UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB
(X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1996
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( ) TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------- --------------------------------
Commission File Number: 0-23054
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Hospitality Worldwide Services, Inc.
(formerly Light Savers U.S.A.,Inc.)
(exact name of registrant as specified in its charter)
New York 11-3096379
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
509 Madison Avenue Suite 1114, New York, NY 10022
- ------------------------------------------- -----
(Address of principle executive offices) (Zip Code)
(212) 223-0699
--------------
(Registrant's telephone number, including area code)
Check whether the issuer (1) has filed all reports 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
APPLICABLE ONLY TO CORPORATE ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
Securities under a plan confirmed by a court.
( ) Yes ( ) No
APPLICABLE ONLY TO CORPORATE ISSUER
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: 6,700,655 shares as of November 11,
1996.
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. and SUBSIDIARY
TABLE OF CONTENTS
Page No.
--------
PART I
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1996
and December 31, 1995 3
Consolidated Statements of Operations for the three
months ended September 30, 1996 and 1995 and nine
months ended September 30, 1996 and 1995 4
Consolidated Statement of Changes in Stockholders'
Equity for the nine months ended September 30, 1996 5
Consolidated Statements of Cash Flows for the nine
months ended September 30, 1996 and 1995 6-7
Notes to Consolidated Financial Statements 8-9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 10-12
PART II
Item 4. Submission of Matters to a Vote of Security Holders 13-14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. and SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------ ------------
CURRENT ASSETS: Unaudited
<S> <C> <C>
Cash and cash equivalents $ 622,035 $ 390,702
Marketable securities -- 715,000
Accounts receivable, less allowance for
doubtful accounts of $ 101,000 for 1995 3,380,252 1,586,836
Current assets of discontinued operations -- 145,317
Costs in excess of billings 1,447,716 129,734
Prepaid and other current assets 160,985 130,671
------------ ------------
Total current assets 5,610,988 3,098,260
------------ ------------
Property and equipment, less accumulated depreciation
of $ 80,635 and $ 48,932 95,469 97,387
Notes receivable 350,000 350,000
Goodwill, less accumulated amortization of
$ 478,923 and $ 166,048 6,120,717 6,433,591
Other assets 35,105 52,008
------------ ------------
Total other assets 6,601,291 6,932,986
------------ ------------
TOTAL $ 12,212,279 $ 10,031,246
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
1996 1995
------------ ------------
CURRENT LIABILITIES: Unaudited
Loan Payable - Bank $ -- $ 455,926
Accounts payable 1,358,063 1,040,587
Accrued and other liabilities 1,896,745 1,073,230
Sales tax payable 117,139 111,955
Billings in excess of costs 290,419 620,574
Accrued loss on disposal of discontinued operations -- 398,806
Income taxes payable 437,944 --
------------ ------------
Total current liabilities 4,100,310 3,701,078
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $ .01 par value, 3,000,000 shares
authorized, none issued and outstanding -- --
Common stock, $ .01 par value, 20,000,000 shares
authorized, 7,200,655 issued and outstanding 72,007 71,257
Additional paid-in capital 8,076,235 7,865,285
Accumulated deficit (36,273) (1,606,374)
------------ ------------
Total stockholders' equity 8,111,969 6,330,168
------------ ------------
TOTAL $ 12,212,279 $ 10,031,246
============ ============
</TABLE>
The accompanying notes are an integral part of these statements
3
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. and SUBSIDIARY
CONSOLIDATED STATMENTS OF OPERATIONS
Unaudited
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 8,240,065 $ 1,583,522 $17,656,829 $ 1,583,522
Cost of goods sold 6,251,807 954,048 13,242,382 954,048
----------- ----------- ----------- -----------
Gross profit 1,988,258 629,474 4,414,447 629,474
----------- ----------- ----------- -----------
Selling, general and administrative
expenses 862,331 532,664 2,277,846 875,721
----------- ----------- ----------- -----------
Income (loss) from operations 1,125,927 96,810 2,136,601 (246,247)
----------- ----------- ----------- -----------
Other income (expense):
Interest income -- 25,349 -- 93,824
Realized loss on sale of securities -- (4,000) -- (38,871)
Income (loss) before provision for income
----------- ----------- ----------- -----------
taxes 1,125,927 118,159 2,136,601 (191,294)
----------- ----------- ----------- -----------
Provision for income taxes 302,649 5,000 574,286 5,000
----------- ----------- ----------- -----------
Income (loss) from continuing operations 823,278 113,159 1,562,315 (196,294)
----------- ----------- ----------- -----------
Discontinued operations:
Income (loss) from discontinued operations,
less applicable taxes of $ 1,780 7,786 (276,009) 7,786 (106,795)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 831,064 $ (162,850) $ 1,570,101 $ (303,089)
=========== =========== =========== ===========
Net Income (loss) per share:
Continuing operations 0.12 0.02 0.22 (0.04)
Discontinued operations 0.00 (0.06) 0.00 (0.02)
----------- ----------- ----------- -----------
Net income (loss) per share: $ 0.12 $ (0.04) $ 0.22 $ (0.06)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 7,137,883 4,625,655 7,064,889 4,625,655
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements
4
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. and SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
Unaudited
<TABLE>
<CAPTION>
Common Stock Treasury Stock
-------------------------- --------------------------
Additional Total
Paid in Accumulated Stockholders'
Shares Value Value Capital Deficit Equity
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996 7,125,655 $ 71,257 $ -- $ 7,865,285 $(1,606,374) $ 6,330,168
Purchase of treasury stock (500,000) -- (437,500) -- -- (437,500)
Private placement of common shares 500,000 -- 437,500 61,700 -- 499,200
Stock isssued to retire debt 75,000 750 -- 149,250 -- 150,000
Net Income -- -- -- -- 1,570,101 1,570,101
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, SEPTMEBER 30, 1996 7,200,655 $ 72,007 $ -- $ 8,076,235 $ (36,273) $ 8,111,969
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements
5
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. and SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
<TABLE>
<CAPTION>
Nine months ended
September 30,
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,570,101 $ (303,089)
Adjustments to reconcile net income (loss) to net cash
used for operating activities:
Depreciation and amortization 344,488 70,803
Provision for losses on accounts receivable (101,000) (130,712)
Realized loss on sale of securities -- 52,938
(Increase) decrease in current assets:
Accounts receivable (1,692,416) (342,022)
Current assets of discontinued operations 145,317 --
Costs in excess of billings (1,317,982) 271,107
Prepaid and other current assets (30,314) (111,447)
Inventory -- (48,288)
Increase (decrease) in current liabilities:
Accounts payable 317,476 490,498
Accrued and other liabilities 973,515 151,966
Sales tax payable 5,184 (37,473)
Billings in excess of costs (330,155) (86,947)
Accrued loss on disposal of discontinued operations (398,806) --
Income taxes payable 437,944 --
(Increase) decrease in other assets 16,903 (12,293)
----------- -----------
NET CASH USED FOR OPERATING ACTIVITIES (59,745) (34,959)
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of marketable securities 715,000 3,044,539
Purchase of marketable securities -- (710,065)
Costs related to business acquisitions, net of acquired cash -- (93,832)
Notes receivable -- (2,709,194)
Purchase of property and equipment (29,696) (70,052)
----------- -----------
NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 685,304 (538,604)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of loan payable - bank (455,926) --
Purchase of treasury stock (437,500) --
Sale of treasury stock 499,200 --
Proceeds from short term borrowings -- 288,151
----------- -----------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES (394,226) 288,151
----------- -----------
NET DECREASE IN CASH 231,333 (285,412)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 390,702 878,903
----------- -----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 622,035 $ 593,491
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements
6
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. and SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
<TABLE>
<CAPTION>
Nine months ended
September 30,
1996 1995
----------- -----------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 5,031 $ 4,500
Income taxes $ 164,296 $ 5,000
NON-CASH TRANSATIONS:
Fair value (including goodwill) of assets acquired $ -- $ 8,854,713
Stock issued for assets acquired -- 5,000,000
Issuance of debt for acquisition of business -- 2,406,094
===========
Liabilities assumed -- 1,448,619
===========
Issuance of stock for repayment of debt 150,000
Repayment of debt from issuance of stock (150,000)
</TABLE>
The accompanying notes are an integral part of these statements
7
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. and SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
1. Organization and Basis of Presentation
Hospitality Worldwide Services, Inc., formerly Light Savers U.S.A., Inc., (the
"Company") was incorporated in the State of New York on October 10, 1991. On
August 1, 1995, the Company acquired substantially all of the assets and
business, and assumed certain liabilities, of AGF Interior Services, Inc. (d/b/a
Hospitality Restoration and Builders) ("AGF"), through its newly formed
subsidiary corporation, Hospitality Restoration and Builders, Inc. ("HRB"). HRB
provides interior and exterior cosmetic renovation and maintenance for leading
hotel and hospitality customers nationwide. The acquisition was accounted for as
a purchase with the results of HRB included from the acquisition date.
The consolidated financial statements and related notes thereto as of September
30, 1996 and for the three and nine months ended September 30, 1996 and 1995 are
presented as unaudited but in the opinion of management include all adjustments
necessary to present fairly the information set forth therein. These adjustments
consist solely of normal recurring accruals. The consolidated balance sheet
information for December 31, 1995 was derived from the audited financial
statements included in the Company's Form 10-KSB. These interim financial
statements should be read in conjunction with that report.
The interim results are not necessarily indicative of the results for any future
period.
Note 2: Net Income (Loss) per Share of Common Stock
Net income (loss) per share of common stock was computed by dividing the net
income (loss) by the weighted average number of common shares and common stock
equivalents outstanding during the period. For the three months ended September
30, 1996 and 1995, and the nine months ended September 30, 1996 and 1995 there
were no common stock equivalents included in the calculation since the impact
would be immaterial.
Note 3: Discontinued Operations
In December 1995, the Company determined to focus its resources on its
hospitality and renovation business and discontinue its lighting business. On
February 26, 1996, the Company entered into a divestiture agreement (the
"Agreement") with its former President. In accordance with the Agreement, the
Company disposed of the lighting business, together with 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, (ii) the Company retained the former President as
a consultant for a three year period at an annual retainer 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 prior 20 trading days, but not below certain
minimum set prices. The Agreement also provides that the former President has
the ability to request the Company to purchase the relevant optioned shares at a
50% discount to market. If the Company does not purchase the relevant optioned
shares, the option will be canceled with respect to such shares. Based on a
reallocation of fair value to the components of the Agreement, the 500,000
shares of common stock repurchased from the former president have been recorded
as $437,500 of treasury stock. See Note 4 for subsequent disposition of shares.
Note 4: Issuance of Shares
The Company completed a private placement for the sale of 500,000 shares of
treasury stock to accredited investors at a price of $1.00 per share, for
aggregate gross proceeds of $500,000.
8
<PAGE>
On September 15, 1996, the Company issued 75,000 shares to two former
consultants to the discontinued lighting business in settlement of five year
consulting agreements which at September 15, 1996 had a $150,000 remaining
liability.
Note 5: Pro Forma Information
The following pro forma consolidated financial information has been prepared to
reflect the acquisition of the assets and business of AGF. The pro forma
financial information is based on the historical financial statements of the
Company and AGF, and should be read in conjunction with the accompanying
footnotes. The accompanying pro forma operating statements are presented as if
the transaction occurred January 1, 1995. The pro forma financial information is
unaudited and is not necessarily indicative of what the actual results of
operation of the Company would have been assuming the transaction had been
completed as of January 1, 1995, and neither is it necessarily indicative of the
results of operations for future periods.
Nine months ended September 30 1995
--------------------------------------------------------
(unaudited)
Net Sales $3,762,236
Loss from continuing operations ($1,171,487)
Loss per share from continuing
operations ($0.17)
The above unaudited pro forma statements have been adjusted to reflect the
amortization of goodwill, as generated by the acquisition, over a 17-year
period, interest income on the $350,000 note receivable, elimination of the
interest income on the $2,500,000 funds used in connection with the acquisition,
and the 2,500,000 shares issued as consideration in the transaction. The impact
of outstanding stock options was not included in the calculation of loss per
share from continuing operations as the impact would be immaterial.
9
<PAGE>
HOSPITALITY WORLDWIDE SERVICES INC., and SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
In August 1995, the Company's wholly-owned subsidiary, Hospitality Restoration
and Builders, ("HRB"), acquired substantially all of the assets and business and
assumed certain liabilities of AGF Interior Services ("AGF"), a company that
provides renovation services to the hospitality industry ("the Acquisition"). In
December 1995, the Company determined to focus its resources on its hospitality
renovation business and to discontinue its lighting business. In February 1996,
the Company sold its lighting business to the Company's former President.
In October, 1996, the Company changed its name from Light Savers, U.S.A., Inc.,
to Hospitality Worldwide Services, Inc.. The change of the corporate name is
more indicative of the nature of the Company's business in view of the
significant change in the character and strategic focus resulting from the
acquisition of AGF and disposal of the Company's lighting business. These
transactions were part of a strategic corporate program to refocus the Company's
business operations into areas with higher growth potential. The name change was
approved at the annual shareholders meeting held in September, 1996.
Certain matters discussed in this report are forward-looking statements that are
subject to risks and uncertainties that could cause actual results to differ
materially from those projected.
RESULTS OF OPERATIONS
Three months ended September 30, 1996 vs. nine months ended September 30, 1995.
Net sales for the three month period ended September 30, 1996 were $8,240,065,
compared to $1,583,522, for the same period last year. Due to the timing of the
acquisition of AGF effective August 1, 1995, sales for the three months ended
September 30, 1995 represent only two months of activity. Sales for the Company
increased significantly, due to growth in the Company's renovation business as a
result of increased sales and marketing efforts and the establishment of the
Company's name in the hospitality industry.
Gross profit for the three month period ended September 30, 1996 was $1,988,258,
or 24.1% of sales, compared to $629,474, or 39.8%, for the same period last
year. The higher gross profit percentage for 1995 is the result of the
performance of a few high margin projects. The gross profit for 1996 was
impacted by higher than expected costs on the Company's largest job in New York,
and the acceptance of a few low margin jobs to promote the Company's
capabilities.
Selling, general and administrative expenses for the three month period ended
September 30, 1996 were $862,331, or 10.5% of sales, compared to $532,664, or
33.6% of sales, for the same period last year. Included in the selling, general
and administrative expenses for the quarter ended September 30, 1996 and 1995
was $99,625 and $66,417, respectively, of amortization of goodwill for the
acquisition of AGF. The Company believes that selling, general and
administrative costs will continue to increase as its business grows and as it
develops a larger infrastructure to handle future growth. However, due to
rapidly increasing sales, and a majority of the Company's resources dedicated to
field operations, these costs should continue to decline as a percentage of
sales.
Income from operations for the three month period ended September 30, 1996 was
$1,125,927, compared to $96,810 for the same period last year. Operating profits
increased in 1996 due to larger revenues and the ability of the Company to
maintain low selling, general and administrative expenses as a percentage of
sales.
Income tax expense for the three month period ended September 30, 1996 was
$302,649 compared to $5,000 for the same period last year. The effective income
tax rate used to calculate the tax provision is based on the expected annual
income tax rate which takes into account the utilization of an $800,000 net
operating loss carryforward for federal income tax purposes.
As a result of the above, net income for the three month period ended September
30, 1996 was $831,064, or $.12 per share compared to a loss of ($162,850), or
($.04) per share for the same period last year. The loss for 1995 is
10
<PAGE>
attributable to losses incurred in the discontinued lighting business due to
unsuccessful attempts to promote and grow that business segment.
Nine months ended September 30, 1996 vs. nine months ended September 30, 1995.
Net sales for the nine month period ended September 30, 1996 were $17,656,829,
compared to $1,583,522, for the same period last year. Due to the timing of the
acquisition of AGF effective August 1, 1995, sales for the nine months ended
September 30, 1995 represent only two months of activity. Sales for the Company
increased significantly, due to growth in the Company's renovation business from
increased sales and marketing efforts and the establishment of the Company's
name in the hospitality industry.
Gross profit for the nine month period ended September 30, 1996 was $4,414,447,
or 25.0% of sales, compared to $629,474, or 39.8%, for the same period last
year. The higher gross profit percentage for 1995 is the result of the
performance of a few high margin projects. The gross margin for 1996 was
impacted by higher than expected costs on the Company's largest job in New York,
and the acceptance of few low margin jobs to promote the Company's name.
Selling, general and administrative expenses for the nine month period ended
September 30, 1996 were $ 2,277,846, or 12.9% of sales, compared to $875,721, or
55.3% of sales, for the same period last year. Included in the selling, general
and administrative expenses for the quarter ended September 30, 1996 and 1995,
was $312,875 and $66,417, respectively, of amortization of goodwill for the
acquisition of AGF. The Company believes that these costs will continue to
increase as its business grows and as it develops a larger infrastructure to
handle future growth. However, due to rapidly increasing sales, and a majority
of the Company's resources dedicated to field operations, these costs should
continue to decline as a percentage of revenues.
Income from operations for the nine month period ended September 30, 1996 was
$2,136,601, compared to a loss of ($246,247) for the same period last year.
Operating profits increased in 1996 due to larger revenues and the ability of
the Company to maintain low selling, general and administrative expenses as a
percentage of sales.
Income tax expense for the nine month period ended September 30, 1996 was
$574,286, compared to $5,000 for the same period last year. The effective income
tax rate used to calculate the tax provision is based on the expected annual
income tax rate which takes into account the utilization of an $800,000 net
operating loss carryforward for federal income tax purposes.
As a result of the above, net income for the nine month period ended September
30, 1996 was $1,570,101or $.22 per share compared to a net loss of ($303,089) or
($.06) per share for the same period last year. The loss for 1995 is
attributable to losses incurred in the discontinued lighting business due to
unsuccessful attempts to promote and grow that business segment.
The results for the nine month period ended September 30, 1995 are not
indicative of the Company's future operating results since the Company acquired
the assets and business of AGF in August 1995 and discontinued its lighting
business in December 1995. Therefore, the following Management's Discussion and
Analysis of Financial Condition and Results of Operations reflects the Company's
operating results on a pro forma consolidated basis giving effect to the
Acquisition and the discontinuance of the lighting business as if such
transactions took place on January 1, 1995. The pro forma financial information
is based on the historical financial statements of the Company and AGF and
should be read in conjunction with such financial statements and the notes
thereto included elsewhere herein. 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 Acquisition and the
discontinuance of the lighting business had been completed as of January 1,
1995, and neither is it necessarily indicative of the results of operations for
future periods.
For the nine months ended September 30, 1996, sales were $17,656,829, compared
to $3,762,236 for the same period last year. The increase in net sales is
related to the Company's continuing investment in sales and marketing
activities.
Gross profit for the nine months ended September 30, 1996 was $4,414,447, or
25.0% of revenues, compared to $834,746, or 22.2% of revenues, for the same
period last year. The lower gross profit for 1995 was the result of the
performance of a large low margin contract which was substantially completed in
September, 1995.
11
<PAGE>
Selling, general and administrative expenses were $2,277,846 for the nine months
ended September 30, 1996, compared to $2,001,223 for the same period last year.
Included in the selling, general and administrative expenses for the nine months
ended September 30, 1996 and 1995 was $312,875 and $66,417, respectively, of
amortization of goodwill for the acquisition of HRB. The Company believes that
these costs will continue to increase as its business grows and as it develops a
larger infrastructure to handle future growth. However, due to rapidly
increasing sales, and a majority of the Company's resources dedicated to field
operations, these costs should continue to decline as a percentage of revenues.
Income tax expense for the nine months ended September 30, 1996 was $574,286,
compared to $5,000 for the same period last year. The effective income tax rate
used to calculate the tax provision is based on the expected annual income tax
rate which takes into account the utilization of an $800,000 net operating loss
carryforward for federal income tax purpose.
Net income for the nine months ended September 30, 1996 was $1,570,701, compared
to a net loss of ($1,171,487), for the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
In August, 1996, the Company negotiated a new bank line of credit with Marine
Midland Bank of New York, which provides the company up to $1,000,000. The line
bears interest at the bank's prime lending rate plus .5%, and is secured by
accounts receivable. Proceeds from the borrowing will be utilized to fund short
term cash requirements. At September 30, 1996, there were no borrowings on the
line.
The Company's short-term and long-term liquidity requirements generally consist
of operating capital for restoration and maintenance related costs and selling,
general and administrative expenses. The Company continues to satisfy its
short-term and long-term liquidity requirements with cash generated from
operations, and periodic utilization of its line of credit.
Net cash used by operating activities was ($59,745) for the nine months ended
September 30, 1996, compared to ($34,959) for the same period last year. During
the nine months ended September 30, 1996, the Company's accounts receivable
increased by $1,692,416. Such increase resulted from revenue growth. This
increase was partly offset by an increase in accounts payable and accrued
expense of $1,290,991. The negative cash for 1996 is due mainly to the timing of
receipts for a few large contracts, as well as revenue accruals for additional
work performed on certain contracts that the Company expects to collect in the
fourth quarter.
Net cash provided by investing activities for the nine months ended September
30,1996 was $685,304, compared to a net use of ($538,604) for the nine months
ended September 30, 1995. The increase is the result of the sale of the
Company's short term marketable security of $715,000. Due to the nature of the
Company's business, including the outsourcing of most renovation and maintenance
related work, the Company has insignificant capital requirements, and therefore
can use its operating cash for operating needs.
On April 8, 1996, the Company completed a private placement of 500,000 shares of
treasury stock to accredited investors at a price of $1.00 per share, for
aggregate gross proceeds of $500,000. The Company used the proceeds of the
private placement for working capital.
The Company believes its present cash position, including increasing sales and
cash on hand, and its ability to obtain additional financing as necessary, will
allow the company to meets its short-term and long-term operating needs for at
least twelve months.
12
<PAGE>
HOPSITALITY WORLDWIDE SERVICES, INC. and SUBSIDIARY
TABLE OF CONTENTS
PART II
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareoholders was held on September 26, 1996 for the
purpose of electing a board of directors, appointment of auditors, and voting of
the proposals described below.
All of management's nominees for Directors as listed in the proxy statement were
elected with the following vote:
Withhold
For Authority
1. Alan G. Friedberg 5,119,703 11,820
2. Scott Kaniewski 5,119,703 11,820
3. Louis K. Adler 5,119,703 11,820
4. George C. Ash 5,119,703 11,820
5. Richard A. Bartlett 5,119,703 11,820
An amendment to the Company's Certificate of Incorporation to change the name of
the Company from Light Savers U.S.A., Inc. to Hospitality Worldwide Services,
Inc., was approved with the following vote:
Broker
For Against Abstentions Non-Votes
5,107,473 10,750 0 13,300
An amendment to the Company's Certificate of Incorporation to increase the
number of authorized shares of the Company's Common Stock from 10,000,000 to
20,000,000 and Preferred Stock from 2,500,000 to 3,000,000 was approved with the
following vote:
Broker
For Against Abstentions Non-Votes
3,824,441 49,835 16,500 1,240,747
An amendment to the Company's Certificate of Incorporation to limit the
liability of the Company's directors to the fullest extent permitted by the New
York Business Corporation Law was approved with the following vote:
Broker
For Against Abstentions Non-Votes
4,952,137 61,735 23,000 94,651
13
<PAGE>
An amendment to the Company's By-Laws to permit indemnification of the Company's
directors was approved with the following vote:
Broker
For Against Abstentions Non-Votes
4,958,587 55,285 23,000 94,651
Adoption of the Company's 1996 Stock Option Plan was approved with the following
vote:
Broker
For Against Abstentions Non-Votes
3,812,391 59,385 19,000 1,240,747
Adoption of the Company's 1996 Outside Directors' Stock Option Plan was approved
with the following vote:
Broker
For Against Abstentions Non-Votes
3,794,277 83,349 30,500 1,223,397
The appointment of BDO Seidman, LLP as independent auditors for the year ending
December 31, 1996 was approved with the following vote:
Broker
For Against Abstentions Non-Votes
5,120,853 170 10,500 0
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
None
14
<PAGE>
SIGNATURES
Pursuant to the requirements 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 U.S.A.,INC.
By: /s/ Alan G. Friedberg
------------------------------------
Alan G. Friedberg
President and Chief Executive Officer
By: /s/ Howard G. Anders
------------------------------------
Howard G. Anders
Executive Vice President and Chief
Financial Officer
Dated: November 12, 1996
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Form 10-QSB for the quarter ended September 30, 1996 and is qualified
in its entirety by reference to such Financial Statements and Notes, thereto.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 622,035
<SECURITIES> 0
<RECEIVABLES> 3,580,252
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,610,988
<PP&E> 95,469
<DEPRECIATION> 111,046
<TOTAL-ASSETS> 12,212,279
<CURRENT-LIABILITIES> 4,100,310
<BONDS> 0
0
0
<COMMON> 72,007
<OTHER-SE> 8,111,969
<TOTAL-LIABILITY-AND-EQUITY> 12,212,279
<SALES> 8,240,065
<TOTAL-REVENUES> 8,240,065
<CGS> 6,251,807
<TOTAL-COSTS> 6,251,807
<OTHER-EXPENSES> 862,331
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,125,927
<INCOME-TAX> 302,649
<INCOME-CONTINUING> 823,278
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 831,064
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
