HOSPITALITY WORLDWIDE SERVICES INC, SB-2/A, 1997-08-26

HOSPITALITY WORLDWIDE SERVICES INC
SB-2/A, 1997-08-26
ELECTRIC LIGHTING & WIRING EQUIPMENT

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 26, 1997

REGISTRATION NO. 333-31765

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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HOSPITALITY WORLDWIDE SERVICES, INC.
(Name of small business issuer in its charter)

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<TABLE>
<S> <C> <C>
NEW YORK 1522 11-3096379
(State or Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>

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450 PARK AVENUE
SUITE 2603
NEW YORK, NEW YORK 10022
(212) 223-0699
(Address and telephone number of Principal Executive Offices)

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HOWARD G. ANDERS, EXECUTIVE VICE PRESIDENT
HOSPITALITY WORLDWIDE SERVICES, INC.
450 PARK AVENUE
SUITE 2603
NEW YORK, NEW YORK 10022
(212) 223-0699
(Name, Address and Telephone Number of Agent For Service)

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COPIES OF COMMUNICATIONS TO:

<TABLE>
<S> <C>
ROBERT H. FRIEDMAN, ESQ. TRACY EDMONSON, ESQ.
OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP LATHAM & WATKINS
505 PARK AVENUE 505 MONTGOMERY STREET
NEW YORK, NEW YORK 10022 SUITE 1900
SAN FRANCISCO, CALIFORNIA 94111
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as practicable after this registration statement becomes effective.

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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SUBJECT TO COMPLETION, DATED AUGUST 26, 1997

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

PROSPECTUS

[LOGO]
2,500,000 SHARES

HOSPITALITY WORLDWIDE SERVICES, INC.

COMMON STOCK
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ALL OF THE 2,500,000 SHARES (THE "SHARES") OF COMMON STOCK, $.01 PAR VALUE
(THE "COMMON STOCK") OFFERED HEREBY (THE "OFFERING") ARE BEING SOLD BY
HOSPITALITY WORLDWIDE SERVICES, INC. (THE "COMPANY"). THE COMMON STOCK IS
CURRENTLY QUOTED ON THE NASDAQ SMALLCAP MARKET ("NASDAQ") UNDER THE SYMBOL
"ROOM." ON AUGUST 22, 1997, THE LAST REPORTED SALE PRICE OF THE COMMON STOCK ON
NASDAQ WAS $8.25. SEE "PRICE RANGE OF COMMON STOCK." APPLICATION HAS BEEN MADE
TO HAVE THE COMMON STOCK APPROVED FOR QUOTATION ON THE NASDAQ NATIONAL MARKET
("NASDAQ NMS") UNDER THE SYMBOL "ROOM."

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

SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN
MATTERS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
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<S> <C> <C> <C>
PER SHARE................................................................. $ $ $
TOTAL (3)................................................................. $ $ $
</TABLE>

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(1) The Company has agreed to indemnify the several underwriters identified
elsewhere herein (the "Underwriters") against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities
Act"). See "Underwriting."

(2) Before deducting expenses payable by the Company estimated at $450,000.

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 375,000 additional shares of Common Stock on the same terms and
conditions set forth above, solely to cover over-allotments, if any. If all
such shares are purchased, the total Price to Public, Underwriting Discount
and Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."

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THE SHARES OF COMMON STOCK ARE OFFERED BY THE UNDERWRITERS, SUBJECT TO PRIOR
SALE, WHEN, AS AND IF ISSUED TO AND ACCEPTED BY THE UNDERWRITERS AND SUBJECT TO
APPROVAL OF CERTAIN LEGAL MATTERS BY COUNSEL FOR THE UNDERWRITERS. IT IS
EXPECTED THAT DELIVERY OF THE COMMON STOCK WILL BE MADE AGAINST PAYMENT THEREFOR
ON OR ABOUT , 1997, IN NEW YORK, NEW YORK.

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Jefferies & Company, Inc.

, 1997
<PAGE>

[PICTURES OF FOUR HOTELS FOR WHICH THE COMPANY PERFORMED RENOVATION AND
PROCUREMENT SERVICES]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THIS OFFERING
AND MAY BID FOR AND PURCHASE SHARES OF COMMON STOCK IN THE OPEN MARKET. IN
ADDITION, UNDERWRITERS MAY ENGAGE IN PASSIVE MARKET MAKING. FOR A DESCRIPTION OF
THESE ACTIVITIES, SEE "UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS MAY ENGAGE IN PASSIVE
MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON NASDAQ IN ACCORDANCE WITH RULE
103 UNDER REGULATION M. SEE "UNDERWRITING."

<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL
STATEMENTS, EACH INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE IN THIS
PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL INFORMATION HEREIN ASSUMES NO
EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION. THE TERM "COMPANY" MEANS,
UNLESS THE CONTEXT REQUIRES OTHERWISE, HOSPITALITY WORLDWIDE SERVICES, INC. AND
ITS SUBSIDIARIES. IT SHOULD BE NOTED THAT SMITH TRAVEL RESEARCH HAS NOT PROVIDED
ANY FORM OF CONSULTATION, ADVICE OR COUNSEL REGARDING ANY ASPECTS OF, AND IS IN
NO WAY WHATSOEVER ASSOCIATED WITH, THE PROPOSED OFFERING. EACH PROSPECTIVE
INVESTOR IS URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY.

THE COMPANY

Hospitality Worldwide Services, Inc. has evolved over the past two years
from a narrowly focused lighting fixture design, manufacturing and installation
company formerly known as Light Savers U.S.A., Inc., into one of the leading
providers of a broad range of outsourcing services to the hospitality industry.
These services include hotel renovation, procuring hotel furniture, fixtures and
equipment ("FF&E") and reordering hotel operating supplies and equipment
("OS&E"). This rapid evolution resulted from two primary factors: (i) the
acquisition of the assets comprising the business of Hospitality Restoration and
Builders, Inc. ("HRB") and the acquisition of The Leonard Parker Company
("LPC"), including its then subsidiary, Parker Reorder Corporation ("Parker
Reorder") and (ii) the Company's disposition of its lighting business. The
Company's total revenues increased from $5.0 million in 1995 to $24.4 million in
1996 ($83.1 million on a pro forma basis after giving effect to the acquisition
of LPC). The Company's earnings increased from a net loss applicable to common
shareholders of $1.1 million in 1995 to net income applicable to common
shareholders of $1.8 million in 1996 ($1.4 million on a pro forma basis after
giving effect to the acquisition of LPC). See "--Summary Historical and Pro
Forma Financial Information" and "Selected Historical and Pro Forma Financial
Data."

HRB has performed a wide variety of renovation services for the hospitality
industry for over 18 years. Founded in 1969, LPC provides procurement services
to hotel owners, operators and developers in over 40 countries and over 40
states. The original founders of both HRB and LPC continue to manage these
businesses. Parker Reorder offers hotel properties the ability to order, on an
as needed basis, any and all OS&E products used by such properties. The Company
is enhancing its reorder business with a new proprietary software product
("Parker FIRST"), which allows clients to reorder OS&E and other products
on-line and will provide such clients with access to forecasting and product
evaluation capabilities. Headquartered in New York, New York and with offices in
Coral Gables, Florida; Los Angeles, California; Singapore; Dubai, United Arab
Emirates and Sandton, South Africa, the Company is well-situated to meet client
needs around the globe.

LINES OF BUSINESS

RENOVATION. The Company provides a complete package of high quality
renovation services to the hotel industry ranging from pre-planning,
value-engineering and scope preparation of a project to performing the
renovation and delivering furnished rooms. For more than 18 years, the Company's
renovation division has been delivering high quality renovations on time and
within budget and is currently working on third- and fourth- generation projects
for a number of its clients. The Company distinguishes itself from its
competitors by striving to keep a hotel fully operational as renovations are
performed, with minimal inconvenience to guests or interruptions to hotel
operations. Almost all of the Company's renovation projects involve interior
cosmetic improvements such as new paint, vinyl and carpeting. According to a
recent industry report, approximately 55 percent of hotel executives placed
upgrading existing facilities as a top priority. The Company's renovation
clients include FelCor Suite Hotels, Inc., Chartwell Leisure, The Griffin Group,
Prime Hospitality Group and The Getty's Group.

3
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PROCUREMENT. The Company procures FF&E products for hotel owners, operators
and developers, including carpeting, bedding, casegoods, wallcovering, artwork
and decorative lighting, as well as OS&E products, including china, glassware,
kitchen supplies, linens, flatware, uniforms and guestroom amenities, to meet
initial hotel operating requirements. As part of this service, the Company
prepares budgets, negotiates pricing and payment terms with manufacturers,
issues purchase orders and oversees shipping, delivery and installation services
in connection with both new hotels and major renovations. Worldwide contacts
with over 3,500 vendors and the Company's substantial buying power enable it to
offer its customers exceptional quality and competitive pricing. LPC purchased
approximately $305.0 million of products for its clients in 1996, making it the
second largest purchasing agent for the hospitality industry in the United
States ranked by sales volume. Recently completed projects include The Grand
Hyatt and The New York Palace in New York, New York; The Loews Hotel in Miami
Beach, Florida; The Atlantis Resort in Paradise Island, Bahamas; The Hilton
International in Sandton, South Africa and The Windsor Hotel & Casino in
Ontario, Canada.

REORDER. The Company acts as purchasing agent for hotels in connection with
recurring orders of OS&E products, paper and stationery, chemicals and
engineering supplies. The Company has completed the development of the initial
version of Parker FIRST, an automated reorder software package, and plans to
initiate beta testing during September 1997 and commercially introduce the
product in the first quarter of 1998. Parker FIRST provides a single hotel
property or group of related hotel properties with a streamlined on-line
ordering, forecasting and product evaluation system. In addition, Parker
Reorder, through Parker FIRST, provides information regarding existing and new
products, order processing, status of orders, receipt of merchandise, invoicing
and associated financial data. Parker FIRST will simplify the ordering process
and provide detailed daily and historical patterns of use. The Company believes
that as Parker FIRST achieves commercial success, the Company's reorder business
will represent a growing percentage of the Company's overall earnings. See "Risk
Factors--Risks Associated with Development of Parker FIRST."

INDUSTRY DYNAMICS

According to recently published data, the United States hospitality industry
alone consists of approximately 45,000 properties offering approximately 3.4
million rooms for daily rental. The hospitality industry as a whole has
experienced five consecutive years of growth in which the demand for rooms has
outpaced the growth in the supply of rooms. Industry analysts predict that this
growth will continue in the near future. According to Smith Travel Research, the
combination of increasing revenues, resulting from both higher occupancies and
higher average daily rates, and improving operating efficiencies at the property
level have resulted in dramatic increases in industry profitability. The
forecasted continued high demand for hotel rooms resulting from the strong
business climate coupled with recent record industry profits and availability of
capital to the hospitality industry is expected to continue to fuel the demand
for the Company's services.

Based upon the Company's experience, hotels generally require refurbishing
every five to seven years. In addition, it is common practice in the hospitality
industry for operating entities to allocate funds annually for ongoing
maintenance and renovation. The Company believes that the need for renovation
services, combined with record profits in the hospitality industry, will
continue to provide numerous renovation opportunities. In addition, as a result
of the downturn in the hospitality industry in the late 1980's, many corporate
hotel chains downsized, eliminating significant numbers of technical personnel.
As a result, hotels are finding it necessary to outsource more of their
renovation and procurement needs.

4
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BUSINESS STRATEGY

It is the Company's goal to further its position as one of the leading
providers of renovation and procurement services for the hospitality industry on
a global basis. To that end, the Company intends to:

- leverage the synergies that exist between its procurement, renovation and
reorder businesses by cross selling its services and pursuing referrals.
For example, the Company obtained renovation projects at The Grand Hyatt
Hotel and The Roosevelt Hotel in New York, New York directly as a result
of its performance on procurement projects for the same hotels;

- take advantage of the recent consolidation in the hospitality industry by
forming additional strategic alliances with both domestic and
international chains and franchised hotels, as well as major management
companies with a global presence;

- seek additional opportunities to complement and expand its existing
businesses, including (i) entering into joint venture projects that allow
the Company to leverage its broad range of services and (ii) achieving
market penetration of Parker FIRST. The Company is also considering
entering into hotel development and has entered into discussions with
respect to development opportunities on a contract fee basis; and

- take advantage of the fragmentation in the industry by acquiring and
consolidating hospitality related businesses throughout the country. Many
of these businesses are small, closely-held or family owned operations
which would benefit from the Company's resources, experience and
substantial customer base.

APOLLO JOINT VENTURE

In May 1997, the Company entered into a joint venture (the "Apollo Joint
Venture") with Apollo Real Estate Advisors II, L.P. ("Apollo") and Watermark
Limited LLC ("Watermark LLC") to identify, acquire, renovate, refurbish and sell
hotel properties. The Company will perform all of the renovation and procurement
services for each of the properties purchased by the Apollo Joint Venture. In
addition, the Company will receive a five percent equity interest in each of the
entities formed to purchase such properties in exchange for its contribution of
five percent of the total equity required to acquire, renovate and sell such
properties. The Apollo Joint Venture has entered into an agreement to acquire
the Warwick Hotel in Philadelphia, Pennsylvania and has identified two
additional hotel properties and is actively negotiating for their acquisition.
Following the closing of the transaction, the Company will fully renovate and
refurbish the Warwick Hotel pursuant to a contract with the Apollo Joint Venture
operating entity which is expected to generate approximately $14 million of
renovation revenues for the Company. The Warwick transaction is scheduled to
close on or before September 28, 1997 but is subject to a number of conditions.
There can therefore be no assurance that this transaction will close by such
date or at all.

The Company's headquarters are located at 450 Park Avenue, Suite 2603, New
York, New York 10022, and its telephone number is (212) 223-0699.

5
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THE OFFERING

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<S> <C>
Common Stock offered by the Company.......... 2,500,000 shares

Common Stock to be outstanding after the
Offering..................................... 10,314,739 shares(1)

Use of Proceeds.............................. For repayment of certain indebtedness,
additional investment in Parker FIRST,
funding of the Company's capital contribution
to the projects that may be undertaken in
respect of the Apollo Joint Venture and
general corporate purposes, including
potential acquisitions and development
activities, and working capital. See "Use of
Proceeds."

Risk Factors................................. The purchase of the Shares offered hereby
involves a high degree of risk. Prospective
investors should review carefully and
consider the information set forth under
"Risk Factors."

Nasdaq Symbol................................ ROOM
</TABLE>

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(1) Does not include: (i) as of June 30, 1997 (a) 50,000 shares of Common Stock
issuable upon exercise of outstanding options granted to an executive
officer of the Company; (b) 50,000 shares of Common Stock issuable upon
exercise of options outstanding under the Company's 1994 Non-Statutory Stock
Option Plan (the "1994 Plan"); (c) 1,162,500 shares of Common Stock issuable
upon exercise of options outstanding under the Company's 1996 Stock Option
Plan (the "Employee Plan"); (d) 100,000 shares of Common Stock issuable upon
exercise of options outstanding under the Company's 1996 Outside Directors'
Stock Option Plan (the "Directors' Plan"); (e) 41,666 shares of Common Stock
issuable upon exercise of outstanding warrants granted to the underwriter in
connection with the Company's initial public offering; and (f) 300,000
shares of Common Stock issuable upon exercise of an outstanding option
granted to Resource Holdings Associates, L.P. ("Resource Holdings"); (ii)
750,000 shares of Common Stock issuable upon exercise of an outstanding
warrant granted to Apollo in connection with the Apollo Joint Venture (which
is currently exercisable as to 250,000 shares); (iii) 1,000,000 shares of
Common Stock (subject to upward adjustment to a maximum of 5,000,000 shares
in the event that the market price of the Common Stock is below $5.00 at the
time of conversion) issuable upon conversion of the LPC Preferred (as
hereinafter defined); and (iv) shares of Common Stock in an amount equal to
2.5% of the outstanding Common Stock on a fully diluted basis after the
completion of the Offering issuable upon exercise of warrants to be granted
to Jefferies & Company, Inc. (the "Jefferies' Warrants").

6
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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION

The summary historical and pro forma financial information set forth below
is derived from the consolidated financial statements appearing elsewhere in
this Prospectus. The consolidated financial statements of Hospitality Worldwide
Services, Inc. and Subsidiary as of December 31, 1995 and 1996 and for the years
then ended have been audited by BDO Seidman, LLP, independent certified public
accountants. The information as at and for the six-month periods ended June 30,
1996 and 1997 is unaudited and, in the opinion of management, contains all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the Company's financial position and results of operations
at such dates and for such periods. The results for the six months ended June
30, 1997 are not necessarily indicative of the results for the full year. The
pro forma information is presented for illustrative purposes only and is not
necessarily indicative of the results of operations and financial position that
would have been obtained had the transaction reflected therein been consummated
on the dates indicated. During the periods presented below, the Company
consummated the acquisition of its renovation, purchasing and reorder businesses
and disposed of its lighting business. Consequently, the summary historical and
pro forma financial information presented below may not be comparable for the
periods presented. The summary historical and pro forma financial information
should be read in conjunction with such financial statements, including the
notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
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<S> <C> <C> <C> <C> <C> <C>
PRO FORMA PRO FORMA
1995 1996 1996(1) 1996 1996(1) 1997
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(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>

STATEMENT OF OPERATIONS DATA:

Revenues..................................... $4,980,291 $24,367,112 $83,067,724 $9,416,764 $36,823,122 $37,707,498

Cost of revenues............................. 3,823,779 18,289,924 70,171,807 6,990,707 31,121,935 29,694,278

Selling, general and administrative
expenses................................... 1,619,189 3,218,520 10,309,525 1,418,151 4,158,922 6,259,562

Other income (expense)....................... 107,250 (24,960) 215,719 2,706 152,616 (114,769)

Income (loss) from continuing operations..... (380,427) 1,907,383 1,735,165 738,959 1,044,931 821,573

Loss from discontinued operations............ (735,542) (64,705) -- -- -- --

Dividends on preferred shares................ -- -- 300,000 -- 150,000 150,000

Net income (loss) applicable to common
shareholders............................... (1,115,969) 1,842,678 1,435,165 738,959 894,931 671,573

Net income (loss) per share from continuing
operations................................. $ (0.07) $ 0.27 $ 0.17 $ 0.11 $ 0.11 $ 0.07

Loss per share from discontinued
operations................................. (0.13) (0.01) -- -- -- --

Net income (loss) per share.................. $ (0.20) $ 0.26 $ 0.17 $ 0.11 $ 0.11 $ 0.07

Weighted average number of common equivalent
shares outstanding......................... 5,653,052 7,192,361 8,442,361 7,027,990 8,277,990 9,105,219
</TABLE>

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<TABLE>
<CAPTION>
JUNE 30, 1997
---------------------------------

<S> <C> <C>
ACTUAL AS ADJUSTED(2)
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BALANCE SHEET DATA:

Current assets................................................................ $18,205,111 $32,241,361

Total assets.................................................................. 39,458,382 53,494,632

Working capital (deficit)..................................................... (902,108) 17,829,142

Total current liabilities..................................................... 19,107,219 14,412,219

Total stockholders' equity.................................................... 20,252,149 38,983,399
</TABLE>

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(1) Gives effect to the acquisition of LPC by the Company as if such acquisition
had occurred on January 1, 1996. The amounts in the pro forma columns
reflect adjustments for amortization of goodwill, officers' compensation,
interest income, taxes and dividends on preferred shares.

(2) As adjusted to reflect the issuance of 2,500,000 shares of Common Stock
offered by the Company hereby at an assumed public offering price of $8.25
per share, including 1,000,000 shares from the Company's treasury, and the
application of the net proceeds therefrom. See "Use of Proceeds."

8
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RISK FACTORS

PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS. SEE "DISCLOSURE
REGARDING FORWARD-LOOKING STATEMENTS."

RECENT CHANGE OF BUSINESS FOCUS

The Company's historical results of operations do not reflect combined
operations relating to its current lines of business for a significant period of
time and such results may not be indicative of the Company's future results of
operations. In August 1995, the Company acquired substantially all of the assets
and business and assumed certain liabilities of AGF Interior Services, Inc.,
doing business as Hospitality Restoration and Builders ("AGF"), a company that
provided renovation services to the hospitality industry. In February 1996, the
Company disposed of its lighting business, which prior to the acquisition of the
assets of AGF, was its only operating business. In January 1997, the Company
acquired 100% of the outstanding capital stock of LPC. In May 1997, the Company
entered into the Apollo Joint Venture. These businesses represent a substantial
change from the Company's original line of business, designing, manufacturing
and installing energy-efficient lighting fixtures for the hospitality industry.
Management and other key personnel may not have the depth of expertise required
to manage such a substantial change in business focus. If the Company's efforts
are not successful, the Company's results of operations could be materially
adversely affected. See "Selected Historical and Pro Forma Financial
Information" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

MANAGEMENT OF GROWTH

The Company has recently experienced and is expected to continue to
experience growth in the scope of its operations. The Company will need to hire
additional financial, human resources and sales and marketing personnel. This
growth will result in increased responsibilities for management and may place a
strain on the Company's operational, financial and other resources. There can be
no assurance that the Company will be able to achieve or manage any such growth
effectively. Failure to do so could have a material adverse effect on the
Company. See "Business."

HISTORY OF LOSSES AND RECENT RESULTS

For the year ended December 31, 1996, the Company had net income applicable
to common shareholders of $1,842,678 and pro forma net income applicable to
common shareholders of $1,435,165, compared to a net loss of $1,115,969 for the
year ended December 31, 1995. The Company's net income applicable to common
shareholders for the six months ended June 30, 1997 was $671,573. During that
same period, the Company recognized increased renovation revenues of $780,183
without any increase in associated costs as a result of renegotiating a
renovation contract with Watermark LLC, the general partner of the Company's
principal shareholder. If this renovation contract had not been renegotiated,
net income applicable to Common Shareholders for the six months ended June 30,
1997 would have been approximately $230,000. See "--Control by Certain
Shareholders," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and "Certain Transactions." There can be no assurance
that the Company's operations will continue to be profitable or that any
positive cash flow generated by the Company's operations will be sufficient to
meet the Company's future cash and operational requirements. See "Selected
Historical and Pro Forma Financial Information."

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

9
<PAGE>
with other independent procurement companies, hotel purchasing companies and
food service distribution companies. With respect to Parker FIRST, the Company
expects competition from a number of hotel management companies, hotel
companies, franchise operators and other entities who are pursuing the
development of software systems that attempt to provide on-line procurement
services. There is no single competitor or small number of competitors that is
or are dominant in the Company's business areas. However, some of the Company's
competitors and potential competitors possess substantially greater financial,
personnel, marketing and other resources than the Company. There can be no
assurance that the Company will be able to compete successfully. See
"Business--Competition."

NEED FOR ADDITIONAL FINANCING

Management believes that the Company's current cash, cash equivalents and
lines of credit, together with the proceeds from this Offering, will be
sufficient to enable the Company to carry out its business objectives for the
next 18 months. Thereafter, the Company will be dependent upon its ability to
generate cash flows from operations sufficient to meet its obligations as they
become due, to fund its working capital needs and to fund any acquisitions or
investments in joint ventures. Unless the Company can generate cash flows from
operations sufficient to fund these requirements, the Company will be required
to obtain additional financing to continue to implement its business strategies.
As part of its business strategy, the Company plans to pursue acquisitions of
renovation businesses and make additional investments in connection with the
Apollo Joint Venture. To the extent the Company consummates any such
acquisitions in the next 18 months or must contribute funds to joint venture
projects in excess of the amount contemplated by "Use of Proceeds," the Company
will need to raise additional capital. There can be no assurance that any
additional financing will be available to the Company on acceptable terms, if at
all. Any inability by the Company to obtain additional financing, if required,
will have a material adverse effect on the Company. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."

RISK OF JOINT INVESTMENT

The Apollo Joint Venture may be terminated by either the Company, Apollo or
Watermark LLC at any time after May 2002 upon 180 days' prior written notice.
Apollo will have complete discretion over the approval and the terms of each
project presented to the Apollo Joint Venture. Each project will be governed by
a separate operating agreement. Each operating agreement in respect of the
development companies formed to purchase, renovate and sell hotel properties
pursuant to the Apollo Joint Venture will provide that Apollo, as the majority
in interest member, may request that each member provide additional capital for
a specific project. In the event that the Company is unable to meet such capital
request, its interest in such project will be decreased by the amount which the
other members contribute pursuant to such capital request, as well as an
additional penalty amount. Further, if the Company were to pursue the
opportunity to acquire a hotel during the next five years, it would be required
to first present such opportunity to Apollo.

In addition to Apollo's discretion over projects in which the Apollo Joint
Venture will participate, the operating companies formed in respect of each
project will be controlled by Apollo as the majority member in interest and
Apollo and Watermark LLC as managers. The risk is present in this joint venture,
and in other joint ventures in which the Company may subsequently determine to
participate, that the other joint venture partners may at any time have
economic, business or legal interests or goals that are inconsistent with those
of the joint venture or the Company. Moreover, if Apollo were unable to meet its
economic or other obligations to the venture, the Company could be required to
fulfill those obligations. The operating agreements will also impose certain
limitations on transferability of interests, including the right of members
holding in the aggregate a majority of the interests of the operating company to
force any other member to sell its interest upon a transfer by such members of
their interests. In light of the substantial limitations on the Company's
discretion with respect to the Apollo Joint Venture, there can be

10
<PAGE>
no assurance that it will prove to be a successful joint venture for the
Company. See "Business--Apollo Joint Venture."

RISKS ASSOCIATED WITH DEVELOPMENT OF PARKER FIRST

The growth of the Company's reorder business depends largely on the
successful introduction and subsequent market penetration of Parker FIRST. The
Company plans to initiate beta testing this software in September 1997 and there
can be no assurance that the product will be successfully implemented on the
Company's proposed timetable or that, once introduced, Parker FIRST will be
commercially successful. Significant flaws in the software or delays in
implementation would have a material adverse effect on the Company. In addition,
there can be no assurance that the Company's competitors will not develop
software products that are substantially equivalent or superior to Parker FIRST.

LIMITED INTELLECTUAL PROPERTY PROTECTION

The Company believes that the proprietary nature of Parker FIRST is critical
to the success of such software. There can be no assurance that the steps taken
by the Company to deter misappropriation of its proprietary information will be
adequate or that the Company will be able to take appropriate steps to enforce
intellectual property rights. Further, the laws of many foreign countries do not
protect the Company's intellectual property rights to the same extent as the
laws of the United States. The failure of the Company to protect its proprietary
information could have a material adverse effect on the Company.

HOTEL RENOVATION RISKS

The Company provides renovation services to its clients on a fixed price
basis. As a result, the Company is exposed to certain risks, including the
possibility of unforeseen construction costs and delays due to various factors
such as the inability to obtain regulatory approvals, inclement weather, fires,
acts of nature and labor or material shortages. Such unanticipated delays and
expenses, should they materialize, could affect the Company's results of
operations and its reputation and impair its ability to obtain additional
renovation work and could have a material adverse effect on the Company.

DEPENDENCE UPON AVAILABILITY OF QUALIFIED LABOR

The Company's ability to provide renovation services successfully to the
hospitality industry depends upon its ability to hire local contractors and
laborers in the areas where it provides such renovation services. The Company is
dependent upon the availability of a local labor force, which is affected by
prevailing wages, weather and local economic conditions and there can be no
assurance that such supply will be adequate to meet the Company's requirements
or that such supply can be obtained at wage levels satisfactory to the Company.

Parker FIRST will require substantial software development and technical
support to complete the development and the deployment of the product and to
support it once it is in place. The Company faces intense competition for
software development and technical support personnel from other entities. There
can be no assurance that the Company will be successful in hiring and retaining
such key personnel.

SUPPLIER RELATIONSHIPS

The Company's purchasing arrangements with suppliers of hospitality-related
products are by purchase order and terminable at will by either party. There can
be no assurance that any of the Company's supplier relationships will not be
terminated in the future. While the Company has been able to obtain products on
a timely basis in the past, the Company is subject to the risk that it will be
unable to purchase sufficient products to meet its clients' requirements. Any
shortages or delays in obtaining these products could have a material adverse
effect on the Company.

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

A portion of the Company's revenues is derived from international sales and
the Company's business strategy involves expanding its international operations.
There are certain risks inherent in conducting business internationally, such as
unexpected changes in regulatory requirements, export restrictions, tariff

11
<PAGE>
and other trade barriers, difficulties in staffing and managing foreign
operations, different employment laws and practices in foreign countries, longer
payment cycles, political instability, exposure to currency fluctuations,
exchange rates, imposition of currency exchange controls, potentially adverse
tax consequences and country-specific product requirements, any of which could
adversely effect the success of the Company's international operations. There
can be no assurance that one or more of these factors will not have a material
adverse effect on the Company's international operations and, consequently, on
the Company.

CONTROL BY CERTAIN SHAREHOLDERS

Upon completion of the Offering, Watertone Holdings, L.P. ("Watertone") will
beneficially own 1,800,000 shares or 17.5% of the outstanding Common Stock. See
"Principal Shareholders." Robert Berman, the President and Chief Executive
Officer of the Company, is a director of Watermark LLC, the general partner of
Watertone. The Parker family controls 1,250,000 shares or 12.1% of the
outstanding Common Stock and 200,000 shares of LPC Preferred, each of which are
entitled to 4.17 votes. The Parker family, as holders of LPC Preferred are
entitled to (i) vote on all matters submitted to the holders of the Common Stock
and/or directors; and (ii) elect two directors to the Company's Board of
Directors at any time that any of the LPC Preferred is outstanding. Accordingly,
each of Watertone, Watermark LLC, Mr. Berman and the Parker family will be able
to influence (in addition to Mr. Berman's, Leonard Parker's and Douglas Parker's
influence as officers and/or directors) the affairs of the Company, including
the election of directors and other matters requiring shareholder approval.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have 10,314,739 shares of
Common Stock issued and outstanding. Of these shares, a total of 6,196,168
shares of Common Stock (including the 2,500,000 shares offered hereby) will be
freely tradable without restriction or registration under the Securities Act by
persons other than "affiliates" of the Company, as defined in the Securities Act
(who would be required to sell under Rule 144 under the Securities Act). The
remaining 4,118,571 shares of Common Stock outstanding upon completion of the
Offering will be "restricted securities" as that term is defined by Rule 144
(the "Restricted Shares").

The Company's officers and directors and Watertone, who beneficially own an
aggregate of 2,564,666 shares of Common Stock (together with an aggregate of
1,365,000 shares of Common Stock underlying outstanding options), and the
Company have agreed that, without the prior written consent of Jefferies, he,
she or it will not, during the period ending 180 days after the date of the
Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option to contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or (ii) enter into any swap or
similar agreement that transfers, in whole or in part, the economic risk of
ownership of the Common Stock, whether any such transaction described in clause
(i) or (ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. Jefferies may, in its sole discretion and at
any time without notice, release all or any portion of the securities subject to
these lock-up agreements.

No predictions can be made as to the effect, if any, that the sale or
availability for sale of shares of additional Common Stock will have on the
market price of the Common Stock. Nevertheless, sales of substantial amounts of
such shares in the public market, or the perception that such sales could occur,
could materially and adversely affect the market price of the Common Stock and
could impair the Company's ability to raise capital through an offering of its
equity securities in the future. See "Shares Eligible for Future Sale."

12
<PAGE>
POSSIBLE ANTI-TAKEOVER EFFECTS OF PREFERRED STOCK; POTENTIAL DILUTION OF COMMON
STOCK OR INTEREST IN PARKER REORDER

The Company's Certificate of Incorporation authorizes the Board of Directors
to issue up to 3,000,000 shares of preferred stock, par value $.01 per share
(the "Preferred Stock"). The Preferred Stock may be issued in one or more
series, the terms of which may be determined at the time of issuance by the
Board of Directors, without further action by shareholders. As of the date of
this Prospectus, 200,000 shares of 6% Redeemable Convertible Preferred Stock
(the "LPC Preferred") are outstanding, which shares were issued as partial
consideration for the acquisition of LPC. Although the Company currently has no
plans for the issuance of additional shares of Preferred Stock, there can be no
assurance that the Company will not do so in the future. The ability of the
Board of Directors to issue Preferred Stock could have the effect of delaying,
deferring or preventing a change of control of the Company or the removal of
existing management and, as a result, could prevent the shareholders of the
Company from being paid a premium over the market value for their shares of
Common Stock. If the Company fails to redeem the LPC Preferred upon the request
of the holders thereof at any time after January 10, 2002, the holders of LPC
Preferred will be entitled to elect a majority of the members of the Board of
Directors. At any time between January 10, 1998 and January 10, 2000, the
holders of the LPC Preferred will have the right to convert such stock into
either (i) 1,000,000 shares of Common Stock (subject to upward adjustment to a
maximum of 5,000,000 shares in the event that the market price of the Common
Stock is below $5.00 at the time of conversion) or (ii) 9.8% of the capital
stock of Parker Reorder. If the holders exercise the option to convert the LPC
Preferred into shares of Common Stock, holders of Common Stock will experience
dilution. If the holders exercise the option to convert the LPC Preferred into
9.8% of the capital stock of Parker Reorder, the Company's equity ownership in
Parker Reorder will be reduced. The holders of LPC Preferred also have the
right, as long as the LPC Preferred is outstanding, to receive 20% of the
cumulative net profits of Parker Reorder, measured from January 1, 1997. See
"Description of Securities-- Description of Preferred Stock."

DILUTION

Purchasers of the Common Stock in the Offering will experience immediate and
substantial dilution of $6.31 per share in the net tangible book value per share
of the Common Stock as of June 30, 1997.

NO DIVIDENDS

The Company has never paid a dividend on its Common Stock and does not
intend to pay any dividends on its Common Stock in the foreseeable future. In
addition, the Company is restricted from paying or declaring any dividends on
any capital stock other than the LPC Preferred, so long as such LPC Preferred is
outstanding. See "Dividend Policy."

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). All statements other than statements
of historical information provided herein are forward-looking and may contain
information about financial results, economic conditions, trends and known
uncertainties. Such statements are indicated by words or phrases such as
"anticipate," "estimate," "project," "management believes," "the Company
believes" and similar words or phrases. The Company cautions the reader that
actual results could differ materially from those expected by the Company,
depending on the outcome of certain factors, including, without limitation,
factors discussed under "Risk Factors." Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. The Company undertakes no obligation to release publicly the result of
any revisions to these forward-looking statements which may be made to reflect
events or circumstances after the date hereof, including, without limitation,
changes in the Company's business strategy or planned capital expenditures, or
to reflect the occurrence of unanticipated events.

13
<PAGE>
USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the Shares
offered by the Company hereby at an assumed public offering price of $8.25 per
share, after deducting underwriting discounts and expenses payable by the
Company, are estimated to be $18,731,250 ($21,608,438 if the Underwriters' over-
allotment option is exercised in full).

Of the net proceeds, the Company intends to use $2.2 million to repay a note
which bears interest at a rate of 12% per annum and is due on November 16, 1997;
$2.5 million to repay borrowings under the Company's lines of credit which bear
interest at a rate of prime plus .25% to .5% per annum; $5.0 million for
additional investment in Parker FIRST and the expenses relating to marketing and
hiring of additional personnel in connection therewith; approximately $4.0
million to fund its equity interest in certain entities to be formed to acquire
hotel properties in respect of the Apollo Joint Venture; and approximately $5.0
million for general corporate purposes, including potential acquisitions and
development activities, and working capital. While the Company is currently
considering a number of potential acquisitions of hospitality related service
companies, there are no agreements with respect to any acquisition and there can
be no assurance that the Company will enter into any such agreements or
consummate any such acquisitions.

The allocation of the net proceeds of the Offering set forth above
represents the Company's best estimate based upon its present plans and certain
assumptions regarding general economic and industry conditions and the Company's
future revenues and expenditures. The Company reserves the right to reallocate
these proceeds within the above-mentioned categories or to other purposes if
management believes it is in the Company's best interests.

Any additional net proceeds realized from the exercise of the Underwriters'
over-allotment option (up to approximately $2,877,188) will be added to the
Company's working capital.

Pending application of the net proceeds of the Offering, the Company intends
to invest such net proceeds in short-term, interest-bearing, investment grade
securities.

14
<PAGE>
PRICE RANGE OF COMMON STOCK

The Common Stock is currently listed for quotation on Nasdaq under the
symbol "ROOM." The following table sets forth, for the periods indicated, the
high and low bid prices for the Common Stock as reported on Nasdaq. Quotations
reflect prices between dealers, without retail mark-up, mark-down or commissions
and may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
HIGH BID LOW BID
-------- -------
<S> <C> <C>
1995
1st Quarter.......................................................................................... $ 2 1/4 $1 1/4
2nd Quarter.......................................................................................... $ 2 1/2 $ 3/4
3rd Quarter.......................................................................................... $ 2 3/8 $1 7/16
4th Quarter.......................................................................................... $ 2 5/16 $1 1/16
1996
1st Quarter.......................................................................................... $ 11 1/16 $ 1/2
2nd Quarter.......................................................................................... $ 2 3/16 $1 3/8
3rd Quarter.......................................................................................... $ 3 3/8 $1 1/2
4th Quarter.......................................................................................... $ 7 $2 7/16
1997
1st Quarter.......................................................................................... $ 8 9/16 $5 7/8
2nd Quarter.......................................................................................... $ 9 1/16 $5 5/16
3rd Quarter (through August 22)...................................................................... $ 9 3/4 $7 3/8
</TABLE>

On August 22, 1997, the last reported sale price of the Common Stock on
Nasdaq was $8.25. As of August 22, 1997, the Company had 59 holders of record of
its Common Stock. Application has been made to have the Common Stock approved
for quotation on Nasdaq NMS under the symbol "ROOM."

DIVIDEND POLICY

The Company has not declared or paid any dividends on the Common Stock and
does not intend to declare or pay any dividends on the Common Stock in the
foreseeable future. The Company currently intends to reinvest earnings, if any,
in the development and expansion of its business. The declaration of dividends
in the future will be at the election of the Board of Directors and will depend
upon the earnings, capital requirements and financial position of the Company,
general economic conditions and other relevant factors. In addition, the Company
is restricted from paying or declaring any dividends on any capital stock other
than the LPC Preferred, so long as such LPC Preferred is outstanding.

15
<PAGE>
CAPITALIZATION

The following table sets forth at June 30, 1997, the actual capitalization
of the Company, the capitalization of the Company as adjusted to reflect a
repurchase of Common Stock by the Company and the borrowings related thereto and
the capitalization of the Company as further adjusted to give effect to the sale
of the Shares offered by the Company hereby at an assumed public offering price
of $8.25 per share and application of the estimated net proceeds therefrom. This
table should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations," the financial statements and
pro forma financial statements and notes thereto and "Selected Historical and
Pro Forma Financial Data" included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1997
-----------------------------
<S> <C> <C>
ACTUAL AS ADJUSTED(1)
------------- --------------
Cash and cash equivalents.......................................................... $ 1,434,878 $ 15,471,128
------------- --------------
------------- --------------
Current portion of notes payable and capital lease obligations..................... 60,000 60,000
Loan payable bank.................................................................. 2,495,000 --
Note payable....................................................................... 2,200,000 --
Long-term debt--less current portion............................................... 99,014 99,014
------------- --------------
$ 4,854,014 $ 159,014
------------- --------------
Stockholders' equity:
Preferred stock,
3,000,000 shares authorized, 200,000 LPC Preferred shares issued and
outstanding.................................................................. 5,000,000 5,000,000
Common stock, $.01 par value;
20,000,000 shares authorized, 7,814,739 and 10,314,739 shares issued and
outstanding respectively; 1,000,000 and 0 shares held in treasury
respectively(1)(2)........................................................... 88,148 103,148
Treasury stock................................................................... (2,925,000) --
Additional paid-in capital....................................................... 17,193,991 32,985,241
Translation adjustment........................................................... (12,867) (12,867)
Retained earnings................................................................ 907,877 907,877
------------- --------------
Total stockholders' equity..................................................... 20,252,149 38,983,399
------------- --------------
Total capitalization......................................................... $ 25,106,163 $ 39,142,413
------------- --------------
------------- --------------
</TABLE>

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

(1) As adjusted to reflect the issuance of 2,500,000 shares of Common Stock
offered by the Company hereby at an assumed public offering price of $8.25
per share, including 1,000,000 shares from the Company's treasury, and the
application of a portion of the net proceeds therefrom. See "Use of
Proceeds."

(2) Does not include shares issuable upon exercise of certain options and
warrants. See "Prospectus Summary--The Offering."

16
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

The selected historical and pro forma financial data set forth below is
derived from the consolidated financial statements appearing elsewhere in this
Prospectus. The consolidated financial statements of Hospitality Worldwide
Services, Inc. and Subsidiary of December 31, 1995 and 1996 and for the years
then ended have been audited by BDO Seidman, LLP, independent certified public
accountants. The information as at and for the six-month periods ended June 30,
1996 and 1997 is unaudited and, in the opinion of management, contains all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the Company's financial position and results of operations
at such dates and for such periods. The results for the six months ended June
30, 1997 are not necessarily indicative of the results for the full year.

Unaudited pro forma information in this Prospectus gives effect to the
acquisition of LPC as if such acquisition had occurred on January 1, 1996. The
unaudited pro forma condensed consolidated statements of operations have been
included as required and allowed by the rules of the Securities and Exchange
Commission (the "Commission") and are provided for comparative purposes only.
The pro forma statements of operations do not purport to be indicative of the
results which would have been obtained if the acquisitions had been effected on
the date or dates indicated or which may be obtained in the future. The
unaudited pro forma condensed consolidated statements of operations are based on
management's current estimate of the allocation of the purchase price for the
acquisition of LPC, the actual allocation of which may differ. During the
periods presented below, the Company consummated the acquisition of its
renovation, purchasing and reorder businesses and disposed of its lighting
business. Consequently, the selected historical and pro forma financial
information presented below may not be comparable for the periods presented. The
selected historical and pro financial information should be read in conjunction
with such financial statements, including the notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30
---------------------------------- -------------------------------------
PRO FORMA PRO FORMA
1995 1996 1996(1) 1996 1996(1) 1997
--------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)

STATEMENT OF OPERATIONS DATA:

Revenues................................... $4,980,291 $24,367,112 $83,067,724 $9,416,764 $36,823,122 $37,707,498

Cost of revenues........................... 3,823,779 18,289,924 70,171,807 6,990,707 31,121,935 29,694,278

Selling, general and administrative
expenses................................. 1,619,189 3,218,520 10,309,525 1,418,151 4,158,922 6,259,562

Other income (expense)..................... 107,250 (24,960) 215,719 2,706 152,616 (114,769)

Income (loss) from continuing operations... (380,427) 1,907,383 1,735,165 738,959 1,044,931 821,573

Loss from discontinued operations.......... (735,542) (64,705) -- -- -- --

Dividends on preferred shares.............. -- -- 300,000 -- 150,000 150,000

Net income (loss) applicable to common
shareholders............................. (1,115,969) 1,842,678 1,435,165 738,959 894,931 671,573

Net income (loss) per share from continuing
operations............................... $ (0.07) $ 0.27 $ 0.17 $ 0.11 $ 0.11 $ 0.07

Loss per share from discontinued
operations............................... (0.13) (0.01) -- -- -- --

Net income (loss) per share................ $ (0.20) $ 0.26 $ 0.17 $ 0.11 $ 0.11 $ 0.07

Weighted average number of common and
common equivalent shares outstanding..... 5,653,052 7,192,361 8,442,361 7,027,990 8,277,990 9,105,219
</TABLE>

17
<PAGE>

<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------
AS
ACTUAL ADJUSTED(2)
----------- ------------
<S> <C> <C>

BALANCE SHEET DATA:

Current assets.................................................................. $18,205,111 $32,241,361

Total assets.................................................................... 39,458,382 53,494,632

Working capital (deficit)....................................................... (902,108) 17,829,142

Total current liabilities....................................................... 19,107,219 14,412,219

Total stockholders' equity...................................................... 20,252,149 38,983,399
</TABLE>

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

18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
COMPANY'S FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL STATEMENTS AND THE
RELATED NOTES THERETO INCLUDED ELSEWHERE HEREIN. SEE "DISCLOSURE REGARDING
FORWARD-LOOKING STATEMENTS."

OVERVIEW

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

Additionally, historical comparisons are not considered meaningful because
revenue recognition methodologies vary across the Company's businesses. The
Company recognizes all revenues associated with a renovation project on a
percentage of completion basis, as if the Company were a general contractor. As
part of this process, the Company develops a complete scope of work to be
performed and invoices its clients on a monthly or bi-monthly basis as work is
performed. The Company's cost of renovation services has been relatively stable
over the past two years. In contrast to the Company's recognition of renovation
revenues, the Company recognizes procurement revenues in two ways: (i) when the
Company acts as a purchaser and reseller of products, the Company recognizes all
revenues associated with the products it purchases at the time of shipment of
the product or (ii) when the Company acts as an agent only, service fee income
is recognized as revenue at the time the service is provided. In either case,
the Company charges its clients a procurement fee based upon the amount of time
and effort it expects to spend on a project. The Company intends to continue to
expand its role as a purchaser and reseller because the Company believes that it
can enter into more advantageous arrangements with its vendors when acting as
principal rather than agent. Under both methods of procurement revenue
recognition, profits primarily include only procurement service fees. The
Company realizes reorder revenues based on the fees it charges its clients for
services rendered.

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 1997 (ACTUAL) COMPARED TO SIX MONTHS ENDED JUNE
30, 1996 (PRO FORMA)

The following comparison of the six month periods ended June 30, 1997 and
1996 gives pro forma effect to the acquisition of LPC as if it occurred on
January 1, 1996. The Company believes that this comparison is more meaningful
than a comparison of the historical periods due to the acquisition of LPC, a
significant portion of its current business.

Revenues increased $884,376, or 2.4%, to $37,707,498 for the six months
ended June 30, 1997, compared to $36,823,122 for the six months ended June 30,
1996. Renovation revenues increased $1,411,415 due to continued growth in the
Company's customer base resulting primarily from increased sales and marketing
efforts.

Cost of revenues decreased $1,427,657, or 4.6%, to $29,694,278 for the six
months ended June 30, 1997, compared to $31,121,935 for the six months ended
June 30, 1996. Cost of revenues as a percentage of revenues for the six months
ended June 30, 1997 decreased to 78.7%, compared to 84.5% for the six months
ended June 30, 1996. Cost of renovation revenues as a percentage of renovation
revenues decreased to 64.6% for the six months ended June 30, 1997, compared to
74.2% for the six months ended June 30, 1996. The Company reduced its cost of
renovation revenues as a percentage of renovation revenues in part by replacing
higher priced subcontractors with lower cost internal personnel on certain

19
<PAGE>

projects. The Company has been able to realize greater efficiencies from larger
renovation projects, which is reflected in the percentage improvement. In
addition, the Company renegotiated its renovation contract with Watermark LLC to
provide for fees more consistent with a project of similar scope and complexity.
As a result of this renegotiation, the Company recognized an increase in its
renovation revenues of approximately $780,183 without an accompanying increase
in costs. See "Certain Transactions." Cost of procurement revenues as a
percentage of procurement revenues has remained relatively unchanged.

Selling, general and administrative expenses for the six months ended June
30, 1997 increased $2,100,640, or 50.5%, to $6,259,562, compared to $4,158,922
for the six months ended June 30, 1996. Selling, general and administrative
expenses increased primarily as a result of increased development costs for the
Parker FIRST software of $621,462 compared to $281,620 for the comparable prior
period, and increased administrative costs relating to the Company's growth. In
addition, selling, general and administrative expenses include $427,573 and
$213,250 of goodwill amortization and other intangible relating to the
acquisition of LPC and the assets of AGF for the six months ended June 30, 1997
and 1996, respectively. As a percentage of revenues, selling, general and
administrative expenses for the six months ended June 30, 1997 increased to
16.6% from 11.3% for the six months ended June 30, 1996.

The effective income tax rate for the six months ended June 30, 1997 was
49.9%, compared to 38.3% for the same period last year. The increase in the
effective tax rate to 49.9% for the six months ended June 30, 1997 was primarily
due to the nondeductibility of the amortization of goodwill that resulted from
the acquisition of LPC and the benefits of all net operating loss carryforwards
previously recognized.

As a result of the foregoing, net income applicable to common shareholders
for the six months ended June 30, 1997 was $671,573, or $.07 per share, compared
to $894,931, or $.11 per share, for the six months ended June 30, 1996. If the
Company's renovation contract with Watermark LLC had not been renegotiated, net
income applicable to common shareholders for the six months ended June 30, 1997
would have been approximately $230,000, or $.03 per share.

SIX MONTHS ENDED JUNE 30, 1997 (ACTUAL) COMPARED TO SIX MONTHS ENDED JUNE
30, 1996 (ACTUAL)

Revenues increased $28,290,734, or 300.4%, to $37,707,498 for the six months
ended June 30, 1997, compared to $9,416,764 for the six months ended June 30,
1996, due in large part to the acquisition of LPC, which contributed
approximately $26,880,319 to such revenues. Renovation revenues for the six
months ended June 30, 1997 increased $1,411,415 due to further development of
its customer base through increased sales and marketing efforts.

Cost of revenues increased $22,703,571, or 324.7%, to $29,694,278 for the
six months ended June 30, 1997, compared to $6,990,707 for the six months ended
June 30, 1996. This increase resulted primarily from the acquisition of LPC,
which incurred costs of approximately $22,700,958 for the six months ended June
30, 1997. Cost of revenues as a percentage of revenues for the six months ended
June 30, 1997 increased to 78.7%, compared to 74.2% for the six months ended
June 30, 1996. The cost of renovation revenues decreased to 64.6% for the six
months ended June 30, 1997, compared to 74.2% for the six months ended June 30,
1996. The Company reduced its cost of renovation revenues as a percentage of
renovation revenues in part by replacing higher priced subcontractors with lower
cost internal personnel on certain projects. The Company has been able to
realize greater efficiencies from larger renovation projects, which is reflected
in the percentage improvement. The Company renegotiated its renovation contract
with Watermark LLC to provide for fees more consistent with a project of similar
scope and complexity. As a result of this renegotiation, the Company recognized
an increase of its renovation gross margin of approximately $780,183 without an
accompanying increase in costs. See "Certain Transactions." Cost of procurement
revenues as a percentage of procurement revenues has remained relatively
unchanged.

Selling, general and administrative expenses for the six months ended June
30, 1997 increased $4,841,411, or 341.4%, to $6,259,562, compared to $1,418,151
for the six months ended June 30, 1996. Contributing to this increase was the
acquisition of the procurement and reorder businesses, which

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incurred expenses of approximately $4,199,900. These expenses include
significant development costs for the Parker FIRST software. Additionally,
selling, general and administrative expenses include $427,573 and $213,250 of
goodwill amortization and other intangible for the six months ended June 30,
1997 and 1996, respectively. As a percentage of net revenues, selling, general
and administrative expenses for the six months ended June 30, 1997 increased to
16.6% from 15.1% for the six months ended June 30, 1996.

The effective income tax rate for the six months ended June 30, 1997 was
49.9%, compared to 26.9% for the same period last year. The increase in the
effective tax rate to 49.9% for the six months ended June 30, 1997 is primarily
due to the nondeductibility of the amortization of goodwill of the LPC
acquisition, and the previous recognition of the benefits of all net operating
loss carryforwards.

As a result of the foregoing, net income applicable to common shareholders
for the six months ended June 30, 1997 was $671,573, or $.07 per share, compared
to $738,959, or $0.11 per share, for the same period last year.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

Revenues for the year ended December 31, 1996 increased $19,386,821, or
389.3%, to $24,367,112, compared to $4,980,291 for the year ended December 31,
1995. Revenues increased significantly because the results for the year ended
December 31, 1995 only include renovation revenues from August 1, 1995, the date
the Company acquired the assets and business of AGF, through December 31, 1995.

Cost of revenues for the year ended December 31, 1996 increased $14,466,145,
or 378.3%, to $18,289,924, compared to $3,823,779 for the year ended December
31, 1995. As a percentage of revenues, cost of revenues decreased to 75.1% for
the year ended December 31, 1996, compared to 76.8% for the year December 31,
1995. Although the Company experienced rapid growth during this period, it was
able to improve its cost of revenues as a result of continued hiring and
training of internal personnel capable of performing services previously
outsourced at a higher cost.

Selling, general and administrative expenses increased $1,599,331, or 98.8%,
to $3,218,520, for the year ended December 31, 1996 compared to $1,619,189 for
the year ended December 31, 1995. Included in the selling, general and
administrative expenses for the years ended December 31, 1996 and 1995 were
$383,922 and $166,048, respectively, of amortization of goodwill resulting from
the acquisition of the assets of AGF. Selling, general and administrative
expenses decreased as a percentage of revenues, from 32.5% to 13.2% as a result
of a larger revenue base, without an accompanying increase in administrative
costs.

The effective income tax rate for the year ended December 31, 1996 was
32.7%. For the year ended December 31, 1995, the Company experienced a net loss
and incurred certain state taxes relating to the renovation business. The rates
for 1995 are the result of certain state and federal minimum tax requirements.

Net income (loss) applicable to common shareholders for the year ended
December 31, 1996 was $1,842,678 or $.27 per share, compared to ($1,115,969), or
($.07) per share, for the year ended December 31, 1995.

LIQUIDITY AND CAPITAL RESOURCES

The Company's short-term and long-term liquidity requirements generally
consist of operating capital for its procurement and renovation businesses and
selling, general and administrative expenses. Historically, the Company has
satisfied its short-term and long-term liquidity requirements with cash
generated from operations and periodic utilization of its lines of credit. Due
to the nature of the Company's business, with a majority of its resources
allocated to personnel for performance of its services, capital requirements are
insignificant. There are substantial capital requirements necessary to beta test
Parker FIRST as well as anticipated additional costs necessary to sell and
market the final product. These future commitments, however, are at the
discretion of the Company's management. As a result, the Company can use its
operating cash and available credit facilities for operating needs.

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Net cash used for operating activities was $660,413 for the six months ended
June 30, 1997, compared to $543,299 for the six months ended June 30, 1996.
During the six months ended June 30, 1997, the Company's accounts receivable
increased by $2,273,812, resulting from growth in revenue. This increase was
partially offset by an increase in accounts payable and accrued expenses of
$715,936. The Company started a significant number of renovation projects in
June 1997, resulting in significant month end billings that the Company believes
will be collected during the third quarter of 1997. Net cash used by investing
activities for the six months ended June 30, 1997 was $24,497, compared to net
cash provided by investing activities of $706,423 for the six months ended June
30, 1996. The positive cash flow for the six months ended June 30, 1996, is the
result of the sale of marketable securities. The 1997 investing activities
include an investment in the development of the Parker FIRST software and
leasehold improvements for the Company's corporate offices of $516,323.

As of June 30, 1997, the Company had drawn $2,295,000 under its $2,500,000
line of credit (the "Line of Credit") with Marine Midland Bank of New York
("Marine"). The Line of Credit matures on September 30, 1997, bears interest at
Marine's prime lending rate plus .5%, is secured by all of the Company's assets
and is guaranteed by HRB. Proceeds from the Line of Credit are utilized to fund
short-term cash requirements. The Company also has available through LPC a
$1,000,000 line of credit with United National Bank (the "LPC Line of Credit"),
which bears interest at a rate of prime plus .25%, and is secured by accounts
receivable of LPC. There were borrowings of $200,000 under the LPC Line of
Credit as of June 30, 1997.

In January 1997, the Company acquired 100% of the outstanding capital stock
of LPC. The purchase price for LPC of approximately $12.4 million consisted of
1,250,000 newly issued shares of Common Stock and 200,000 shares of LPC
Preferred which are convertible, on a formula basis, into 1,000,000 shares of
Common Stock (subject to upward adjustment to a maximum of 5,000,000 shares in
the event that the market price of the Common Stock is below $5.00 at the time
of conversion) during the period from January 10, 1998 to January 10, 2000.

In May 1997, the Company borrowed $2.2 million from Findim Investments S.A.
for a period of six months, which bears interest at a rate of 12% per annum, in
order to exercise an option to purchase 500,000 shares of Common Stock from Tova
Schwartz, the Company's former President and Chief Executive Officer.

Since January 1, 1996, the Company has issued 864,084 shares of Common Stock
in private placements and through the exercise of options and warrants, raising
an aggregate of $1,333,565. During such time, the Company repurchased an
aggregate of 1,500,000 shares of Common Stock from Tova Schwartz for an
aggregate purchase price of $3,175,000.

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 over the remainder of 1997 as it continues to invest in
the development of Parker FIRST. Although these increases may result in a
short-term reduction in operating margin as a percentage of revenues, the
Company anticipates that its investments, including the development of Parker
FIRST, will have a positive impact on its income from operations on a long-term
basis. The Company anticipates making substantial expenditures as it continues
to explore expansion through strategic alliances and acquisitions. See "Use of
Proceeds." The Apollo Joint Venture has entered into an agreement to acquire the
Warwick Hotel in Philadelphia, Pennsylvania and has identified two additional
properties as potential acquisitions. Further, the Company is anticipating
commercial introduction of the Parker FIRST software in the first quarter of
1998. See "Risk Factors--Risk of Joint Investment," "--Need for Additional
Financing" and "--Risks Associated with Development of Parker FIRST."

Although the Company believes that its current cash, cash equivalents and
lines of credit, together with the proceeds from this Offering, will be
sufficient to carry out its business strategy for the next 18 months, if the
Company does not obtain the funds required to meet these requirements, the
Company's expansion plans would have to be scaled back or terminated, and the
ongoing operations of the Company could be materially adversely affected.

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BUSINESS

HISTORY OF THE COMPANY

The Company was formerly known as Light Savers U.S.A., Inc. and 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 the Common Stock. At such
time, the Company was in the business of designing, manufacturing and installing
decorative, energy-efficient lighting fixtures for the hospitality industry. The
Company's primary marketing tool was the Con Edison Applepower Rebate Program
(the "Rebate Program"), under which Con Edison offered rebates to customers who
converted to energy saving devices, such as the Company's lighting fixtures. In
February 1994, Con Edison substantially reduced the Rebate Program, limiting the
effectiveness of the Rebate Program as a marketing tool. As a result, the
Company's revenues were substantially reduced.

In August 1995, the Company acquired substantially all of the assets and
business and assumed certain liabilities of AGF, a company that 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 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, HRB, AGF, Tova Schwartz, 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, the Company's former President and Chief
Executive Officer; (ii) Ms. Schwartz resigned from her positions as a director
and officer of each of the Company and HRB; (iii) the Company repurchased
500,000 shares of 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 subsequently were repurchased by the
Company and placed into treasury); and (v) the Company agreed to pay Ms.
Schwartz consulting fees for a period of three years of $100,000 per year.

In October 1996, the Company changed its name to Hospitality Worldwide
Services, Inc. to reflect the significant shift in the Company's strategic focus
as a result of the acquisition of the renovation business and disposal of the
Company's lighting business. Until January 1997, when the Company acquired LPC,
the Company's only line of business was hotel renovation services.

The purchase price for LPC of approximately $12.0 million consisted of
1,250,000 newly issued shares of Common Stock and 200,000 shares of LPC
Preferred, convertible, on a formula basis, into 1,000,000 shares of Common
Stock (subject to upward adjustment to a maximum of 5,000,000 shares in the
event that the market price of the Common Stock is below $5.00 at the time of
conversion) during the period from January 10, 1998 to January 10, 2000. 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.

THE COMPANY

The Company has evolved over the past two years from a narrowly focused
lighting fixture design, manufacturing and installation company into one of the
leading providers of a broad range of outsourcing services to the hospitality
industry. These services include hotel renovation, procuring FF&E products and
reordering OS&E products. This rapid evolution resulted from two primary
factors: (i) the acquisition of the assets comprising the business of HRB and
the acquisition of LPC, including its then subsidiary, Parker Reorder; and (ii)
the Company's disposition of its lighting business.

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countries and over 40 states. The original founders of HRB and LPC continue to
manage these businesses. The Company is enhancing its reorder business with a
new proprietary software product, Parker FIRST, which allows clients to reorder
OS&E and other products on-line and will provide such clients with access to
forecasting and product evaluation capabilities. Parker Reorder offers hotel
properties the ability to order, on an as needed basis, any and all OS&E
products used by such properties. Headquartered in New York, New York with
offices in Coral Gables, Florida; Los Angeles, California; Singapore; Dubai,
United Arab Emirates and Sandton, South Africa, the Company is well-situated to
meet client needs around the globe.

INDUSTRY OVERVIEW

The Company depends almost exclusively on the hospitality industry for the
sale of its services. As a result, the cyclical nature of the growth of the
hospitality industry directly affects the growth of the Company. According to
recently published data, the United States hospitality industry alone consists
of approximately 45,000 properties offering approximately 3.4 million rooms for
daily rental. The hospitality industry as a whole has experienced five
consecutive years of growth in which the demand for rooms has outpaced the
growth in the supply of rooms. This period of growth began in 1992 when new
hotel construction declined considerably as lenders who had previously supported
development shifted their focus to restructurings. Industry analysts predict
that this growth will continue in the near future. According to Smith Travel
Research, the combination of increasing revenues, resulting from both higher
occupancies and higher average daily rates and improving operating efficiencies
at the property level have resulted in dramatic increases in industry
profitability. The forecasted continued high demand for hotel rooms resulting
from the strong business climate coupled with recent record industry profits and
availability of capital to the hospitality industry for hotel operations is
expected to continue to fuel the demand for the Company's services.

Based upon the Company's experience, hotels generally require refurbishing
every five to seven years. In addition, it is common practice in the hospitality
industry for operating entities to allocate funds annually for maintenance and
renovations. The Company believes that the need for renovation services,
combined with record profits in the hospitality industry, will continue to
provide numerous renovation opportunities. In addition, as a result of the
downturn in the hospitality industry in the late 1980's, many corporate hotel
chains downsized, eliminating significant numbers of technical personnel. As a
result, hotels are finding it necessary to outsource more of their renovation
and procurement needs.

Additionally there is a growing demand for hotels in many foreign countries
which the Company believes is due to changing political and economic conditions
and increased interest in tourism. The Company believes that a significant
amount of upscale hotel construction is occurring overseas to satisfy this
increased demand.

BUSINESS STRATEGY

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RENOVATION BUSINESS

The Company provides a complete package of high quality renovation services
to the hotel industry ranging from pre-planning, value-engineering and scope
preparation of a project to performing the renovation and delivering furnished
rooms. For more than 18 years, the Company's renovation division has been
delivering high quality renovations on time and within budget and is currently
working on third- and fourth-generation projects for a number of its clients.
The Company distinguishes itself from its competitors by striving to keep the
hotel fully operational as renovations are performed, with minimal inconvenience
to guests or interruptions to hotel operations. Almost all of the Company's
renovation projects involve interior cosmetic improvements such as new paint,
vinyl and carpeting. According to a recent industry report, approximately 55
percent of hotel executives placed upgrading existing facilities as a top
priority.

The Company assumes total control over a renovation project, which may
include design, architecture, engineering, construction and remodeling
activities. The Company develops budgets for its clients based on individual
needs and specifications or works with a prepared budget, finding creative and
effective ways to use available resources. After assessing a project's
specifications, the Company guarantees the price, the level of quality and the
completion date of a project. During the early stages of a project, the Company
works closely with design teams on pre-planning, value engineering, cost control
and critical path timing. This close interaction between all parties allows for
a smooth transition from planning to construction. To ensure that a renovation
project is completed on time and within budget, the Company controls the
undertaking from start to finish, selecting and supervising the subcontractors
on the project, regardless of location.

Representative recent renovation projects completed by the Company include:

- The Grand Hyatt Hotel in New York, New York

- The Griffin Group's Beverly Hilton in Los Angeles, California

- The Cambridge Hyatt in Boston, Massachusetts

- The Roosevelt Hotel in New York, New York

- The Radisson Hotel in Myrtle Beach, South Carolina

- The Omni Hotel in Atlanta, Georgia

- The Embassy Suites Inn in Napa Valley, California

- Doubletree Suites in Boca Raton, Florida

- The Deerfield Beach Hilton in Deerfield Beach, Florida

- Marriott Schaumburg in Schaumburg, Illinois

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PROCUREMENT BUSINESS

The Company procures FF&E products for hotel owners, operators and
developers including carpeting, bedding, casegoods, wallcovering, artwork and
decorative lighting, as well as OS&E products, including china, glassware,
kitchen supplies, linens, flatware, uniforms and guestroom amenities, to meet
initial hotel operating requirements. As part of this service, the Company
prepares budgets, negotiates pricing and payment terms with manufacturers,
issues purchase orders and oversees shipping, delivery and installation services
in connection with both new hotels and major renovations. Worldwide contacts
with over 3,500 vendors and the Company's substantial buying power enable it to
offer its customers exceptional quality and competitive pricing. LPC purchased
approximately $305.0 million of products for its clients in 1996 making it the
second largest purchasing agent for the hospitality industry in the United
States ranked by sales volume.

The Company advises its clients with respect to every aspect of procurement
for a project, including quantity, design specifications, quality, price and
timing of delivery and installation, whether it be new construction or
renovation. The Company is a knowledgeable and efficient liaison between the
property owner and designers, architects, vendors, contractors and
manufacturers. Because of the volume of products the Company purchases for its
clients, it is able to negotiate more favorable pricing, credit, shipping and
payment terms than clients would be able to negotiate for their own account. By
selling its procurement services on a fee basis, the Company's clients benefit
directly from the Company's ability to negotiate a lower product cost.

Because of LPC's long-standing presence in the procurement industry and its
commitment to quality service, the Company has developed relationships with
product vendors, as well as hotel owners, managers and developers at a wide
variety of hotel properties throughout the world. Representative recent
procurement projects completed by the Company include:

- The Grand Hyatt Hotel in New York, New York

- The New York Palace in New York, New York

- The Loews Miami Beach Convention Hotel in Miami Beach, Florida

- The Atlantis Resort in Paradise Island, Bahamas

- The Hilton International in Sandton, South Africa

- The Windsor Hotel & Casino in Ontario, Canada

- The Ritz Carlton in Bali, Indonesia

- Mohegan Sun Resort & Casino in Uncasville, Connecticut

- Hotel Le Royale in Phnom Penh, Cambodia

- Victorian & Alfred Hotel in Capetown, South Africa

The Company believes that many hotel property owners and operators are
outsourcing their procurement requirements, giving the Company an opportunity to
offer its experience and reputation in the hospitality industry, as well as its
purchasing power, to these companies in place of more traditional in-house
purchasing, accounting and design personnel.

The Company has procurement offices in Coral Gables, Florida; Los Angeles,
California; Singapore; Dubai, United Arab Emirates; and Sandton, South Africa.
The Company sells procurement services to clients in the Bahamas, the Caribbean,
Central and South America and Mexico from its Miami, Florida office. The Company
is performing ongoing procurement services for Sun International in Paradise
Island, Bahamas. The Company's Los Angeles, California procurement office
services the western United States and supports the Company's Pacific Rim
operations. The Company's South African procurement office

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recently completed the Palace of the Lost City project in Sun City. The Company
believes that South Africa has become increasingly popular as a holiday
destination due to the slow decline of the Rand and a steady increase in foreign
travelers thereby increasing demand for the development of new hotels. The
Company's Dubai purchasing office is currently purchasing products for four
hotel properties. The Company's Singapore purchasing office enables the Company
to participate in the increased demand for new hotels in Asia.

REORDER BUSINESS

The Company acts as purchasing agent for hotels in connection with recurring
orders for all of the OS&E products, paper and stationery, chemicals and
engineering supplies. As a result of its many years of experience in the
procurement and reorder business, the Company believes its purchasing power
allows its clients to obtain products at a lower cost than from the Company's
competitors.

The Company has developed and is currently marketing Parker FIRST, an
automated reorder software package. Parker FIRST provides a single hotel
property or group of related hotel properties with a streamlined on-line
ordering, forecasting and product evaluation system. In addition, Parker
Reorder, through Parker FIRST, provides information regarding existing and new
products, order processing, status of orders, receipt of merchandise, invoicing
and associated financial data. Parker FIRST will simplify the ordering process
and provide detailed daily and historical patterns of use. The Company has
completed the development of the initial version of Parker FIRST, plans to begin
beta testing during September 1997 and expects to commercially introduce such
product in the first quarter of 1998. The Company believes that as Parker FIRST
achieves commercial success, the Company's reorder business will represent a
growing percentage of the Company's overall earnings. There can be no assurance
that the product will be successfully implemented on the Company's proposed
timetable or that, once introduced, Parker FIRST will be commercially
successful. See "Risk Factors--Risks Associated with Development of Parker
FIRST."

Clients will use an on-site terminal or multiple terminals that will provide
information regarding existing and new products, order processing, the status of
orders, receipt of merchandise, invoicing and associated financial data. In
addition, the client will have access to a series of customized reports tailored
to the client's reporting and accounting network, including product cost
comparisons, inventory forecasting, a historical analysis of product usage,
yearly requirement estimates, inventory analysis and interdepartmental budgeting
and usage reports. The Company will charge its clients an initial fee to install
and set up the Parker FIRST software and train their personnel. Thereafter,
clients will be charged a monthly fee. In addition, the Company intends to
license the software to vendors in exchange for a royalty fee based upon the
volume of such vendors' products sold through Parker FIRST.

The Company believes that Parker FIRST will be a logical and efficient
solution for its clients' procurement requirements. The software components that
comprise the initial version of Parker FIRST are:

- HOTEL REORDER SYSTEM (HRS). Clients can order OS&E products for one or
more hotels on-line by using HRS. This system will provide a completely
automated mechanism for obtaining existing and new product information,
ordering products, determining the status of orders and receiving and
tracking all customer invoices.

- HOST COMPUTER SYSTEM (HOST). The HOST system will act as the central
processing system interfacing between the HRS, the Laptop Identification
Program (LIP) and the On-line Vendor System (OVS). For the HRS, the HOST
will process all orders and provide accounting and invoicing data. For the
OVS, the HOST will transmit orders, maintain accounting information and
monitor shipping. For the LIP, the HOST will provide a mechanism to build
a hotel's unique product list and convert the hotel's product list into a
database that will be transferred to the HRS.

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- HOST ACCOUNTING SYSTEM (HAS). HAS is a customized accounting software
package designed to use the information gathered by HRS to build an
extensive database of an individual client's activity, ensuring accurate
customer billing, timely payment to vendors and resolution of order
discrepancies. The HAS will be able to track the Company's account with
every hotel and vendor.

The following software components are in further development and are
expected to be completed by the time the product is commercially introduced in
the first quarter of 1998:

- ON-LINE VENDOR SYSTEM (OVS). OVS will allow for automated interaction
between the Company and vendors. This system will provide a standardized
mechanism for obtaining complete product information from a vendor on a
particular product as well as the ability to communicate order status,
accounting, invoicing and shipping information between the Company and the
vendor.

- LAPTOP IDENTIFICATION PROGRAM (LIP). LIP will enable Parker Reorder
personnel to accumulate all purchasing data for a client and transfer such
data via modem back to the HOST computer system (as described below). The
LIP will record all of a client's products and match such products to a
database of the Company's procurement products existing on the HOST
system.

In addition, there are numerous organizations that could benefit from an
on-line reordering system, including universities, municipalities and hospitals
and other healthcare facilities. The Company believes that Parker FIRST can be
readily customized and adapted for these applications. No such adaptations have
been made or attempted however, and the Company has not completed any research
on the marketability of Parker FIRST outside of the hospitality industry. As a
result, no assurance can be given that Parker FIRST could be adapted
successfully to such uses.

APOLLO JOINT VENTURE

In May 1997, the Company entered into the Apollo Joint Venture with Apollo
and Watermark LLC to identify, acquire, renovate, refurbish and sell hotel
properties. The Apollo Joint Venture will enable the parties to pool their
resources, including Apollo's real estate acumen and financing capabilities and
the Company's renovation and procurement experience, in order to exploit
opportunities in the hotel redevelopment market. The Company will perform all of
the renovation and procurement services for each of the properties purchased by
the Apollo Joint Venture. Watermark LLC will manage the redevelopment process
and will receive a management fee of 1.5% of all costs incurred by the joint
venture on each project, other than soft costs such as interest, taxes etc. The
joint venture intends to own and operate the properties, through individual
limited liability companies, for such time as is necessary to upgrade and market
them for resale. The Apollo Joint Venture may be terminated by either the
Company, Apollo or Watermark LLC at any time after May 2002 upon 180 days' prior
written notice.

The Apollo Joint Venture has entered into an agreement to acquire the
Warwick Hotel in Philadelphia, Pennsylvania and has identified two additional
hotel properties and is actively negotiating for their acquisition. Following
the closing of the transaction, the Company will fully renovate and refurbish
the Warwick Hotel pursuant to a contract with the Apollo Joint Venture operating
entity which is expected to generate approximately $14 million of renovation
revenues for the Company. The Warwick transaction is scheduled to close on or
before September 28, 1997 but is subject to a number of conditions. There can
therefore be no assurance that this transaction will close by such date or at
all.

As an inducement to enter the Apollo Joint Venture, the Company issued to
Apollo a warrant to purchase 750,000 shares of Common Stock at an exercise price
of $8.115 per share. The warrant expires in 2004 and is currently exercisable as
to 250,000 shares and becomes exercisable as to the remaining 500,000 shares in
increments of 100,000 shares for every $7,500,000 of incremental revenue
realized by the Company from the joint venture. The Company will receive a five
percent interest in each of the operating companies formed to purchase such
properties in exchange for its contribution of five percent of the total equity
required to acquire, renovate and sell such properties, while Apollo will own
95%. Apollo will have

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complete discretion over the approval and the terms of each project presented to
the Apollo Joint Venture. Each project will be governed by a separate operating
agreement under which Apollo and Watermark LLC will serve as managers. Each
operating agreement in respect of the development companies formed to purchase,
renovate and sell hotel properties pursuant to the Apollo Joint Venture will
provide that Apollo, as the majority in interest member, may request that each
member provide additional capital for a specific project. In the event that the
Company is unable to meet such capital request, its interest in such project
will be decreased by the amount which Apollo contributes pursuant to such
capital request, as well as an additional penalty amount. Further, if the
Company were to pursue the opportunity to acquire a hotel during the next five
years, it would be required first to present such opportunity to Apollo. The
operating agreements will also impose certain limitations on transferability of
interests, including the right of members holding in the aggregate a majority of
the interests of the operating company to force any other member to sell its
interest upon a transfer by such members of their interests. See "Risk
Factors--Risk of Joint Investment."

GROWTH OPPORTUNITIES

The Company is exploring opportunities to acquire other hospitality related
companies, many of which are small, closely-held or family owned operations.
While the Company has held discussions with respect to a number of such
acquisitions it believes could be integrated into its existing businesses, no
assurance can be given that the Company will enter into definitive agreements
with respect to such transactions or that any such transactions will be
consummated. In addition, the Company is considering opportunities to enter into
the hotel development business. There can be no assurance that the Company will
enter into this line of business or what phase of development it would pursue.
The pursuit of any of these growth opportunities could require the Company to
raise additional capital.

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 mid to
upscale full service hotels with a global presence. Such segments of the
hospitality industry continue to be successful, with hotel chains and franchises
accounting for the largest percentage of room occupancy and new rooms brought to
market, and full service hotels having over 60% of the hotel rooms in the United
States. The Company also targets as potential clients owners with multiple hotel
properties.

The Company's sales and marketing efforts are coordinated by senior
executives of the Company, together with nine 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. The Company is
also developing a print and co-op advertising program.

The Company's reorder sales efforts are designed to (i) maximize short term
prospects for the sale of existing services and (ii) create a foundation for
future sales efforts associated with the direct marketing of Parker FIRST.

CUSTOMERS

During the six months ended June 30, 1997, the Roosevelt Hotel Corp. and
FelCor Suite Hotels accounted for 18% and 10%, respectively, of the Company's
revenues. During the year ended December 31, 1996, FelCor Suite Hotels and
Regency/Lexington Partners accounted for 49% and 31%, respectively, of the
Company's revenues. During the year ended December 31, 1995, the Company had
four customers that accounted for 23%, 19%, 18% and 14%, respectively, of such
revenues. As the Company continues to grow and expand, the Company believes its
dependence on a small number of

29
<PAGE>
customers will decrease. There can be no assurance that either continued growth
or decreased dependence on significant customers will occur.

COMPETITION

Servicing the hospitality industry is a highly competitive business, where
competition is based largely on price and quality of service. The Company's
competitive strengths are its experience, knowledge and relationships, as well
as the quality of service, reliability and competitive pricing it provides. In
its renovation business, the Company primarily competes with small, local
closely-held or family owned businesses. In its purchasing and reorder
businesses, the Company competes with other independent procurement companies
serving the hospitality industry, hotel purchasing companies and food service
distribution companies. Internationally, the Company competes with design
companies, architectural companies, construction and purchasing companies. In
addition, many European hotel chains own or control a purchasing unit. In
respect of Parker FIRST, the Company expects competition from a number of
management companies, hotel companies, franchise operators and other entities
who are pursuing the development of software systems that attempt to provide
streamlined procurement services. There is no single competitor or small number
of competitors that is or are dominant in the Company's business areas. However,
some of the Company's competitors and potential competitors possess
substantially greater financial, personnel, marketing and other resources than
the Company. There can be no assurance that the Company will be able to compete
successfully.

REGULATION

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

The Company's procurement business is subject to regulation by various state
laws and regulations and international customs, duties, taxing and other
authorities that regulate the import and distribution of goods. Domestically,
the freight carrier provides bills of lading and other documentation that record
the pick-up, shipping and delivery of merchandise purchased by the Company on
behalf of its clients. Internationally, the Company must comply with the
individual 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.

To the extent that additional regulations are imposed and such regulations
prove to be burdensome, such regulations could significantly increase the costs
of compliance, and thereby reduce the Company's profitability.

EMPLOYEES

As of June 30, 1997, the Company employed 146 full-time 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 workmen's compensation insurance for each of its projects.
Each contractor and subcontractor is required to enter into the Company's
standard contract before commencing work on a project. None of the Company's
employees are represented by labor unions and the Company believes that its
relationship with its employees is good.

30
<PAGE>
FACILITIES

The Company maintains its executive office at 450 Park Avenue, Suite 2603,
New York, New York 10022, where it occupies 4,803 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 approximately $206,000 (exclusive of rent adjustments).

The Company maintains its renovation headquarters at 1800 Century Park East,
Suite 370, Los Angeles, California 90067, where it occupies 3,336 square feet in
a multi-story office complex. The Company has entered into a five year lease,
which expires in May 1999, with an unaffiliated lessor pursuant to which it
currently pays an annual fixed rental of approximately $67,000 (exclusive of
rent adjustments). The Company also maintains a renovation office in Coral
Springs, Florida.

The Company maintains its procurement and reorder headquarters at 550
Biltmore Way, Coral Gables, Florida 33134. The Company also maintains
procurement offices in Los Angeles, California; Dubai, United Arab Emirates;
Singapore and Sandton, South Africa.

LEGAL PROCEEDINGS

The Company is not a party to any legal proceedings which, individually or
in the aggregate, are believed to be material to the Company's business.

31
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company and their respective
ages and present positions with the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>

Leonard F. Parker.................................... 67 Chairman of the Board

Robert A. Berman..................................... 37 President, Chief Executive Officer and Director

Howard G. Anders..................................... 54 Chief Financial Officer, Executive Vice President and
Secretary

Douglas Parker....................................... 39 President--Purchasing Division and Director;
President of LPC

Alan G. Friedberg.................................... 38 President--Renovation Division

Guillermo A. Montero................................. 38 President of HRB

Scott A. Kaniewski(1)................................ 33 Director

Louis K. Adler(2).................................... 62 Director

George Asch(2)....................................... 60 Director

Richard A. Bartlett(1)............................... 40 Director
</TABLE>

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

(1) Member of the Audit Committee

(2) Member of the Compensation Committee

LEONARD F. PARKER has been Chairman of the Board of the Company since March
1997. Leonard Parker founded LPC in 1969. Mr. Parker is a graduate of Tulane
University and served in the United States Air Force. Prior to founding LPC, Mr.
Parker was employed from 1950 by Maxwell Company, an interior design and
furnishing company. Mr. Parker is a director of Pompeii Casual Furniture and the
Douglas Gardens Home for the Aged. He also serves on various committees for the
Special Olympics. Leonard Parker is the father of Douglas Parker.

ROBERT A. BERMAN has been President and Chief Executive Officer and a
director of the Company since March 1997. Prior to joining the Company, Mr.
Berman served as the Managing Director of Watermark LLC from September 1992 to
March 1997 and is currently the sole Manager of Watermark LLC. Mr. Berman is
also Vice Chairman and a director of Unistar Gaming Corporation, a wholly-owned
subsidiary of Executone Information Systems, and a director of Catskill
Development, LLC, the owner of an operating harness track.

HOWARD G. ANDERS has been Executive Vice President, Chief Financial Officer
and Secretary of the Company since February 1996 and was the Executive Vice
President, Chief Operating Officer and a director of the Company from October
1994 to November 1995. From December 1995 to February 1996, Mr. Anders was an
independent consultant. Mr. Anders served as Vice President and Chief Financial
Officer of Alpine Lace Brands, Inc. in Maplewood, New Jersey from April 1992 to
October 1994. From April 1983 to April 1992, Mr. Anders was President and Chief
Operating Officer of North Hills Electronic, Inc. in Glen Cove, New York. Mr.
Anders is a graduate of Rutgers University and attended the Harvard Business
School PMD Program.

DOUGLAS A. PARKER has been President-Purchasing Division and a director of
the Company since March 1997. Mr. Parker is also President of LPC. Mr. Parker, a
graduate of Tulane University in

32
<PAGE>
International Business, has been with LPC for 17 years. Mr. Parker is
responsible for the development of the overseas offices in Sandton, Singapore
and Dubai, coordinating the international operations and sales, as well as
vendor and client relationships. Mr. Parker is also a director of Shelby
Williams Industries, Inc. Douglas Parker is the son of Leonard Parker.

ALAN G. FRIEDBERG has been President--Renovation Division of the Company
since March 1997. Previously, he was the Chief Executive Officer, President and
a director of the Company from February 1996 to March 1997. He became the Chief
Executive Officer of HRB in August 1995. Prior thereto, Mr. Friedberg was the
founder and Chief Executive Officer of AGF.

GUILLERMO A. MONTERO has been President of HRB since March 1997. Mr. Montero
has been a senior executive officer of HRB since August 1995 and prior thereto
was associated with AGF since 1979. Mr. Montero attended Oglethorpe University
and Georgia Tech, receiving a B.A. degree in 1982.

SCOTT A. KANIEWSKI has been a director of the Company since March 1996. Mr.
Kaniewski has been a Member of Watermark LLC since February 1995 and the
Managing Director of Watermark LLC since May 1997. Prior to his involvement with
Watermark LLC, Mr. Kaniewski held several positions with VMS Realty Partners,
including Vice President of Hotel Investments from December 1988 to March 1995.
He is a Certified Public Accountant and a member of the Illinois CPA Society.

LOUIS K. ADLER has been a director of the Company since September 1996. Mr.
Adler has been a private investor for over five years in Houston, Texas. He has
been Chairman of the Board and President of Bancshares, Inc. (Houston, TX) since
1973; Vice Chairman of the Board since 1992 and a director since 1988 of
Luther's Bar-B-Q, Inc., a group of twenty restaurants in Texas, Louisiana and
Colorado; a director, Secretary and Treasurer of Warwick Communications, Inc.
since 1993; and a director and officer of several other private companies. Mr.
Adler is also a trustee and the President of the Adler Foundation and member of
the Dean's Advisory Counsel of Goizueta Business School of Emory University.

GEORGE ASCH has been a director of the Company since September 1996. Since
September 1994, Mr. Asch has been a Vice President of Gray, Seifert and Co.,
Inc. an investment management company which became a wholly-owned independent
subsidiary of Legg Mason, Inc. in April 1994. For 25 years prior to joining Gray
Seifert and Co., Inc. in August 1990, Mr. Asch served as President of a
manufacturing company. He currently serves on the boards of various
philanthropic organizations, including the Montefiore Medical Center and the
Price Foundation. He is a graduate of Columbia College and served as an officer
in the United States Navy.

RICHARD A. BARTLETT has been a director of the Company since September 1996.
Mr. Bartlett is a Managing Director of Resource Holdings Limited, a private
merchant banking firm in New York City ("Resource Limited"). He specializes in
legal aspects of mergers, acquisitions and other corporate restructurings. In
that capacity, he sits and has sat on the board of various companies in which
Resource Limited and its principals have made investments. From 1987 to 1993, he
was a member of the Council of Foreign Relations and is a member of the New York
State Bar. Mr. Bartlett received a law degree from Yale Law School and received
his B.A. from Princeton University.

All directors of the Company hold office until the next annual meeting of
the shareholders and until their successors have been elected and qualified. The
officers of the Company are elected by the Board of Directors at the first
meeting after each annual meeting of the Company's shareholders, and hold office
until their death, until they resign or until they have been removed from
office.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has established standing Audit and Compensation
Committees. The Audit Committee exercises the power which the Board of Directors
would otherwise hold with respect to matters pertaining to the audit of the
financial statements of the Company and related financial matters. The Audit
Committee consists of Messrs. Bartlett and Kaniewski. The Compensation Committee
exercises the power

33
<PAGE>
which the Board of Directors would otherwise hold with respect to (i) the grant
of options under the Employee Plan; and (ii) the compensation and benefits of
all officers of the Company. The Compensation Committee consists of Messrs.
Adler and Asch.

DIRECTOR COMPENSATION

The Company does not currently compensate directors who are also executive
officers of the Company for service on the Board of Directors. Directors are
reimbursed for their expenses incurred in attending meetings of the Board of
Directors. In addition, outside directors are entitled to receive options under
the Directors' Plan. See "--1996 Outside Directors' Stock Option Plan."

EXECUTIVE COMPENSATION

The following table sets forth, for the fiscal years indicated, all
compensation awarded to, earned by or paid to Tova Schwartz, who served as Chief
Executive Officer of the Company from its inception until February 1996 and Alan
G. Friedberg, who served as Chief Executive Officer of the Company from February
1996 to March 1997, and Howard G. Anders and Guillermo A. Montero, the Company's
two most highly compensated executives (collectively, the "Named Executive
Officers"). There is no other executive officer of the Company whose salary and
bonus exceeded $100,000 with respect to the fiscal years ended December 31,
1996, 1995 and 1994. Robert Berman, who became the Company's Chief Executive
Officer in March 1997, is paid an annual salary of $215,000.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION(1) SECURITIES
NAME AND -------------------------------- UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)
- -------------------------------------------------------------------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C>

Alan G. Friedberg(2)................................................ 1996 $ 225,000 $ 75,000 400,000
1995 $ 110,520 -- --
1994 -- -- --

Guillermo A. Montero(3)............................................. 1996 $ 190,000 $ 76,665 300,000
1995 $ 83,337 -- --
1994 -- -- --

Howard G. Anders(4)................................................. 1996 $ 150,000 $ 25,000 100,000
1995 $ 128,333 -- 50,000
1994 $ 39,999 -- 50,000

Tova Schwartz(5).................................................... 1996 -- -- --
1995 $ 103,992 -- --
1994 $ 100,000 $ 83,333 --
</TABLE>

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

(1) Perquisites and other personal benefits, securities or property to each
executive officer did not exceed the lesser of $50,000 or 10% of such
executive's salary and bonus.

(2) Mr. Friedberg joined the Company in August 1995 as the Chief Executive
Officer of HRB. In February 1996, he became the Chief Executive Officer and
a director of the Company. Currently, Mr. Friedberg is the
President--Renovation Division of the Company.

(3) Mr. Montero joined the Company in August 1995 as Vice President--Operations
and Chief Operating Officer of HRB. Currently, Mr. Montero is President of
HRB.

34
<PAGE>
(4) Mr. Anders joined the Company in October 1994 as Executive Vice President,
Chief Operating Officer and a director. In February 1996, he resigned as a
director of the Company and became the Chief Financial Officer, Executive
Vice President and Secretary of the Company.

(5) Ms. Schwartz served as the Company's Chief Executive Officer and President
from its inception until she resigned in February 1996.

The following table sets forth certain information regarding stock option
grants made to the Named Executive Officers during the fiscal year ended
December 31, 1996.

OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL OPTIONS
UNDERLYING OPTIONS GRANTED TO EMPLOYEES EXERCISE OR BASE
NAME GRANTED(#) IN FISCAL YEAR PRICE ($/SH) EXPIRATION DATE
- ------------------------------------ ------------------- ------------------------- ----------------- ---------------
<S> <C> <C> <C> <C>

Alan G. Friedberg................... 400,000 43% $ 2.75 9/26/06

Guillermo Montero................... 300,000 32% $ 2.75 9/26/06

Howard G. Anders.................... 100,000 11% $ 2.75 9/26/06
</TABLE>

The following table sets forth certain information regarding unexercised
stock options held by the Named Executive Officers as of December 31, 1996.

AGGREGATED FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE- MONEY OPTIONS AT
DECEMBER 31, 1996 DECEMBER 31, 1996 $(1)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------------------------------------- ----------------------------- -------------------------
<S> <C> <C>

Alan G. Friedberg...................................... 200,000/200,000 $ 800,000/$800,000

Guillermo Montero...................................... 150,000/150,000 $ 600,000/$600,000

Howard G. Anders....................................... 150,000/50,000 $ 747,500/$200,000
</TABLE>

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

(1) On December 31, 1996, the last reported sales price of the Common Stock on
Nasdaq was $6.75 per share.

EMPLOYMENT AGREEMENTS

Pursuant to the Divestiture Agreement, on February 26, 1996 the Company and
Tova Schwartz agreed that Ms. Schwartz would provide consulting services to the
Company on a part-time basis for a term of three years, to be compensated at a
rate of $100,000 per year. As additional consideration for the purchase of the
lighting business, the Company agreed to refer lighting business to Ms. Schwartz
or an entity controlled by her and Ms. Schwartz agreed to pay commissions to the
Company for a period of three years at a rate of 10% (or as negotiated), of the
net invoice price of all sales referred to Ms. Schwartz by the Company. As of
the date of this Prospectus, no commissions have been paid by Ms. Schwartz to
the Company.

In addition, pursuant to the Divestiture Agreement, on February 26, 1996 Mr.
Friedberg, Mr. Montero and the Company agreed on the terms of their respective
employment with the Company, for an initial term of three years, subject to
automatic renewal for successive twelve-month periods unless either party
provides the other with a notification of non-renewal. The salary of Mr.
Friedberg is $225,000 annually, and Mr. Montero is $190,000 annually and Messrs.
Friedberg and Mr. Montero have agreed not

35
<PAGE>
to compete with the Company during the two year period after the termination of
their employment with the Company.

On April 1, 1996, the Company entered into a two year employment agreement
with Mr. Anders, at an initial base salary of $150,000 per annum, which was
increased to $185,000 effective June 1, 1997. Pursuant to such agreement, Mr.
Anders has agreed not to compete with the Company during the term of the
agreement and for a period of two years thereafter.

In connection with the acquisition of LPC, effective January 1, 1997, the
Company and LPC entered into an employment agreement with Leonard Parker,
pursuant to which Mr. Parker is to be employed as Chairman of LPC for a period
of three years at a base salary of $250,000 per annum, which salary is to be
increased based on the consumer price index. Pursuant to the agreement, Mr.
Parker's salary for the period from January 1, 1999 through December 31, 2000
was paid in January 1997. Pursuant to the agreement, Mr. Parker has agreed to
not to compete with the Company during the term of his employment thereunder,
and for a period of one year thereafter.

In connection with the acquisition of LPC, effective January 1, 1997, the
Company and LPC entered into an employment agreement with Douglas Parker,
pursuant to which Mr. Parker is to be employed as President of LPC for a period
of two years at a base salary of $175,000 per annum, which salary is to be
increased based upon the consumer price index. In addition to his base salary,
Mr. Parker is eligible to receive bonuses equal to up to 20% of his base salary
based upon the achievement of performance criteria. In addition, Mr. Parker was
granted options to purchase 65,000 shares of Common Stock at an exercise price
of $6.75 per share under the Employee Plan. Pursuant to the agreement, Mr.
Parker has agreed not to compete with the Company during the term of his
employment thereunder and for a period of one year thereafter.

In connection with the acquisition of LPC, effective January 1, 1997, the
Company and LPC entered into an employment agreement with Bradley Parker
pursuant to which he is to be employed as Chief Executive Officer of LPC upon
the same terms and conditions as those contained in Mr. Douglas Parker's
employment agreement. In addition, effective January 1, 1997, the Company and
Parker Reorder entered into employment agreements with each of Philip Parker and
Mitchell Parker pursuant to which they are to be employed as President and Chief
Executive Officer, respectively, of Parker Reorder upon the same terms and
conditions as those contained in Mr. Douglas Parker's employment agreement.

1996 EMPLOYEE STOCK OPTION PLAN

In September 1996, the Company's Board of Directors adopted, and the
Company's shareholders approved, the Employee Plan. The purpose of the Employee
Plan is to promote the success of the Company by providing additional incentive
to the officers and employees of the Company who are primarily responsible for
the management and growth of the Company, or otherwise materially contribute to
the conduct and direction of its business, operations and affairs, in order to
strengthen their desire to remain in the employ of the Company and to stimulate
their efforts on behalf of the Company, and to retain and attract to the employ
of the Company persons of competence.

The Employee Plan provides that the maximum number of shares of Common Stock
reserved for awards thereunder shall be 1,700,000. As of the date of this
Prospectus, options to purchase 1,162,500 shares of Common Stock under the
Employee Plan are outstanding. The Employee Plan provides for the grant of (i)
options that are intended to qualify as incentive stock options ("Incentive
Stock Options") within the meaning of Section 422A of the Internal Revenue Code
of 1986, as amended, and (ii) options not intended to so qualify. The exercise
price of options granted under the Employee Plan may be less than, more than or
equal to the fair market value of such shares on the date of grant; provided,
however, that the exercise price of an Incentive Stock Option at the time of
grant thereof shall (i), if such Incentive Stock Option is being granted to a
10% shareholder, be at least 110% of the fair market value on the date of grant
and (ii), if such Incentive Stock Option is being granted to any other person,
be at least 100% of

36
<PAGE>
the fair market value on the date of grant. Any options granted under the
Employee Plan that shall expire, terminate or otherwise be annulled for any
reason without having been exercised shall again be available for purposes of
the Employee Plan.

The Employee Plan is administered by a committee (the "Committee") comprised
of not less than two members of the Company's Board of Directors who are
"disinterested persons" for purposes of Rule 16b-3 under the Exchange Act. The
Committee has the power and authority to grant to eligible persons options to
purchase shares of Common Stock under the Employee Plan and to determine the
restrictions, terms and conditions of all such options granted as well as to
interpret the provisions of the Employee Plan, any agreements relating to awards
granted under the Employee Plan, and to supervise the administration of the
Employee Plan.

No Incentive Stock Options may be granted to any person for which the "fair
market value," as defined within the Employee Plan, determined as of the time an
Incentive Stock Option is granted to such person, of the Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by
such person during any calendar year under all plans of the Company and its
subsidiaries, shall exceed $100,000.

Subject to the provisions of the Employee Plan with respect to death,
retirement and termination of employment, the term of each option shall be for
such period as the Committee shall determine as set forth in the applicable
option agreement, but not more than (i) five years from the date of grant in the
case of Incentive Stock Options held by 10% or greater shareholders and (ii) ten
years from the date of grant in the case of all other Incentive Stock Options.

The Employee Plan is intended to comply in all respects with Rule 16b-3
under the Exchange Act.

1996 OUTSIDE DIRECTORS' STOCK OPTION PLAN

In September 1996, the Company's Board of Directors adopted, and the
Company's shareholders approved, the Directors' Plan for purposes of securing
for the Company and its shareholders the benefits arising from stock ownership
by outside directors. Each outside director who becomes a director after March
1, 1996 shall receive an initial 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 Directors' Plan on April 1 of each year, commencing
on April 1, 1997, each outside director shall automatically be granted an option
to purchase 10,000 shares of Common Stock. Options granted under the Directors'
Plan shall be exercisable in three equal installments, commencing on the first
anniversary of the grant date. The exercise price of such options is the closing
price of the Company's Common Stock on Nasdaq on the business day immediately
prior to grant. As of the date of this Prospectus, 250,000 shares of Common
Stock have been reserved for issuance under the Directors' Plan and the Company
has granted 100,000 options to purchase shares of Common Stock under the
Directors' Plan at a weighted average exercise price of $4.10 per share, none of
which are currently exercisable. The Directors' Plan is intended to comply in
all respects with Rule 16b-3 under the Exchange Act.

1994 NON-STATUTORY STOCK OPTION PLAN

In 1994, the Company adopted a non-statutory stock option plan, which was
subsequently terminated. As of the date of this Prospectus, options to purchase
50,000 shares of Common Stock are outstanding under such plan.

37
<PAGE>
CERTAIN TRANSACTIONS

The Company hired Interstate Interior Services ("Interstate") as a
subcontractor on certain of its projects. The President of Interstate is the
sister of Alan G. Friedberg, the President of the Renovation Division of the
Company. During 1996 and from August 1, 1995, the date the Company acquired its
hospitality restoration business, to December 31, 1995, the Company paid fees of
$172,786 and $712,137, respectively, to Interstate.

See "Business--History of the Company" for a description of the agreement
whereby the Company sold its lighting business to Ms. Tova Schwartz, the
Company's former Chief Executive Officer and President.

In February 1996, the Company engaged Resource Holdings as a financial
advisor until December 31, 1997. As compensation for such engagement, the
Company granted Resource Holdings a five-year option to purchase 500,000 shares
of Common Stock at an exercise price of $2.00 per share and paid a retainer of
$10,000 per month for one year. Richard Bartlett, a director of the Company, is
a Managing Director of Resource Holdings. In connection with the Apollo Joint
Venture, 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 to 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. The
Company has not paid any amounts to Resource Holdings pursuant to this
agreement.

In April 1996, the Company and Watermark agreed to adjust the purchase price
paid for the assets and business of AGF resulting in a $350,000 note payable to
the Company from Watermark LLC.

The Company is currently renovating Watermark LLC's corporate headquarters.
The Company bills Watermark LLC regularly for such services. At December 31,
1996, the Company had a receivable of $492,124 from Watermark LLC, which was
collected in full during the first quarter of 1997. During 1997, the Company and
Watermark LLC renegotiated the renovation contract to provide for fees more
consistent with a project of similar scope and complexity. As a result of the
renegotiation, the Company recognized additional revenue for the six months
ended June 30, 1997 of $780,183. As of June 30, 1997 the Company had a
receivable of $1,223,529, including $311,681 of costs in excess of billings,
from Watermark LLC. See "Risk Factors--History of Losses," "--Control by Certain
Shareholders" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

See "Business--Apollo Joint Venture" for a description of the agreement
whereby the Company entered into a joint venture with Apollo and Watermark LLC,
an affiliate of Watertone, a holder in excess of 10% of the Company's
outstanding Common Stock.

All future and ongoing transactions and loans with officers, directors and
principal shareholders of the Company will be on terms no less favorable than
could be obtained from independent third parties and will be approved by a
majority of the disinterested directors of the Company.

38
<PAGE>
PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of June 30, 1997, and as adjusted to reflect
the sale of the Shares offered hereby, by (i) each person known by the Company
to be the beneficial owner of more than 5% of the outstanding Common Stock, (ii)
each director of the Company, (iii) each executive officer of the Company, and
(iv) all directors and executive officers as a group. Unless otherwise
indicated, the address of each person listed below is 450 Park Avenue, Suite
2603, New York, New York 10022.

<TABLE>
<CAPTION>
PERCENT OF CLASS(2)
--------------------------------
<S> <C> <C> <C>
SHARES UPON
BENEFICIALLY COMPLETION OF
BENEFICIAL OWNER(1) OWNED BEFORE OFFERING THE OFFERING
- ------------------------------------------------------------------ -------------- --------------- ---------------
Watertone Holdings, LP(3)......................................... 1,800,000 23.03% 17.45%
Watermark Limited, LLC(3)......................................... 1,800,000 23.03% 17.45%
Robert A. Berman(3)............................................... 1,800,000 23.03% 17.45%
Watertone, LLC(4)................................................. 500,000 6.40% 4.85%
Joel A. Asen(4)................................................... 500,000 6.40% 4.85%
John A. Garraty, Jr.(4)........................................... 500,000 6.40% 4.85%
E.W. Plaut(4)..................................................... 500,000 6.40% 4.85%
Tova Schwartz(5).................................................. 493,155 6.31% 4.78%
John C. Shaw(6)................................................... 411,666 5.07% 3.88%
Richard A. Bartlett(7)............................................ 408,166 5.03% 3.85%
Jerry M. Seslowe(8)............................................... 403,334 4.97% 3.80%
Leonard Parker.................................................... 300,000 3.84% 2.91%
Douglas Parker.................................................... 190,000 2.43% 1.84%
Alan G. Friedberg(9).............................................. 210,000 2.62% 2.00%
Howard G. Anders(10).............................................. 154,500 1.94% 1.48%
Guillermo A. Montero(11).......................................... 150,000 1.88% 1.43%
Louis K. Adler.................................................... 75,000 * *
George Asch....................................................... 75,000 * *
Scott A. Kaniewski................................................ 2,000 * *
All Officers and Directors as a group (10 persons)(12)............ 3,364,666 39.06% 30.26%
</TABLE>

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

* Less than 1%

(1) Except as outlined herein, the persons named in the table, to the Company's
knowledge, have sole voting and dispositive power with respect to all shares
shown as beneficially owned by them, subject to community property laws
where applicable and the information contained in the footnotes hereunder.

(2) Calculations assume that all options and warrants which are exercisable
within 60 days after June 30, 1997 have been exercised.

(3) The address for each of Watertone and Watermark LLC is c/o Varner, Stephens,
Humphries & White, Suite 1700 Riverwood, 3350 Cumberland Circle, Atlanta,
Georgia 30339. Consists of 1,800,000 shares of Common Stock held by
Watertone, as to which each of Watermark LLC and Mr. Berman are attributed
beneficial ownership pursuant to Rule 13d-3 of the Exchange Act ("Rule
13d-3"). Watermark LLC (as the general partner of Watertone) and Mr. Berman
(as the sole Manager of Watermark LLC) each have sole power to vote and
dispose of the 1,800,000 shares of Common Stock. Watermark LLC disclaims
beneficial ownership of all shares held by Watertone, other than those
shares deemed to be beneficially owned by it pursuant to Rule 16a-
1(a)(2)(ii)(B) of the Exchange Act.

(4) The address for each of these beneficial owners is c/o Relco Inc., 3
Stamford Landing, 46 Southfield Avenue, Stamford, Connecticut 06902.
Consists of 500,000 shares of Common Stock held by Watertone LLC as to which
each of Watertone LLC, Joel A. Asen, John A. Garraty, Jr. and E.W. Plaut are
attributed beneficial ownership pursuant to Rule 13d-3. Messrs. Asen,
Garraty and Plaut, as Managers of Watertone LLC, have shared power to vote
and dispose of the 500,000 shares of Common

39
<PAGE>
Stock. Each of Messrs. Asen, Garraty and Plaut disclaim beneficial ownership
of all shares held by Watertone LLC other than those shares deemed to be
beneficially owned by them pursuant to Rule 16a- 1(a)(2)(ii)(B) of the
Exchange Act.

(5) The address for Ms. Schwartz is 11 Wedgewood Lane, Lawrence, New York 10178.

(6) The address for Mr. Shaw is c/o Resource Holdings Associates, L.P., 520
Madison Avenue, 40th Floor, New York, New York, 10022. Consists of (i)
100,516 shares of Common Stock owned individually by Mr. Shaw; (ii) 11,150
shares of Common Stock held by The Shaw Foundation, as to which Mr. Shaw is
attributed beneficial ownership pursuant to Rule 13d-3; and (iii) 300,000
shares of Common Stock underlying the Option as to which Mr. Shaw is
attributed beneficial ownership pursuant to Rule 13d-3. Mr. Shaw has sole
power to vote and dispose of the 100,516 shares of Common Stock he owns
individually and the 11,150 shares held by The Shaw Foundation. Mr. Shaw, as
a Managing Director of Resource Holdings Limited, has shared power to vote
and dispose of the 300,000 shares of Common Stock underlying the Option. Mr.
Shaw disclaims beneficial ownership of all shares beneficially owned by
Resource Holdings and the Shaw Foundation, other than those shares deemed to
be beneficially owned by him pursuant to Rule 16a- 1(a)(2)(ii)(B) of the
Exchange Act.

(7) The address for Mr. Bartlett is c/o Resource Holdings Associates, L.P., 520
Madison Avenue, 40th Floor, New York, New York, 10022. Consists of (i)
108,166 shares of Common Stock owned individually by Mr. Bartlett; and (ii)
300,000 shares of Common Stock underlying an option granted to Resource
Holdings by the Company as partial compensation for services rendered as a
consultant (the "Option") as to which Mr. Bartlett is attributed beneficial
ownership pursuant to Rule 13d-3. Mr. Bartlett has sole power to vote and
dispose of the 108,166 shares of Common Stock he owns individually. Mr.
Bartlett, as a Managing Director of Resource Holdings Limited, has shared
power to vote and dispose of the 300,000 shares of Common Stock underlying
the Option. Mr. Bartlett disclaims beneficial ownership of all shares
beneficially owned by Resource Holdings, other than those shares deemed to
be beneficially owned by him pursuant to Rule 16a-1(a)(2)(ii)(B) of the
Exchange Act.

(8) The address for Mr. Seslowe is c/o Resource Holdings Associates, L.P., 520
Madison Avenue, 40th Floor, New York, New York, 10022. Consists of (i)
103,334 shares of Common Stock owned individually by Mr. Seslowe; and (ii)
300,000 shares of Common Stock underlying the Option as to which Mr. Seslowe
is attributed beneficial ownership pursuant to Rule 13d-3. Mr. Seslowe has
sole power to vote and dispose of the 103,334 shares of Common Stock he owns
individually. Mr. Seslowe, as a Managing Director of Resource Holdings
Limited, has shared power to vote and dispose of the 300,000 shares of
Common Stock underlying the Option. Mr. Seslowe disclaims beneficial
ownership of all shares beneficially owned by Resource Holdings, other than
those shares deemed to be beneficially owned by him pursuant to Rule
16a-1(a)(2)(ii)(B) of the Exchange Act.

(9) Consists of (i) 10,000 shares of Common Stock held individually by Mr.
Friedberg; and (ii) 200,000 shares of Common Stock issuable upon exercise of
presently exercisable options currently held by Mr. Friedberg.

(10) Consists of (i) 4,500 shares of Common Stock held individually by Mr.
Anders; and (ii) 150,000 shares of Common Stock issuable upon exercise of
presently exercisable options currently held by Mr. Anders.

(11) Consists of 150,000 shares of Common Stock issuable upon exercise of
presently exercisable options currently held by Mr. Montero. Does not
include 19,792 shares of Common Stock held by Mr. Montero's wife Maria
Elizabeth Leon, as to which Mr. Montero disclaims beneficial ownership
pursuant to Rule 16a-1(a)(2)(ii)(A) of the Exchange Act.

(12) Includes options to purchase 800,000 shares of Common Stock at exercise
prices ranging from $1.275 to $2.75 per share.

40
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The following summary of certain terms of the Common Stock and the Preferred
Stock of the Company does not purport to be complete and is subject to, and
qualified in its entirety by, the provisions of the Company's Certificate of
Incorporation and By-laws, each as amended, which are included as exhibits to
the Registration Statement of which this Prospectus is a part, and the
provisions of applicable law.

DESCRIPTION OF COMMON STOCK

The Company's Certificate of Incorporation, as amended, authorizes the
issuance of 20,000,000 shares of Common Stock. As of June 30, 1997, there were
7,814,739 shares of Common Stock issued and outstanding. All outstanding shares
of Common Stock are, and the Shares offered hereby will be, validly issued,
fully paid and non-assessable. Holders of Common Stock are entitled to share
ratably in such dividends and distributions as may from time to time be declared
by the Board of Directors of the Company from funds legally available therefor
and upon liquidation will be entitled to share ratably in any assets of the
Company legally available for distribution to holders of the Common Stock. The
Company's Certificate of Incorporation and By-Laws, each as amended, do not
confer any preemptive, subscription, redemption or conversion rights on the
holders of Common Stock. Holders of Common Stock are entitled to cast one vote
for each share held of record on each matter submitted to a vote of
shareholders. There is no provision in the Company's Certificate of
Incorporation or By-Laws, each as amended, for cumulative voting, which means
that holders of a majority of the voting power may elect all of the directors.

DESCRIPTION OF PREFERRED STOCK

The Company's Certificate of Incorporation, as amended, authorizes the
issuance of 3,000,000 shares of Preferred Stock and, in connection with the
acquisition of LPC the Company has issued 200,000 of such shares of Preferred
Stock as 6% Redeemable Convertible Preferred Stock (the "LPC Preferred"). The
LPC Preferred has a stated value of $25 per share (the "Stated Value").

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

The LPC Preferred is convertible, at any one time during the period from
January 10, 1998 to January 10, 2001, into (i) 1,000,000 shares of Common Stock,
subject to upward adjustment to a maximum of 5,000,000 shares in the event that
the market price of the Common Stock is below $5.00 at the time of conversion or
(ii) 9.80% of the outstanding capital stock of Parker Reorder. The LPC Preferred
is also redeemable, at any time after January 10, 2002, at the request of the
holders of all of the LPC Preferred, at a redemption price (the "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. At any time after January 10, 2000, the Company shall have the option to
redeem the LPC Preferred at the Redemption Price.

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.

41
<PAGE>
INDEMNIFICATION OF DIRECTORS

As permitted by the New York Business Corporation Law (the "NYBCL"), the
Company's Certificate of Incorporation and its By-Laws, each as amended, limit
the personal liability of directors of the Company or its shareholders for
damages for any breach of duty in such capacity. Liability is not eliminated for
(i) any director if a judgment or other final adjudication adverse to him
establishes that his acts or omissions were in bad faith or involved intentional
misconduct or a knowing violation of law or that he personally gained in fact a
financial profit or other advantage to which he is not legally entitled or (ii)
any director for any act or omission prior to the adoption of a provision
authorized by Section 402(b) of the NYBCL.

NEW YORK BUSINESS CORPORATION LAW

The Company is subject to the NYBCL. Section 1600 of the NYBCL, known as the
"Security Takeover Disclosure Act," applies to "takeover bids," generally
defined to mean the acquisition of or offer to acquire by an offeror from an
offeree, pursuant to a tender offer or request or invitations for tenders, any
equity security of a target company, if after acquisition thereof, the offeror
would, directly or indirectly, be a beneficial owner of more than five percent
of any class of the issued and outstanding equity securities of such target
company.

No offeror shall make a takeover bid unless as soon as practicable on the
date of commencement on the takeover bid he files with the New York Attorney
General and delivers to the target company at its principal executive offices a
registration statement containing certain specified information as set forth in
Section 1603 of the NYBCL.

The foregoing discussion of certain provisions of the NYBCL is qualified in
its entirety by reference to those NYBCL provisions. The area of state
anti-takeover law has been rapidly changing in recent years. For example,
certain state statutes have been contested on the basis of federal preemption
and other theories. Moreover, the anti-takeover laws do not completely insulate
corporations from hostile takeovers and do not change existing law concerning
directors' fiduciary duties to shareholders. Shareholders are therefore urged to
consult their respective legal counsel regarding applicable anti-takeover laws
and their effect on the Company and its shareholders.

TRANSFER AGENT AND REGISTRAR

The Company's transfer agent and registrar for the Common Stock is
Continental Stock Transfer & Trust Company, New York, New York.

QUOTATION ON NASDAQ

The Company's Common Stock is currently quoted on Nasdaq under the symbol
"ROOM." Application has been made to have Common Stock approved for quotation on
Nasdaq NMS under the symbol "ROOM."

42
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted securities
for at least one year (including the holding period of any prior owner except an
affiliate), including persons who may be deemed "affiliates" of the Company,
would be entitled to sell within any three-month period a number of shares of
Common Stock that does not exceed the greater of one percent of the number of
shares of Common Stock then outstanding (approximately 130,060 shares upon
completion of the Offering) or the average weekly trading volume of the Common
Stock during the four calendar weeks preceding the filing of a Form 144 with
respect to such sales. Sales under Rule 144 are also subject to certain manner
of sale provisions and notice requirements, and to the availability of current
public information about the Company. In addition, a person who is not deemed to
have been an affiliate of the Company at any time during the 90 days preceding a
sale, and who has beneficially owned the shares proposed to be sold for at least
two years (including the holding period of any prior owner except an affiliate),
would be entitled to sell such shares under Rule 144(k) without regard to the
requirements described above. Rule 144 also provides that affiliates who are
selling shares that are not Restricted Shares must nonetheless comply with the
same restrictions applicable to Restricted Shares with the exception of the
holding period requirement.

The Company, its officers and directors and Watertone, who beneficially own
an aggregate of 2,564,666 shares of Common Stock (together with an aggregate of
1,365,000 shares of Common Stock underlying outstanding options), have agreed
that, without the prior written consent of Jefferies, he, she or it will not,
during the period ending 180 days after the date of the Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option to contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or (ii) enter into any swap or similar agreement
that transfers, in whole or in part, the economic risk of ownership of the
Common Stock, whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise. Jefferies may, in its sole discretion and at any time without
notice, release all or any portion of the securities subject to these lock-up
agreements.

43
<PAGE>
UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting Agreement
dated the date of this Prospectus (the "Underwriting Agreement") between the
Company and Jefferies, as representative of the several underwriters named below
(collectively, the "Underwriters"), the Company has agreed to sell to the
Underwriters, and the Underwriters have agreed, severally and jointly, through
Jefferies, to purchase the number of shares of Common Stock set forth opposite
their respective names in the table below at the price set forth on the cover
page of this Prospectus.

<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
- ----------------------------------------------------------------------------------------------- -----------------
<S> <C>
Jefferies & Company, Inc.......................................................................

Total.................................................................................. 2,500,000
-----------------
-----------------
</TABLE>

The Underwriting Agreement provides that the obligation of the Underwriters
to purchase the shares of Common Stock offered hereby is subject to certain
conditions. The Underwriters are committed to purchase all of the shares of
Common Stock offered hereby (other than those covered by the over-allotment
option described below), if any are purchased.

The Underwriters propose to offer the Common Stock to the public initially
at the public offering price set forth on the cover page of this Prospectus, and
to certain dealers at such price less a concession not in excess of $
per share. The Underwriters may allow, and such dealers may reallow, a discount
not in excess of $ per share to certain other dealers. After the
Offering, the public offering price, the concession to selected dealers and the
reallowance to other dealers may be changed by Jefferies.

The Company has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus, to purchase 375,000 additional shares of
Common Stock at the public offering price less the underwriting discounts and
commissions, all as set forth on the cover page of this Prospectus. To the
extent such option is exercised, each Underwriter will become obligated, subject
to certain conditions, to purchase additional shares of Common Stock
proportionate to such Underwriter's initial commitment as indicated in the
preceding table. The Underwriters may exercise such right of purchase only for
the purpose of covering over-allotments, if any, made in connection with the
sale of the shares of Common Stock.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act, or will
contribute to payments the Underwriters may be required to make in respect
thereof.

The Company has agreed with Jefferies not to offer, issue or sell any shares
of Common Stock or securities exercisable for or convertible into shares of
Common Stock for a period of 180 days from the date of this Prospectus, subject
to certain limited exceptions, without prior written consent of Jefferies. The
Company's officers and directors and Watertone who beneficially own an aggregate
of 2,564,666 shares of Common Stock (together with an aggregate of 1,365,000
shares of Common Stock underlying outstanding options), have agreed not to
publicly sell or otherwise dispose of their shares of Common Stock, securities
of the Company convertible into or exercisable or exchangeable for, shares of
Common Stock, or shares of Common Stock received upon conversion, exercise, or
exchange of such securities, without the prior written consent of Jefferies for
a period of 180 days from the date of this Prospectus.

Subject to the sale of all 2,500,000 shares of Common Stock offered hereby,
the Company has also agreed to issue to Jefferies warrants (the "Jefferies'
Warrants") to purchase 2.5% of the outstanding

44
<PAGE>
Common Stock on a fully diluted basis after completion of the Offering at an
exercise price of $12.00 per share. The holders will have certain registration
rights with respect to the Common Stock issuable upon exercise of the Jefferies'
Warrants.

In order to facilitate the Offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Stock. Specifically, the Underwriters may over-allot in
connection with the Offering, creating a short position in the Common Stock for
their own account. In addition, to cover over-allotments or to stabilize the
price of the Common Stock, the Underwriters may bid for, and purchase, shares of
Common Stock in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an Underwriter or a dealer for distributing the
Common Stock in the Offering, if the syndicate repurchases previously
distributed Common Stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Common Stock above independent market
levels. The Underwriters are not required to engage in these activities, and may
end any of these activities at any time.

The Underwriters and dealers may engage in passive market making
transactions in the Common Stock in accordance with Rule 103 of Regulation M
promulgated by the Securities and Exchange Commission (the "Commission"). In
general, a passive market maker may not bid for, or purchase, the Common Stock
at a price that exceeds the highest independent bid. In addition, the net daily
purchases made by any passive market maker generally may not exceed 30% of its
average daily trading volume in the Common Stock during a specified two month
prior period. A passive market maker must identify passive market making bids as
such on the Nasdaq electronic inter-dealer reporting system. Passive market
making may stabilize or maintain the market price of the Common Stock above
independent market levels. Underwriters and dealers are not required to engage
in passive market making and may end passive market making activities at any
time.

LEGAL MATTERS

The legality of the securities offered hereby and certain other legal
matters will be passed upon for the Company by Olshan Grundman Frome &
Rosenzweig LLP, 505 Park Avenue, New York, New York 10022. Counsel for the
Underwriters in connection with this Offering is Latham & Watkins, 505
Montgomery Street, Suite 1900, San Francisco, California 94111.

EXPERTS

The financial statements of Hospitality Worldwide Services, Inc. and
Subsidiary and The Leonard Parker Company and Affiliates, except for The Leonard
Parker Company (Africa) (Proprietary) Limited, included in this Prospectus have
been audited by BDO Seidman, LLP, independent certified public accountants, to
the extent and for the periods set forth in their reports appearing elsewhere
herein, and is included in reliance upon such reports given upon the authority
of said firm as experts in auditing and accounting. The financial statements of
The Leonard Parker Company (Africa) (Proprietary) Limited which are not
separately included in this Prospectus have been audited by Fotinakis Phitidis
(SA), to the extent and for the periods set forth in their reports appearing
elsewhere herein, and is included in reliance upon such reports given upon the
authority of said firm as experts in auditing and accounting.

ADDITIONAL INFORMATION

The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith, files periodic reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed with the Commission may be inspected and copied at the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, its Midwest Regional Office, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and its Northeast

45
<PAGE>
Regional Office, 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of the
Commission at prescribed rates by writing to the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Such material may also be accessed electronically
by means of the Commission's home page on the Internet at http://www.sec.gov.
The Common Stock is quoted on Nasdaq and such reports, proxy statements and
other information may also be inspected at the offices of Nasdaq, 1735 K Street,
N.W., Washington, D.C. 20006.

The Company has filed with the Commission a Registration Statement on Form
SB-2 under the Securities Act with respect to the securities offered hereby
(such Registration Statement with all exhibits, and amendments thereto being
referred to hereinafter as the "Registration Statement"). This Prospectus, which
is a part of the Registration Statement, does not contain all of the information
set forth in the Registration Statement. For further information with respect to
the Company and the securities offered hereby, reference is made to the
Registration Statement. The statements contained in this Prospectus as to the
contents of any contract or any other document in this Prospectus are not
necessarily complete and, in each instance, reference is made to the copy of
such Registration Statement, each such statement being qualified in any and all
respects by such reference. The Registration Statement, including exhibits, may
be inspected without charge and copied at the Commission's Public Reference
Section located at 450 Fifth Street, N.W., Washington, D.C. 20549, its Midwest
Regional Office, 500 West Madison, Suite 1400, Chicago, Illinois 60661 and its
Northeast Regional Office, 7 World Trade Center, Suite 1300, New York, New York
10048 upon payment of the fees prescribed by the Commission. Such material may
also be accessed electronically by means of the Commission's home page on the
Internet at http://www.sec.gov.

CHANGE IN ACCOUNTANTS

On March 14, 1996, the Company dismissed Arthur Andersen LLP ("Andersen") as
its independent accountants. The Company's Board of Directors approved such
dismissal. Andersen's accountant's report on the financial statements of the
Company for the 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. On March 15, 1996, BDO Seidman, LLP was engaged
as new independent accountants to the Company.

46
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARY
AND THE LEONARD PARKER COMPANY AND AFFILIATES

INDEX TO PRO FORMA FINANCIAL STATEMENTS

HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARY AND THE LEONARD PARKER COMPANY AND AFFILIATES

Unaudited Pro Forma Condensed Consolidated Financial Information........................................... P-2

Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 1996
(unaudited).............................................................................................. P-3

Pro Forma Condensed Consolidated Statement of Operations for the six months ended June 30, 1996
(unaudited).............................................................................................. P-4

Notes to Pro Forma Condensed Consolidated Statements of Operations......................................... P-5
</TABLE>

P-1
<PAGE>

HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARY
AND THE LEONARD PARKER COMPANY AND AFFILIATES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

On January 10, 1997, Hospitality Worldwide Services, Inc. (the "Company")
acquired The Leonard Parker Company and Affiliates ("LPC"), including its then
subsidiary, Parker Reorder Corporation ("Parker Reorder").

The $12,436,229 purchase price of LPC consisted of 1,250,000 newly issued
shares of Common Stock and 200,000 shares of 6% redeemable convertible preferred
stock, $25 stated value, convertible on a formula basis, into 1,000,000 shares
of Common Stock (subject to upward adjustment to a maximum of 5,000,000 shares
in the event that the market price of the Common Stock is below $5.00 at the
time of conversion) during the period from January 10, 1998 to January 10, 2000.
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 date of acquisition.

The accompanying unaudited pro forma condensed consolidated statements of
operations illustrate the effect of the acquisition of LPC on the Company's
results of operations. The unaudited pro forma condensed consolidated statements
of operations for the year ended December 31, 1996 and six months ended June 30,
1996, assume the acquisition of LPC took place on January 1, 1996.

The unaudited pro forma condensed consolidated statements of operations have
been included as required and allowed by the rules of the Commission and are
provided for comparative purposes only. The pro forma statements of operations
do not purport to be indicative of the results which would have been obtained if
the acquisition had been effected on the date indicated or which may be obtained
in the future. The unaudited pro forma condensed consolidated statements of
operations are based on management's current estimate of the fair value of the
securities issued to the former owners of LPC.

The accompanying unaudited pro forma condensed consolidated statements of
operations should be read in conjunction with the respective historical
financial statements of the Company and those of LPC, which are contained
elsewhere herein.

P-2
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARY
AND THE LEONARD PARKER COMPANY AND AFFILIATES

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
PRO FORMA
HWS LPC ADJUSTMENTS (B) PRO FORMA
------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Revenues........................................ $ 24,367,112 $ 58,700,612 $ -- $ 83,067,724
------------- ------------- -------------
Cost of revenues................................ 18,289,924 51,881,883 -- 70,171,807
Selling, general and administrative expenses.... 3,218,520 8,566,005 400,000(1) 10,309,525
(1,875,000)(2)
------------- ------------- --------------- -------------
21,508,444 60,447,888 (1,475,000) 80,481,332
------------- ------------- --------------- -------------
Income (loss) from operations................... 2,858,668 (1,747,276) 1,475,000 2,586,392
Other income (expense):
Interest income............................... 1,141 259,251 -- 260,392
Interest expense.............................. (26,101) (18,572) -- (44,673)
------------- ------------- --------------- -------------
Income (loss) before provision for income
taxes......................................... 2,833,708 (1,506,597) 1,475,000 2,802,111
Provision for income taxes...................... 926,325 45,571 94,950(4) 1,066,946
------------- ------------- --------------- -------------
Income (loss) from continuing operations........ 1,907,383 (1,552,168) 1,379,950 1,735,165
Dividends on preferred shares................... -- -- 300,000(3) 300,000
------------- ------------- --------------- -------------
Income (loss) applicable to common
shareholders.................................. $ 1,907,383 $ (1,552,168) $ 1,079,950 $ 1,435,165
------------- ------------- --------------- -------------
------------- ------------- --------------- -------------
Income per share:
Continuing operations......................... 0.27 0.17
------------- -------------
------------- -------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING................................... 7,192,361 8,442,361
------------- -------------
------------- -------------
</TABLE>

See accompanying notes to pro forma financial statements

P-3
<PAGE>

HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARY
AND THE LEONARD PARKER COMPANY AND AFFILIATES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
PRO FORMA
HWS LPC ADJUSTMENTS (B) PRO FORMA
------------ ------------- ------------------- -------------
<S> <C> <C> <C> <C>
Revenues.......................................... $ 9,416,764 $ 27,406,358 $ -- $ 36,823,122
------------ ------------- ------------------- -------------
Cost of revenues.................................. 6,990,707 24,131,228 -- 31,121,935
Selling, general and administrative expenses...... 1,418,151 2,483,771 200,000(1) 4,158,922
57,000(2)
------------ ------------- ------------------- -------------
8,408,858 26,614,999 257,000 35,280,857
------------ ------------- ------------------- -------------
Income (loss) from operations..................... 1,007,906 791,359 (257,000) 1,542,265
Interest income................................... 2,706 149,910 -- 152,616
------------ ------------- ------------------- -------------
Income (loss) before provision for income taxes... 1,010,612 941,269 (257,000) 1,694,881
Provision for income taxes........................ 271,653 24,297 354,000(4) 649,950
------------ ------------- ------------------- -------------
Income (loss) from continuing operations.......... 738,959 916,972 (611,000) 1,044,931
Dividends on preferred shares..................... -- -- 150,000(3) 150,000
------------ ------------- ------------------- -------------
Income (loss) applicable to common shareholders... $ 738,959 $ 916,972 $ (761,000) $ 894,931
------------ ------------- ------------------- -------------
------------ ------------- ------------------- -------------
Income per share:
Continuing operations........................... 0.11 0.11
------------ -------------
------------ -------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING..................................... 7,027,990 8,277,990
------------ -------------
------------ -------------
</TABLE>

See accompanying notes to pro forma financial statements

P-4
<PAGE>
NOTE A

(1) The components of the purchase price of the net assets of LPC are as
follows:

<TABLE>
<S> <C>
Components of Purchase Price:
Preferred Stock Issued..................................................... $5,000,000
Common Stock Issued........................................................ 6,953,190
Accrual for acquisition costs.............................................. 483,039
----------
Purchase price............................................................. 12,436,229
Tangible net worth acquired................................................ (348,190)
----------
Goodwill................................................................... $12,088,039
</TABLE>

NOTE B

The pro forma adjustments to the unaudited pro forma condensed consolidated
statements of income are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1996
------------- ----------
<S> <C> <C>
(1) Amortization of goodwill over an estimated useful life of 30 years................. $ 400,000 $ 200,000

(2) Adjust historical compensation of officers to compensation per employment
agreements entered into at date of acquisition..................................... $ (1,875,000) $ 57,000

(3) To record dividends of 6% on preferred stock....................................... $ 300,000 $ 150,000

(4) To provide for additional income taxes on LPC's pro forma income. Prior to the
acquisition, LPC was treated as an S Corporation for tax purposes.................. $ 94,950 $ 354,000
</TABLE>

P-5
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARIES

Report of Independent Certified Public Accountants........................................................ F-2

Consolidated Balance Sheets as of December 31, 1996 and June 30, 1997 (unaudited)......................... F-3

Consolidated Statements of Operations for the years ended December 31, 1995 and 1996 and the six months
ended June 30, 1996 and 1997 (unaudited)................................................................ F-4

Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 1995 and 1996
and the six months ended June 30, 1997 (unaudited)...................................................... F-5

Consolidated Statements of Cash Flows for the years ended December 31, 1995 and 1996 and the six months
ended June 30, 1996 and 1997 (unaudited)................................................................ F-6

Notes to Consolidated Financial Statements................................................................ F-8

THE LEONARD PARKER COMPANY AND AFFILIATES

Report of Independent Certified Public Accountants........................................................ F-23

Reports of Independent Chartered Accountants.............................................................. F-24

Combined Balance Sheet as of December 31, 1996............................................................ F-26

Combined Statements of Operations for the years ended December 31, 1995 and 1996.......................... F-27

Combined Statements of Stockholders' Equity for the years ended December 31, 1995 and 1996................ F-28

Combined Statements of Cash Flows for the years ended December 31, 1995 and 1996.......................... F-29

Summary of Accounting Policies............................................................................ F-31

Notes to Combined Financial Statements.................................................................... F-33
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors

Hospitality Worldwide Services, Inc.

New York, New York

We have audited the accompanying consolidated balance sheet of Hospitality
Worldwide Services, Inc. (formerly Light Savers U.S.A., Inc.) and subsidiary as
of December 31, 1996, and the related consolidated statements of operations,
changes in stockholders' equity and cash flows for each of the two years in the
period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Hospitality
Worldwide Services, Inc. and subsidiary as of December 31, 1996, and the results
of its operations and its cash flows for each of the two years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.

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

BDO Seidman, LLP

New York, New York

March 21, 1997

F-2
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS (NOTE 8)

<TABLE>
<CAPTION>
DECEMBER 31, 1996 JUNE 30, 1997
----------------- -------------
<S> <C> <C>
(UNAUDITED)
Current Assets:
Cash and cash equivalents.......................................................... $ 276,191 $ 1,434,878
Accounts receivable, net of allowance for doubtful accounts of $50,000 and $357,316
(Notes 5 and 10b)................................................................ 3,134,841 11,567,273
Current portion of note receivable-related party (Note 3).......................... 70,000 60,000
Costs and estimated earnings in excess of billings on uncompleted contracts (Note
6)............................................................................... 2,176,907 2,050,731
Advances to vendors................................................................ -- 2,181,540
Prepaid and other current assets................................................... 421,303 910,689
----------------- -------------
Total current assets......................................................... 6,079,242 18,205,111
Property and equipment, less accumulated depreciation of
$61,711 and $184,799 (Note 7)...................................................... 142,877 1,719,724
Goodwill ($6,559,639 and $18,676,325) and other intangible ($1,287,500 at June 30,
1997), less accumulated amortization of $549,970 and $977,543 (Note 3)............. 6,049,669 18,986,282
Notes receivable-related party, less current portion (Note 3)........................ 280,000 265,273
Deferred taxes (Note 9).............................................................. 65,280 40,071
Other assets......................................................................... 133,022 241,921
----------------- -------------
$ 12,750,090 $ 39,458,382
----------------- -------------
----------------- -------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Loan payable-bank (Note 8a)........................................................ $ 1,400,000 $ 2,495,000
Note payable (Note 8b)............................................................. -- 2,200,000
Current portion of notes payable and capital lease obligations (Note 8c)........... -- 60,000
Accounts payable (Note 5).......................................................... 1,175,068 4,726,435
Accrued and other liabilities...................................................... 1,897,389 2,765,567
Billings in excess of costs and estimated earnings on uncompleted
contracts (Note 6)............................................................... 200,802 463,975
Customer deposits.................................................................. -- 6,122,950
Income taxes payable............................................................... 297,860 273,292
----------------- -------------
Total current liabilities.................................................... 4,971,119 19,107,219
Notes payable and capital lease obligations, net of current portion.................. -- 99,014
----------------- -------------
4,971,119 19,206,233
----------------- -------------
Commitments and contingency (Notes 10c and 11)

Stockholders' equity: (Notes 3, 13 and 14)
Preferred stock, 3,000,000 shares authorized, 200,000 shares of 6% redeemable
convertible, $25 stated value per share, issued and outstanding.................. -- 5,000,000
Common stock, $.01 par value, 20,000,000 shares authorized, 6,725,655 and 7,814,739
outstanding (1,000,000 shares held in treasury).................................. 72,257 88,148
Additional paid-in capital......................................................... 8,185,410 17,193,991
Treasury stock..................................................................... (715,000) (2,925,000)
Foreign currency translation adjustment............................................ -- (12,867)
Retained earnings.................................................................. 236,304 907,877
----------------- -------------
Total stockholders' equity................................................... 7,778,971 20,252,149
----------------- -------------
$ 12,750,090 $ 39,458,382
----------------- -------------
----------------- -------------
</TABLE>

See accompanying notes to consolidated financial statements

F-3
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------- ---------------------------
1995 1996 1996 1997
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Revenues (Notes 10 and 12)............................ $ 4,980,291 $ 24,367,112 $ 9,416,764 $ 37,707,498
------------- ------------- ------------ -------------
Cost of revenues (Notes 10 and 12).................... 3,823,779 18,289,924 6,990,707 29,694,278
Selling, general and administrative expenses.......... 1,619,189 3,218,520 1,418,151 6,259,562
------------- ------------- ------------ -------------
5,442,968 21,508,444 8,408,858 35,953,840
------------- ------------- ------------ -------------
Income (loss) from operations..................... (462,677) 2,858,668 1,007,906 1,753,658
------------- ------------- ------------ -------------
Other income (expense):
Interest expense.................................... (13,007) (26,101) -- (255,524)
Interest income..................................... 120,257 1,141 2,706 140,755
------------- ------------- ------------ -------------
107,250 (24,960) 2,706 (114,769)
------------- ------------- ------------ -------------
Income (loss) before provision for income taxes... (355,427) 2,833,708 1,010,612 1,638,889
Provision for income taxes (Note 9)................... 25,000 926,325 271,653 817,316
------------- ------------- ------------ -------------
Income (loss) from continuing operations.......... (380,427) 1,907,383 738,959 821,573
------------- ------------- ------------ -------------
Discontinued operations: (Note 4).....................
Loss from discontinued operations................... (336,736) (64,705) -- --
Loss on disposal of discontinued operations......... (398,806) -- -- --
------------- ------------- ------------ -------------
Loss from discontinued operations................... (735,542) (64,705) -- --
------------- ------------- ------------ -------------
Net income (loss)..................................... (1,115,969) 1,842,678 738,959 821,573
Preferred dividends................................. -- -- -- 150,000
------------- ------------- ------------ -------------
------------- ------------- ------------ -------------
Net income (loss) applicable to common shareholders... $ (1,115,969) $ 1,842,678 $ 738,959 $ 671,573
------------- ------------- ------------ -------------
------------- ------------- ------------ -------------
Primary:
Net income (loss) per share from continuing
operations........................................ $ (0.07) $ 0.27 $ 0.11 $ 0.07
------------- ------------- ------------ -------------
Discontinued operations:
Loss from operations.............................. (0.06) (0.01) -- --
Loss on disposal.................................. (0.07) -- -- --
------------- ------------- ------------ -------------
(0.13) (0.01) -- --
------------- ------------- ------------ -------------
Net income (loss) per share......................... $ (0.20) $ 0.26 $ 0.11 $ 0.07
------------- ------------- ------------ -------------
------------- ------------- ------------ -------------
Fully Diluted:
Net income (loss) per share from continuing
operations........................................ $ (0.07) $ 0.26 $ 0.11 $ 0.07
------------- ------------- ------------ -------------
Discontinued operations:
Loss from operations.............................. (0.06) (0.01) -- --
Loss on disposal.................................. (0.07) -- -- --
------------- ------------- ------------ -------------
(0.13) (0.01) -- --
------------- ------------- ------------ -------------
Net income (loss) per share......................... $ (0.20) $ 0.25 $ 0.11 $ 0.07
------------- ------------- ------------ -------------
------------- ------------- ------------ -------------
Weighted average number of common and common
equivalent shares outstanding....................... 5,653,052 7,192,361 7,027,990 9,105,219
------------- ------------- ------------ -------------
------------- ------------- ------------ -------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 1995 AND 1996 AND PERIOD ENDED JUNE 30, 1997

<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK FOREIGN UNREALIZED
------------------------ ---------------------- ADDITIONAL CURRENCY LOSS ON
NUMBER OF PAR NUMBER OF PAR TREASURY PAID IN TRANSLATION MARKETABLE
SHARES VALUE SHARES VALUE STOCK CAPITAL ADJUSTMENT SECURITIES
----------- ----------- ----------- --------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995..... -- $ -- 4,625,655 $ 46,257 $ -- $ 4,590,285 $ -- $ (52,938)
Issuance of 2.5 million
shares in connection with
acquisition (Note 3)........ -- -- 2,500,000 25,000 -- 3,275,000 -- --
Sale of available-for-sale
securities.................. -- -- -- -- -- -- -- 52,938
Net loss..................... -- -- -- -- -- -- -- --
BALANCE, DECEMBER 31, 1995... -- -- 7,125,655 71,257 -- 7,865,285 -- --
Purchase of treasury stock
(Note 13)................... -- -- (1,000,000) -- (1,152,500) -- -- --
Sale of treasury stock (Note
13)......................... -- -- 500,000 -- 437,500 62,500 -- --
Stock issued in settlement of
service contract liability
(Note 13)................... -- -- 75,000 750 -- 149,250 -- --
Stock options issued for
consulting services (Note
13)......................... -- -- -- -- -- 44,000 -- --
Exercise of stock options and
warrants.................... -- -- 25,000 250 -- 64,375 -- --
Net income................... -- -- -- -- -- -- -- --
----------- ----------- ----------- --------- ----------- ------------ ----------- -----------
BALANCE, DECEMBER 31, 1996... -- -- 6,725,655 72,257 (715,000) 8,185,410 -- --
Exercise of stock options and
warrants (unaudited) (Note
13)......................... -- -- 339,084 3,391 -- 758,391 -- --
Purchase of treasury stock
(unaudited) (Note 8b)....... -- -- (500,000) -- (2,210,000) -- -- --
Stock issued in connection
with acquisition (Note 3)
(unaudited)................. 200,000 5,000,000 1,250,000 12,500 -- 6,940,690 -- --
Issuance of warrants to joint
venture partner (unaudited)
(Note 15)................... -- -- -- -- -- 1,287,500 -- --
Foreign currency translation
adjustment (unaudited)...... -- -- -- -- -- -- (12,867) --
Stock options issued for
consulting services
(unaudited)................. -- -- -- -- -- 22,000 -- --
Net income (unaudited)....... -- -- -- -- -- -- -- --
Preferred dividends
(unaudited) (Note 15)....... -- -- -- -- -- -- -- --
----------- ----------- ----------- --------- ----------- ------------ ----------- -----------
BALANCE, JUNE 30,
1997(unaudited)............. 200,000 $ 5,000,000 7,814,739 $ 88,148 $(2,925,000) $ 17,193,991 $ (12,867) $ --
----------- ----------- ----------- --------- ----------- ------------ ----------- -----------
----------- ----------- ----------- --------- ----------- ------------ ----------- -----------

RETAINED TOTAL
EARNINGS STOCKHOLDERS'
(DEFICIT) EQUITY
---------- -------------
<S> <C> <C>
BALANCE, JANUARY 1, 1995..... $ (490,405) $ 4,093,199
Issuance of 2.5 million
shares in connection with
acquisition (Note 3)........ -- 3,300,000
Sale of available-for-sale
securities.................. -- 52,938
Net loss..................... (1,115,969) (1,115,969)
BALANCE, DECEMBER 31, 1995... (1,606,374) 6,330,168
Purchase of treasury stock
(Note 13)................... -- (1,152,500)
Sale of treasury stock (Note
13)......................... -- 500,000
Stock issued in settlement of
service contract liability
(Note 13)................... -- 150,000
Stock options issued for
consulting services (Note
13)......................... -- 44,000
Exercise of stock options and
warrants.................... -- 64,625
Net income................... 1,842,678 1,842,678
---------- -------------
BALANCE, DECEMBER 31, 1996... 236,304 7,778,971
Exercise of stock options and
warrants (unaudited) (Note
13)......................... -- 761,782
Purchase of treasury stock
(unaudited) (Note 8b)....... -- (2,210,000)
Stock issued in connection
with acquisition (Note 3)
(unaudited)................. -- 11,953,190
Issuance of warrants to joint
venture partner (unaudited)
(Note 15)................... -- 1,287,500
Foreign currency translation
adjustment (unaudited)...... -- (12,867)
Stock options issued for
consulting services
(unaudited)................. -- 22,000
Net income (unaudited)....... 821,573 821,573
Preferred dividends
(unaudited) (Note 15)....... (150,000) (150,000)
---------- -------------
BALANCE, JUNE 30,
1997(unaudited)............. $ 907,877 $20,252,149
---------- -------------
---------- -------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------- ----------------------------
1995 1996 1996 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................... $ (1,115,969) $ 1,842,678 $ 738,959 $ 671,573
Adjustments to reconcile net income (loss) to net
cash used for operating activities:
Depreciation and amortization..................... 178,801 404,114 233,442 550,661
Provision for losses on accounts receivable....... 125,366 (101,000) (101,000) 79,232
Write-off of accounts receivable.................. -- -- -- (110,904)
Loss on disposal of discontinued operations....... 398,806 -- -- --
Realized loss on sale of securities............... 52,938 -- -- --
Stock options issued for services................. -- 44,000 -- 22,000
Deferred taxes.................................... -- (65,280) -- 25,209
(Increase) decrease in current assets:
Accounts receivable............................. (539,439) (1,447,005) (2,308,139) (2,273,812)
Current assets of discontinued operations....... (145,317) 145,317 145,317 --
Costs and estimated earnings in excess of
billings on uncompleted contracts............. (129,734) (2,047,173) (37,030) 126,176
Advances to vendors............................. -- -- -- (1,626,971)
Prepaid and other current assets................ 182,029 (290,632) 31,083 (383,259)
Increase (decrease) in current liabilities:
Accounts payable................................ 495,158 134,481 195,295 (1,068,398)
Accrued and other liabilities................... 360,172 862,204 528,874 352,462
Billings in excess of costs and estimated
earnings on uncompleted contracts............. (640,175) (419,772) 140,050 263,173
Customer deposits............................... -- -- -- 2,845,912
Accrued loss on disposal of discontinued
operations.................................... -- (398,806) (398,806) --
Income taxes payable............................ -- 297,860 271,653 (24,568)
Increase (decrease) in other assets............... (9,632) (81,014) 17,003 (108,899)
------------- ------------- ------------- -------------
NET CASH USED FOR OPERATING ACTIVITIES................ (786,996) (1,120,028) (543,299) (660,413)
------------- ------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of marketable securities....................... 3,047,243 -- -- --
(Purchase) sale of short-term marketable
securities.......................................... (715,000) 715,000 715,000 --
Payment for acquisition, net of acquired cash....... 125,966 -- -- 688,925
Purchase of property and equipment.................. (40,819) (65,682) (8,577) (713,422)
------------- ------------- ------------- -------------
NET CASH PROVIDED BY (USED FOR) INVESTING
ACTIVITIES.......................................... 2,417,390 649,318 706,423 (24,497)
------------- ------------- ------------- -------------
</TABLE>

F-6
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------- ----------------------------
1995 1996 1996 1997
------------- ------------- ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings on loan payable-- bank..... $ 455,926 $ 1,400,000 -- $ 1,095,000
Repayment of loan payable--bank..................... -- (455,926) (455,926) --
Purchase of treasury stock.......................... -- (1,152,500) (437,500) (2,210,000)
Proceeds from sale of treasury stock................ -- 500,000 499,200 --
Note receivable..................................... (2,574,521) -- -- 24,727
Proceeds from borrowings on notes payable........... -- -- -- 2,200,000
Repayment of notes payable and capital lease
obligations......................................... -- -- -- (15,045)
Proceeds from issuance of stocks and warrants....... -- 64,625 -- 761,782
------------- ------------- ------------- -------------
NET CASH PROVIDED BY (USED FOR) FINANCING
ACTIVITIES.......................................... (2,118,595) 356,199 (394,226) 1,856,464
EFFECT OF EXCHANGE RATE CHANGES ON CASH............... -- -- -- (12,867)
------------- ------------- ------------- -------------
NET (DECREASE) INCREASE IN CASH....................... (488,201) (114,511) (231,102) 1,158,687
CASH, BEGINNING OF PERIOD............................. 878,903 390,702 390,702 276,191
------------- ------------- ------------- -------------
CASH, END OF PERIOD................................... $ 390,702 $ 276,191 $ 159,600 $ 1,434,878
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest............................................ $ 12,486 $ 26,101 $ -- $ 148,101
Income taxes........................................ -- 696,324 -- 724,738

NON-CASH TRANSACTIONS:
Fair value (including goodwill) of net assets
acquired............................................ 5,450,000 -- -- 11,953,500
Stock issued for assets acquired...................... (3,300,000) -- -- (11,953,500)
Note payable for assets acquired...................... (2,150,000) -- -- --
Stock issued in settlement of service contract
liability........................................... -- 150,000 -- --
Settlement of debt by issuance of stock............... -- (150,000) -- --
Additional paid-in capital for fair value of warrants
issued to joint venture partner..................... -- -- -- 1,287,500
Fair value of warrants issued to joint venture
partner............................................. -- -- -- (1,287,500)
</TABLE>

See accompanying notes to consolidated financial statements.

F-7
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997)

1. ORGANIZATION AND BASIS OF PRESENTATION

Over the past two years, Hospitality Worldwide Services, Inc. (the
"Company") has evolved from a lighting fixture design, manufacturing and
installation company formerly known as Light Savers, U.S.A., Inc., into an
organization dedicated to providing a broad range of outsourcing services to the
hospitality industry. These services include the procurement of hotel furniture,
fixtures and equipment and the reorder of hotel operating supplies and
equipment. In addition, the Company is also engaged in all aspects of the hotel
renovation business. In August 1995, the Company acquired the assets comprising
the business of Hospitality Restoration and Builders, Inc. ("HRB"), and in
January 1997, the Company acquired The Leonard Parker Company and affiliates
("LPC"), including its then subsidiary, Parker Reorder Corporation ("Parker
Reorder").

Founded in 1969, LPC provides procurement services to hotel owners,
operators and developers in the United States and internationally. HRB has
provided a wide variety of renovation services to the hospitality industry for
over 18 years. Parker Reorder provides hotel properties with the ability to
order, on an as needed basis, any and all of the products used by such
properties.

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, HRB, as of December 31, 1996, and HRB, LPC and
Parker Reorder as of June 30, 1997. All significant intercompany balances and
transactions have been eliminated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ESTIMATES

The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

INTERIM FINANCIAL STATEMENTS

The consolidated financial statements as of June 30, 1997 and for the six
months ended June 30, 1997 and 1996 are presented as unaudited. In the opinion
of management, these financial statements include all adjustments necessary to
present fairly the information set forth therein. These adjustments consist
solely of normal recurring accruals. The interim results of operations for the
six months ended June 30, 1997 and 1996 are not necessarily indicative of the
results to be expected for the full year or for any other interim period.

REVENUE RECOGNITION

RENOVATION

The Company recognizes revenues and earnings on contracts using the
percentage of completion method, based primarily on contract costs incurred to
date compared to total estimated contract costs.

To the extent contracts extend over one year, revisions in cost and profit
estimates during the course of the work are reflected in the accounting period
in which the facts which require the revision become

F-8
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

known. Assets and liabilities related to contracts are included in current
assets and current liabilities in the accompanying consolidated balance sheets,
as they will be liquidated in the normal course of contract completion, although
this may require more than one year.

Revenues on short-term contracts are recognized based on the completed
contract method, results of which are not materially different than the
percentage of completion method for such contracts.

At the time a loss on a contract becomes known, the amount of the estimated
ultimate loss on both short and long-term contracts is accrued.

Claims (cost recoveries from construction projects) are recorded when
realization is probable and the amount can be reliably estimated.

PROCUREMENT

Revenues are recognized two ways; (i) as a purchaser and reseller of
products, the Company recognizes all revenues associated with the products it
purchases at the time of shipment of the respective product, and (ii) when the
Company acts as an agent, revenue is recognized as service fee income at the
time the service is provided. Revenues include both resale of product and
service fee income.

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

PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost and shown net of depreciation.
The Company provides for depreciation using the straight-line method over
estimated useful lives (generally 3-7 years) for financial reporting purposes,
and the accelerated method for income tax reporting purposes.

GOODWILL AND OTHER INTANGIBLE

Goodwill is amortized on a straight-line basis over its estimated useful
life of 17-30 years. The Company periodically evaluates goodwill based upon the
expected undiscounted cash flow from the acquired business.

Other intangible represents the fair value on the date of grant of a warrant
to purchase 750,000 shares of Common Stock which is currently exercisable as to
250,000 shares (see Note 15), and is being amortized over a period of 5 years
commencing May 1997.

NET INCOME (LOSS) PER SHARE OF COMMON STOCK

Net income (loss) per share of common stock was computed by dividing the
earnings (loss) by the weighted average number of common shares and common stock
equivalents outstanding during the period.

INCOME TAXES

The Company accounts for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("Statement 109"). Under the asset and

F-9
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
liability method of Statement 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities, if any, are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.

FOREIGN CURRENCY

The Company has foreign operations in South Africa and Asia. With respect to
the financial statements, the assets and liabilities of the foreign operations
are translated to United States dollars ("U.S. $") at the rate prevailing on the
balance sheet dates and the income statements have been translated from the
functional currency to U.S. $ using an average exchange rate for the applicable
period. Results of this translation process are accumulated as a separate
component of stockholders' equity. Exchange gains or losses are included in
operating expense in the accompanying consolidated statements of operations.

CASH AND CASH EQUIVALENTS

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

LONG-LIVED ASSETS

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of," which requires
that certain long-lived assets be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. This standard is effective for fiscal years that begin after
December 15, 1995. The Company's adoption of this pronouncement on January 1,
1996 did not have a material impact on the Company's consolidated financial
statements.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying values of financial instruments including cash and cash
equivalents, accounts receivable, loan payable--bank, accounts payable, and
other liabilities approximate fair value due to the relatively short maturities
of these instruments. Due to the nature of the transaction and the relationship
of the parties involved, it is not practical to determine the fair value of the
note receivable--related party.

STOCK OPTIONS

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 ("SFAS No.123"), "Accounting for
Stock-Based Compensation," which allows a choice of either the intrinsic value
method or the fair value method of accounting for employee stock options. The
Company has chosen to continue the use of the intrinsic value method. Expenses
related to stock options

F-10
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
issued to nonemployees are accounted for using the fair value at the date of
grant as required by SFAS No. 123.

RECENT ACCOUNTING STANDARDS

In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("SFAS No. 128"), "Earnings Per Share."
SFAS No. 128 specifies the computation, presentation and disclosure requirements
for earnings per share. SFAS No. 128 is effective for periods ending after
December 15, 1997. The adoption of this statement is not expected to have a
material effect on the consolidated financial statements.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "REPORTING COMPREHENSIVE INCOME" ("SFAS
No. 130"), which establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
No. 130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements.

SFAS No. 130 is effective for financial statements for periods beginning
after December 15, 1997 and requires comparative information for earlier years
to be restated. Because of the recent issuance of this standard, management has
been unable to fully evaluate the impact, if any, the standard may have on
future financial statement disclosures. Results of operations and financial
position, however, will be unaffected by implementation of this standard.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "DISCLOSURE ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION" ("SFAS No. 131"), which supersedes Statement
of Financial Accounting Standards No. 14, "FINANCIAL REPORTING FOR SEGMENTS OF A
BUSINESS ENTERPRISE." SFAS No. 131 establishes standards for the way that public
companies report information about operating segments in annual financial
statements and requires reporting of selected information about operating
segments in interim financial statements issued to the public. It also
establishes standards for disclosures regarding products and services,
geographic areas and major customers. SFAS No. 131 defines operating segments as
components of a company about which separate financial information is available
that is evaluated regularly by the chief operating decision maker in deciding
how to allocate resources and in assessing performance.

SFAS No. 131 is effective for financial statements for periods beginning
after December 15, 1997 and requires comparative information for earlier years
to be restated. Because of the recent issuance of this standard, management has
been unable to fully evaluate the impact, if any, it may have on future
financial statement disclosures. Results of operations and financial position,
however, will be unaffected by implementation of this standard.

F-11
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PRESENTATION OF PRIOR YEAR DATA

Certain reclassifications have been made to conform prior year data with the
current presentation.

3. ACQUISITION OF BUSINESSES

HRB

On August 1, 1995, the Company acquired substantially all of the assets and
business and assumed certain liabilities of AGF Interior Services Co. (d/b/a
Hospitality Restoration and Builders) ("AGF") through its newly formed
subsidiary corporation, HRB. HRB provides interior and exterior cosmetic
renovations and maintenance for hotel and hospitality customers nationwide.

The aggregate consideration for the acquisition was $5,450,000. As finally
determined, the purchase price consists of a $2,150,000 promissory note payable
to AGF over five years, bearing interest at 8% per annum and 2,500,000 shares of
the Company's common stock, delivered to AGF and issued in the name of AGF's
sole stockholder, Watermark Investments Ltd. ("Watermark"). The acquisition
resulted in goodwill of $6,599,639, which is being amortized on a straight-line
basis over its estimated useful life of 17 years. The acquisition was accounted
for as a purchase with the results of HRB included in the consolidated financial
statements from the acquisition date.

On May 23, 1995, the Company loaned AGF $2,500,000, evidenced by a
promissory note ("Note Receivable"), payable over five years and bearing
interest at 8% per annum. On April 12, 1996, the Company and Watermark agreed to
offset the $2,150,000 note payable and the $2,500,000 note receivable, with a
net balance of $350,000, receivable in 60 equal monthly installments with
interest at 7% per annum with payments commencing January 1997.

LPC

On January 10, 1997, the Company acquired LPC, a purchasing company for the
hospitality industry that acts as an agent for the purchase of goods and
services for its customers which include major hotels and management companies
worldwide. The purchase price of approximately $12,400,000, which is subject to
downward adjustment based on the net worth of LPC as of December 31, 1996,
consisted of 1,250,000 newly issued shares of Common Stock of the Company, and
200,000 shares of newly issued 6% redeemable convertible preferred stock, $25
stated value per share ("LPC Preferred"). (See Note 13(a)). The acquisition was
accounted for as a purchase, with the results of LPC included in the
consolidated financial statements from the acquisition date. The cost in excess
of net assets acquired (goodwill) was $12,088,016, and is being amortized over
30 years using the straight-line method.

The following pro forma consolidated financial information has been prepared
to reflect the acquisition of LPC. The pro forma financial information is based
on the historical financial statements of the Company and LPC and should be read
in conjunction with the accompanying footnotes. The accompanying pro forma
operating statements are presented as if the acquisition occurred on January 1,
1996. The pro forma financial information is unaudited and is not necessarily
indicative of what the actual

F-12
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997)

3. ACQUISITION OF BUSINESSES (CONTINUED)

results of operations of the Company would have been assuming the acquisition
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 SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1996
------------- ----------------
<S> <C> <C>
(UNAUDITED)
Revenues........................................................................ $ 83,067,724 $ 36,823,122
Net income from continuing operations applicable to common shares............... $ 1,435,165 $ 894,931
Net income per share from continuing operations................................. $ 0.17 $ 0.11
</TABLE>

The above unaudited pro forma consolidated financial information has been
adjusted to reflect the following: amortization of goodwill as generated by the
LPC acquisition, over a 30-year period, adjustments to reflect LPC's officers'
employment agreements entered into at the date of acquisition, dividends of 6%
on the LPC Preferred and additional income taxes on LPC's pro forma income, and
the issuance of 1,250,000 common shares in the transaction.

4. DISCONTINUED OPERATIONS

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

In 1995, the Company incurred a loss on disposal of discounted operations of
$398,806, which primarily includes the present value of the amounts payable to
the former President. Revenues of the lighting business segment for 1995 were
$530,000. In 1996, the Company incurred additional losses from discontinued
operations of $64,705.

5. ACCOUNTS RECEIVABLE/ACCOUNTS PAYABLE

Accounts receivable include retainages (amounts withheld by customers until
completion of projects) amounting to $585,149 as of December 31,1996, and
$470,579 as of June 30, 1997, on contracts which are collectible upon the
acceptance by the owner, and are anticipated to be collected in their entirety
in 1997.

The Company withholds a portion of payments due subcontractors as retainages
($181,528 at December 31, 1996 and $109,522 as of June 30, 1997). The
subcontractor balances are paid when the Company collects its retainages
receivable.

F-13
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997)

6. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

Billings on uncompleted contracts in excess of costs and estimated earnings
represent deferred revenue and consist of:

<TABLE>
<CAPTION>
DECEMBER 31, 1996 JUNE 30, 1997
----------------- --------------
<S> <C> <C>
(UNAUDITED)
Costs incurred on uncompleted contracts....................................... $ 19,962,133 $ 23,036,626
Estimated earnings............................................................ 7,027,729 9,012,719
Billings to date.............................................................. (25,013,757) (30,462,589)
----------------- --------------
Costs on uncompleted contracts in excess of billings and estimated earnings... $ 1,976,105 $ 1,586,756
----------------- --------------
Included in the accompanying consolidated balance sheet under the following
captions:

Costs and estimated earnings in excess of billings on uncompleted contracts... $ 2,176,907 $ 2,050,731
Billings in excess of costs and estimated earnings on uncompleted contracts... (200,802) (463,975)
----------------- --------------
$ 1,976,105 $ 1,586,756
----------------- --------------
----------------- --------------
</TABLE>

7. PROPERTY AND EQUIPMENT

Major classes of property and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, 1996 JUNE 30, 1997
----------------- --------------
<S> <C> <C>
(UNAUDITED)
Furniture and fixtures........................................................ $ 52,048 $ 320,129
Office equipment.............................................................. 134,153 536,982
Computer software............................................................. -- 657,149
Leasehold improvements........................................................ 18,387 390,263
-------- --------------
204,588 1,904,523
Less: Accumulated depreciation................................................ (61,711) (184,799)
-------- --------------
$ 142,877 $ 1,719,724
-------- --------------
-------- --------------
</TABLE>

8. BORROWINGS

(A) LOAN PAYABLE--BANK

In 1996, the Company secured a line of credit ("line") with a bank, which
expires September 30, 1997. The line provides for borrowings up to $2.5 million,
with interest at prime + 1/2% (8.75% at December 31, 1996 and 9% at June 30,
1997), is collateralized by all Company assets and is guaranteed by HRB. At
December 31, 1996 and June 30, 1997, the Company had an outstanding balance of
$1.4 million and $2.295 million, respectively, on the line. LPC also has
available a $1,000,000 line of credit (the "LPC Line of

F-14
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997)

8. BORROWINGS (CONTINUED)

Credit") with a bank, which bears interest at prime + .25% and is secured by
LPC's accounts receivable. There were borrowings of $200,000 under the LPC Line
of Credit of $200,000 at June 30, 1997.

(B) NOTE PAYABLE (UNAUDITED)

In May 1997, the Company borrowed $2.2 million from Findim Investments S.A.
("Findim") for a period of six months at an interest rate of 12% per annum,
interest payable monthly commencing June 1, 1997. Upon maturity, the Company
must remit the principal balance plus any unpaid interest. In the event the
Company cannot pay the balance due at maturity, the Company will have to issue
500,000 shares of its Common Stock to Findim in settlement of all amounts owed.
Findim is required to sell those shares and apply the net proceeds therefrom
against principal plus accrued and unpaid interest. Any surplus of such net
proceeds, after payment of principal and interest, shall be paid over to the
Company. Proceeds from the borrowing were used to exercise an option to purchase
500,000 shares of Common Stock from Tova Schwartz, the Company's former
President and Chief Executive Officer.

<TABLE>
<CAPTION>
JUNE 30,
1997
----------
<S> <C>
Prime plus 3/4% (9.25% at June 30, 1997) note payable with a financial institution, principal and
interest due monthly, matures June 1998, secured by certain assets of LPC........................... $ 58,335
19 1/2% note payable, principal and interest due monthly, matures August 2001, collateralized by
property and equipment.............................................................................. 32,358
9 3/4% capital lease obligation, payable in monthly installments of $1,578, expiring in August 2001,
collateralized by telephone equipment 68,321
----------
159,014
Less: current maturities.............................................................................. 60,000
----------
$ 99,014
----------
----------
</TABLE>

F-15
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997)

9. PROVISION FOR INCOME TAXES

Provision for income taxes consists of the following:

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
--------------------- ------------------------
<S> <C> <C> <C> <C>
1995 1996 1996 1997
--------- ---------- ----------- -----------

<CAPTION>
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Current:
Federal....................................................... $ -- $ 620,929 $ 178,288 $ 543,009
Foreign....................................................... -- -- -- 45,136
State......................................................... 25,000 370,676 93,365 203,963
--------- ---------- ----------- -----------
25,000 991,605 271,653 792,108
Deferred:
Federal and State............................................. -- (65,280) -- 25,208
--------- ---------- ----------- -----------
$ 25,000 $ 926,325 $ 271,653 $ 817,316
--------- ---------- ----------- -----------
--------- ---------- ----------- -----------
</TABLE>

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

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------- ------------------------
1995 1996 1996 1997
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Statutory Federal income tax @ 34%............................ $ (120,845) $ 963,640 $ 343,608 $ 557,652
Increase (decrease) resulting from:
State and local taxes, net of Federal tax benefit........... 16,500 239,027 61,621 136,052
Nondeductible goodwill amortization and expenses............ 28,000 56,861 8,006 76,006
Valuation allowance......................................... 101,345 (339,120) (136,000) --
Foreign tax rate in excess of 34%........................... -- -- -- 15,096
Other....................................................... -- 5,917 (5,582) 32,510
----------- ---------- ----------- -----------
Provision for income taxes.................................... $ 25,000 $ 926,325 $ 271,653 $ 817,316
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
</TABLE>

At December 31, 1995, there was a deferred tax asset of $339,120 primarily
resulting from net operating loss carry forwards and non deductible accruals.
The full amount of the deferred tax asset was offset by a valuation allowance
due to uncertainties with achieving future profitable operations. The valuation
allowance was decreased by $339,120 during 1996 due to the Company's
profitability during 1996, and an assessment that it is more-likely-than-not
that operations will continue to generate taxable income.

The primary tax effects of the temporary differences, which give rise to the
Company's net deferred tax asset, are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1996 JUNE 30, 1997
----------------- -------------
<S> <C> <C>
Accrued liabilities............................................................. $ 87,280 $ 71,980
Goodwill amortization........................................................... (22,000) (31,908)
------- -------------
$ 65,280 $ 40,072
------- -------------
------- -------------
</TABLE>

F-16
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997)

10. RELATED PARTY TRANSACTIONS

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

(b) During 1996 and the six months ended June 30, 1997, the Company
performed renovation services for Watermark LLC. Watermark LLC is the general
partner of Watertone Holdings LP, which owns approximately 23% of the
outstanding common stock of the Company. In addition, the President of the
Company is a director of Watermark LLC. Each of the President of the Company and
Watermark LLC has power to vote or dispose of such 23% interest. During 1997,
the Company and Watermark LLC renegotiated the renovation contract to provide
for fees more consistent with a project of similar scope and complexity. As a
result of the renegotiation, the Company recognized additional revenues for the
six months ended June 30, 1997 of $780,183 without an accompanying increase in
costs. As of December 31, 1996 and June 30, 1997 the Company had a receivable
balance of $492,124 and $1,223,529, including $311,681 of costs in excess of
billings, respectively, from, Watermark. The December 31, 1996 balance was paid
in full during the first quarter of 1997.

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

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30,
----------------- ------------------------
<S> <C> <C> <C>
1996 1997
---------- ------------
Revenues: $ 526,743 $ 143,066 $ 1,400,925
Cost of revenues: 492,283 127,432 547,930
Gross profit: $ 34,460 $ 15,634 $ 852,995
-------- ---------- ------------
-------- ---------- ------------
</TABLE>

(c) In connection with the Apollo Joint Venture (See Note 15), 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 to
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.

11. COMMITMENTS AND CONTINGENCY

(A) LEASE COMMITMENTS

The Company leases office space in New York, California and Florida, which
expire at various dates through 2007.

F-17
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997)

11. COMMITMENTS AND CONTINGENCY (CONTINUED)

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

<TABLE>
<S> <C>
December 31,
1997.......................................................................... $ 765,000
1998.......................................................................... 911,000
1999.......................................................................... 867,000
2000.......................................................................... 784,000
2001.......................................................................... 688,000
Thereafter.................................................................... 1,123,000
---------
$5,138,000
---------
---------
</TABLE>

Rent expense for the years ended December 31, 1995 and 1996 and for the six
months ended June 30, 1996 and 1997 was $88,000, $120,534, $48,909 and $448,552,
respectively.

(B) EMPLOYMENT AGREEMENTS

The Company has employment agreements with eight management personnel, which
expire at various periods through January 1, 2000. The agreements call for
annual compensation of $1,550,000.

On June 3, 1997, Moise Hendeles, a former director of the Company, filed a
lawsuit against the Company and its current and former chief executive officers
alleging that the Company breached an oral agreement made by the Company's
former Chairman of the Board, Tova Schwartz, to grant to Mr. Hendeles options to
purchase 25,000 shares of the Company's common stock at a purchase price of $.50
per share. Mr. Hendeles seeks specific performance and unspecified other
damages. The Company is vigorously defending this action and believes it has
meritorious defenses and that the ultimate resolution will not have a material
adverse effect on the Company's financial condition or cash flows.

12. MAJOR CUSTOMERS AND SUBCONTRACTOR

Most of the Company's customers are in the hospitality industry with a few
of them accounting for a substantial portion of annual revenues. As a result,
the trade accounts receivable and costs in excess of billings subject the
Company to concentration of credit risk. As of December 31, 1996, two customers
accounted for approximately 80% and 65% of accounts receivable and costs in
excess of billings, respectively. As of June 30, 1997, one customer accounted
for 18% of accounts receivable and five customers accounted for 87% of costs in
excess of billings.

The two largest customers of the Company for the year ended December 31,
1996 accounted for 49% and 31% of net revenues, and the four largest customers
for the year ended December 31, 1995 accounted for 23%, 19%, 18%, and 14% of net
revenues. For the period ended June 30, 1997 the Company had two customers which
accounted for 18% and 10% of revenues, and for the period ended June 30, 1996,
the two largest customers accounted for 48%, and 39% of revenues.

During 1996, 35% of the Company's cost of revenues were costs charged by one
subcontractor.

F-18
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997)

13. STOCKHOLDERS' EQUITY

(A) PREFERRED STOCK

In connection with the acquisition of LPC, the Company designated and issued
200,000 shares of LPC Preferred. Holders of the LPC Preferred have the right at
such holders' option, at any one time during the period from January 11, 1998 to
January 10, 2000, to convert all of such holder's shares of LPC Preferred into
(i) such whole number of shares of Common Stock equal to the product of 25,
which represents the stated value of the LPC Preferred, and the number of such
holder's 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 holder's intention to exercise the conversion option is given (the
"Conversion Rate"); 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 five or greater than 25 or (ii) such whole number of shares of
Common Stock, par value $1.00 per share, of Parker Reorder (the "Parker Common
Stock") equal to 9.80% of the outstanding shares of Parker Common Stock as
calculated immediately after such conversion.

The Company is restricted from paying or declaring any dividends on any
capital stock other than the LPC Preferred issued in connection with the
acquisition of LPC, so long as such LPC Preferred is outstanding.

So long as any of the LPC Preferred remains outstanding, the holders of the
LPC Preferred shall be entitled to receive out of the cumulative net profit, as
defined, of Parker Reorder a cash payment (the "participating dividends") equal
to 20% of the cumulative net profit, as defined, from January 1, 1997 of Parker
Reorder, less all participating dividends previously paid to the holders of the
LPC Preferred .

(B) COMMON STOCK

On January 26, 1994, the Company completed its initial public offering
("IPO") of 1,437,500 shares of Common Stock at a price of $3.00 per share less
an underwriter's discount of 10%. This included an additional 187,500 shares
purchased by the underwriter on an over-allotment option grant, which was
exercised simultaneously with the completion of the offering. Proceeds of the
IPO, net of commissions of $431,250 and other related expenses of $486,958 (of
which $265,016 was recorded in 1993 as deferred costs), were $3,394,292.

The underwriter received warrants to purchase 125,000 shares exercisable at
$3.60 per share for a period of four years commencing one year from the
effective date of the IPO. Additionally, the Company reimbursed the underwriter
on a non-accountable basis for its expense in the amount of 3% of the gross
proceeds of the IPO. During 1996, 12,500 warrants were exercised. For the six
months ended June 30, 1997 an additional 70,834 warrants were exercised.

On February 28, 1996, the Company engaged a financial advisor until December
31, 1997. As compensation for such engagement, the Company granted the financial
advisor a five-year option to purchase 500,000 shares of Common Stock at an
exercise price of $2.00 per share and agreed to pay a retainer of $10,000 per
month for at least one year. The fair value of the options of $44,000 has been
recorded as prepaid consulting and is being amortized over a two year period,
the term of the agreement, ending February 28, 1998. A director of the Company
is also a managing director of the financial advisor. On January 15, 1997, the
financial advisor exercised 200,000 options resulting in $400,000 of additional
capital to the Company.

In March 1996 in accordance with the divestiture agreement between the
Company and its former President, the Company repurchased 500,000 shares of
Common Stock for $250,000 with a market value of $437,500.

F-19
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997)

13. STOCKHOLDERS' EQUITY (CONTINUED)
In April 1996, the Company consummated a private placement of the 500,000
shares of Common Stock for aggregate gross proceeds of $500,000.

In September 1996, the Company issued 75,000 shares to two former
consultants to the discontinued lighting business in settlement of the unexpired
portion of their service agreements.

In October 1996, in accordance with the divestiture agreement between the
Company and its former President, the Company repurchased an additional 500,000
shares of Common Stock for $715,000.

During the six months ended June 30, 1997, options and warrants to purchase
339,084 shares were exercised, including options to purchase 200,000 shares by
the financial advisor, for total proceeds to the Company of $761,782.

14. STOCK OPTION PLANS

At December 31, 1996, the Company has three stock option plans, which are
described below. As permitted by Statement of Financial Accounting Standards No.
123, the Company applies APB Opinion 25, "Accounting for Stock Issued to
Employees," and related interpretations in accounting for the plans. Under APB
Opinion 25, 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 the 1994 Non-Statutory
Stock Option Plan (the "1994 Plan") for purposes of issuance of up to 100,000
shares of the Company's Common Stock to certain key employees or consultants.
With respect thereto, options to purchase 85,000 shares at $1.275 per share were
granted and 50,000 of such options remain outstanding, and are currently
exercisable and expire on October 3, 1999. The 1994 Plan was retired, and there
are no options available for grant. Additionally, during 1995 the Company
granted 75,000 non Plan options at $1.275 per share of which 50,000 options
remain outstanding and are currently exercisable. The remaining non plan options
expire on March 15, 2000.

On September 26, 1996, the Company's Board of Directors adopted the 1996
Stock Option Plan (the "Plan") for issuance of up to 1,700,000 shares of the
Company's Common Stock for the purpose of providing incentive to the officers
and employees of the Company who are primarily responsible for the management
and growth of the Company. Each option granted pursuant to the Plan shall be
designated at the time of grant as either an "incentive stock option" or as a
"non-qualified stock option." The Company granted 1,191,500 options under the
Plan since adoption at an average grant price of $3.62 per share, of which
20,750 options have been exercised to date, 8,250 options have been cancelled
and are available for grant and 577,500 are currently exercisable. 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. The
Company has available 516,750 shares for grant under the Plan.

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 issuance of up to 250,000 shares of the
Company's Common Stock for the purpose of securing for the Company and its
shareholders the benefits arising from stock ownership by its outside directors.
Subject to shareholder approval, each outside director who becomes an outside
director after March 1, 1996 shall receive an initial 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

F-20
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997)

14. STOCK OPTION PLANS (CONTINUED)

Common Stock. Options granted under the Outside Directors' Plan shall be
exercisable in three equal installments beginning on the first anniversary of
the grant date. The Company granted options to purchase 100,000 shares under the
Outside Directors' Plan at an average grant price of $4.10, none of which are
currently exercisable. The Company has available 150,000 shares for grant under
the Outside Directors Plan.

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

Under the accounting provisions of SFAS No. 123, the Company's net income
and earnings per share would have been reduced to the pro forma amounts
indicated below.

<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Net income (loss)(in thousands)
As reported................................................................................. $ 1,843 $ (1,116)
Pro forma................................................................................... $ 1,583 $ (1,182)
Primary earnings (loss) per share
As reported................................................................................. $ 0.26 $ (0.20)
Pro forma................................................................................... $ 0.22 $ (0.21)
</TABLE>

The following table contains information on stock options for the three year
period ended December 31, 1996, and the six months ended June 30, 1997.

<TABLE>
<CAPTION>
WEIGHTED
EXERCISE AVERAGE
OPTION PRICE RANGE EXERCISE
SHARES PER SHARE PRICE
---------- ----------------- -------------
<S> <C> <C> <C>
Outstanding, January 1, 1994....................................... -- -- --
Granted............................................................ 85,000 $1.275 $ 1.275
Exercised.......................................................... -- -- --
Canceled........................................................... -- -- --
---------- ----------------- ------
Outstanding, December 31, 1994..................................... 85,000 $1.275 $ 1.275
Granted............................................................ 75,000 $1.275 $ 1.275
Exercised.......................................................... -- -- --
Canceled........................................................... -- -- --
---------- ----------------- ------
Outstanding, December 31, 1995..................................... 160,000 $1.275 $ 1.275
Granted............................................................ 1,491,500 $2.00 to $2.75 $ 2.50
Exercised.......................................................... (12,500) $1.275 to $2.75 $ 1.57
Canceled........................................................... -- -- --
---------- ----------------- ------
Outstanding, December 31, 1996..................................... 1,639,000 $1.275 to $2.75 $ 2.38
Granted (unaudited)................................................ 300,000 $6.125 to $6.75 $ 6.67
Exercised (unaudited).............................................. (268,250) $1.275 to $2.75 $ 1.92
Canceled (unaudited)............................................... (8,250) $2.75 $ 2.75
---------- ----------------- ------
Outstanding, June 30, 1997 (unaudited)............................. 1,662,500 $1.275 to $6.75 $ 3.23
---------- ----------------- ------
---------- ----------------- ------
Exercisable at year-end 1994....................................... 85,000 $1.275 $ 1.275
1995............................................................. 120,000 $1.275 $ 1.275
1996............................................................. 1,120,000 $2.00 to $2.75 $ 2.21
</TABLE>

F-21
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997)

14. STOCK OPTION PLANS (CONTINUED)

<TABLE>
<CAPTION>
1996 OUTSIDE
1996 STOCK DIRECTORS
1994 PLAN OPTION PLAN PLAN
--------------- ------------ -------------
<S> <C> <C> <C>
Available for future grants at December 31, 1996........................ -- 768,500 190,000
</TABLE>

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

The following table summarizes information about stock options outstanding
at December 31, 1996.

<TABLE>
<S> <C>
Range of exercise prices....................................................... $1.275-$2.75
Outstanding options
Number outstanding at December 31, 1996...................................... 1,639,000
Weighted average remaining contractual life (years).......................... 4.30
Weighted average exercise price.............................................. $ 2.38
Exercisable options
Number outstanding at December 31, 1996...................................... 1,120,000
Weighted average exercise price.............................................. $ 2.21
</TABLE>

15. JOINT VENTURE (UNAUDITED)

In May 1997, the Company entered into an Agreement to Joint Venture (the "JV
Agreement") with Apollo Real Estate Advisors II, L.P. ("Apollo") and Watermark.
The purpose of the joint venture is 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 joint venture.
In addition, the Company will receive a 5% equity interest in each joint venture
entity in exchange for its contribution of 5% of the total required equity. The
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 the
JV Agreement, the Company issued to Apollo a seven year warrant to purchase
750,000 shares of Common Stock at $8.115 per share. The warrant expires in 2004.
The warrant is currently exercisable as to 250,000 shares and becomes
exercisable as to the remaining 500,000 shares in increments of 100,000 shares
for every $7,500,000 of incremental revenue realized by the Company from the
joint venture. Pursuant to the JV Agreement, Watermark will receive a management
fee of 1.5% of all costs incurred by the joint venture on each project, other
than soft costs such as interest, taxes, etc.

At date of execution, the fair value of the warrant to purchase 750,000
shares of Common Stock (which is currently exercisable as to 250,000 shares) was
approximately $1,287,500, which will be recorded as an intangible asset and
amortized over a period of five years, the minimum term of the JV Agreement,
beginning in the second quarter of 1997. The remaining warrant to purchase
500,000 shares will not be valued until vesting occurs, at which time the fair
value of the vested warrants will be charged to operations.

16. SUBSEQUENT EVENT (UNAUDITED)

The Company is pursuing a public offering of its securities. The Company has
filed a registration statement on Form SB-2 for the offering of 2,500,000 shares
of Common Stock.

F-22
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Leonard Parker Company and Affiliates

We have audited the accompanying combined balance sheet of Leonard Parker
Company and Affiliates as of December 31, 1996, and the related combined
statements of operations, stockholders' equity and cash flows for each of the
two years in the period ended December 31, 1996 and 1995. These combined
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits. We did not audit the financial statements of Leonard Parker
Company (Africa) (Propriety) Limited, a foreign affiliate, which statements
reflect total assets of $597,378 as of December 31, 1996, and total revenues of
$1,039,762 and $311,062 for the two years ended December 31, 1996 and 1995,
respectively. Those statements were audited by other auditors whose unqualified
auditor's report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for such affiliate, is based solely on the
report of the other auditors.

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

In our opinion, based on our audits and the report of other auditors, the
combined financial statements referred to above present fairly, in all material
respects, the financial position of Leonard Parker Company and Affiliates as of
December 31, 1996, and the results of their operations and their cash flows for
each of the two years in the period ended December 31, 1996 and 1995 in
conformity with generally accepted accounting principles.

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

Miami, Florida

February 27, 1997

F-23
<PAGE>

REPORT OF THE INDEPENDENT CHARTERED ACCOUNTANTS TO THE MEMBERS

To The Members
Leonard Parker Company and Affiliates

We have audited the accompanying balance sheet of Leonard Parker Company
(Africa) (Proprietary) Limited as of December 31, 1996 and the related
statements of operations, stockholders' equity and cash flow for the year ended
December 31, 1996 set out on pages two to eight. These financial statements are
the responsibility of the company's directors. Our responsibility is to report
on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally
accepted in South Africa which do not differ in any significant respect from
standards generally accepted in the United States. These standards require that
we plan and perform the audit to obtain reasonable assurance that, in all
material respects, fair presentation is achieved in the financial statements. An
audit includes an evaluation of the appropriateness of the accounting policies,
an examination, on a test basis, of evidence supporting the amounts and
disclosures included in the financial statements, an assessment of the
reasonableness of significant estimates and a consideration of the
appropriateness of the overall financial statement presentation. We consider
that our audit procedures were appropriate in the circumstances to express our
opinion presented below.

In our opinion these financial statements fairly present the financial
position of the company at December 31, 1996, and the results of its operations
and cash flow information for the year then ended December 31, 1996 in
conformity with generally accepted accounting practice and in the manner
required by the Companies Act.

<TABLE>
<S> <C>
/s/ FOTINAKIS PHITIDIS
------------------------------------
Fotinakis Phitidis
Chartered Accountants (SA)

Johannesburg
March 14, 1997
</TABLE>

F-24
<PAGE>

REPORT OF THE INDEPENDENT CHARTERED ACCOUNTANTS TO THE MEMBERS

To the Members
Leonard Parker Company and Affiliates

We have audited the accompanying balance sheet of Leonard Parker Company
(Africa) (Proprietary) Limited as of December 31, 1995 and the related
statements of operations, stockholders' equity and cash flow for the year ended
December 31, 1995 set out on pages two to eight. These financial statements are
the responsibility of the company's directors. Our responsibility is to report
on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally
accepted in South Africa which do not differ in any significant respect from
standards generally accepted in the United States. These standards require that
we plan and perform the audit to obtain reasonable assurance that, in all
material respects, fair presentation is achieved in the financial statements. An
audit includes an evaluation of the appropriateness of the accounting policies,
an examination on a test basis, of evidence supporting the amount and
disclosures included in the financial statements, an assessment of the
reasonableness of significant estimates and a consideration of the
appropriateness of the overall financial statement presentation. We consider
that our audit procedures were appropriate in the circumstances to express our
opinion presented below.

In our opinion these financial statements fairly present the financial
position of the company at December 31, 1995, and the results of its operations
and cash flow information for the year ended December 31, 1995 in conformity
with generally accepted accounting practices and in the manner required by the
Companies Act.

<TABLE>
<S> <C>
/s/ FOTINAKIS PHITIDIS
------------------------------------
Fotinakis Phitidis
Chartered Accountants (SA)

Johannesburg
October 3,
1996
</TABLE>

F-25
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES
COMBINED BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
ASSETS
CURRENT
Cash.............................................................................................. $ 781,221
Restricted cash................................................................................... 188,779
Accounts receivable--(net of allowance of $336,000)............................................... 6,128,047
Prepaid expenses and other current assets......................................................... 660,561
------------
Total current assets................................................................................ 7,758,608
Property and equipment, net......................................................................... 986,475
------------
$8,745,083
------------
------------

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable.................................................................................. $4,619,765
Accrued expenses.................................................................................. 326,031
Current maturities of long-term debt and capital lease obligations................................ 65,198
Customer deposits................................................................................. 3,277,038
------------
TOTAL CURRENT LIABILITIES........................................................................... 8,288,032
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, LESS CURRENT MATURITIES............................... 108,861
------------
Total liabilities................................................................................... 8,396,893
------------
COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENTS

STOCKHOLDERS' EQUITY
Common stock...................................................................................... 72,382
Retained earnings................................................................................. 285,954
Cumulative foreign currency translation adjustment................................................ (10,146)
------------
Total stockholders' equity.......................................................................... 348,190
------------
$8,745,083
------------
------------
</TABLE>

See accompanying summary of accounting policies and notes to combined financial
statements.

F-26
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1995 1996
------------- -------------
<S> <C> <C>
NET SALES.......................................................................... $ 43,862,635 $ 56,890,803
COST OF SALES...................................................................... 40,785,288 51,881,883
------------- -------------
GROSS PROFIT....................................................................... 3,077,347 5,008,920
Service fees....................................................................... 1,280,844 1,809,809
Operating expenses................................................................. (4,462,775) (8,516,311)
------------- -------------
LOSS FROM OPERATIONS............................................................... (104,584) (1,697,582)
Interest income.................................................................... 145,425 259,251
Interest expense................................................................... (24,601) (18,572)
Other expense...................................................................... (25,752) (49,694)
------------- -------------
Loss before income taxes........................................................... (9,512) (1,506,597)
Provision for foreign taxes........................................................ 2,281 45,571
------------- -------------
NET LOSS........................................................................... $ (11,793) $ (1,552,168)
------------- -------------
------------- -------------
Pro forma
Loss before income taxes......................................................... $ (9,512) $ (1,506,597)
Benefit for income taxes......................................................... 2,281 439,205
------------- -------------
Pro forma net loss................................................................. $ (7,231) $ (1,067,392)
------------- -------------
------------- -------------
</TABLE>

See accompanying summary of accounting policies and notes to combined financial
statements.

F-27
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
CUMULATIVE
FOREIGN TOTAL
CURRENCY STOCK-
COMMON RETAINED TRANSLATION HOLDERS'
STOCK EARNINGS ADJUSTMENT EQUITY
----------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Balance at January 1, 1995............................ $ 71,782 $ 3,211,536 $ 9,880 $ 3,293,198
Capital contribution.................................. 600 -- -- 600
Distributions......................................... -- (480,000) -- (480,000)
Net loss.............................................. -- (11,793) -- (11,793)
Foreign currency translation adjustment............... -- -- (10,804) (10,804)
----------- ------------- --------------- -------------
Balance at December 31, 1995.......................... 72,382 2,719,743 (924) 2,791,201
Distributions......................................... -- (881,621) -- (881,621)
Net loss.............................................. -- (1,552,168) -- (1,552,168)
Foreign currency translation adjustment............... -- -- (9,222) (9,222)
----------- ------------- --------------- -------------
Balance at December 31, 1996.......................... $ 72,382 $ 285,954 $ (10,146) $ 348,190
----------- ------------- --------------- -------------
----------- ------------- --------------- -------------
</TABLE>

See accompanying summary of accounting policies and notes to combined
financial statements.

F-28
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1995 1996
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss............................................................................ $ (11,793) $ (1,552,168)
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Loss on disposal of assets........................................................ 25,752 49,694
Depreciation and amortization..................................................... 167,825 185,355
Property distribution treated as compensation..................................... -- 528,663
Changes in assets and liabilities:
Decrease (increase) in accounts receivable...................................... 8,144,218 (3,241,743)
Decrease (increase) in prepaid expenses and other current assets................ 943,560 (248,158)
(Decrease) increase in accounts payable......................................... (4,804,282) 3,197,341
(Decrease) increase in accrued expenses......................................... (2,981) 268,917
Decrease in customer deposits and advances...................................... (1,177,588) (478,787)
------------- -------------
Net cash provided by (used in) operating activities................................. 3,284,711 (1,290,886)
------------- -------------

INVESTING ACTIVITIES:
Net purchases of property and equipment........................................... (303,520) (633,427)
Increase in cash surrender value of officers' life insurance...................... (59,505) (65,412)
Purchases of securities........................................................... (200,000) (202,046)
------------- -------------
Net cash used in investing activities............................................... (563,025) (900,885)
------------- -------------

FINANCING ACTIVITIES:
Proceeds from issuance of common stock............................................ 600 --
Restricted deposits............................................................... -- (188,779)
Distributions to shareholders..................................................... (480,000) (31,621)
Payments of long-term debt and capital lease obligation........................... (67,491) (125,409)
Proceeds of long-term debt and capital lease obligation........................... 48,276 16,061
------------- -------------
Net cash used in financing activities............................................... (498,615) (329,748)
------------- -------------
</TABLE>

See accompanying summary of accounting policies and notes to combined financial
statements.

F-29
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1995 1996
------------ -------------
<S> <C> <C>
Net (decrease) increase in cash...................................................... $ 2,223,071 $ (2,521,519)
Effect of exchange rate changes in cash.............................................. (10,804) (9,222)
Cash, at beginning of year........................................................... 1,099,695 3,311,962
------------ -------------
Cash, at end of year................................................................. $ 3,311,962 $ 781,221
------------ -------------
------------ -------------
SUPPLEMENTAL INFORMATION:
Cash Paid During the Year For:
Interest........................................................................... $ 11,820 $ 16,202
Income Taxes....................................................................... $ 10,538 $ 38,009
Capital lease obligation incurred.................................................. $ -- $ 74,665
Non-cash distribution of assets to stockholders.................................... $ -- $ 1,439,568
</TABLE>

See accompanying summary of accounting policies and notes to combined financial
statements.

F-30
<PAGE>
LEONARD PARKER COMPANY AND AFFILIATES
SUMMARY OF ACCOUNTING POLICIES

<TABLE>
<S> <C>
Description of Business........... The Leonard Parker Company (the Company) was organized
in 1976 under the laws of the State of Florida,
operating as a purchasing agent for hotel furnishings.
In recent years, the Company has expanded its operations
overseas and is currently doing business in South Africa
and Asia in addition to its domestic operations. (See
Note 6).

Affiliates and Basis of To facilitate the operations in two of these countries,
Presentation.................... two new companies were formed and began doing business
during 1994. Leonard Parker Company Pacific/Asia PTE.
Ltd. operates in Singapore and Leonard Parker Company
(Africa) (Proprietary) Limited operates in South Africa.
During 1995, Parker Reorder Corporation was formed in
the United States. All three companies are collectively
known as the "Affiliates."

The foreign affiliates' financial statements have been
prepared in accordance with U.S. generally accepted
accounting principles translated to United States
dollars (U.S. $) using a methodology consistent with
Statement of Financial Accounting Standards No. 52,
Foreign Currency Translation. Assets and liabilities are
translated to U.S. $ at the rate prevailing on the
balance sheet dates and the income statements have been
translated from the functional currency to U.S. $ using
an average exchange rate for the applicable period.
Results of this translation process are accumulated as a
separate component of stockholders' equity. Exchange
losses (approximately $19,000 and $13,000 for the years
ended December 31, 1996 and 1995, respectively) are
included in operating expense in the accompanying
combined statements of operations.

Principles of Combination......... The accompanying combined financial statements include
the accounts of the Company and the Affiliates, all of
which are under common control. Intercompany
transactions and balances have been eliminated in
combination.

Accounts Receivable............... The Companies provide an allowance for losses on
receivables based on a review of the current status of
existing receivables and historical collection
experience, and consider the current provision to be
adequate.

Property and Equipment............ Property and equipment are recorded at cost and leased
equipment under capital leases is recorded at the
present value of future lease payments. Depreciation and
amortization are provided by the accelerated and
straight-line methods over the estimated useful economic
lives of the assets, ranging from five to eight years.

Restricted Cash................... Restricted cash consists of deposits to collateralize
obligations under certain contracts.
</TABLE>

F-31
<PAGE>
<TABLE>
<S> <C>
Revenue Recognition............... Revenues are recognized at the time of shipment of the
respective merchandise or at the time the service is
provided depending on the contract.

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

Income Taxes...................... The Company, with the consent of its shareholders,
elected to be taxed as an S corporation. Shareholders of
an S corporation are taxed on their proportionate share
of the Company's taxable income. Accordingly, no
provision for federal or state income tax is required.

Two of the affiliates are subject to taxation in South
Africa and Singapore respectively, and accordingly
calculate and report tax charges in accordance with
applicable statutory regulations.

The proforma benefit for income taxes represents the
estimated income taxes that would have been reported had
the Company not been an S corporation and had been
subject to federal and state income taxes.

Approximately $1,300,000 of the Company's domestic loss
can be carried back and used to offset previous taxable
income. Realization of the remaining loss carryforward
is not considered more likely than not. Accordingly, a
valuation allowance has been established for the carry
forward portion.

Use of Estimates.................. The preparation of the financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions
that effect the reported amounts of assets and
liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from
estimated amounts.

Financial Instruments............. The carrying amounts of financial instruments including
cash, accounts receivable and accounts payable
approximated fair value due to the relatively short
maturity.

Long-Lived Assets................. In March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of", which
requires that certain long-lived assets be reviewed for
impairment whenever events or changes in circumstances
indicate that the carrying amount may not be
recoverable. This standard is effective for fiscal years
that begin after December 15, 1995. The Company's
adoption of this pronouncement on January 1, 1996 did
not have a material impact on the Company's combined
financial statements.
</TABLE>

F-32
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

1. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
Office equipment.................................................................................... $ 592,445
Furniture and fixtures.............................................................................. 466,858
Computer software................................................................................... 369,577
Leasehold improvements.............................................................................. 203,022
Telephone equipment under capital leases............................................................ 74,665
Vehicles............................................................................................ 39,329
------------
1,745,896
Less: accumulated depreciation and amortization..................................................... 759,421
------------
$ 986,475
------------
------------
</TABLE>

2. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

Long-term debt and capital lease obligations consist of:

<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
Prime + 3/4% (9 1/4% at December 31, 1996) note payable with a financial institution, principal and
interest due monthly, matures June 1998, secured by all corporate assets.......................... $ 83,333

19 1/2% note payable, principal and interest due monthly, matures August 2001, collateralized by
property and equipment............................................................................ 19,989

9 3/4% capital lease obligation, payable in monthly installments of $1,578, expiring in August 2001,
collateralized by telephone equipment............................................................. 70,737
------------
174,059
Less: current maturities............................................................................ 65,198
------------
$ 108,861
------------
------------
</TABLE>

At December 31, 1996, maturities of notes payable and capital lease
obligations are as follows:

<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
Years Ended December 31,
1997................................................................................................ $ 65,198
1998................................................................................................ 50,620
1999................................................................................................ 19,438
2000................................................................................................ 21,886
2001................................................................................................ 16,917
----------
$ 174,059
----------
----------
</TABLE>

F-33
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

2. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
The Company has available a revolving line of credit with a bank for up to
$2 million collateralized by accounts receivable. The line of credit has a rate
of prime + 1/2% and is payable monthly. This agreement is renewed annually. The
agreement matures in July 1997. As of December 31, 1996, no amounts are
outstanding under this agreement.

3. COMMITMENTS AND CONTINGENCIES

The Company and Affiliates rent office space under non-cancelable operating
leases expiring in 2001. Future minimum payments under all lease agreements are
as follows:

<TABLE>
<CAPTION>
AMOUNT
------------
<S> <C>
Years Ended December 31,
1997.............................................................................................. $ 607,000
1998.............................................................................................. 626,000
1999.............................................................................................. 625,000
2000.............................................................................................. 572,000
2001.............................................................................................. 476,000
------------
$ 2,906,000
------------
------------
</TABLE>

Rent expense totalled approximately $463,000 and $537,000 in 1995 and 1996,
respectively.

The Company, acting as agent for two of its customers, maintains two
repurchase agreement accounts in the name of the Company as agent for the
customers. These accounts are used to fund the purchases of merchandise. The
balance in these accounts as of December 31, 1996 totaled approximately $22,000.

The Company is currently a defendant of a lawsuit for copyright
infringement. The claimant is seeking an award of $100,000 per infringement and
there are two alleged copyrights in the suit. Management and the Company's
counsel believe that the Company has defenses in this matter and that it will
not have a material adverse effect on these financial statements.

The Florida Department of Revenue has assessed the Company with a sales tax
deficiency in the amount of approximately $237,000, including penalties and
interest. The Company is appealing the assessment. Management has provided for
approximately $209,000 in connection with this matter. However, the Company
intends to vigorously defend this matter.

F-34
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

4. STOCKHOLDERS' EQUITY

Common stock consists of the following at December 31, 1996 and 1995:

<TABLE>
<CAPTION>
SHARES AMOUNT
--------- ---------
<S> <C> <C>
Leonard Parker Company, Inc.,
1,000 shares authorized,
$10 par value............................................................................. 100 $ 1,000
Leonard Parker Company (Africa)
(Proprietary) Limited,
1,000 shares authorized, R$1 par value.................................................... 6 2
Leonard Parker Company Pacific/Asia
PTE Ltd., 100,000 shares authorized,
S$1 par value............................................................................. 100,000 70,780
Parker Reorder Corporation,
10,000 shares authorized, $1 par value.................................................... 600 600
--------- ---------
100,706 $ 72,382
--------- ---------
--------- ---------
</TABLE>

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

R$ -- South African Rand

S$ -- Singapore Dollar

During December 1996, the stockholders received a distribution of assets
with a book value of approximately $1,440,000, of which approximately $850,000
was recorded as a dividend and approximately $590,000 was recorded as
compensation and other expenses. Furthermore, additional bonuses of
approximately $1,446,000 were paid in 1996.

5. SIGNIFICANT CUSTOMERS

For 1995 and 1996, one customer accounted for 13% and 11% of combined
revenues, respectively.

F-35
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

6. FOREIGN OPERATIONS

Information about the Company's operations in different geographic areas for
the years ended December 31, 1995 and 1996 is as follows:

<TABLE>
<CAPTION>
UNITED SOUTH
STATES SINGAPORE AFRICA COMBINED
------------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Year ended December 31, 1995:
Sales................................................... $ 43,554,034 $ 132,398 $ 176,203 $ 43,862,635
Operating income (loss)................................. $ (83,223) $ (25,866) $ 4,505 $ (104,584)
Income (loss) before income taxes....................... $ 10,546 $ (25,952) $ 5,894 $ (9,512)
Identifiable assets..................................... $ 8,024,892 $ 104,111 $ 106,304 $ 8,235,307

Year ended December 31, 1996:
Sales................................................... $ 55,993,092 $ 103,838 $ 793,873 $ 56,890,803
Operating income (loss)................................. $ (1,638,614) $ (167,927) $ 108,959 $ (1,697,582)
Income (loss) before income taxes....................... $ (1,472,437) $ (161,974) $ 127,714 $ (1,506,697)
Identifiable assets..................................... $ 8,094,877 $ 52,850 $ 597,356 $ 8,745,083
</TABLE>

7. SUBSEQUENT EVENTS

On January 9, 1997, the Leonard Parker Company and its affiliates
collectively entered into an agreement to merge with a New York corporation.

At the time of closing, the stockholders of the Company converted the common
stock of the Company into an aggregate of (a) 1,250,000 shares of common stock
of the New York corporation; and (b) 200,000 shares of preferred stock, stated
value of $25 per share of the New York corporation.

F-36
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON IS AUTHORIZED IN CONNECTION WITH ANY
OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT
CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY
ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE ANY IMPLICATION THAT INFORMATION CONTAINED HEREIN IS CORRECT
AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 9
Disclosure Regarding Forward-Looking
Statements................................... 13
Use of Proceeds................................ 14
Price Range of Common Stock.................... 15
Dividend Policy................................ 15
Capitalization................................. 16
Selected Historical and Pro Forma Financial
Data......................................... 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 19
Business....................................... 23
Management..................................... 32
Certain Transactions........................... 38
Principal Shareholders......................... 39
Description of Capital Stock................... 41
Shares Eligible for Future Sale................ 43
Underwriting................................... 44
Legal Matters.................................. 45
Experts........................................ 45
Additional Information......................... 45
Change in Accountants.......................... 46
Pro Forma Financial Statements................. P-1
Financial Statements........................... F-1
</TABLE>

2,500,000 SHARES

[LOGO]

HOSPITALITY WORLDWIDE
SERVICES, INC.

COMMON STOCK

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

PROSPECTUS
---------------------

Jefferies & Company, Inc.

, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 722 of the New York Business Corporation Law ("NYBCL") permits, in
general, a New York corporation to indemnify any person made, or threatened to
be made, a party to an action or proceeding by reason of the fact that he or she
was a director or officer of the corporation, or served another entity in any
capacity at the request of the corporation, against any judgment, fines, amounts
paid in settlement and reasonable expenses, including attorney's fees actually
and necessarily incurred as a result of such action or proceeding, or any appeal
therein, if such person acted in good faith, for a purpose he or she reasonably
believed to be in, or, in the case of service for another entity, not opposed
to, to the best interests of the corporation and, in criminal actions or
proceedings, in addition had no reasonable cause to believe that his or her
conduct was unlawful. Section 723 of the NYBCL permits the corporation to pay in
advance of a final disposition of such action or proceeding the expenses
incurred in defending such action or proceeding upon receipt of an undertaking
by or on behalf of the director or officer to repay such amount as, and to the
extent, required by statute. Section 721 of the NYBCL provides that
indemnification and advancement of expense provisions contained in the NYBCL
shall not be deemed exclusive of any rights to which a director or officer
seeking indemnification or advancement of expenses may be entitled, provided no
indemnification may be made on behalf of any director or officer if a judgment
or other final adjudication adverse to the director or officer establishes that
his or her acts were committed in bad faith or were the result of active or
deliberate dishonesty and were material to the cause of action so adjudicated,
or that he or she personally gained in fact a financial profit or other
advantage to which he or she was not legally entitled.

Article Three of the Company's Certificate of Incorporation, as amended,
provides, in general, that the personal liability of the directors of the
Company is eliminated to the fullest extent permitted by the provisions of
paragraph (b) of Section 402 of the NYBCL, as the same may be amended and
supplemented. Section 402(b) of the NYBCL provides that the certificate of
incorporation of a New York corporation may set forth a provision eliminating or
limiting the personal liability of directors to the corporation or its
stockholders for damages for any breach of duty in such capacity, provided that
no such provision shall eliminate or limit (1) the liability of any director if
a judgment or other final adjudication adverse to him establishes that his acts
or omissions were in bad faith or involved intentional misconduct or a knowing
violation of law or that he personally gained in fact a financial profit or
other advantage to which he is not legally entitled or (2) the liability of any
director for any act or omission prior to the adoption of a provision authorized
by Section 402(b) of the NYBCL.

Article XII of the Company's By-Laws, as amended, provides that the Company
shall, to the fullest extent now or hereafter permitted by the New York Business
Corporation Law, indemnify any director or officer who is or was made, or
threatened to be made, a party to an action or proceeding, whether civil or
criminal, whether involving any actual or alleged breach of duty, neglect or
error, any accountability, or any actual or alleged misstatement, misleading
statement or other act or omission and whether brought or threatened in any
court or administrative or legislative body or agency, including an action by or
in the right of the Company to procure a judgment in its favor and an action by
or in the right of any other corporation of any type or kind, domestic or
foreign, or any partnership, joint venture, trust, employee benefit plan or
other enterprise, which any director or officer of the Company is serving or
served in any capacity at the request of the Company, or is serving or served
such other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise in any capacity, against judgments, fines, amounts paid in
settlement, and costs, charges and expenses, including attorneys' fees, or any
appeal therein; provided, however, that no indemnification shall be provided to
any such director or officer if a judgment or other final adjudication adverse
to the director or officer establishes that (i) his acts were committed in bad
faith or were the result of active and deliberate dishonesty and, in either
case, were material to the

II-1
<PAGE>
cause of action so adjudicated, or (ii) he personally gained in fact a financial
profit or other advantage to which he was not legally entitled.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses (other than underwriting
discounts and commissions) which will be paid by the Registrant in connection
with the issuance and distribution of the securities being registered. With the
exception of the registration fee and NASD filing fee, all amounts shown are
estimates.

<TABLE>
<S> <C>
Registration fee............................................................... $ 7,432.53
NASD filing fee................................................................ 2,952.73
Nasdaq listing expenses........................................................ 30,000.00
Blue Sky fees and expenses (including legal and filing fees)................... 15,000.00
Printing expenses.............................................................. 125,000.00
Transfer agent and registrar fees and expenses................................. 5,000.00
Legal fees and expenses (other than Blue Sky).................................. 150,000.00
Accounting fees and expenses................................................... 110,000.00
Miscellaneous expenses......................................................... 4,614.74
----------
TOTAL...................................................................... $450,000.00
----------
----------
</TABLE>

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

(a) The following securities were issued by the Registrant since its
inception and prior to the date of filing of this Registration Statement. There
were no underwriting discounts or commissions paid in connection with the
issuance of any of these securities, except as otherwise noted:

<TABLE>
<CAPTION>
DESCRIPTION OF NUMBER OF SHARES
DATE SECURITIES ISSUED SOLD/ISSUED OFFERING PRICE PURCHASER
- ------------------------ ------------------------ ----------------- ---------------- ------------------------
<S> <C> <C> <C> <C>
April 1996.............. Private Placement of 75,000 $1.00 Louis K. Adler
Common Stock 75,000 $1.00 George Asch
100,000 $1.00 James Pinto
83,333 $1.00 John C. Shaw
83,333 $1.00 Richard A. Bartlett
83,334 $1.00 Jerry Seslowe

September 1996.......... Common Stock issued to 37,500 N/A Mark Schindler
former consultants 37,500 N/A Eugene Stricker

January 1997............ Private Placement of 300,000 N/A Leonard Parker
Common Stock in 190,000 N/A Douglas Parker
connection with the 190,000 N/A Bradley Parker
acquisition of LPC 190,000 N/A Philip Parker
190,000 N/A Mitchell Parker
190,000 N/A Gregg Parker

January 1997............ Private Placement of 40,000 N/A Douglas Parker
Redeemable Convertible 40,000 N/A Bradley Parker
Preferred Stock in 40,000 N/A Philip Parker
connection with the 40,000 N/A Mitchell Parker
acquisition of LPC 40,000 N/A Gregg Parker
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
DESCRIPTION OF NUMBER OF SHARES
DATE SECURITIES ISSUED SOLD/ISSUED OFFERING PRICE PURCHASER
- ------------------------ ------------------------ ----------------- ---------------- ------------------------
<S> <C> <C> <C> <C>
January 1997............ Common Stock issued upon 200,000 $2.00 Resource Holdings
exercise of options

July 1997............... Warrant to purchase 750,000 $8.115 Apollo Real Estate
Common Stock (exercise price Advisors II, LP
per share)
</TABLE>

The sales set forth above are claimed to be exempt from registration with
the Securities and Exchange Commission pursuant to Section 4(2) of the
Securities Act of 1933, as amended, as transactions by an issuer not involving
any public offering. All certificates representing the shares issued by the
Registrant referred to herein and currently outstanding have been properly
legended.

ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- -------------- --------------------------------------------------------------------------------------------------
<C> <S>

+1.1 Form of Underwriting Agreement between the Registrant and Jefferies & Company, Inc.

*3.1 Certificate of Incorporation of the Registrant, as amended.

+3.2 Amended and Restated By-Laws of the Registrant.

**4.1 Specimen Certificate of the Registrant's Common Stock.

+4.2 Form of Underwriter's Warrant Agreement.

+5.1 Opinion of Olshan Grundman Frome & Rosenzweig LLP as to the legality of the securities.

***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), Hospitality
Restoration and Builders, Inc., the Registrant 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 Registrant, Hospitality Restoration and Builders, Inc., Watermark Investments Limited
(Bahamas), Watermark Investments Limited (Delaware), AGF Interior Services Co., Tova Schwartz,
Alan G. Friedberg and Guillermo Montero.

***10.3 Memorandum Agreement dated April 12, 1996, by and between the Registrant and Watermark.

***10.4 Bill of Sale and Assumption Agreement dated February 26, 1996, by and between the Registrant and
Tova Schwartz.

***10.5 Consulting Agreement dated February 28, 1996, by and between the Registrant and Resource Holdings
Associates, L.P.

****10.6 1996 Stock Option Plan.

****10.7 Form of Stock Option Agreement for the 1996 Stock Option Plan.

****10.8 1996 Outside Directors' Stock Option Plan.

****10.9 Form of Stock Option Agreement for the Outside Directors' Stock Option Plan.
</TABLE>

II-3
<PAGE>

*****10.11 Agreement and Plan of Merger, dated as of January 9, 1997, by and among The Leonard Parker
Company, a Florida corporation, Leonard Parker, Douglas Parker, Bradley Parker, Philip Parker,
Mitchell Parker and Gregg Parker and LPC Acquisition Corp. a Florida corporation.

***10.12 Employment Agreement dated April 1, 1996, by and between the Registrant and Howard G. Anders.

+10.13 Employment Agreement, dated as of January 9, 1997, by and among The Leonard Parker Company, the
Registrant and Leonard Parker.

+10.14 Employment Agreement, dated as of January 9, 1997, by and among The Leonard Parker Company, the
Registrant and Douglas Parker.

+10.15 Employment Agreement, dated as of January 9, 1997, by and among The Leonard Parker Company, the
Registrant and Bradley Parker.

+10.16 Employment Agreement, dated as of January 9, 1997, by and among Parker Reorder Corporation, a
Florida corporation ("Parker Reorder"), the Registrant and Philip Parker.

+10.17 Employment Agreement, dated as of January 9, 1997, by and among Parker Reorder, the Registrant and
Mitchell Parker.

+10.18 Registration Rights Agreement, dated as of January 9, 1997, by and among the Registrant, Leonard
Parker, Douglas Parker, Bradley Parker, Philip Parker, Gregg Parker and Mitchell Parker.

+10.19 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.

+10.20 Warrant dated May 12, 1997 issued to Apollo Real Estate Advisors II, L.P.

10.21 Financial Advisory Agreement dated April 10, 1997, by and between the Registrant and Resource
Holdings Associates.

*****16.1 Letter from Arthur Andersen LLP dated March 19, 1996.

+21.1 Subsidiaries of the Registrant.

+23.1 Consent of Olshan Grundman Frome & Rosenzweig LLP (included in Exhibit 5.1).

23.2 Consent of BDO Seidman, LLP, certified public accountants.

23.3 Consent of Fotinakis Phitidis, Chartered Accountants (SA).

+24.1 Powers of Attorney (included on signature page to this Registration Statement).
</TABLE>

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

+ Previously filed.

* Incorporated by reference to the Registrant's Current Report on Form 8-K
dated January 24, 1997.

** Incorporated by reference to the Registrant's Registration Statement on
Form SB-2 (Registration No. 33- 7094-NY).

*** Incorporated by reference to the Registrant's Form 10-KSB for the fiscal
year ended December 31, 1995.

II-4
<PAGE>
**** Incorporated by reference to the Registrant's Registration Statement on
Form S-8 filed on February 12, 1997 (Registration No. 333-21689).

***** Incorporated by reference to the Registrant's Current Report on Form 8-K/A
dated March 25, 1996.

ITEM 28. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that it will: (1) for
determining any liability under the Securities Act, treat the information
omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
small business issuer under Rule 424(b)(1), or (4), or 497(h) under the
Securities Act as part of this registration statement as of the time the
Commission declared it effective. (2) for determining any liability under
Securities Act, treat each post-effective amendment that contains a form of
prospectus as a new registration statement for the securities offered in the
registration statement, and that offering of the securities at that time as the
initial BONA FIDE offering of those securities.

II-5
<PAGE>
SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorizes this Amendment No. 1
to the Registration Statement to be signed on its behalf by the undersigned, the
City of New York, State of New York, on the 22nd day of August, 1997.

HOSPITALITY WORLDWIDE SERVICES, INC.
(Registrant)

By: *
------------------------------------------
Robert A. Berman
CHIEF EXECUTIVE OFFICER AND DIRECTOR

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the date indicated.

SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
President, Chief Executive
* Officer (principal
- ------------------------------ executive officer) and August 22, 1997
Robert A. Berman Director
* Chairman of the Board
- ------------------------------ Officer August 22, 1997
Leonard F. Parker

/s/ HOWARD G. ANDERS Executive Vice President,
- ------------------------------ Chief Financial Officer August 22, 1997
Howard G. Anders (principal financial
officer and principal
accounting officer) and
Secretary
* President--LPC and Director
- ------------------------------ August 22, 1997
Douglas Parker

* Director
- ------------------------------ August 22, 1997
Louis K. Adler

* Director
- ------------------------------ August 22, 1997
George Asch

* Director
- ------------------------------ August 22, 1997
Richard A. Bartlett

* Director
- ------------------------------ August 22, 1997
Scott Kaniewski

*By: /s/ HOWARD G. ANDERS
-------------------------
Howard G. Anders
ATTORNEY-IN-FACT

II-6
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

HOSPITALITY WORLDWIDE SERVICES, INC.
(EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- -------------- --------------------------------------------------------------------------------------------------
<C> <S>

+1.1 Form of Underwriting Agreement between the Registrant and Jefferies & Company, Inc.

*3.1 Certificate of Incorporation of the Registrant, as amended.

+3.2 Amended and Restated By-Laws of the Registrant.

**4.1 Specimen Certificate of the Registrant's Common Stock.

+4.2 Form of Underwriter's Warrant Agreement.

+5.1 Opinion of Olshan Grundman Frome & Rosenzweig LLP as to the legality of the securities.

***10.3 Memorandum Agreement dated April 12, 1996, by and between the Registrant and Watermark.

***10.4 Bill of Sale and Assumption Agreement dated February 26, 1996, by and between the Registrant and
Tova Schwartz.

***10.5 Consulting Agreement dated February 28, 1996, by and between the Registrant and Resource Holdings
Associates, L.P.

****10.6 1996 Stock Option Plan.

****10.7 Form of Stock Option Agreement for the 1996 Stock Option Plan.

****10.8 1996 Outside Directors' Stock Option Plan.

****10.9 Form of Stock Option Agreement for the Outside Directors' Stock Option Plan.

****10.10 Form of Option Granted to Officers.

***10.12 Employment Agreement dated April 1, 1996, by and between the Registrant and Howard G. Anders.

+10.13 Employment Agreement, dated as of January 9, 1997, by and among The Leonard Parker Company, the
Registrant and Leonard Parker.

+10.14 Employment Agreement, dated as of January 9, 1997, by and among The Leonard Parker Company, the
Registrant and Douglas Parker.

+10.15 Employment Agreement, dated as of January 9, 1997, by and among The Leonard Parker Company, the
Registrant and Bradley Parker.

+10.16 Employment Agreement, dated as of January 9, 1997, by and among Parker Reorder Corporation, a
Florida corporation ("Parker Reorder"), the Registrant and Philip Parker.

+10.17 Employment Agreement, dated as of January 9, 1997, by and among Parker Reorder, the Registrant and
Mitchell Parker.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- -------------- --------------------------------------------------------------------------------------------------
<C> <S>
+10.18 Registration Rights Agreement, dated as of January 9, 1997, by and among the Registrant, Leonard
Parker, Douglas Parker, Bradley Parker, Philip Parker, Gregg Parker and Mitchell Parker.

+10.19 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.

+10.20 Warrant dated May 12, 1997 issued to Apollo Real Estate Advisors II, L.P.

10.21 Financial Advisory Agreement dated April 10, 1997, by and between the Registrant and Resource
Holdings Associates.

*****16.1 Letter from Arthur Andersen LLP dated March 19, 1996.

+21.1 Subsidiaries of the Registrant.

+23.1 Consent of Olshan Grundman Frome & Rosenzweig LLP (included in Exhibit 5.1).

23.2 Consent of BDO Seidman, LLP, certified public accountants.

23.3 Consent of Fotinakis Phitidis, Chartered Accountants (SA).

+24.1 Powers of Attorney (included on signature page to this Registration Statement).
</TABLE>

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

+ Previously filed.

* Incorporated by reference to the Registrant's Current Report on Form 8-K
dated January 24, 1997.

** Incorporated by reference to the Registrant's Registration Statement on
Form SB-2 (Registration No. 33-7094- NY).

*** Incorporated by reference to the Registrant's Form 10-KSB for the fiscal
year ended December 31, 1995.

**** Incorporated by reference to the Registrant's Registration Statement on
Form S-8 filed on February 12, 1997 (Registration No. 333-21689).

***** Incorporated by reference to the Registrant's Current Report on Form 8-K/A
dated March 25, 1996.

<PAGE>
Exhibit 10.21

RESOURCE HOLDINGS LTD.

April 10, 1997

PERSONAL AND CONFIDENTIAL
- -------------------------

Mr. Robert Berman
President and CEO
Hospitality Worldwide Services, Inc.
450 Park Avenue
Suite 2603
New York, NY 10022

Dear Robert:

This letter, when executed by you, will confirm the agreement of Hospitality
Worldwide Services, Inc. ("HWS") to engage Resource Holdings Associates ("RHA")
as a financial advisor, upon the terms contained herein.

The work to be performed shall include (i) assistance negotiating the Agreement
with Apollo Real Estate Advisors, (ii) financial advice and strategic planning
with respect to the business of HWS, and (iii) general assistance in structuring
or negotiating merger or acquisition opportunities brought to the attention of
HWS by parties other than RHA.

In consideration for the aforementioned services, RHA shall receive:

Sixteen and one-half percent (16.67%) of the 60% HWS share of the "Promote"
as earned by HWS from the new venture to be formed by and among HWS,
Apollo, and Watermark (10% of the total "Promote" as outlined in the
attached Term Sheet).

RHA shall receive additional fees in amounts to be mutually agreed upon for (i)
finding and/or initiating merger and acquisition opportunities and (ii)
structuring, negotiating or reviewing the documentation of mergers, joint
ventures and other HWS investments, when the parties agree that the time and
effort expended by RHA has been beyond the intended scope of this retention
agreement.

Subject to prior authorization, RHA shall be reimbursed for travel and other
out-of-pocket expenses.

RHA will undertake its duties on a good-faith basis.

RHA and its partners, officers and employees shall be indemnified and held
harmless from all claims, actions, suits, proceedings

<PAGE>

April 10, 1997
Page -2-

and liabilities of any kind arising out of the services provided by RHA under
the agreement and for all amounts paid in approved settlements and all costs and
expenses (including attorneys fees and court costs) arising from any such
claims, actions, suits, or proceedings of any kind unless and to the extent that
any conduct of its partners, officers or employees has been determined in any
such proceeding to have been willful misconduct in the performance of the
services.

The engagement of RHA shall continue for as long as HWS receives a "Promote"
from the HWS/Apollo venture, except that the provisions of the indemnity and any
payment obligations related to any unpaid balances due RHA, at the time of
termination, shall indefinitely survive such termination.

The engagement of RHA will be by written agreement executed and delivered in the
State of New York and will be governed by the laws of such State.

Please sign this letter at the place indicated below to confirm your agreement
to engage RHA as a financial advisor to HWS.

We are looking forward to working with you.

Yours very truly,

/s/ Jerry M. Seslowe
- ------------------------------
Jerry M. Seslowe

AGREED AND ACCEPTED:

/s/ Robert Berman
- ------------------------------

DATE: April 15, 1997
------------------------

<PAGE>
EXHIBIT 23.2

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Hospitality Worldwide Services, Inc.
New York, New York

We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement on Form SB-2 of our reports dated March 21, 1997,
relating to the consolidated financial statements of Hospitality Worldwide
Services, Inc. (formerly Light Savers U.S.A., Inc.) and subsidiary, and February
27, 1997, relating to the combined financial statements of Leonard Parker
Company and affiliates, which are contained in that Prospectus.

We also consent to the reference to us under the caption "Experts" in the
Prospectus.

/S/ BDO Seidman
BDO Seidman, LLP
New York, New York

August 25, 1997

<PAGE>

Exhibit 23.3

[LETTERHEAD OF FOTINAKIS PHITIDIS]

CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS

HOSPITALITY WORLDWIDE SERVICES, INC.
New York, NEW YORK

We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our reports dated March 14, 1997 and October 3, 1996
relating to the financial statements of Leonard Parker Company (Africa)
(Proprietary) Limited, which are not included in that Prospectus.

We also consent to the reference to us under the caption "Experts" in the
Prospectus.

/s/ FOTINAKIS PHITIDIS
- --------------------------
FOTINAKIS PHITIDIS
Chartered Accountants (SA)

JOHANNESBURG
August 25, 1997