fixed rental of approximately  $145,000.  The Company
is currently in the process of exploring sublease alternatives for the space.

            Bekins  maintains  its office in St. Louis,  Missouri  under a lease
which  expires  in  December  1999 at an annual  fixed  rental of  approximately
$100,000 for 8,000 square feet.  Bekins also owns a 78,000 square foot warehouse
in Orlando,  Florida and leases  warehouse  space in Las Vegas,  Nevada where it
occupies  22,000 square feet under a lease which expires in October,  1999 at an
annual fixed rental of $112,000.

            HWS  REAG  maintains  its  offices  in  Chicago,  Illinois  where it
occupies approximately 3,200 square feet under a lease expiring in March 2003 at
an annual fixed rental of $58,000.  HWS REAG also maintains satellite offices in
Denver, Colorado and Stamford, Connecticut.

Item 3.  Legal Proceedings

            Given the nature of the  construction  industry and the  contracting
process,  disputes often arise among contractors,  subcontractors and customers.
These  disputes  have the  potential  to result in the  assertion  of claims and
litigation.

            The Company is a  defendant  in various  litigation  incident to its
business, and in certain instances the amounts sought include substantial claims
and  counterclaims.  Although  the  Company  cannot  predict  the  outcome  with
certainty,  in  management's  opinion based on the facts known at this time, the
Company  anticipates  that the  resolution  of such  litigation  will not have a
material  adverse  effect  on  its  business,  operating  results  or  financial
condition.

            On June 1, 1998, an action (the "State  Action") was brought against
the Company by West  Atlantic  Corp.  in the  Supreme  Court of the State of New
York,  County of New York.  The State Action  alleges that the Company  retained
West  Atlantic  Corp.  pursuant  to  an  agreement  dated  March  1,  1995  (the
"Agreement") to perform certain  marketing and selling services for the Company.
The State  Action  further  alleges that fees were earned and not paid under the
Agreement and seeks damages for breach of contract of not less than $10,000,000,
damages  with respect to  "significant  benefits to the Company" in an amount of
not less than  $5,000,000  and damages  relating to breach of the duties of good
faith and fair  dealing in an amount of not less than  $10,000,000.  The Company
believes  that the three  claims are  duplicative.  The State  Action also seeks
interest  and  specific  performance.  The  Company  believes  that since it has
performed all  obligations  required to be performed  under the  Agreement,  the
State  Action  does not have merit and intends to  vigorously  defend the claims
asserted against it. In addition,  the Company has brought claims in federal and
state court against Tova  Schwartz,  the former  President  and Chief  Executive
Officer of the Company's  predecessor,  seeking  indemnity and punitive damages.
The state and federal actions claim that, among other things, Schwartz failed to
disclose  to the  Company  the  existence  of the  Agreement  when  the  Company
purchased  from  Schwartz  certain  shares of Common  Stock which she then held.
Schwartz has filed a motion to dismiss the Company's  state action  claims.  The
motion has been fully briefed,  argued, and submitted, and is presently awaiting
decision.  By  agreement  of the  parties,  the Federal  Action has been stayed,
subject to reinstatement upon notice by either party.


<PAGE>

            Prime and the Company entered into a master development agreement in
June 1998 which committed  Prime and the Company to the joint  development of up
to 20 AmeriSuites  Hotels.  Pursuant to the master  development  agreement,  the
Company  committed its resources to the  development  of the  AmeriSuites  Hotel
projects. Prior to the completion of development of several approved AmeriSuites
projects,  Prime, in late 1998, withdrew from the venture. On March 17, 1999 the
Company  filed an  arbitration  demand with the New York office of the  American
Arbitration  Association  seeking to recover damages incurred by the Company and
lost  profits  due to  Prime's  withdrawal  from the  joint  development  of the
AmeriSuites  projects.  The  amount of damages  calculated  by the  Company  are
$1,702,320  for  out-of-pocket  costs  and  overhead  plus  $34,534,685  in lost
profits.


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.

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

1998
First Quarter                          $ 13-1/2                $8-3/4
Second Quarter                          10-7/16                 7-7/8
Third Quarter                            9-5/16                 2-7/8
Fourth Quarter                            6-1/4                 1-7/8

            On March 26, 1999, the last reported sales price of the Common Stock
on the American Stock Exchange was $3.625 per share.

            (b)  Holders.  As of March 26,  1999,  there were  approximately  92
record holders and approximately 1,500 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 on 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.


<PAGE>

Item 6.  Selected Financial Data (a)

<TABLE>
<CAPTION>

                                                                             Years Ended December 31,
                                                                       (in thousands, except share amounts)
                                                          1994          1995           1996         1997            1998
                                                          ----          ----           ----         ----            ----
<S>                                                      <C>            <C>           <C>          <C>          <C>
Revenues                                                    $524        $4,980        $24,367      $85,442      $229,979
Income (loss) from continuing operations                 (1,285)         (380)          1,907        (844)           950
Basic earnings (loss) from continuing operations           (.28)         (.07)            .27        (.13)           .06
per common share
Diluted earnings (loss) from continuing operations           (b)           (b)            .27          (b)           .05
per common share
Total assets                                               4,492        10,031         12,750       84,268       133,374
Long-term debt                                                --            --             --           --         2,965
</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.
(b)         Antidilutive.

Item 7.     Management's  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 services to the hospitality  industry on a global basis, the Company acquired
its  procurement  and  reorder  businesses  in  January  1997 and its  logistics
business  in  January  1998.  As a  result  of this  significant  change  in the
Company's  business  focus,  period to  period  historical  comparisons  are not
considered meaningful.

Results of Operations: 1998 Compared to 1997

            Revenues  for the year ended  December  31, 1998 were  $229,979,210,
compared to  $85,441,712  for the year ended  December 31, 1997. The increase in
revenues  resulted from growth in the customer base and project scope across all
product lines, along with the purchase of Bekins in January 1998 and HWS REAG in
February 1998.

            Gross profit for 1998 was $22,260,891 or 9.7% of revenues,  compared
to  $11,042,100  or 12.9% of revenues  for 1997.  The growth in gross  profit in
dollars was a result of the  increase  in sales  volume.  The  decrease in gross
profit as a percent of sales was due  primarily  to the  provision  on  contract
revenues  recorded in 1998 related to specific  renovation  projects  which have
been substantially completed but have not yet been closed out with the customer.

            Selling,  general  and  administrative  ("SG&A")  expenses  for 1998
totaled $21,113,908 or 9.2% of revenues,  as compared to $10,622,184 or 12.4% of
revenues for 1997.  The increase in SG&A  expenses in 1998 was due  primarily to
the expansion of administrative  staff to support the higher sales level as well
as the  acquisition  of


<PAGE>

Bekins and HWS REAG in early  1998.  The drop in SG&A  expenses  as a percent of
revenue was the result of operating efficiencies achieved as sales increased.

            Income from  operations  for 1998 totaled  $1,146,983 as compared to
$184,636 for the previous year.  Operating profits increased in the current year
due to higher sales coupled with a slower growth rate in expenses.  As a result,
income  from  operations  increased  to 0.5% of  revenues  in 1998  from 0.2% of
revenues in 1997.

            Interest  expense  increased  from  $287,633  in 1997 to $756,100 in
1998. The rise in interest expense was the result of increased  borrowings under
the  Company's  lines of credit and the  addition  of Bekins debt to the balance
sheet upon its  acquisition.  Interest  income grew in 1998 to  $1,314,605  from
$774,836 in the prior year due  primarily to interest  earned on invested  funds
raised in the public offering of the Company's common stock in September 1997.

            The provision for income taxes for the year ended  December 31, 1998
was $755,150,  based on an effective tax rate of 44.3%.  For 1997, the provision
for taxes was  $227,988.  The  increase in the  provision in 1998 was due to the
higher level of pre-tax income.  For 1997, the Company  recorded a provision for
income taxes despite a pre-tax loss  primarily due to the  non-deductibility  of
goodwill amortization as well as state and local taxes payable.

            Based on factors discussed above, income from continuing  operations
increased  from a $843,649  loss in 1997 to  $950,338  of income in 1998.  Basic
earnings per share from  continuing  operations  increased  from a $0.13 loss in
1997 to $0.06 of income in 1998.  Diluted  earnings  per share  from  continuing
operations were $0.05 in 1998.

            The  discontinued  operations  for  1998  relate  to  the  Company's
subsidiary,  HDS, which was formed to provide hotel development services.  Based
on the abandonment of the hotel development  agreement by Prime in late 1998 and
the  Company's  assessment  of the future  viability  of HDS,  the  Company,  in
December  1998,  decided to  discontinue  its hotel  development  business.  The
Company anticipates ceasing operations by April, 1999 and has no future material
cost obligations  related to this business.  The Company is pursuing recovery of
its costs  incurred  and lost  profits  from Prime  pursuant  to an  arbitration
demand.

            The income from continuing operations for 1998 was $950,338 compared
to a net loss of $843,649 for 1997. As disclosed in Note 15 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 loss from continuing  operations would have
been approximately $423,000 for 1998 and $1,427,000 for 1997.

Results of Operations: 1997 Compared to 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  $11,042,100,
or 12.9% 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.  Customer  deposits  and  advances  to
vendors increased during 1997 due to the acquisition of LPC.

            Selling,  general and administrative  ("SG&A") expenses for the year
ended  December 31, 1997 were  $10,622,184,  or 12.4% 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.


<PAGE>
            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  up to 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 the decrease in income
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 15 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  $1,427,000 as compared to the reported net loss of  approximately
$844,000.


Liquidity and Capital Resources

            The  Company's  short-term  and  long-term  liquidity   requirements
generally consist of operating  capital for its business and SG&A expenses.  The
Company continues to satisfy its short-term and long-term liquidity requirements
with cash  generated  from  operations,  bank  lines of credit  and funds from a
public offering of its Common Stock in September 1997. Debt maturing in 1999 and
capital  expenditures  in 1999  will be paid from  funds  available  from  these
sources.

            Net cash used in operating  activities was  $17,834,703 for the year
ended  December 31, 1998,  compared to net cash provided of $3,693,798 for 1997.
Due to the Company's significant revenue growth and acquisitions,  the Company's
accounts  receivable  and  advances to vendors  increased by  $40,156,030.  This
increase  was only  partially  offset by an  increase  in  accounts  payable and
customer deposits of $20,518,174. The Company expects to collect the receivables
fully in 1999.

            Net cash  used in  investing  activities  for  1998 was  $2,293,966,
compared  to net cash used of  $21,545,620  for last  year.  The  difference  is
primarily due to the net sale of marketable securities in 1998 as opposed to the
net purchase of  marketable  securities in 1997 using funds from the proceeds of
the public offering in September,  1997. The 1998 sale of marketable  securities
was offset by the cash  purchase of HWS REAG for  $1,500,000,  an  investment in
real estate  ventures of $4,187,260,  an investment in mortgages  receivable for
$3,637,000 and property and equipment purchases of $3,665,536.

            Net cash provided by financing  activities for 1998 was  $10,343,396
as compared to net cash  provided  in 1997 of  $29,539,760.  The major items for
each year were a net borrowing  under lines of credit of $10,925,000 in 1998, as
opposed to proceeds from the public offering in 1997 of $32,126,630.

            In March 1998, the Company  obtained a $7,000,000  unsecured line of
credit with Marine Midland Bank of New York. Borrowings under the line of credit
bear interest at the bank's prime lending rate.  Proceeds from the borrowing are
utilized to fund short-term cash  requirements.  At December 31, 1998, there was
$4,975,000  in  outstanding  borrowings  under the line of  credit.  The line of
credit matures in May, 1999.

            In July 1998,  the Company  obtained a new unsecured  line of credit
with  NationsBank N.A. which provides the Company with a maximum of borrowing of
$6,000,000.  Borrowings under the line bear interest at the bank's


<PAGE>

prime lending rate. Proceeds from the borrowing are used to fund short-term cash
requirements.  At  December  31,  1998,  there  was  $5,950,000  in  outstanding
borrowings under the line of credit. The line of credit matures in May, 1999.

            In  January  1998,  the  Company  acquired  100% of the  outstanding
capital  stock of  Bekins.  The  purchase  price  for  Bekins  of  approximately
$11,400,000  consisted of 514,117 shares of Common Stock issued in January 1997,
and the assumption of certain Bekins' debt. In addition,  under the terms of the
acquisition  agreement,  in January  1999 the Company  was  required to issue an
additional 639,512 shares of common stock given the decrease in the price of the
Company's common stock.

            In February  1998,  the Company  acquired the assets of  Watermark's
real estate  advisory  business  consisting  primarily of asset  management  and
advisory contracts. The purchase price for such business was $1,500,000 of cash.

            Capital  expenditures  for property and equipment  were $3.7 million
compared  to $2.7  million in 1997,  an increase  of $1.0  million.  Significant
capital  expenditures  were incurred during the past two years in developing the
Parker FIRST system.  The Company does not  anticipate  incurring  this level of
expenditures  for the Parker FIRST system in 1999,  given that the system became
operational in 1998.

            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
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 the Historic Hotel 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 commitments will not be significant going forward.

            The  Company   believes   its  present  cash   position,   including
anticipated increasing revenues,  cash on hand, availability under bank lines of
credit 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.

Inflation

            Inflation  and  changing  prices  during  the  current  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.

Year 2000

            The Year 2000 issue  results from  computer  programs and  circuitry
that do not  differentiate  between the year 1900 and the year 2000 because they
were written using two- rather than  four-digit  dates to define the  applicable
year. If not corrected,  many computer  applications and date-sensitive  devices
could fail or create erroneous  results before, on or after January 1, 2000. The
Year 2000 issue affects virtually all companies and organizations, including the
Company.

            The Company has developed,  and is  implementing a plan, the goal of
which is to assure that the Company will achieve Year 2000  readiness in time to
avoid  significant  Year 2000  failures.  The  Company  is  proceeding  with its
assessment of the Year 2000 readiness issues for its computer systems,  business
processes, facilities and equipment to assure their continued functionality. The
Company is continuing  its  assessment  of the  readiness of external  entities,
including subcontractors,  suppliers, vendors, and customers that interface with
the Company. To that end, the Company has taken the following actions:
<PAGE>

   o   Computer Systems. The Company periodically  upgrades its computer systems
      as its needs  require.  The  Company  began the  process of  replacing  or
      upgrading  the  software for its internal  computer  systems in 1998,  and
      expects  to  complete  this  process,  including  the  replacement  of its
      financial  and project  management  systems by the third  quarter of 1999.
      Vendors of the new internal  computer  systems  certified  them to be Year
      2000 compliant.  The Company's computer hardware is limited to stand-alone
      and  networked  desk-top  systems.  The Company has assessed the Year 2000
      readiness of its computer hardware and potential risks to operations,  and
      intends to replace  those  systems that may pose a risk to  operations  in
      1999. Parker FIRST, the Company's new proprietary  software  product,  has
      been developed and maintained by Parker Reorder. Parker FIRST software was
      designed to account for the Year 2000 and beyond.  This  software  product
      was in use by hotel companies beginning in 1998.

   o   Business Processes. The Company has and continues to assess the potential
      impact  of Year  2000  on its  business  processes.  Management  for  each
      division is  assessing  the risks of Year 2000  issues as it  specifically
      relates to such businesses,  and the division's readiness.  The Company is
      in the process of contacting its key vendors, suppliers and subcontractors
      regarding their Year 2000 readiness.

            The costs incurred for replacing or upgrading the Company's computer
systems  are  being  funded  with  cash  flows  from  operations  and  available
financing.   The  costs  incurred   principally  relate  to  new  systems  being
implemented to improve business functionality rather than solely to address Year
2000 issues.  These costs associated with the computer systems  replacements and
implementation are anticipated to be approximately $3.0 million.

            The Company believes that its internal computer systems, facilities,
and equipment  will be Year 2000  compliant.  However there is no assurance that
all of the planned  upgrades  will be completed in time or function as intended.
As the Company has no contingency  plan other than to deal as  expeditiously  as
possible  with  situations  if and when they arise,  the Company may  experience
significant disruptions, the costs of which the Company is unable to estimate at
this time. The Company also believes that disruptions in some of its vendors' or
subcontractors'  operations will not  significantly  affect its projects because
the Company has relationships with other vendors and subcontractors with similar
expertise.  The Company  cannot  assume,  however,  that an  adequate  supply of
vendors or subcontractors will be available.

Item 7a.  Quantitative and Qualitative Disclosures about Market Risk

            The Company  does not have a material  exposure to risks  associated
with foreign currency  fluctuations related to its operations.  The Company does
not use derivative financial instruments in its operations. The Company does not
have a material  exposure to market  risks  associated  with changes in interest
rates given (a) the relative  stability  of interest  rates  currently,  (b) the
types of debt  securities  the Company  invests in and (c) the Company's lack of
significant  balances  of variable  interest  rate debt.  The  Company  does not
believe that it has any other material  exposure to market risks associated with
interest rates.

Item 8.  Financial Statements

            See Index to Financial Statements.

Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosure

            On November 19, 1997, the Company dismissed BDO Seidman, LLP ("BDO")
as its independent  accountants.  The Company's Board of Directors approved such
dismissal.  BDO accountant's  report on the financial  statements of the Company
for the prior 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, Arthur Andersen LLP was engaged as independent
accountants to the Company.

<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 January 1, 1998, by and between
                    the Company and Robert A. Berman  (Incorporated by reference
                    to Exhibit 10.6 to the Amendment No. 1 to the Company's Form
                    10-K,  filed on April 29, 1998,  for the year ended December
                    31, 1997).
          10.7      Employment Agreement,  dated January 1, 1998, by and between
                    the Company and Howard G. Anders  (Incorporated by reference
                    to Exhibit  10.7 to the  Company's  Form 10-K filed on April
                    29, 1998, for the year ended December 31, 1997).
          10.8      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).
          10.9      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).


<PAGE>
         10.10      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).
         10.11      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).
         10.12      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).
         10.13      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).
         10.14      Employment Agreement,  dated January 1, 1998, by and between
                    the Company and Douglas Parker (Incorporated by reference to
                    Exhibit 10.14 to the  Amendment No. 1 to the Company's  Form
                    10-K,  filed on April 29, 1998,  for the year ended December
                    31, 1997).
         10.15      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).
         10.16      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).
         10.17      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).
         10.18      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).
         10.19      Registration  Rights  Agreement dated as of January 1, 1998,
                    by and among the Company and the Shareholders  named therein
                    (Incorporated  by reference to Exhibit 10.1 to the Company's
                    Amended Current Report on 8-K, dated September 16, 1998).
         10.20      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).
         10.21      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).
         10.22      Stock Purchase Agreement, dated as of March 30, 1999, by and
                    among  the  Company,  Watermark  Investments  Limited,  LLC,
                    Leonard  Parker,  Douglas  Parker,  Philip Parker,  Mitchell
                    Parker, Gregg Parker and Bradley Parker.
            11      Computation  of earnings per share  (Incorporated  herein by
                    reference to Note 16 to the Company's Consolidated Financial
                    Statements).
            21      Subsidiaries  of the Company  (Incorporated  by reference to
                    Exhibit  21 to the  Company's  Form 10-K for the year  ended
                    December 31, 1998).
           *23      Consent of Arthur Andersen LLP
           *27      Financial Data Schedule

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

(c)         Reports on Form 8-K

Form 8-K dated January 9, 1998,  filed with the  Commission on January 23, 1998,
as amended on March 24, 1998,  April 16, 1998 and September 16, 1998,  reporting
Item 2, Acquisition or Disposition of Assets.

<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: April 15, 1999              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:

           Signature                           Title                  Date

/s/ Robert A. Berman           Chairman of the Board, Chief       April 15, 1999
------------------------       Executive Officer (principal
Robert A. Berman               executive officer) and Director

/s/ Leonard F. Parker          Chairman Emeritus of the Board     April 15, 1999
------------------------       and Director
Leonard F. Parker

/s/ Douglas A. Parker          President and Director             April 15, 1999
------------------------
Douglas A. Parker

/s/ Howard G. Anders           Executive Vice President,          April 15, 1999
------------------------       Chief Financial Officer,
Howard G. Anders               (principal financial officer,
                               principal accounting officer)
                               and Secretary

/s/ Scott A. Kaniewski         Director                           April 15, 1999
------------------------
Scott A. Kaniewski

/s/ Louis K. Adler             Director                           April 15, 1999
------------------------
Louis K. Adler

/s/ George C. Asch             Director                           April 15, 1999
------------------------
George C. Asch

/s/ Richard A. Bartlett        Director                           April 15, 1999
------------------------
Richard A. Bartlett

<PAGE>


Item 8.     Financial Statements

                          Index to Financial Statements

                                                                        Page No.
                                                                        --------

HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARIES

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

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


<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,  1998  and  1997  and  the  related  consolidated   statements  of
operations,  stockholders' equity and cash flows for the years 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, 1998 and 1997, and the results of their
operations  and their cash flows for the years then ended,  in  conformity  with
generally accepted accounting principles.



Arthur Andersen LLP


/s/ Arthur Andersen LLP

New York, New York
March 30, 1999

<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 consolidated statements of operations,  stockholders' equity
and cash flows of Hospitality  Worldwide  Services,  Inc. (formerly Light Savers
U.S.A.,  Inc.) and  subsidiary  for the year  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 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 consolidated  financial statements referred to above present
fairly, in all material respects the results of its operations and cash flows of
Hospitality Worldwide Services,  Inc. and subsidiary for the year ended December
31, 1996, in conformity with generally accepted accounting principles.



BDO Seidman, LLP


/s/ BDO Seidman, LLP

New York, New York
March 21, 1997


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

<TABLE>
<CAPTION>
                                     ASSETS
                                                                                         December 31,
                                                                                  1998                 1997
                                                                                  ----                 ----

<S>                                                                             <C>                 <C>        
Cash and cash equivalents                                                       $2,178,856          $11,964,129
Marketable securities                                                            8,500,000           18,915,686
Accounts receivable, net (Note 5)                                               56,846,432           21,932,667
Costs and estimated earnings in excess of billings (Note 5 and 6)                5,566,942            3,420,829
Note receivable                                                                         --              342,144
Advances to vendors                                                             12,759,446            4,255,181
Deferred taxes (Note 10)                                                         3,834,079               64,881
Prepaids and other current assets                                                4,737,140            1,037,480
                                                                                ----------          ------------
        Total current assets                                                    94,422,895           61,932,997
Property and equipment, net (Note 7)                                             8,715,682            3,547,712
Goodwill and other intangibles, net (Note 3)                                    24,746,934           17,078,180
Deferred taxes (Note 10)                                                           701,099              674,207
Other assets                                                                     4,787,440            1,034,595
                                                                              ------------          -----------
        Total assets                                                          $133,374,050          $84,267,691
                                                                              ------------          -----------

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable (Note 5)                                                     $ 32,075,326          $16,374,426
Accrued and other liabilities                                                    6,558,959            2,540,222
Billings in excess of costs and estimated earnings (Note 6)                      1,758,158              295,967
Customer deposits                                                               19,863,845           13,323,571
Current portion of long-term debt (Note 9)                                         621,000                   --
Loans payable  (Note 8)                                                         10,925,000                   --
Income taxes payable (Note 10)                                                     176,045                7,669
                                                                              ------------          -----------
        Total current liabilities                                               71,978,333           32,541,855

Long-term debt (Note 9)                                                          2,964,862                   --
                                                                              ------------          -----------
        Total liabilities                                                       74,943,195           32,541,855

Commitments and contingencies (Note 12)

Stockholders' equity  (Note 14)
Convertible preferred stock, $.01 par value, $25 stated value,                   3,000,000            5,000,000
   5,000,000 shares authorized,120,000 and 200,000 shares
   issued and outstanding, $3,000,000 and $5,000,000
   liquidation preference
Common stock, $.01 par value, 50,000,000 shares authorized,                        127,102              113,456
   12,710,156 and 11,345,572 issued
Additional paid-in capital                                                      56,447,760           47,519,725
Retained earnings (deficit)                                                     (1,144,007)            (907,345)
                                                                              ------------          -----------
        Total stockholders' equity                                              58,430,855           51,725,836
                                                                              ------------          -----------
        Total liabilities and stockholders' equity                            $133,374,050          $84,267,691
                                                                              ------------          -----------
</TABLE>

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


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

<TABLE>
<CAPTION>

                                                                                     Year Ended December 31,
                                                                        1998                    1997                  1996
                                                                        ----                    ----                  ----
<S>                                                                 <C>                         <C>                   <C>        
Revenues                                                            $     229,979,210           $85,441,712           $24,367,112
                                                                  -------------------- --------------------- ---------------------
Cost of revenues:
      Cost of revenues                                                    198,855,319            74,399,612            18,289,924
      Provision on contract revenues                                        8,863,000                    --                    --
                                                                  -------------------- --------------------- ---------------------
      Total cost of revenues                                              207,718,319            74,399,612            18,289,924
                                                                  -------------------- --------------------- ---------------------
             Gross profit                                                  22,260,891            11,042,100             6,077,188
Selling, general and administrative expenses                               21,113,908            10,857,464             3,218,520
                                                                  -------------------- --------------------- ---------------------
             Income from operations                                         1,146,983               184,636             2,858,668
                                                                  -------------------- --------------------- ---------------------
Other income (expense):
      Interest expense                                                      (756,100)             (287,633)               (26,101)
      Interest income                                                      1,314,605               774,836                  1,141
      Warrant expense                                                              --           (1,287,500)                    --
                                                                  -------------------- --------------------- ---------------------
      Total other income (expense)                                            558,505             (800,297)              (24,960)
                                                                  -------------------- --------------------- ---------------------
      Income (loss) from continuing operations before                       1,705,488             (615,661)             2,833,708
      income taxes
Provision for income taxes                                                    755,150               227,988               926,325
                                                                  -------------------- --------------------- ---------------------
             Income (loss) from continuing operations                         950,338             (843,649)             1,907,383
                                                                  -------------------- --------------------- ---------------------
Discontinued operations (Note 4):
      Loss from discontinued operations (less applicable income
      tax benefit of $536,900 in 1998)                                       (826,100)                  --                (64,705)
      Loss on disposal of discontinued operations, including
      provision of $104,000 for operating losses during phase-
      out period (less applicable income tax benefit of $59,100)              (90,900)                  --                    --
                                                                  -------------------- --------------------- ---------------------
        Loss from discontinued operations                                    (917,000)                  --               (64,705)
                                                                  -------------------- --------------------- ---------------------
             Net income (loss)                                      $          33,338          $  (843,649)         $  1,842,678
                                                                  -------------------- --------------------- ---------------------
Basic earnings (loss) per common share:
         Income (loss) from continuing operations                   $            0.06          $     (0.13)         $       0.27
                                                                  -------------------- --------------------- ---------------------
         Discontinued operations:
             Loss from discontinued operations                                  (0.07)                  --                 (0.01)
             Loss on disposal                                                   (0.01)                  --                    --
                                                                  -------------------- --------------------- ---------------------
                                                                                (0.08)                  --                 (0.01)
                                                                  -------------------- --------------------- ---------------------
             Net income (loss)                                      $           (0.02)        $      (0.13)         $       0.26
                                                                  -------------------- --------------------- ---------------------
Diluted earnings (loss) per common share:
         Income (loss) from continuing operations                   $            0.05                   (a)         $       0.27
                                                                  -------------------- --------------------- ---------------------
         Discontinued operations:
             Loss from discontinued operations                                    (a)                    --               (0.01)
             Loss on disposal                                                     (a)                    --                  --
                                                                  -------------------- --------------------- ---------------------
                                                                                  (a)                    --               (0.01)
                                                                  -------------------- --------------------- ---------------------
             Net income (loss)                                                    (a)                   (a)         $      0.26
                                                                  -------------------- --------------------- ---------------------

Weighted average common shares outstanding                                 12,092,437            8,885,570            6,983,333
                                                                  -------------------- --------------------- ---------------------
Weighted average common and common equivalent shares
outstanding                                                                13,227,021            9,876,802            7,131,915
                                                                  -------------------- --------------------- ---------------------
</TABLE>

(a)    Antidilutive

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


<PAGE>
              HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
                                     Preferred Stock                 Common Stock
                               Number of          Stated       Number of      Par Value  
                                  of               Value        Shares                   
                                 Shares                                                  
----------------------------- ------------ -------------- ---------------- ------------- 
BALANCE,                               --             --        7,125,655       $71,257  
January 1, 1996
Purchase of treasury stock             --             --      (1,000,000)            --  
Sale of treasury stock                 --             --          500,000            --  
Stock issued in settlement             --             --           75,000           750  
of service agreements
Stock options issued for               --             --               --            --  
services
Exercise of stock options              --             --           25,000           250  
and warrants
Net income                             --             --               --            --  
----------------------------- ------------ -------------- ---------------- ------------- 
BALANCE,                               --             --        6,725,655        72,257  
 December 31, 1996
Purchase of treasury stock             --             --        (500,000)            --  
Exercise of stock options              --             --          419,917         4,199  
and warrants
Issuance of shares in             200,000      5,000,000        1,250,000        12,500  
connection with acquisition
Stock issued in connection             --             --        3,450,000        24,500  
with offering, net of
expenses
Income tax benefit from                --             --               --            --  
warrants exercised
Warrants issued for services           --             --               --            --  
Net loss                               --             --               --            --  
Preferred dividends                    --             --               --            --  
----------------------------- ------------ -------------- ---------------- ------------- 
BALANCE,                          200,000     $5,000,000       11,345,572      $113,456  
 December 31, 1997
Exercise of stock options              --              --         265,667         2,657  
and  warrants
Issuance of shares in                  --              --         514,117         5,141  
connection with acquisition
Conversion of preferred          (80,000)    (2,000,000)          584,800         5,848  
stock
Net income                             --             --               --            --  
Preferred dividends                    --             --               --            --  
----------------------------- ------------ -------------- ---------------- ------------- 
<S>                               <C>         <C>              <C>             <C>       
BALANCE                           120,000     $3,000,000       12,710,156      $127,102  
December 31, 1998
----------------------------- ------------ -------------- ---------------- ------------- 
</TABLE>

<TABLE>
<CAPTION>
                                 Treasury         Additional Paid     Retained            Total
                                  Stock            in Capital         Earnings        Stockholders'
                                                                      (Deficit)           Equity
----------------------------- --------------- ----------------- ----------------- ------------------
BALANCE,                           $--              $7,865,285      ($1,606,374)         $6,330,168
January 1, 1996
Purchase of treasury stock       (1,152,500)                --                --        (1,152,500)
Sale of treasury stock               437,500            62,500                --            500,000
Stock issued in settlement                --           149,250                --            150,000
of service agreements
Stock options issued for                  --            44,000                --             44,000
services
Exercise of stock options                 --            64,375                --             64,625
and warrants
Net income                                --                --         1,842,678          1,842,678
----------------------------- --------------- ----------------- ----------------- ------------------
BALANCE,                           (715,000)         8,185,410           236,304          7,778,971
 December 31, 1996
Purchase of treasury stock       (2,210,000)                --                --        (2,210,000)
Exercise of stock options                 --         1,018,931                --          1,023,130
and warrants
Issuance of shares in                     --         6,940,000                --         11,952,500
connection with acquisition
Stock issued in connection         2,925,000        27,379,246                --         30,328,746
with offering, net of
expenses
Income tax benefit from                   --           360,349                --            360,349
warrants exercised
Warrants issued for services              --         3,635,789                --          3,635,789
Net loss                                  --                --         (843,649)          (843,649)
Preferred dividends                       --                --         (300,000)          (300,000)
----------------------------- --------------- ----------------- ----------------- ------------------
BALANCE,                                  --       $47,519,725       $ (907,345)        $51,725,836
 December 31, 1997
Exercise of stock options                 --           768,024                --            770,681
and  warrants
Issuance of shares in                     --         6,165,859                --          6,171,000
connection with acquisition
Conversion of preferred                   --         1,994,152                --                 --
stock
Net income                                --                --            33,338             33,338
Preferred dividends                       --                --         (270,000)          (270,000)
----------------------------- --------------- ----------------- ----------------- ------------------
<S>                                <C>             <C>              <C>                 <C>        
BALANCE                                   --       $56,447,760      $(1,144,007)        $58,430,855
December 31, 1998
----------------------------- --------------- ----------------- ----------------- ------------------
</TABLE>

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


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

                                                                                               Year Ended December 31,
                                                                                      1998               1997            1996
                                                                                      ----               ----            ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                               <C>              <C>               <C>        
Net income (loss)                                                                      $33,338        $(843,649)     $ 1,842,678
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization                                                        2,295,949        1,114,001          404,114
Stock based compensation charge                                                        213,555        1,593,420           44,000
Deferred income tax benefit                                                        (3,796,090)        (668,422)         (65,280)
(Increase) decrease in current assets:
Accounts receivable, net                                                          (31,651,765)     (12,299,779)      (1,548,005)
Current assets of discontinued operations                                                   --               --          145,317
Costs in excess of billings                                                        (2,146,113)      (1,243,922)      (2,047,173)
Advances to vendors                                                                (8,504,265)      (4,255,181)               --
Prepaid and other current assets                                                       138,268           36,528        (290,632)
Other assets                                                                           519,942        (487,100)         (81,014)
Increase (decrease) in current liabilities:
Accounts payable                                                                    13,977,900       10,579,593          134,481
Accrued and other liabilities                                                        2,909,737          316,802          862,204
Billings in excess of costs                                                          1,316,191           95,165        (419,772)
Customer deposits                                                                    6,540,274       10,046,533               --
Accrued loss on disposal of discontinued operations                                    150,000               --        (398,806)
Income taxes payable                                                                   168,376        (290,191)          297,860
                                                                                --------------- ---------------- ----------------
      Net cash provided by (used in) operating activities                         (17,834,703)        3,693,798      (1,120,028)
                                                                                --------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities                                                  (8,500,000)     (18,915,686)               --
Sale of marketable securities                                                       18,915,686               --          715,000
Purchase price of acquisition                                                      (1,500,000)               --               --
Cash acquired upon acquisition, net of acquisition costs                              (62,000)          479,061               --
Notes receivable repayment                                                             342,144               --               --
Investment in real estate ventures                                                 (4,187,260)        (414,473)               --
Purchase of property and equipment                                                 (3,665,536)      (2,694,522)         (65,682)
Investment in mortgages receivable                                                 (3,637,000)               --               --
                                                                                --------------- ---------------- ----------------
      Net cash provided by (used in) investing activities                          (2,293,966)     (21,545,620)          649,318
                                                                                --------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings on loan payable                                            26,625,000        3,180,000        1,400,000
Repayment of loan payable                                                         (15,700,000)      (4,580,000)        (455,926)
Repayment of long term debt                                                        (1,352,285)               --               --
Purchase of treasury stock                                                                  --      (2,210,000)      (1,152,500)
Proceeds from sale of treasury stock                                                        --               --          500,000
Proceeds from stock offering                                                                --       32,126,630               --
Proceeds from exercise of stock options and warrants                                   770,681        1,023,130           64,625
                                                                                --------------- ---------------- ----------------
      Net cash provided by financing activities                                     10,343,396       29,539,760          356,199
                                                                                --------------- ---------------- ----------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                               (9,785,273)       11,687,938        (114,511)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                      11,964,129          276,191          390,702
                                                                                --------------- ---------------- ----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                           $ 2,178,856      $11,964,129     $    276,191
                                                                                --------------- ---------------- ----------------
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
              HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                           Year Ended December 31,
                                                                              1998                 1997                       1996
                                                                              ----                 ----                       ----
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
<S>                                                                        <C>                   <C>                   <C>        
Interest                                                                   $  794,724            $ 178,113             $    26,101
Income taxes                                                                3,826,546              785,127                 696,324
NON-CASH INVESTING & FINANCING
ACTIVITIES:
Net assets acquired (including goodwill)                                    6,233,000           11,166,229                      --
Stock issued for assets acquired                                            6,171,000           11,952,500                      --
Issuance of stock for repayment of debt                                            --                   --                 150,000
Preferred stock dividends not paid in lieu of purchase
price reduction for LPC                                                            --              300,000                      --
acquisition
Warrants granted and exercisable by Apollo                                         --            1,837,527                      --
Warrants granted to underwriters for stock offering                                --            1,798,262                      --
Preferred stock dividends accrued                                             270,000                   --                      --
</TABLE>


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


<PAGE>
              HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.          Organization and Business

            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 hotel cosmetic renovations and maintenance,  acts
as a purchasing agent and principal for leading hotel and hospitality customers,
provides  logistical  services to a wide variety of customers  and provides real
estate  advisory  services to the  hospitality  industry  throughout  the United
States, with limited operations abroad.

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 investments in
real estate joint  ventures,  which are  accounted for under the equity and cost
method, as appropriate.  All significant inter-company 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.  Unapproved  change orders and
claims are included in earnings  from  renovation  contracts at their  estimated
recoverable  amounts 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 contracts.


<PAGE>

Procurement

            The Company  recognizes  procurement  earnings for fixed fee service
contracts  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 efforts  expended bears to the estimated  efforts over
the life of the  contract.  Earnings  for  variable  fee service  contracts  are
generally recognized upon completion of the associated service.

            The  Company  performs  procurement  services  either  acting  as  a
principal,  for  which it  functions  in a manner  similar  to a  purchaser  and
reseller of merchandise,  or as an agent. As an agent,  revenues  include solely
the service fee income and the cost of the  contracts  includes  labor and other
direct costs  associated  with the contract and those  indirect costs related to
contract  performance.  As a principal,  the revenues and cost of the  contracts
also include the associated  merchandise  purchased for the customer,  which are
recognized  when the  merchandise  is  shipped  directly  from the vendor to the
customer.

            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.

Logistics

            The  Company  recognizes  earnings  on  logistics  and  installation
services  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 efforts  expended bears to the estimated  efforts over
the life of the  contract.  The cost of the contracts  includes  labor and other
direct costs  associated  with the contract and those  indirect costs related to
contract performance.

            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;  software, 7 years;  furniture and fixtures,  10 years; and building,  25
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 15-30 years.  Goodwill  represents the costs of an acquisition in
excess of the fair  value of net  assets  acquired  at the date of  acquisition.
Accumulated  amortization was $2,439,238 and $1,489,855 at December 31, 1998 and
1997, respectively.

            Earnings Per Common Share

            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 incremental number of shares issuable under stock-based  compensation plans,
the assumed conversion of convertible preferred stock and the elimination of the
preferred stock dividends, if such adjustments are dilutive.

<PAGE>
            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.

            Marketable Securities

            Marketable debt and equity  securities  consisted of certificates of
deposit  maturing in six months or less as of December  31, 1998 and  commercial
paper and treasury notes maturing in six months or less as of December 31, 1997.
Marketable    securities   are   classified   as    available-for-sale   or   as
held-to-maturity,    based   on   the   Company's   intended   holding   period.
Available-for-sale  securities are reported at fair value based on quoted market
prices, with unrealized gains or losses, if any, reported as other comprehensive
income.  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

            Long-lived  assets to be held and used are 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,  when the carrying  amount of an asset exceeds the sum of its expected
future cash flows,  on an  undiscounted  basis,  the asset's  carrying amount is
written down to fair value.  Long-lived assets to be disposed of are reported at
the lower of carrying amount or fair value less cost to sell.

            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 based method 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,  accounts payable, and accrued and other
liabilities  approximate  the fair values as of December  31,  1998,  due to the
short-term  maturity of these  instruments.  The carrying amounts as of December
31,  1998 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
settlement  amounts for such  instruments  given the intended holding period and
approximate  their carrying amounts as of December 31, 1998. The carrying amount
of the loan payable approximates its fair value given the short term maturity of
the loan. The fair value of long-term  debt is estimated  based on the Company's
year-end,  risk-adjusted incremental borrowing rate for similar liabilities.  As
of December 31, 1998, the carrying amount of the debt approximated fair value.

            Comprehensive Income

            In 1998,  the Company  adopted  Statement  of  Financial  Accounting
Standards  ("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 includes net
income plus other  comprehensive  income,  which includes  changes in cumulative
foreign  translation  adjustments and


<PAGE>

unrealized    gains   and   losses   on   marketable    securities    that   are
available-for-sale.  The Company has not presented  statements of  comprehensive
income, as other comprehensive income was not material.

3.          Acquisitions

            In January 1997,  the Company  completed the  acquisition of Leonard
Parker  Company  ("LPC") and Parker Reorder Online  ("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  provides  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  200,000  newly  issued  shares of 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.

            In January 1998, the Company acquired 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,  including  acquisition
costs, of approximately  $11,400,000 consisted of 514,117 shares of Common Stock
and the assumption of certain Bekins' debt. Additionally, under the terms of the
purchase  agreement,  the Company was  required to issue an  additional  639,512
shares of Common  Stock in January  1999 given the  decrease in the price of the
Company's common stock on the one year anniversary date of the acquisition.  The
acquisition  resulted  in goodwill of  approximately  $7,400,000  which is being
amortized on a straight-line  basis over its estimated  useful life of 30 years.
The  acquisition has been accounted for as a purchase with the results of Bekins
included  in the  consolidated  financial  statements  of the  Company  from the
acquisition date.

            In February  1998,  the  Company,  through HWS REAG,  purchased  the
assets of Watermark  Investments  Limited's  ("Watermark")  real estate advisory
business,  consisting  primarily of contracts to perform future asset management
and advisory services.  Watermark is an international management company that is
the general partner of and manages  Watertone  Holdings LP, a shareholder of the
Company.  The purchase price was $1,500,000 of cash. The acquisition resulted in
goodwill of approximately $1,500,000 which is being amortized on a straight-line
basis over its  estimated  useful  life of 15 years.  The  acquisition  has been
accounted  for as a  purchase  with  the  results  of HWS REAG  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 LPC,  Parker Reorder and Bekins.  The pro
forma financial  information is based on the historical  financial statements of
the Company,  LPC,  Parker  Reorder and Bekins 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, 1996. 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,  1996,  and  neither is it
necessarily indicative of the results of operations for future periods.

<TABLE>
<CAPTION>

Year Ended December 31                                               1997              1996
-------------------------------------------------------------------------------------------------
(unaudited)
<S>                                                                <C>               <C>
Revenues                                                           $105,357,000      $100,851,000
Income (loss) from continuing operations                              (675,000)         1,718,000
Basic income (loss) per share from continuing operations                 (0.10)              0.16
Diluted income (loss) per share from continuing operations                  (a)              0.14
--------------------------------------------------------------------------------------------------
</TABLE>

(a)  antidilutive

<PAGE>
            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 a 30 year period,  dividends of 6% on preferred shares in
the  LPC  and  Parker  Reorder  transaction,   officers  compensation  based  on
employment agreements entered into at the date of acquisition, additional income
taxes on pro forma income and given  Bekin's  organizational  structure  and the
1,764,117 common shares and $5,000,000  preferred shares issued as consideration
in the transactions through December 31, 1998.

4.          Discontinued Operations

            In 1998, the Company commenced operations associated with its wholly
owned subsidiary,  Hospitality Development Services Corporation ("HDS"). HDS was
to provide hotel  development  services  involving  managing and  overseeing the
development  process  related to new hotel  construction.  In January 1998,  the
Company  reached an agreement  in  principle to enter into a master  development
agreement with Prime Hospitality  Corp.  ("Prime") to develop up to 20 new hotel
properties over a two-year  period.  The agreement was executed in June 1998. In
late 1998,  the Company was  informed by Prime that Prime was no longer going to
pursue  new  development   opportunities,   including  those  under  the  master
development agreement with the Company.

            In December  1998,  the  Company  decided to  discontinue  its hotel
development  business,  especially  in light of Prime's  decision.  The  Company
anticipates ceasing operations by April 1999, although the resolution date as to
the recovery from Prime of costs  incurred by the Company and lost profits under
their master development  agreement is uncertain.  The Company has reflected the
current year operating results associated with its development business, as well
as the estimated loss on disposal,  as discontinued  operations on the statement
of 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 1996,  the  Company
incurred additional losses from discontinued operations of $64,705.


5.          Accounts Receivable and Accounts Payable

            Accounts  receivables  include  retainages of $3,756,317 at December
31, 1998 and $636,577 at December 31, 1997, on contracts  which are  collectible
upon the  acceptance  by the  owner.  All  amounts  at  December  31,  1997 were
collected  in 1998 and  amounts  at  December  31,  1998 are  anticipated  to be
collected  in  their  entirety  in  1999.  As of  December  31,  1998,  accounts
receivable and costs and estimated  earnings in excess of billings are shown net
of the 1998  provision  on  contract  revenues  of  $6,500,000  and  $2,363,000,
respectively.

            Accounts  receivables and costs and estimated  earnings in excess of
billings  include  unapproved  change  orders and  estimated  net claims,  which
involve  negotiations  with  the  customer  and in  some  cases  may  result  in
litigation.  The Company  believes that it has established  contractual or legal
bases for pursuing  recovery of  unapproved  change  orders and claims and it is
management's intention to pursue these matters and litigate, if necessary, until
a decision or settlement is reached. Unapproved change orders and claims involve
the  use of  estimates  and it is  reasonably  possible  that  revisions  to the
estimated recoverable amounts could be made within the next year. The settlement
of these amounts depends on individual  circumstances  and negotiations with the
counter  party,  accordingly,  the  timing of the  collection  will vary and may
extend  beyond  one  year.  The  amounts  recorded  at  December  31,  1998 were
approximately $12,200,000.


<PAGE>

            The Company  withholds a portion of payments due  subcontractors  as
retainages,  which  amounted to  $1,348,124 at December 31, 1998 and $212,278 at
December 31,  1997.  The  subcontractor  balances  are  generally  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,
                                                                                    1998                            1997
------------------------------------------------------------------------------------------------------ ---------------------
<S>                                                                              <C>                           <C>        
Costs incurred on uncompleted contracts                                          $62,823,883                   $15,629,620
Estimated earnings                                                                18,494,385                     7,333,524
Billings to date                                                                 (77,509,484)                  (19,838,282)
---------------------------------------------------------------------------------------------- -----------------------------
Costs and estimated earnings on uncompleted contracts in excess
of billings                                                                       $3,808,784                    $3,124,862
------------------------------------------------------------------------------------------------ ---------------------------
Included in the accompanying consolidated balance sheet under the
following captions:
Costs and estimated earnings in excess of billings                                $5,566,942                    $3,420,829
Billings in excess of costs and estimated earnings                                (1,758,158)                     (295,967)
--------------------------------------------------------------------------------------------- -----------------------------
                                                                                  $3,808,784                    $3,124,862
--------------------------------------------------------------------------------------------- -----------------------------
</TABLE>

7.      Property and Equipment

        Property and equipment consist of the following:
<TABLE>
<CAPTION>

                                                                        December 31,
                                                             1998                             1997
---------------------------------------------------------------------------------------------------
<S>                                                     <C>                       <C>             
Building                                                $  2,263,874              $             --
Furniture and fixtures                                     1,056,746                       347,769
Office equipment                                           2,295,139                     1,068,352
Leasehold improvements                                       609,064                       245,297
Software                                                   3,911,256                     2,224,167
---------------------------------------------------------------------------------------------------
                                                          10,136,079                     3,885,585
Less: Accumulated depreciation and amortization          (1,420,397)                     (337,873)
---------------------------------------------------------------------------------------------------
                                                        $  8,715,682                  $  3,547,712
---------------------------------------------------------------------------------------------------
</TABLE>

8.      Loans Payable

        In 1996, the Company  obtained a secured line of credit with a bank. The
line provided for borrowings of up to $2.5 million,  with interest at prime plus
1/2% and was  collateralized  by all Company  assets and was  guaranteed  by the
Company's  renovation  subsidiary.  In September  1997,  the Company  repaid all
outstanding borrowings under the line.

        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.

        In March 1998,  the Company  obtained an  unsecured  line of credit with
Marine Midland Bank.  The line provides for borrowings of up to $7,000,000  with
interest at the bank's prime  lending  rate.  At December  31, 1998,  there were
$4,975,000 in outstanding  borrowings under the line. The line of credit matures
on May 31, 1999.


<PAGE>
        In July 1998,  the  Company  obtained an  unsecured  line of credit with
NationsBank.  The line provides for borrowings of up to $6,000,000 with interest
at the bank's prime lending rate. At December 31, 1998, there were $5,950,000 in
outstanding  borrowings  under the line.  The line of credit  matures on May 30,
1999.

        The  weighted  average  interest  rates  for 1998 and 1997 on the  loans
outstanding during the year were 8.20% and 8.92%, respectively.

    9.      Long-Term Debt

        Long-term debt consists of the following:
<TABLE>
<CAPTION>
                                                                                               December 31,
                                                                                     1998                      1997
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>                             <C>
Term loan with NationsBank held by Bekins. Payable in quarterly                   $1,854,000                      --
installments of $117,000 with the final balance due on April 1, 2001.Interest
 is at the bank's prime lending rate (7.75% at December 31, 1998).

Mortgage note payable with NationsBank held by Bekins related to the               1,633,000                      --
building owned. Payable in quarterly installments of $31,000 with the final
balance due on April 1, 2001. Interest is at the bank's prime lending rate
(7.75% at December 31, 1998).

Capital lease  obligations  held by Bekins covering various office furniture          43,000                      --
and equipment  bearing  interest  at fixed  rates of 6.75% to 10.50% with
varying payments through December 2001.

Notes payable held by LPC covering computer and office equipment bearing              55,862                      --
interest at fixed rates of 9% to 23%, with payments through September 2001
                                                                                ---------------------------------------
                                                                                   3,585,862                      --
Less current maturities                                                              621,000                      --
                                                                                ---------------------------------------
                                                                                  $2,964,862                      --
                                                                                ---------------------------------------
</TABLE>

The term loan and  mortgage  note payable  contain  restrictive  covenants  that
require, among other things, Bekins to maintain certain ratios of operating cash
flow to fixed charges and total funded debt to operating cash flows,  as well as
minimum  operating cash flows. At December 31, 1998,  Bekins was in violation of
one of the covenants and received a waiver of such violation from the bank.

The following represents the schedule of the aggregate annual principal payments
on long-term debt for the years ended December 31:

                            1999                                $621,000
                            2000                                 633,931
                            2001                               2,330,931
                            2002                                      --
                         thereafter                                   --
                                                 -----------------------
                                                              $3,585,862

<PAGE>
10.     Income Taxes

        The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>

                                                             Year Ended December 31,
                                                1998                    1997                    1996
-----------------------------------------------------------------------------------------------------
Current:
<S>                                        <C>                    <C>                     <C>        
Federal                                    $ 3,117,122            $   360,349             $   620,929
State and Local                                838,118                536,061                 370,676
------------------------------------------------------------------------------------------------------
                                             3,955,240                896,410                 991,605
------------------------------------------------------------------------------------------------------

Deferred:
Federal                                    (3,046,406)              (465,547)                (65,280)
State and Local                              (749,684)              (202,875)                      --
------------------------------------------------------------------------------------------------------
                                           (3,796,090)              (668,422)                (65,280)
------------------------------------------------------------------------------------------------------
Total                                      $   159,150            $   227,988             $   926,325
------------------------------------------------------------------------------------------------------
</TABLE>

        For the year ended December 31, 1998,  the Company  recorded a provision
for income taxes for continuing  operations of $755,150 and a benefit for income
taxes for discontinued operations of $596,000.

    The following is a reconciliation of the Company's income taxes based on the
statutory  rate and the actual  provision  for income taxes for both  continuing
operations and discontinued operations:

<TABLE>
<CAPTION>

                                                                         Year Ended December 31,
                                                              1998                   1997                    1996
------------------------------------------------------------------- ---------------------- -----------------------
<S>                                                    <C>                    <C>                      <C>
Statutory federal income tax at 34%                    $    65,446            $ (209,325)              $   963,640
Increase (decrease) resulting from:
Prior year provision adjustment                          (205,028)                     --                       --
State and local taxes, net of federal tax benefit           58,366                219,903                  239,027
Nondeductible goodwill amortization and expenses           240,366                217,410                   62,778
-------------------------------------------------------------------------------------------------------------------
Provision for income taxes                             $   159,150            $   227,988              $   926,325
-------------------------------------------------------------------------------------------------------------------
</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, 1998 and 1997 are as follows:

<TABLE>
<CAPTION>

Deferred Income Tax Liability (Asset)                            1998                          1997
----------------------------------------------------------------------------------------------------
<S>                                                        <C>                          <C>        
Warrant expense                                            $(677,580)                   $ (735,016)
Rent expense                                                (102,562)                      (52,800)
Goodwill amortization                                          62,959                        50,017
Allowance for doubtful accounts                           (3,834,079)                      (64,881)
Other                                                          16,084                        63,592
                                                       --------------                   -----------
                                                         $ (4,535,178)                   $ (739,088)
                                                       --------------                   -----------
</TABLE>

        The Company has  recorded  net  deferred tax assets at December 31, 1998
and 1997 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 the
expectation  that the Company will generate  taxable  income in future years and
the ability to carry back losses to prior years.

<PAGE>
11.  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 1996 the Company paid
      fees of $172,786 to Interstate.

(b)   During  1997 and 1996,  the  Company  performed  renovation  services  for
      Watermark.  Watermark  is the general  partner of  Watertone  Holdings LP,
      which is a shareholder of the Company.  In addition,  the Chief  Executive
      Officer of the Company  was a director  of  Watermark.  During  1997,  the
      Company and Watermark  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,  1998 and  December  31, 1997 the
      Company had no receivables due from Watermark.

The following  revenues and gross profit have been reflected in the consolidated
financial statements:

                                       Year Ended               Year Ended
                                   December 31, 1997        December 31, 1996
--------------------------------------------------------------------------------
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 14), 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
      1998 and 1997.

(d)   Officer and Employee  Loans. At various times during the year, the Company
      has provided  short-term loans to various of the officers and employees of
      the Company bearing  interest at 12%. Loans provided during 1998, 1997 and
      1996 amounted to $3,590,000,  $767,000, and $0, respectively.  The balance
      owed to the Company was  $250,000  and  $647,500 at December  31, 1998 and
      1997, respectively.

(e)   During 1998 and 1997,  the Company  provided  renovation  and  procurement
      services to the Apollo  Joint  Venture and ING Joint  Venture in which the
      Company has an ownership  interest  (Note 12). The following  revenues and
      gross profit, exclusive of the warrant expense related to the Apollo Joint
      Venture  (Note 14),  have been  reflected  in the  consolidated  financial
      statements.

                                     Year Ended               Year Ended
                                 December 31, 1998        December 31, 1997
--------------------------------------------------------------------------------
Revenues                         $   22,806,617           $       850,960
Cost of revenues                     21,684,241                   622,634
--------------------------------------------------------------------------------
Gross profit                     $    1,122,376           $       228,326
--------------------------------------------------------------------------------

        Amounts   receivable   from  the  joint  ventures  were  $5,722,696  and
$1,161,000 at December 31, 1998 and 1997.

<PAGE>
12. Commitments and Contingencies

(A) Lease Commitments
        The Company  leases  office space in New York,  Los Angeles,  St. Louis,
Chicago  and Coral  Gables  which  expire at  various  dates  through  2007.  In
conjunction with the acquisition of Bekins in January,  1998 the Company assumed
a ground lease on a building in Orlando,  Florida which expires in 2085,  with a
minimum annual  payment of $6,489 and assumed a lease on warehouse  space in Las
Vegas, Nevada through October, 1999.

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

December 31
--------------------------------------------------------------------------------
1999                                               $  2,614,970
2000                                                  1,958,723
2001                                                  1,752,330
2002                                                  1,675,677
2003                                                  1,635,314
Thereafter                                            8,387,794
                                                   ------------
                                                    $18,024,808

        Rent  expense for 1998,  1997 and 1996 was  $2,581,948,  $1,093,686  and
$120,534 respectively.

(B) Employment Agreements
        The Company  currently has employment  agreements with twelve members of
management personnel that expire from January 2000 to March 2001 at an aggregate
annual compensation of $2,575,000.

(C) Litigation
        The  Company  is a  defendant  in  various  litigation  incident  to its
business and in some instances the amounts sought include substantial claims and
counterclaims.  Although the outcome of the 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.  As
these matters  continue to proceed  through the  litigation  process to ultimate
resolution,  it is  reasonably  possible  that the  Company's  estimation of the
effect of such matters could change within the next year.

(D) Joint Venture Commitments
        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, 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 an equity
interest in each of the entities formed to purchase such properties equal to its
contribution  to 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, 1998, the Company contributed  approximately  $720,000 to the
joint venture operating entity that was formed to purchase the property. Through
March 30, 1999,  the Company  contributed  an  additional  $155,000 to the joint
venture.  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. In addition, in March 1998 the Apollo
Joint Venture  acquired the Historic Inn in Richmond,  Virginia.  As of


<PAGE>

December 31, 1998, the Company has made capital contributions  totaling $200,000
to the joint venture  operating  entity that was formed in  connection  with the
purchase of the property.  Through March 30, 1999,  the Company  contributed  an
additional  $25,000  to the  joint  venture.  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 57% by Apollo, 3% by the Company and 40%
by the former sole owner.  The Company is accounting for this  investment on the
cost method.  The Company is fully renovating and refurbishing  these properties
pursuant to contracts with the Apollo Joint Venture operating entity (Note 11).

        In March 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 ING Joint Venture intends to own and operate the property only for
the time  necessary  to renovate and upgrade the hotel and market it for resale.
As of December 31, 1998, the Company  contributed  approximately $2.1 million to
the ING Joint  Venture.  Through  March 31,  1999,  the Company  contributed  an
additional  $75,000  to the  joint  venture.  There are no  additional  material
capital  commitments to be made by the Company with respect to this project.  In
addition,  the ING Joint Venture  obtained  financing for $38.65 million to fund
the purchase of the hotel as well as the renovation and refurbishment costs. The
Company has an  approximately  18% interest in the ING Joint Venture.  The other
partners in the ING Joint  Venture are entitled to specified  preferred  returns
and priority  distributions of capital. In addition, the joint venture agreement
provides ING Realty  Partners  with the right to have the joint venture sell the
property  after  March  2000,  and  certain  buy/sell  provisions  which  may be
exercised by any partner.  The Company is accounting for this  investment  under
the  equity  method.  The  Company is fully  renovating  and  refurbishing  this
property pursuant to a contract with the ING Joint Venture (Note 11).

13. Major Customers and Subcontractors

        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, 1998, one customer accounted for approximately 27% of accounts receivable.

        The largest  customers of the Company for 1998, a major lodging  company
and a major hotel development  company accounted for 15% and 10%,  respectively,
of the  Company's  revenues.  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  revenues.  The two largest  customers of the Company for 1996
accounted for 49% and 31% of revenues.

        During 1998 and 1997,  no  subcontractors  accounted for over 10% of the
Company's  cost of revenues.  During 1996, 35% of the Company's cost of revenues
were costs charged by one subcontractor.

14. 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.  Dividends for 1998 have been accrued as of
December 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 12% 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 at the stated
value of the stock.

<PAGE>

        In October 1998,  80,000 shares of LPC Preferred  were converted into an
aggregate of 584,800 shares of common stock. The remaining 120,000 shares of LPC
Preferred are  convertible,  at any time during the period from January 10, 1998
to January 10, 2000,  into (i) 600,000  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 2,400,000 shares, or (ii) 5.88%
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  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 January 1998,  in  connection  with the  acquisition  of Bekins,  the
Company issued 514,117 shares of Common Stock. Further, pursuant to a make-whole
provision in the purchase  agreement,  639,512 additional shares of Common Stock
were issued by the Company in January 1999 (Note 3).

        As an  inducement  to enter into the Apollo Joint Venture (Note 12), the
Company  issued to Apollo a seven-year  warrant to purchase up to 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  renovation  revenue and purchasing  fees 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.  In
1998, the Company  recognized an expense of $213,575,  which 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.


<PAGE>
15.     Stock Option Plan

        At December 31,  1998,  the Company has three stock  option  plans.  The
Company  accounts  for its stock option  plans under the  intrinsic  value based
method such that 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  additional  shares  available  for  grant,  although
unexercised options remain outstanding.

        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.  The Company can issue  options for up to
2,700,000  shares under the Plan. 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".  Options are granted at the fair market value of
the stock.  The term for each option  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 five 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.
The Company can issue  options for up to 250,000  shares  under this plan.  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 are  granted at the fair  market  value of the stock.
Options granted under the Outside Directors Plan vest over three years and shall
be exercisable in three equal installments beginning on the first anniversary of
the grant date. The term of the options is five years.

        The  Company is  required  to provide  pro forma  information  regarding
income from continuing operations 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,  under which compensation cost would be measured at the
grant date based on the fair value of the awards and recognized over the vesting
period.  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  1998,   1997  and  1996,
respectively:  no dividends paid for all years;  expected volatility of 98%, 49%
and 40%;  risk-free  interest rate of 5.54%, 6.04% and 6.41%; and expected lives
of 5.8 years, 5.3 years and 2 years.

        Under the fair value based method,  the Company's income from continuing
operations  and  earnings  per  share  would  have  been the pro  forma  amounts
indicated below.
<TABLE>
<CAPTION>

                                                                        1998                     1997                     1996
----------------------------------------------------------------------------- ------------------------ ------------------------
Income (loss) from continuing operations (in thousands):
<S>                                                            <C>                       <C>                        <C>        
As reported                                                    $         950             $       (844)              $     1,907
Pro forma                                                               (423)                  (1,427)                    1,583
Basic earnings per share from continuing operations:
As reported                                                             0.06                    (0.13)                     0.27
Pro forma                                                              (0.06)                   (0.19)                     0.23
Diluted earnings per share from continuing operations:
As reported                                                             0.05                       (a)                     0.27
Pro forma                                                                 (a)                      (a)                     0.22
</TABLE>

(a) Antidilutive


<PAGE>
        The following table contains  information on stock options for the three
year period ended December 31, 1998.

<TABLE>
<CAPTION>

                                                                Option shares           Weighted average
                                                                                         exercise price
----------------------------------------------------------------------------------- --------------------------
<S>                                                                      <C>                            <C>  
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
Granted                                                                    426,000                       8.95
Exercised                                                                (250,834)                       2.74
Canceled                                                                 (179,750)                       8.28
----------------------------------------------------------------------------------- --------------------------
Outstanding, December 31, 1998                                           1,723,416                      $6.42
----------------------------------------------------------------------------------- --------------------------
Exercisable at December 31, 1998                                           864,650                      $3.67
Exercisable at December 31, 1997                                           759,875                       2.73
Exercisable at December 31, 1996                                         1,120,000                      $2.21
----------------------------------------------------------------------------------- --------------------------
</TABLE>

<TABLE>
<CAPTION>

                                                Exercise price less                 Exercise price 
                                                   than market                      equal to market
---------------------------------------------------------------------------------------------------
Weighted-average fair value of:
<S>                                                   <C>                             <C>  
Options granted in 1996                               --                              $0.82
Options granted in 1997                               --                              $4.88
Options granted in 1998                               --                              $7.14
</TABLE>

The following table summarizes  information  about stock options  outstanding at
December 31, 1998.

<TABLE>
<CAPTION>

                                                        Options Outstanding                         Options Exercisable
        ---------------------------------- -----------------------------------------------------------------------------------------
                     Amount                  Weighted            Range of           Weighted         Amount        Weighted
                   Outstanding                Average          Exercise Price        Average      Exercisable       Average
                                             Remaining                              Exercise                       Exercise
                                             Contractual                             Price                          Price
                                             Life (years)
        ---------------------------------- -----------------------------------------------------------------------------------------
<S>                <C>                        <C>              <C>    <C>            <C>            <C>             <C>  
                     735,250                  6.55              $1.275-2.75          $2.57          715,250         $2.56
                     231,666                  3.11               6.125-6.75           6.65           75,000          6.67
                     756,500                  8.99               8.94-12.00          10.09           74,400         11.24
        ---------------------------------- -----------------------------------------------------------------------------------------
                   1,723,416                  7.16             $1.275-12.00          $6.42          864,650         $3.67
</TABLE>

<PAGE>
16. Earnings Per Share

        The  following  table  reconciles  the  components  of basic and diluted
earnings per common share for income (loss) from  continuing  operations for the
years ended December 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>

                                                                   1998                    1997                      1996
------------------------------------------------------------------------------------------------------------------------------
Numerator:
<S>                                                         <C>                      <C>                        <C>        
Income (loss) from continuing operations                    $     950,338            $   (843,649)              $ 1,907,383
Preferred stock dividends                                       (270,000)                (300,000)                       --
--------------------------------------------------------------------------------------------------- ------------------------
Income (loss) available to common stockholders from               680,338              (1,143,649)                1,907,383
continuing operations - Basic
--------------------------------------------------------------------------------------------------- ------------------------
Effect of dilutive securities (a):
Preferred stock dividends                                              --                       --                        --
--------------------------------------------------------------------------------------------------- ------------------------

Income (loss) available to common stockholders from         $     680,338            $ (1,143,649)              $ 1,907,383
continuing operations - Diluted
--------------------------------------------------------------------------------------------------- ------------------------
Denominator:
Weighted average common shares outstanding - Basic             12,092,437                8,885,570                6,983,333
--------------------------------------------------------------------------------------------------- ------------------------
Effect of dilutive securities(a):
Stock-based compensation plans                                    738,984                       --                  148,582
Contingently issuable shares                                      395,600                       --                        --
Convertible Preferred stock                                            --                       --                        --
--------------------------------------------------------------------------------------------------- ------------------------
Weighted average common and common equivalent shares           13,227,021                8,885,570                7,131,915
outstanding - Diluted
--------------------------------------------------------------------------------------------------- ------------------------
Basic earnings (loss) per common share from continuing     $         0.06           $       (0.13)                    $0.27
operations
Diluted earnings (loss) per common share from continuing   $         0.05                      (a)                    $0.27
operations
</TABLE>


(a)     The common stock equivalent  shares for the year ended December 31, 1998
        was 1,020,474  shares for the convertible  preferred  stock; and for the
        year ended  December  31,  1997 was 991,232  shares for the  Stock-based
        compensation  plans, and 1,000,000 shares for the convertible  preferred
        stock.  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.

<PAGE>
17.  Operating Segments

        The  Company's  operating  segments are based on the  separate  lines of
        business  acquired over the past several  years which provide  different
        services to the hospitality industry, namely renovation,  purchasing and
        logistics services.
<TABLE>
<CAPTION>

                                                       1998                          1997                            1996
------------------------------------------------------------ ----------------------------- -------------------------------
Sales to Customers
<S>                                             <C>                             <C>                            <C>        
Renovation                                      $74,657,871                     $19,394,593                    $24,367,112
Purchasing                                      132,379,848                      64,886,119                             --
Logistics                                        21,979,962                              --                             --
General Corporate and Real Estate                   961,529                       1,161,000                             --
                                       --------------------- ------------------------------- ------------------------------
                                               $229,979,210                     $85,441,712                    $24,367,112
                                       --------------------- ------------------------------- ------------------------------

Inter-segment Sales
Renovation                                      $        --                     $        --                    $        --
Purchasing                                       18,107,008                         165,000                             --
Logistics                                         4,047,038                              --                             --
General Corporate and Real Estate                        --                              --                        115,980
                                       --------------------- ------------------------------- ------------------------------
                                                $22,154,046                        $165,000                       $115,980
                                       --------------------- ------------------------------- ------------------------------

Income (Loss) from Operations
Renovation                                      $ 4,272,174                     $   842,539                     $3,309,399
Purchasing                                          509,365                         190,314                             --
Logistics                                         1,377,000                              --                             --
General Corporate and Real Estate               (5,011,556)                       (848,217)                      (450,731)
                                       --------------------- ------------------------------- ------------------------------
                                                $ 1,146,983                     $   184,636                    $ 2,858,668
                                       --------------------- ------------------------------- ------------------------------

Depreciation and Amortization
Renovation                                     $    515,609                     $   431,019                   $    387,631
Purchasing                                        1,062,753                         658,183                             --
Logistics                                           537,000                              --                             --
General Corporate and Real Estate                   180,587                          24,799                         16,483
                                       --------------------- ------------------------------- ------------------------------
                                                $ 2,295,949                      $1,114,001                   $    404,114
                                       --------------------- ------------------------------- ------------------------------

Interest Income
Renovation                                 $             --                  $       51,961               $             --
Purchasing                                          509,914                         443,074                             --
Logistics                                             1,000                              --                             --
General Corporate and Real Estate                   803,691                         279,801                          1,141
                                       --------------------- ------------------------------- ------------------------------
                                                $ 1,314,605                    $    774,836                $         1,141
                                       --------------------- ------------------------------- ------------------------------

Interest Expense
Renovation                                 $             --                 $         9,089               $             --
Purchasing                                           39,779                          41,547                             --
Logistics                                           353,000                              --                             --
General Corporate and Real Estate                   363,321                         236,997                         26,101
                                       --------------------- ------------------------------- ------------------------------
                                             $      756,100                 $       287,633                  $      26,101
                                       --------------------- ------------------------------- ------------------------------
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                                                       1998                            1997                           1996
---------------------------------------------------------------- ----------------------------- ------------------------------- 
Total Assets at Year End
<S>                                                <C>                            <C>                              <C>        
Renovation                                         $ 33,147,042                   $  12,991,220                    $12,636,374
Purchasing                                           57,232,280                      41,619,690                             --
Logistics                                            17,051,060                              --                             --
                                                ---------------- ------------------------------- ------------------------------
      Segment Total                                 107,430,382                      54,610,910                     12,636,374
Unallocated:
      Cash and cash equivalents                       1,283,411                       6,000,493                         36,979
      Marketable securities                           8,500,000                      18,915,686                             --
      Real estate investments                         7,159,024                         408,256                             --
      Deferred taxes                                  4,535,178                         739,088                             --
      Other                                           4,466,055                       3,593,258                         76,737
                                                ---------------- ------------------------------- ------------------------------
                                                   $133,374,050                  $   84,267,691                    $12,750,090
                                                ---------------- ------------------------------- ------------------------------

Capital Expenditures
Renovation                                           $  390,475                  $       79,870                 $       65,682
Purchasing                                            2,509,088                       2,315,151                             --
Logistics                                               454,000                              --                             --
General Corporate and Real Estate                       311,973                         299,501                             --
                                                ---------------- ------------------------------- ------------------------------
                                                  $   3,665,536                  $    2,694,522                 $       65,682
                                                ---------------- ------------------------------- ------------------------------
</TABLE>

        All  transactions  between  reportable  segments are accounted for on an
arms length basis and are eliminated in consolidation.

        Sales to Customers include sales to related parties (Note 11).

        The  Company's  revenue  and assets  predominately  relate to the United
States operations, with immaterial amounts related to foreign operations.

        In 1998, the Company adopted SFAS No. 131,  "Disclosures  about Segments
of an Enterprise and Related  Information",  which revised the disclosures about
the  Company's  operating  segments.  The  Company has  restated  prior years to
conform to the new disclosure requirements.

18. Quarterly Financial Information (unaudited) (a)

<TABLE>
<CAPTION>

1998 Quarter Ended (e)                                 March 31           June 30          September 30                December 31
-------------------------------------------------------------------------------------- -------------------- -----------------------
<S>                                                     <C>               <C>                  <C>                          <C>    
Revenues                                                $41,290           $52,359              $69,937                      $66,393
Gross profit                                              6,474             7,925                9,673                   (1,811)(f)
Income (loss) from continuing operations                  1,243             1,708                2,487                   (4,488)(f)
Loss from discontinued operations                          (25)             (125)                (189)                    (578) (g)
Net income (loss)                                         1,218             1,583                2,298                      (5,066)
Basic earnings per common share: (b)
   Income (loss) from continuing operations                0.10              0.14                 0.20                     (0.36)
   Net income (loss)                                       0.10              0.13                 0.18                     (0.41)
Diluted earnings per common share: (b)
   Income (loss) from continuing operations                0.09              0.12                 0.18                        (c)
   Net income (loss)                                       0.09              0.12                 0.17                        (c)
</TABLE>

<TABLE>
<CAPTION>

1997 Quarter Ended                                     March 31           June 30          September 30                December 31
-------------------------------------------------------------------------------------- -------------------- ----------------------
<S>                                                     <C>               <C>                  <C>                        <C>    
Revenues                                                $18,196           $19,513              $16,532                    $31,201
Gross profit                                              2,842             3,712                3,900                        588
Net income (loss)                                           397               430                  719                 (2,390)(d)
Basic earnings per common share (b)                         .04               .04                  .08                      (.22)
Diluted earnings per common share (b)                       .04               .04                  .07                        (c)
</TABLE>

<PAGE>

(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 $1,434,000  related to
       the  recognition of warrants  issued in connection  with the Apollo Joint
       Venture.
(e)    1998  quarterly  amounts  have  been  restated  to  reflect  discontinued
       operations.
(f)    The fourth  quarter  includes  the  provision  on  contract  revenues  of
       $8,863,000.
(g)    The fourth quarter discontinued operations includes a loss on disposal of
       $90,900 after tax.