SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1997 Commission File Number 0-23382
TRANS GLOBAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 62-1544008
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1393 Veterans Memorial Highway, Hauppauge, NY 11788
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 724-0006
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months, (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Number of shares of common stock outstanding as of November 10, 1997: 3,819,721
<PAGE>
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
INDEX
Part 1 - Financial Information:
Item 1. Financial Statements: Page No.
---------
Balance Sheets as of September 30, 1997 and December 31, 1996 3-4
Consolidated Statements of Operations-
Three and Nine Months Ended September 30, 1997
and September 30, 1996 5
Consolidated Statements of Cash Flows-
Nine Months Ended September 30, 1997 and September 30, 1996. 6-7
Consolidated Statement of Stockholders' Equity-
Nine Months Ended September 31, 1997 8-9
Notes to Consolidated Financial Statements 10-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-13
Part 11 Other Information
Item 6. Exhibits 11 Calculation of Earnings per Share 16-18
11.1 Computation of earnings per share for three
and nine months ended September 30, 1997
27.0 Financial Data Schedule
<PAGE> 3
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED
Balance Sheets
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and Cash Equivalents $ 370,106 $ 56,231
Accounts Receivable- Net 6,294,905 5,190,056
Loans Receivable-Officer 47,500 42,500
Prepaid Expenses and Other Current Assets 73,445 230,074
--------- ---------
Total Current Assets 6,785,956 5,518,861
--------- ---------
Property and Equipment-Net 203,382 74,581
--------- ---------
Other Assets:
Due from Affiliates 1,745,405 1,508,502
Customer Lists 2,669,809 2,838,535
Goodwill, Net 787,690 824,125
Covenant Not-to-Compete, Net -0- 60,381
Deferred Offering Costs 318,240 151,307
Other Assets 43,182 22,958
Investment in Preferred Stock of Affiliate 2,100,730 2,100,730
--------- ---------
Total Other Assets 7,665,056 7,506,538
--------- ---------
Total Assets $ 14,654,394 $ 13,099,980
========== ==========
See Notes to Financial Statements
</TABLE>
<PAGE> 4
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED
Balance Sheets
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, 1997 December 31,1996
(Unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable and Accrued Expenses $ 373,009 $ 283,356
Accrued Payroll and Related Taxes and
Expenses 2,345,594 1,784,061
Accrued Payroll Tax Penalties -0- 77,000
Loans Payable, Asset-Based Lender 3,977,981 3,690,875
Note Payable- Other 138,230 138,230
Current Portion of Obligation -
Voluntary Settlement Agreement 183,333 300,000
-------- ---------
Total Current Liabilities 7,018,147 6,273,522
--------- ---------
Other Liabilities:
Voluntary Settlement Agreement Obligation 16,667 -0-
--------- --------
Stockholders' Equity:
Common Stock, $.01 Par Value, 50,000,000
Shares Authorized, Issued and
Outstanding [3,819,721- September 30,1997
3,816,888- December 31, 1996] 38,197 38,168
Capital in Excess of Par Value 12,887,851 12,879,380
Deferred Consulting Fees (197,819) (303,473)
Accumulated Deficit (5,108,649) (5,787,617)
---------- ----------
Total Stockholders' Equity 7,619,580 6,826,458
--------- ---------
Total Liabilities and
Stockholders Equity $14,654,394 $ 13,099,980
========== ==========
See notes to consolidated financial statements
</TABLE>
<PAGE> 5
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION> Three Months Ended Nine Months Ended
September 30, September 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues $ 18,799,319 $ 16,911,396 $ 57,689,536 $45,379,718
Cost of Services Provided 17,037,957 15,387,465 52,907,042 41,562,317
---------- ---------- ---------- ----------
Gross Profit 1,761,362 1,523,931 4,782,494 3,817,401
Selling, General
and Administrative 974,883 1,122,721 3,260,211 3,405,625
Related Party
Administrative Expenses 30,000 30,000 90,000 90,000
Amortization of Intangibles 68,387 110,623 265,608 341,400
--------- --------- --------- ---------
Total Operating Expenses 1,073,270 1,263,344 3,615,819 3,837,025
Operating Profit (Loss) 688,092 260,587 1,166,675 ( 19,624)
Other Income (Expenses):
Interest Expense (201,009) (183,151) (583,874) (508,688)
Other Income 33,635 21,655 96,167 58,576
Voluntary Settlement
Agreement -0- (300,000) -0- (300,000)
--------- --------- --------- ---------
Total Other Expenses- Net (167,374) (461,496) (487,707) (750,112)
Net Income/(Loss) $ 520,718 $ (200,909) $ 678,968 $ (769,736)
Net Income/(Loss) Per
Share of Common Stock $ .14 $ (.11) $ .18 $ (.54)
--------- --------- --------- ---------
Weighted Average Number of
Shares of Common Stock 3,819,721 1,906,124 3,819,525 1,420,871
========= ========= ========= =========
See notes to consolidated financial statements
</TABLE>
<PAGE> 6
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
1997 1996
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income/(Loss) from Continuing Operations $ 678,968 $ (769,736)
Adjustments to Reconcile Net Income/(Loss)
to Net Cash Provided by Operating
Activities:
Depreciation and Amortization 296,901 360,452
Charges from Option Exercise 105,654 111,383
Common stock isued for services rendered -0- 9,506
Change in Assets and Liabilities:
(Increase) Decrease in Assets:
Receivables (1,104,849) (1,536,613)
Loans Receivable - Officer ( 5,000) -0-
Prepaid Expenses and Other Current Assets 156,629 (100,273)
Increase (Decrease) in Liabilities:
Accounts Payable and Accrued Expenses 89,653 98,282
Accrued Payroll Taxes and Related Expenses 561,533 1,393,081
Accrued Payroll Tax Penalties (77,000) (625,000)
Voluntary settlement aggrement (100,000) 300,000
--------- ---------
Total Adjustments ( 76,479) 10,818
--------- ---------
Net Cash Provided by (used in) Operating Activities 602,489 ( 758,918)
Cash Flows from Investing Activities:
Capital Expenditures ( 160,160) ( 45,517)
Advances to Affiliates ( 236,903) ( 215,357)
Other ( 20,224) 859
------- --------
Net Cash Used in Investing Activities $ (417,287) $ ( 260,015)
Cash Flows from Financing Activities:
Net Payments from/(to) Asset-Based Lender $ 287,106 $( 113,840)
Repayment of Subordinated Debt -0- ( 700,000)
Advances from Affiliates -0- ( 176,832)
Issuance of Common Stock -0- 2,375,000
Exercise of Stock Options 8,500 -0-
Deferred Offering Costs ( 166,933) -0-
Repayment of Note Payable -0- ( 60,513)
---------- ---------
Net Cash Used in Financing Activities 128,673 1,323,815
</TABLE>
<PAGE> 7
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited) [Continued]
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
1997 1996
<S> <C> <C>
Net Increase in Cash and Cash Equivalents $ 313,875 $ 304,882
Cash and Cash Equivalents at Beginning of Period 56,231 210,597
---------- --------
Cash and Cash Equivalents at End of Period $ 370,106 $ 515,479
========== =========
Supplemental Disclosures of Cash Flow Information:
Cash paid for:
Interest 583,874 508,688
Income Taxes -0- -0-
See notes to consolidated financial statements
</TABLE>
<PAGE> 8
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
Consolidated Statement of Stockholders Equity
For the Nine Months Ended September 30, 1997
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Amounts
-------- --------
<S> <C> <C>
Common Stock $.01 Par Value Authorized
50,000,000 Shares
Balance December 31, 1996 22,901,331 $ 229,014
Exercise of Stock Options 17,000 170
One-for-Six Reverse Split (19,098,610) ( 190,987)
------------ ---------
Balance - September 30, 1997 3,819,721 38,197
=========== =========
Capital in Excess of Par Value
Balance- December 31, 1996 $ 12,688,534
Exercise of Stock Options 8,330
One-for-Six Reverse Split 190,987
----------
Balance September 30, 1997 $ 12,887,851
===========
Accumulated (deficit)
Balance December 31, 1996 $ (5,787,617)
Net Income 678,968
------------
Balance- September 30, 1997 $ (5,108,649)
Deferred Charges
Balance December 31, 1996 $ (303,473)
Amortization of deferred consulting costs 105,654
-------
Balance- September 30, 1997 $ (197,819)
========
Total Stockholders' Equity
Balance December 31, 1996 $ 6,826,458
Exercise of Stock Options 8,500
Amortization of deferred consulting cost 105,654
Net Income 678,968
---------
Balance- September 30, 1997 $ 7,619,580
==========
</TABLE>
<PAGE> 9
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
- -----------------------------------------------------------------------------
(1) Basis of Presentation
Trans Global Services,Inc, a Delaware corporation, operates through two
subsidiaries, Avionics Research Holdings, Inc. ["Holdings"], formerly known as
ARC Acquisition Group, and Resource Management International, Inc. ["RMI"].
The Company is engaged in providing technical temporary staffing services
throughout the United States. The principal stockholder of the Company is
SIS Capital Corp. ["SISC"], a wholly-owned subsidiary of Consolidated
Technology Group Ltd. ["Consolidated"], a publicly held company.
In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position of the Company
as of September 30, 1997 and December 31, 1996 and the results of its
operations for the three and nine months ended September 30, 1997 and 1996.
These consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto together with
management's discussion and analysis of financial condition and results of
operations contained in the Company's Form 10-K for the year ending December
31, 1996. The results of operations for the three and nine months ended
September 30,1997 are not necessarily indicative of the results for the entire
year or any future interim period.
(2) Summary of Significant Accounting Policies
The accounting policies followed by the Company are set forth in Note 2 to
the Company's consolidated financial statements as filed in its December 31,
1996 Form 10K.
(3) Earnings Per Share
Earnings per share reflects the weighted average number of shares outstanding
for each period. The modified treasury stock method is used. On June 20, 1997,
the Company effected a one-for-six reverse split in its Common Stock. All share
and per share information in these financial statements gives effect,
retroactively, to such split. Common stock equivalents, consisting of warrants
and options are included even though it may produce an anti-dilutive result.
[4] Accounts Receivable and Loan Payable - Asset Based Lender
Receivables are shown net of an allowance for doubtful accounts of $62,500 at
September 30, 1997 and December 31, 1996. The Company finances a majority of its
receivables from an asset-based lender under agreements entered into in February
1995 and subsequently amended. The agreements have a maximum availabilty of
funds of $5,500,000. Funds can be advanced in an amount equal to 85% of the
total face amount of outstanding and unpaid receivables, with the asset-based
lender having the right to reserve 15% of the outstanding and unpaid receivables
financed. The interest rate is equal to the base lending rate of an agreed upon
bank, which was 8.50% at September 30, 1997 and 8.25% at December 31, 1996 plus
2% and a fee of .3% of the receivables financed. The asset-based lender has a
security interest in all accounts receivables, contract rights, personal
property, fixtures and inventory of the Company. At September 30, 1997 and
December 31, 1996 the total amount advanced by the asset- based lender was
$3,977,981 and $3,690,875 respectively. The weighted average interest rate on
this short-term borrowing outstanding as of September 30, 1997 and December 31,
1996 was approximately 10.44% and 10.25% respectively.
<PAGE> 10
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
- -----------------------------------------------------------------------------
[4] Accounts Receivable and Loan Payable - Asset Based Lender [continued]
The Company has been advised that, as a result of a change in its general
lending policies, the Company's asset-based lender is reducing the Company's
maximum borrowing availability to $3 million effective December 31, 1997. In
lieu of the .3% fee on the receivables financed, the asset-based lender, will
charge a flat administrative fee of $10,500 per calendar month, provided that
the outstanding receivables do not aggregate more than $10,000,000. An
additional fee will be charged on a prorata basis if such outstanding
receivables exceed $10,000,000 at any time during the month. This fee would be
$954.55 for each $1,000.000 of receivables over $ 10,000,000. Although the
Company is seeking alternative financing sources, no assurance can be given that
the Company can or will be able to obtain an alternate financing source, the
failure of which could have a material adverse effect upon the Company.
(5) Commitments and Contingencies
Voluntary Settlement Agreement Obligation - As of September 30, 1997 the
Company has a $200,000 obligation remaining with regard to an agreement it
entered into with the United States Department of Labor and the independent
trustee of the Job Shop Technical Services, Inc. 401(k) Plan (collectively
"DOL"). The Company agreed to pay the DOL an aggregate of $300,000 in 18
monthly installments of $16,667 of which 12 payments remain.
<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Three Months Ended September 30, 1997 and 1996
The Company had revenues for the three months ended September 30, 1997, of $18.8
million reflecting an 11% increase in revenues over the $16.9 million during the
same period in 1996. This increase is a reflection of the success of the
Company's continuing sales and placement efforts. The gross margin for the
quarter ended September 30, 1997 was 9.4% compared to 9.0% for the quarter ended
September 30, 1996. This increase was a result of the Company having completed
paying the FICA for a larger percentage of its workforce in the current period
than it had in 1996.
Selling, general and administrative expenses exclusive of related party
expenses, were $975,000, or 5.2%, of revenues, for the three months ended
September 30, 1997 and $1,123,000, or 6.6%, of revenues for the three months
ended September 30, 1996. This decrease can be attributed to the continuing
effort the Company is placing on controlling costs and the conclusion of payroll
tax penalties which the Company has had to incur in previous periods.
Revenue from technical temporary staffing services is based on the hourly cost
of payroll plus a percentage. The success of the Company's business will be
dependent upon its ability to generate sufficient revenues to enable it to cover
its fixed costs and other operating expenses, and to reduce its variable costs,
principally its interest. Under its agreements with its clients, the Company is
required to pay its employees and pay all applicable Federal and state
withholding and payroll taxes prior to receipt of payment from the clients.
Furthermore, the Company's payments from its clients are based upon the hourly
rate paid to the employee, without regard to when payroll taxes are payable with
respect to the employee. Accordingly, the Company's cost of services are greater
during the first part of the year, when Federal Social Security taxes and state
unemployment and related taxes, which are based on a specific level of
compensation, are due. Thus, until the Company satisfies its payroll tax
obligations, it will have a lower gross margin than after such obligations are
satisfied. Furthermore, to the extent that the Company experiences turnover in
employees, its gross margin will be adversely affected. For example, in 1997,
Social Security taxes are payable on the first $65,400 of compensation. Once
that level of compensation is paid with respect to any employee, there is no
further requirement for the Company to pay Social Security tax for such
employee. Since most of the Company's employees receive compensation in excess
of that amount, the Company's costs with respect to any employee are
significantly higher during the period when it is required to pay Social
Security taxes than it is after such taxes have been paid.
<PAGE> 12
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued
During the three months ended September 30,1997 interest expense was $201,000,
a 10% increase from the $183,000 interest costs during the same period in 1996.
This was a result of increased borrowings due to greater revenues and
slightly higher interest rates.
Amortization of intangibles decreased by approximately $42,000 for the three
months ended September 30, 1997 compared to the three months ended September 30,
1996, due to the completion of amortization of the covenant not to compete,
resulting from the December 1993 acquisition of Holdings.
As a result of the foregoing, the Company earned $520,718, or $.14 per share,
for the three months ended September 30, 1997,as compared to a net loss of $200,
909, or $.11 per share loss for the three months ended September 30, 1996. This
increase can be attributed to a combination of the increase in sales and a
stabilization of selling, general and administrative expenses.
Nine Months Ended September 30, 1997 and 1996
The Company had revenues of $57.7 million for the nine months ended September
30, 1997 reflecting a 27% increase from the revenues of $45.4 million for the
same period a year earlier. This increase is attributable to the Company's
increased sales and placement efforts and success in replacing the loss of a
contract on January 1, 1996 with one of the Company's larger clients. For the
nine months ended September 30, 1997, the Company had a gross margin of 8.3% as
compared to 8.4% for the nine months ended September 30, 1996. The slight
decrease in margin reflects the additional payroll taxes incurred because of the
Company's continued increase in staffing.
The Company's selling, general and administrative expenses decreased by $145,000
for the nine months ended September 30, 1997 as compared to the nine months
ended September 30, 1996. This decrease can be attributed to a reduction of
$400,000 in payroll tax penalties in 1997 from 1996. Other selling,
general and administrative expenses increased modestly despite a significant
increase in revenue.
During the nine months ended September 30, 1997, interest expense
was $584,000, a 14.7% increase from $509,000 in the 1996 period as a result of
increased borrowings and slightly higher interest rates.
The Company had net income of approximately $679,000, or $.18 per share for the
nine months ended September 30, 1997 as compared to a net loss of $770,000, or
$.54 per share loss, for the nine months ended September 30, 1996. The Company
believes that with the continued increased revenues and stabilized selling,
general and administrative costs it has improved its operations. The Company is
continuing to search for ways to reduce its financing costs by seeking to enter
into agreements with other financing sources which would offer lower financing
costs. However, no assurance can be given that the Company can or will operate
profitably in the future.
<PAGE> 13
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations [Continued]
Liquidity and Financial Position
As of September 30, 1997, the Company had a working capital deficit of $232,000.
This working capital deficiency reflects (a) $4.0 million due to the Company's
asset-based lender, (b) payroll taxes and related expenses of $2.3 million, (c)
accounts payable and accrued expenses of $400,000, and (d) $300,000 with respect
to other current obligations. The payroll and related taxes and expenses relates
primarily to compensation to the Company's contract employees and related taxes,
which were paid during the first week of October 1997.
The Company finances its payroll obligations by borrowing from an asset-based
lender at an interest rate of 2% in excess of prime. The Company also pays a fee
of .3% of the face amount of the invoices financed. The borrowings are secured
by a security interest in all of the Company's assets. Pursuant to an April 1997
amendment to the agreement, on December 31, 1997 the borrowing availability will
be reduced to $3.0 million and the Company will pay a fixed monthly fee of
$10,500 to the asset-based lender. The fee will be subject to increases to the
extent that receivables in any month exceed $10 million. The interest rate of 2%
in excess of prime will not be affected by the amendment. Such reduction in
borrowing availability, if implemented, would have a material adverse effect
upon the Company. At September 30, 1997, such borrowings from the asset-based
lender were approximately $4.0 million. The interest rates (exclusive of the
fee) payable by the Company at September 30,1997 and 1996 were 10.5% and 10.25%,
respectively.
As of September 30, 1997 the Company has a $200,000 obligation remaining with
regard to an agreement it entered into with the United States Department of
Labor and the independent trustee of the Job Shop Technical Services, Inc.
401(k) Plan (collectively "DOL"). The Company agreed to pay the DOL an aggregate
of $300,000 in 18 monthly installments of $16,667 of which 12 payments remain.
In May 1991, prior to the acquisition of Avionics Research Corp. ("Avionics")
by the Company, the Government Printing Office wrote Avionics asking for
reimbursement of approximately $296,000 for allegedly unauthorized work on
two programs. Although the Company believes that these claims are without
merit and intends to contest these claims vigorously if reasserted, it
believes that the ultimate disposition of this matter will not have a material
adverse affect on the Company's consolidated financial position.
<PAGE>
Part II - Other Information
Item 6. Exhibits
(a) List of Exhibits:
11.1 Computation of earnings per share for three and nine months
ended September 30, 1997.
27.0 Financial Data Schedule
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Trans Global Services, Inc.
(Registrant)
-------------------------
Date: November 13,1997 Lewis S. Schiller
(Chief Executive Officer)
------------------------
Date: November 13,1997 Glen R. Charles
(Chief Financial Officer)
<PAGE>
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
EXHIBIT 11.1- Computation of Earnings per Share
<TABLE>
<S> <C> <C> <C> <C>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, 1997 September 30, 1996 September 30, 1997 September 30, 1996
Primary /Fully Diluted Primary/Fully Diluted
EPS EPS EPS EPS
Net income/
(loss)
historical $ 520,718 520,718 (200,909) 678,968 678,968 (769,736)
Adjustments
per modified
treasury stock
method 115,943 112,660 318,151 328,405
Adjusted net
income,
primary 633,378 997,119
Adjusted net
income,
fully diluted 663,378 1,007,373
Income/(Loss) per Share:
Income/(Loss)
per share
- - Note 1 $ 0.15 (0.11) $ 0.24 (0.54)
Income/(Loss)
per share
- - assuming
full dilution Note 2 0.15 (0.06) $ 0.24 (0.25)
Note 1:
Computed by dividing the net earnings by the weighted average number of common
shares outstanding (3,819,721 and 1,906,124 and 3,819,525 and 1,420,871) for
the three and nine months ended September 30, 1997 and 1996, respectively,
adjusting the number of shares and the net earnings for the 1997 periods by
items (i) to (v) below using the modified treasury stock method of
calculating earnings per share.
(i) Assumes that 222,500 1995 Stock Incentive Plan stock options
outstanding at September 30, 1997 were exercised at the beginning of the
period and that the proceeds were used to purchase treasury stock at
the average market price of the Company's common stock for the period
as quoted on The Nasdaq Smallcap Market ("Nasdaq"), retire debt and
to invest the balance.
(ii) Assumes common stock purchase warrants to purchase an aggregate of
124,933 common shares were exercised at the beginning of the period
and that the proceeds were used to purchase treasury stock at the
average market price of the Company's common stock for the period as
quoted on Nasdaq, retire debt and to invest the balance.
</TABLE>
<PAGE>
TRANS GLOBAL SERVICES, INC. and SUBSIDIARIES
EXHIBIT 11.1 Computation of Earnings per Share [Continued]
(iii) Assumes common stock purchase warrants to purchase an aggregate of
816,666 shares were exercised at the beginning of the period and
that the proceeds were used to purchase treasury stock at the average
market price of the Company's common stock for the period as quoted
on Nasdaq, retire debt and to invest the balance.
(vi) Assumes that stock options to purchase 3,000 shares were exercised
at the beginning of the period and that the proceeds were used to
purchase treasury stock at the average market price of the Company's
common stock for the period as quoted on Nasdaq, retire debt and
to invest the balance.
(v) Assumes that 18,991 1993 Stock Incentive Plan stock options
outstanding at September 30, 1997 were exercised at the beginning of the
period and that the proceeds were used to purchase treasury stock at
the average market price of the Company's common stock for the period
as quoted on Nasdaq, retire debt and to invest the balance.
The proceeds received from the above transactions would then be used to
purchase treasury stock up to 20%, retire debt and the remaining balance
invested. See Schedules 1 and 3.
Note 2:
Computed by dividing net earnings by the weighted average number of common
shares (3,819,721 and 1,906,124 and 3,819,525 and 1,420,871) for the three and
nine months ended September 30,1997 and 1996, respectively, adjusting the
number of shares and the net earnings for the 1997 period by items (i) to (v)
below using the modified treasury stock method of calculating earnings per
share.
(i) Assumes that 222,500 1995 Stock Incentive Plan stock options
outstanding at September 30, 1997 were exercised at the beginning of the
period and that all proceeds were used to purchase treasury stock at
the period end market price of the Company's common stock as quoted
on Nasdaq, retire debt and to invest the balance.
(ii) Assumes common stock purchase warrants to purchase and aggregate of
124,933 common shares were exercised at the beginning of the period
and that the proceeds were used to purchase treasury stock at the
period end market price of the Company's common stock as quoted
on Nasdaq, retire debt and to invest the balance.
(iii) Assumes common stock purchase warrants to purchase an aggregate of
816,666 shares were exercised at the beginning of the period and
that the proceeds were used to purchase treasury stock at the period
end market price of the Company's common stock as quoted on Nasdaq,
retire debt and to invest the balance.
(iv) Assumes that stock options to purchase 3,000 shares were exercised
at the beginning of the period and that the proceeds were used to
purchase treasury stock at the period end market price of the
Company's common stock as quoted on Nasdaq, retire debt and to
invest the balance.
<PAGE>
TRANS GLOBAL SERVICES, INC. and SUBSIDIARIES
EXHIBIT 11.1 -Computation of Earnings per Share [Continued]
(v) Assumes that 18,991 1993 Stock Incentive Plan stock options out-
standing at September 30, 1997 were exercised at the beginning of the
period and that the proceeds were used to purchase treasury stock
at the period end market price of the Company's common stock as
quoted on Nasdaq, retire debt and to invest the balance.
The proceeds received from the above transactions would then be used to
purchase treasury stock up to 20%, retire debt and the remaining balance
invested. See Schedules 2 and 4.
NOTE: THIS CALCULATION IS SUBMITTED IN ACCORDANCE WITH THE SECURITIES ACT
OF 1934 RELEASE NO. 9083, ALTHOUGH IT IS CONTRARY TO PARA.40 OF APB
15 BECAUSE IT MAY PRODUCE AN ANTI-DILUTIVE RESULT.
<PAGE>
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
EXHIBIT 11.1 - Computation of Earnings per Share
<TABLE>
<CAPTION>
SCHEDULE 1.
PRIMARY EARNINGS PER SHARE - 3 Months
September 30, 1997
<S> <C>
Weighted average # of shares o/s 09/30/97 3,819,721
Total issuable warrants and options
Options pursuant to 1995 Stock Incentive Plan-employees 218,333
Options pursuant to 1995 Stock Incentive Plan- directors 2/96 2,500
Options pursuant to 1995 Stock Incentive Plan- directors 2/97 1,666
Series A and other Warrants 124,933
Series D Warrants 816,666
SMACS Options 3,000
Options pursuant to 1993 option plan 18,991
---------
Total issuable 1,186,089
Total that can be reacquired:
(3,819,721 x20%) 763,944
Issued not reacquired 422,145
Proceeds Price # of Shares
Options pursuant to 1995 Stock Incentive Plan
-employees $ 6.750 218,333 1,473,748
Options pursuant to 1995 Stock Incentive Plan
-directors 2/96 $ 6.186 2,500 15,465
Options pursuant to 1995 Stock Incentive Plan
-directors 2/97 $11.250 1,666 18,743
Series A and other Warrants Various 124,933 3,607,134
Series D Warrants $ 7.500 816,666 6,124,995
SMACS Options $ 3.000 3,000 9,000
Options pursuant to 1993 option plan $13.500 18,991 256,379
---------
11,505,463
</TABLE>
<PAGE>
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
EXHIBIT 11.1 - Computation of Earnings Per Share [Continued]
SCHEDULE 1- Primary Earnings Per Share - September 30,1997 [Continued]
<TABLE>
<S> <C> <C>
Limitation
763,944 shares x 3.125(avg FMV) 2,387,325
- ------- ----- ---------
Total proceeds remaining to retire debt 9,118,138
Outstanding short - term debt 7,018,147
- -A/P and accrued expenses (373,009)
- -Accrued payroll and related taxes and expenses (2,345,594)
- - Note payable (Gov't Printing Office) (138,230)
---------
4,161,314
Other Liabilities
- -Litigation settlement 16,667
-------
Remaining proceeds for cash 4,940,157
Net income effects of debt retirement: at 08/15/97
Interest expense per P&L = 201,009 for 3 months
retired 8/15/97 = net interest expense 100,505
Cash invested in money market fund @ 2.5% interest for 1.5 months
4,940,157 @ 2.5% / 12 x 1.5 = 15,438
P&L impact
Reduction of interest expense 100,505
Additional interest income 15,438
------
115,943
Weighted average # of shares o/s 09/30/97 3,819,721
Options and warrants not reacquired 422,145
----------
Total 4,241,866
=========
September 30, 1997 3 month Net income per F/S 520,718
Adjustment per modified treasury stock method 115,943
-------
Adjusted net earnings 636,661
Primary EPS 636,661/4,241,866 = $0.150089842536
$0.15
</TABLE>
<PAGE>
TRANS GLOBAL SERVICES, INC. and SUBSIDIARIES
EXHIBIT 11.1
<TABLE>
<S> <C> <C> <C>
SCHEDULE 2
Fully Diluted Earnings per share - 3 Months
September 30, 1997
Weighted average # of shares o/s 09/30/97 3,819,721
Total issuable warrants and options
Options pursuant to 1995 Stock Incentive Plan-employees 218,333
Options pursuant to 1995 Stock Incentive Plan-directors 2,500
Options pursuant to 1995 Stock Incentive Plan-directors 1,666
Series A and other Warrants 124,933
Series D Warrants 816,666
SMACS options 3,000
Options pursuant to 1993 option plan 18,991
------
Total issuable 1,186,089
Total that can be reacquired:
(3,819,721 x 20%) 763,944
Issued not reacquired 422,145
Proceeds Price # of Shares
Options pursuant to
1995 Stock Incentive Plan - employees $ 6.750 218,333 1,473,748
Options pursuant to
1995 Stock Incentive Plan - directors $ 6.186 2,500 15,465
Options pursuant to
1995 Stock Incentive Plan - $11.250 1,666 18,743
Series A and other Warrants Various 124,933 3,607,134
Series D Warrants $ 7.500 816,666 6,124,995
SMACS Options $ 3.000 3,000 9,000
Options pursuant to 1993 option plan $13.500 18,991 256,379
-------
11,505,463
</TABLE>
<PAGE>
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
EXHIBIT 11.1 -Computation of Earnings Per Share [Continued]
<TABLE>
<CAPTION>
SCHEDULE 2 [Continued]
Fully Diluted Earnings Per Share - September 30, 1997
<S> <C>
Limitation
763,944, shares x 4.50 (FMV at 09/30/97) 3,437,748
---------
Total proceeds remaining to retire debt 8,067,715
Outstanding short-term debt 7,018,147
- -A/P and accrued expenses 373,009
- -Accrued payroll and related taxes and expenses 2,345,594
- -Note payable (Gov't Printing Office) 138,230
---------
4,161,314
Other Liabilities
Litigation Settlement 16,667
------
Remaining proceeds for cash 3,889,734
Net income effects of debt retirement: at 8/15/97
Interest expense per P&L= 201,009 for three months
retired 8/15/97= net interest expense 100,505
Cash invested in money market fund @ 2.5% interest for 1.5 months
3,889,734 @ 2.5%/1.5/12 = 12,155
<S> <C>
P&L impact
Net income per F/S 520,178
Reduction of interest expense 100,505
Additional interest income 12,155
------
Adjusted net income 633,378
Weighted average # of shares o/s 09/30/97 3,819,424
Options and warrants not reacquired 422,145
----------
Total 4,241,569
Fully diluted EPS 633,378/4,241,569 = $0.1493
= $ 0.15
</TABLE>
<PAGE>
TRANS GLOBAL SERVICES, INC. and SUBSIDIARIES
EXHIBIT 11.1 -Computation of Earnings per Share
<TABLE>
<CAPTION>
SCHEDULE 3
Primary Earnings per share - 9 Months
September 30, 1997
<S> <C> <C>
Weighted average # of shares o/s 09/30/97 3,819,525
Total issuable warrants and options
Options pursuant to 1995 Stock Incentive Plan-employees 218,333
Options pursuant to 1995 Stock Incentive Plan- directors 2/96 2,500
Options pursuant to 1995 Stock Incentive Plan- directors 2/97 1,666
Series A and other Warrants 124,933
Series D Warrants 816,666
SMACS Options 3,000
Options pursuant to 1993 option plan 18,991
---- ------
Total issuable 1,186,089
Total that can be reacquired:
(3,819,525 x20%) 763,905
Issued not reacquired 422,184
Proceeds Price # of Shares
Options pursuant to 1995 Stock Incentive Plan
-employees $ 6.750 218,333 1,473,748
Options pursuant to 1995 Stock Incentive Plan
-directors 2/96 $ 6.186 2,500 15,465
Options pursuant to 1995 Stock Incentive Plan
-directors 2/97 $11.250 1,666 18,743
Series A and other Warrants Various 124,933 3,607,134
Series D Warrants $ 7.500 816,666 6,124,995
SMACS Options $ 3.000 3,000 9,000
Options pursuant to 1993 option plan $13.500 18,991 256,379
---------
11,505,464
Limitation
763,884 shares x 5.932 (avg FMV) 4,531,360
---------
Total proceeds remaining to retire debt 6,974,104
Outstanding short-term debt 7,018,147
- -A/P and accrued expenses (373,009)
- -Accrued payroll and related taxes and expenses (2,345,594)
- -Note payable (Gov't printing office) (138,230)
Other Liabilities 4,161,314
Litigation settlement 16,667
---------
Remaining proceeds for cash 2,796,123
</TABLE>
<PAGE>
TRANS GLOBAL SERVICES, INC. and SUBSIDIARIES
EXHIBIT 11.1 Computation of Earnings per Share
<TABLE>
<CAPTION>
SCHEDULE 3 [Continued]
<S> <C> <C> <C>
Net income effects of debt retirement: at 05/15/97
Interest expense per P&L = 583,874 for 9 months
retired 5/15/97 = net interest expense 291,937
Remaining proceeds for cash 2,796,123
Cash invested in money market fund @ 2.5% interest for 4.5 months
2,796,123 @2.5%x4.5/12 26,214
P&L impact
Reduction of interst expense 291,937
Additional interest income 26,214
-------
318,151
Weighted average # of shares o/s 09/30/97 3,819,525
Options and warrants not reacquired 422,184
---------
Total 4,241,709
September 30,1997 6 month Net income per F/S 678,968
Adjustment per modified treasury stock method 318,151
-------
Adjusted net earnings 997,119
Primary EPS 988,381/4,241,709 = 0.23507
$0.24
</TABLE>
<PAGE>
TRANS GLOBAL SERVICES, INC. and SUBSIDIARIES
EXHIBIT 11.1
<TABLE>
<S> <C> <C> <C>
SCHEDULE 4
Fully Diluted Earnings per share - 9 Months
September 30, 1997
Weighted average # of shares o/s 09/30/97 3,819,525
Total issuable warrants and options
Options pursuant to 1995 Stock Incentive Plan-employees 218,333
Options pursuant to 1995 Stock Incentive Plan-directors 2,500
Options pursuant to 1995 Stock Incentive Plan-directors 1,666
Series A and other Warrants 124,933
Series D Warrants 816,666
SMACS options 3,000
Options pursuant to 1993 option plan 18,991
------
Total issuable 1,186,089
Total that can be reacquired:
(3,819,525 x 20%) 763,905
Issued not reacquired 422,184
Proceeds Price # of Shares
Options pursuant to
1995 Stock Incentive Plan - employees $ 6.750 218,333 1,473,748
Options pursuant to
1995 Stock Incentive Plan - directors $ 6.186 2,500 15,465
Options pursuant to
1995 Stock Incentive Plan - $11.250 1,666 18,743
Series A and other Warrants Various 124,933 3,607,134
Series D Warrants $ 7.500 816,666 6,124,995
SMACS Options $ 3.000 3,000 9,000
Options pursuant to 1993 option plan $13.500 18,991 256,379
-------
11,505,464
Limitation
763,905, shares x 4.50 (FMV at 09/30/97) 3,437,573
---------
Total proceeds remaining to retire debt 8,067,891
Outstanding short-term debt 7,018,147
- -A/P and accrued expenses 373,009
- -Accrued payroll and related taxes and expenses 2,345,594
- -Note payable (Gov't Printing Office) 138,230
---------
4,161,314
Other Liabilities
Litigation Settlement 16,667
------
Remaining proceeds for cash 3,889,910
Net income effects of debt retirement: at 5/15/97
Interest expense per P&L= 583,874 for nine months
retired 5/15/97= net interest expense 291,937
Cash invested in money market fund @ 2.5% interest for 4.5 months
3,889,910 @ 2.5%x4.5/12 = 36,468
</TABLE>
<PAGE>
TRANS GLOBAL SERVICES, INC. and SUBSIDIARIES
EXHIBIT 11.1 Computation of Earnings per Share
<TABLE>
<CAPTION>
SCHEDULE 4 [Continued]
<S> <C>
P&L impact
Net income per F/S 678,968
Reduction of interest expense 291,937
Additional interest income 36,468
------
Adjusted net income 1,007,373
Weighted average # of shares o/s 09/30/97 3,819,525
Options and warrants not reacquired 422,184
----------
Total 4,241,709
Fully diluted EPS 1,007,373/4,241,709 = $0.2375
0.24
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF OPERATIONS FILED
AS PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 370,106
<SECURITIES> 0
<RECEIVABLES> 6,294,905
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,785,956
<PP&E> 203,382
<DEPRECIATION> 31,293
<TOTAL-ASSETS> 14,654,394
<CURRENT-LIABILITIES> 7,018,147
<BONDS> 0
<COMMON> 38,197
0
0
<OTHER-SE> 7,581,383
<TOTAL-LIABILITY-AND-EQUITY> 14,654,394
<SALES> 57,689,536
<TOTAL-REVENUES> 57,689,536
<CGS> 52,907,042
<TOTAL-COSTS> 52,907,042
<OTHER-EXPENSES> 3,615,819
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 583,874
<INCOME-PRETAX> 678,968
<INCOME-TAX> 0
<INCOME-CONTINUING> 678,968
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 678,968
<EPS-PRIMARY> .18
<EPS-DILUTED> .24
</TABLE>
