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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, 2002 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: (631) 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 7, 2002: 14,150,000
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
INDEX
Part I - Financial Information:
Item 1. Financial Statements: Page No.
---------
Report of Independent Certified Pubic Accountants 3
Balance Sheets as of September 30, 2002 (unaudited)
and December 31, 2001. 4-5
Consolidated Statements of Operations-
Three and Nine Months Ended September 30, 2002 (unaudited)
and September 30, 2001(unaudited). 6
Consolidated Statements of Cash Flows-
Nine Months Ended September 30, 2002 (unaudited)
and September 30, 2001 (unaudited). 7-8
Consolidated Statement of Stockholders' Equity - 9
Nine Months Ended September 30, 2002 (unaudited)
Notes to Consolidated Financial Statements(Unaudited) 10-13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14-16
Item 4. Controls and Procedures 17
Part II - Other Information
Item 6. Exhibits and Reports on Form 8K 18
Independent Accountant's Report
To the Stockholders and Board of Directors of Trans Global Services, Inc.
Hauppauge, New York
We have reviewed the accompanying consolidated balance sheet of Trans Global
Services, Inc. and its subsidiaries as of September 30, 2002, and the related
consolidated statements of operations for the three and nine month periods ended
September 30, 2002 and 2001, the related consolidated statement of stockholders'
equity for the nine month period ended September 30, 2002 and the related
consolidated statements of cash flows for the nine month periods ended September
30, 2002 and 2001. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 3 to the
consolidated financial statements, the Company has suffered a net loss of
approximately $1,650,000 for the nine months ended September 30, 2002 and has an
accumulated deficit of approximately $11,200,000 as of September 30, 2002.
Management's plans in regard to these matters are also described in Notes 3 and
7. The consolidated financial statements do not include any adjustments which
might arise from the outcome of these uncertainties.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 2001, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the year then ended [ not presented herein]; and in our report dated
February 23, 2002, we expressed an unqualified opinion on those consolidated
financial statements.
MOORE STEPHENS, P. C.
Certified Public Accountants.
November 5, 2002
Cranford, New Jersey
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- -----------------------------------------------------------------------------
September 30, December 31,
2002 2001
(Unaudited)
Assets:
Current Assets:
Cash $ 87,014 $ 58,695
Accounts Receivable- Net of allowance
for doubtful accounts of $62,500 1,676,456 2,116,793
Notes Receivable- i-engineering.com, Inc. -0- 22,448
Prepaid Expenses and Other Current Assets 45,133 52,781
-------- ---------
Total Current Assets 1,808,603 2,250,717
Property and Equipment-Net 95,993 92,644
Other Assets:
Customer Lists 1,349,145 1,500,000
Other Assets 49,862 54,922
--------- ---------
Total Other Assets 1,399,007 1,554,922
--------- ---------
Total Assets $ 3,303,603 $ 3,898,283
============= ===========
See Notes to Consolidated Financial Statements
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- -----------------------------------------------------------------------------
September 30, December 31,
2002 2001
(Unaudited)
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable and Accrued Expenses $ 236,139 $ 506,065
Accrued Payroll and Related Taxes and Expenses 680,716 504,318
Loans Payable, Asset-Based Lender 942,066 1,527,847
Notes Payable- Outside Investors -0- 77,819
--------- ---------
Total Current Liabilities 1,858,921 2,616,049
Commitments and Contingencies - -
Stockholders' Equity:
Common Stock, $.01 Par Value, 25,000,000
Shares Authorized. 2002: 15,620,000 Issued,
13,579,150 Outstanding, 2001: 5,854,295
Issued, 4,384,295 Outstanding.
156,200 58,543
Capital in Excess of Par Value 15,526,325 13,837,173
Accumulated Deficit (11,201,813) ( 9,551,077)
----------- ------------
4,480,712 4,344,639
Notes Receivable - Related Parties ( 65,218) ( 91,593)
Less Treasury Stock, at Cost
1,470,000 Shares (2,970,812) (2,970,812)
----------- ------------
Total Stockholders' Equity 1,444,682 1,282,234
---------- -----------
Total Liabilities and Stockholders' Equity $ 3,303,603 $ 3,898,283
============ ===========
See Notes to Consolidated Financial Statements
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
- -----------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
Revenue $ 5,729,262 $ 7,098,087 $ 16,467,934 $ 21,050,765
Cost of Services Provided 5,275,684 6,470,384 15,257,978 19,265,935
--------- ---------- ---------- ----------
Gross Profit 453,578 627,703 1,209,956 1,784,830
Operating Expenses:
Selling, General and
Administrative 630,489 679,545 1,831,801 2,185,538
Amortization of Intangibles 50,285 68,382 150,855 205,146
Cost of Issuance of Below
Market Options -0- -0- 725,000 -0-
--------- --------- ---------- ---------
Total Operating Expenses 680,774 747,927 2,707,656 2,390,684
Operating (Loss) ( 227,196) ( 120,224) (1,497,700) ( 605,854)
Other Income (Expenses):
Interest Expense ( 65,931) ( 69,072) ( 193,807) (169,311)
Interest Income 20 268 20 6,997
Other Income (Expense) ( 9,024) ( 2,692) 40,751 ( 11,545)
-------- -------- ---------- -----------
Total Other (Expenses)-Net ( 74,995) ( 71,496) ( 153,036) ( 173,859)
--------- --------- ---------- -----------
Loss before income taxes ( 302,131) ( 191,720) (1,650,736) ( 779,713)
Income taxes -0- -0- -0- -0-
--------- --------- --------- ---------
Net Loss $ ( 302,131) $ ( 191,720) $ (1,650,736) $ ( 779,713)
=========== =========== ============= ===========
Basic and fully diluted
Loss Per Share $ ( .03) $( .06) $ ( .24) $ ( .23)
-------- -------- ------------ ----------
Basic and Diluted - Weighted
Average Number of Shares
of Common Stock 9,940,511 3,384,295 6,910,284 3,342,514
See Notes to Consolidated Financial Statements
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- -----------------------------------------------------------------------------
Nine Months Ended
September 30,
2 0 0 2 2 0 0 1
Operating Activities:
Net (Loss) $(1,650,736) $ (779,713)
Adjustments to Reconcile Net (Loss)
to Net Cash (Used in) Provided By
Operations:
Depreciation and Amortization 189,299 254,819
Cost of Issuance of Below Market Options 725,000 -0-
Variable Price Options -0- 3,827
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Assets:
Accounts Receivable-Net 440,337 (874,975)
Prepaid Expenses and Other
Current Assets 7,648 31,232
(Decrease) Increase in Liabilities:
Accounts Payable and Accrued
Expenses ( 119,926) ( 53,187)
Accrued Payroll and Related
Taxes and Expenses 176,398 443,700
--------- ---------
Total Adjustments 1,418,756 (194,584)
--------- --------
Net Cash - Operating Activities ( 231,980) (974,297)
--------- ---------
Forward
See Notes to Consolidated Financial Statements
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- -----------------------------------------------------------------------------
Nine Months Ended
September 30,
2002 2001
Net Cash -
Operating Activities Forwarded $ (231,980) $ (974,297)
Investing Activities:
Capital Expenditures ( 3,266) ( 44,555)
Repayments from i-engineering.com, Inc. -0- 203,003
Other, Net ( 11,019) ( 2,255)
--------- ----------
Net Cash - Investing Activities ( 14,285) 156,193
Financing Activities:
Net Payments from (to)
Asset-Based Lender (585,781) 888,691
Proceeds from Exercise of Options 71,809 -0-
Proceeds from the Sale of Common Stock 778,313 -0-
(Repayment) of Note Payable
-Outside Investors ( 77,819) ( 88,681)
Collection of Notes Receivable, Related
Parties - Stock Option Plan 88,062 -0-
---------- -----------
Net Cash - Financing Activities 274,584 800,010
---------- ----------
Net Increase(Decrease) in Cash 28,319 ( 18,094)
Cash - Beginning of Year 58,695 58,463
---------- ----------
Cash - September 30 $ 87,014 $ 40,369
=========== ===========
Supplemental Disclosures of Cash
Flow Information:
Cash paid for:
Interest $ 193,807 $ 164,133
Income Taxes $ -0- $ -0-
Supplementary Disclosure of Non Cash Investing and Financing Activities during
the nine months ended September 30, 2002 and 2001.
Nine Months Ended September 30, 2002
Reduced exercise price of outstanding warrants
in exchange for existing debt $ 150,000 $ -0-
Received capital assets in exchange for
cancellation of notes and accounts receivable $ 38,527 $ -0-
Nine Months Ended September 30, 2001 - None
See Notes to Consolidated Financial Statements
Trans Global Services, Inc.
Consolidated Statement of Stockholders' Equity (Unaudited)
Shares Amounts
Common Stock $.01 Par Value, Authorized
25,000,000 Shares
Balance - December 31, 2001 5,854,295 $ 58,543
Shares Issued on Exercise of Below Market Options 800,000 8,000
Shares Issued on Exercise of Stock Options 668,705 6,687
Shares Issued on Reduction of Exercise Price
of Outstanding Warrants and Cancellation of Debt 297,000 2,970
Sale of 8,000,000 Shares of Common Stock (Note 7) 8,000,000 80,000
--------- ------
Balance - September 30, 2002 15,620,000 $ 156,200
========= ======
Capital in Excess of Par Value
Balance - December 31, 2001 $ 13,837,173
Issuance and Exercise of Below Market Options 742,000
Issued on Reduction of Exercise Price
of Outstanding Warrants and Cancellation of Debt 147,030
Exercise of Stock Options 40,122
Sale of 8,000,000 Shares of Common Stock(Note 7) 760,000
------------
Balance - September 30, 2002 $ 15,526,325
============
Accumulated Deficit
Balance - December 31, 2001 $ (9,551,077)
Net Loss for the Nine Months Ended September 30, 2002 (1,650,736)
-----------
Balance - September 30, 2002 $(11,201,813)
==========
Notes Receivable; Related Parties
Balance - December 31, 2001 $ ( 91,593)
Collection of Notes Receivable 88,062
Note Receivable Issued for
570,834 Shares of Common Stock(Note 7) ( 61,687)
----------
Balance - September 30, 2002 $ ( 65,218)
==========
Treasury Stock
Balance - December 31, 2001 1,470,000 $ (2,970,812)
Balance - September 30, 2002 1,470,000 $ (2,970,812)
Total Stockholders' Equity
Balance - December 31, 2001 $ 1,282,234
Issuance and Exercise of Below Market Options 750,000
Shares Issued on Reduction of Exercise Price
of Outstanding Warrants and Cancellation of Debt 150,000
Collection of Notes Receivable, Related Parties
Stock Option Plan 88,062
Exercise of Stock Options 46,809
Note Receivable Issued for
570,834 Shares of Common Stock (Note 7) ( 61,687)
Sale of 8,000,000 Shares of Common Stock 840,000
Net Loss for the Nine Months Ended September 30, 2002 ( 1,650,736)
------------
Balance - September 30, 2002 $ 1,444,682
============
See Notes to Consolidated Financial Statements
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
(1) Basis of Presentation
Trans Global Services, Inc. (the "Company" or "Trans Global"), a Delaware
corporation, operates through three subsidiaries, Avionics Research Holdings,
Inc.,["Holdings"], Resource Management International, Inc. ["RMI"] and Truecom,
Inc. ("Truecom"). In October, 2002 the Company established two new operating
subsidiaries, RMI Pendragon, Inc. and Phoenix Services, Inc., through which all
business obtained by transfer from Phoenix and NAG affiliates will be recorded.
See Note 7 for further explanation and information about a change in control of
the Company. The Company is engaged in providing technical temporary staffing
services throughout the United States, principally in the aerospace and aircraft
industries.
In the opinion of the Company, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the consolidated financial position of the Company
as of September 30, 2002 and the consolidated results of its operations for the
three and nine months ended September 30, 2002 and 2001. 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, 2001. The results of
operations for the three and nine months ended September 30, 2002 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 included in the Company's Form 10-K
for the year ended December 31, 2001.
(3) Going Concern
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles which contemplates
continuation of the Company as a going concern and realization of assets and
settlement of liabilities and commitments in the normal course of business. For
the nine months ended September 30, 2002, the Company had a loss from operations
and losses are continuing. At such date, the Company had a working capital
deficiency and an accumulated deficit. The losses combined with the working
capital deficiency raise substantial doubt about the Company's ability to
continue as a going concern. In addition, the Company's agreement with its
asset-based lender has terminated and the Company is continuing to borrow under
the agreement on a month-to-month basis(See Note 4). Management intends to
develop additional revenues through the acquisition of temporary staffing
contracts from a company that acquired a controlling position in the Company or
its affiliates. (See Note 7). The consolidated financial statements do not
include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
(4) Loan Payable - Asset Based Lender
On October 16, 2001, the Company entered into a one year agreement with an
asset-based lender (factor) which Agreement shall be deemed automatically
renewed for successive periods of one year. the agreement has expired and the
lender is continuing to provide financing under the terms of the agreement on a
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
month-to-month. The Company is currently in discussion with a number of
potential financing sources. However, no firm offers have been received as of
this date and the Company cannot give assurance as to its ability to enter into
a new credit agreement.
Pursuant to this Agreement, the Company can borrow up to 85% of its qualified
accounts receivable at an interest rate of prime plus 2.5% plus a fee of .7% of
the receivables factored with a minimum monthly charge of $12,000. The maximum
availability under this credit agreement is $2.5 million, and at September 30,
2002, the maximum available under the borrowing base formula was $1,425,000.
5) Agreement with The Finx Group
On November 15, 2001, the Company entered into an agreement with The Finx Group,
Inc. ("Finx"), pursuant to which it issued 5,000,000 shares of Common Stock to
Finx in December 2001, Finx issued 2,500,000 shares of Finx common stock to the
Company in December 2001, and Finx agreed to invest $1,000,000, for which the
Company was to issue shares of preferred stock which were convertible into
3,000,000 shares of Common Stock. In December 2001, Finx invested $250,000 and
received preferred stock convertible into 750,000 shares of Common Stock. On
March 7, 2002, the agreement was terminated, Finx returned to the Company
4,000,000 shares of Common Stock, the Company returned to Finx the 2,500,000
shares of Finx Common Stock and all of the shares of preferred stock which were
issued or issuable pursuant to the November 2001 agreement were cancelled. The
effects of the cancellation are reflected retroactively in the consolidated
financial statements for the year ended December 31, 2001. The net effect of the
transaction was the issuance by the Company of 1,000,000 shares of Common Stock
to designees of Finx for $250,000, which is reflected in the consolidated
financial statements. The 1,000,000 shares are held by designees of Finx,
including Mr. Lewis S. Schiller and members of his family. Mr. Schiller was the
Company's chief executive officer and chairman of the Company's board of
directors from December 2001 until March 2002.
(6) Stock Options and Warrants
In January 2002, the Company's board of directors approved the 2002
Non-Qualified Stock Option Plan, pursuant to which non-qualified stock options
could be granted up to 3,500,000 shares. Pursuant to this plan, the then chief
executive officer granted options to purchase a total of 3,100,000 shares of
Common Stock at an exercise price of $.05 per share. All of such options were
exercised in January and February 2002. The grants included a grant of an option
to purchase 2,500,000 shares to a non-affiliated consultant who exercised such
option in full, and subsequently cancelled the exercise and returned to the
Company 2,300,000 of the shares, which shares remain available for grant under
the plan. As a result of the grant of the options at an exercise price which was
below the then current market price, the Company recognized a non-cash charge to
earnings of $725,000, on the 800,000 shares of the Company's Common Stock
issued, in the first quarter of 2002.
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
In February 2002, the then chief executive officer reduced the exercise price of
certain warrants, previously issued to an outside consultant, to purchase
300,000 shares of Common Stock from $.35 per share to $.01 per share and
provided that the holder of the warrant could exercise the warrant on a cashless
exercise basis in exchange for debt currently due the holder of $150,000. As a
result, the Company issued 297,000 shares of Common Stock.
On April 12, 2002, the board of directors terminated the 1998 and 1999 incentive
stock option plans. At such date, there were outstanding options to purchase
20,000 shares of Common Stock, which remain outstanding. On that date, the board
of directors granted options to purchase 758,705 shares of Common Stock under
the Company's 2002 Non-Qualified Stock Option Plan to employees at $.07 per
share, which was the fair market value on such date. In May, June and August
2002 options to purchase 668,705 shares of Common Stock were exercised. At
September 30, 2002 options to purchase 90,000 shares of common stock remain
outstanding under the Non-Qualified Stock Option Plan.
(7) Change In Control / Sale of Common Stock
In July 2002, the Company sold 1,000,000 shares of Common Stock to Phoenix
Marketing Services, Inc. ("Phoenix") an unaffiliated company, for a purchase
price of $100,000. The agreement was entered into in anticipation of a more
comprehensive agreement between the two parties, and the then president of the
Company agreed that if the subsequent transaction was not consummated, he would
purchase the shares for $100,000.
In August 2002, the Company and NAG Financial, LLC ("NAG"), a Texas limited
liability company and an affiliate of Phoenix, entered into an agreement
pursuant to which:
* NAG or its designees purchased 7,000,000 share of common stock for
$740,000 in installments. These purchases were completed during September 2002.
A portion of the shares were purchased by a note in the amount of $61,687, which
is payable not later than December 31, 2002.
* NAG or its associates would transfer to the Company contracts or
contract rights relating to temporary staffing or other similar or related
services.
* The Company would pay to NAG a fee of 2% of net collections, as defined
in the agreement, from the contracts assigned to it, up to a maximum of
$1,000,000.
* The Company would issue one share of a newly created series of preferred
stock for each $.21 of gross profit generated from the assigned contracts
through June 30, 2005, up to a maximum of 2,000,000 shares of the preferred
stock. Each of the shares of preferred stock would be convertible into two
shares of common stock and would have the right to vote with the common stock,
with each share of the preferred stock having two votes.
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
* Mr. Sicinski and Mr. Link agreed to vote their shares of common stock in
accordance with NAG's instruction until NAG or its designees shall have
purchased 5,250,000 shares of common stock. The voting obligations of Mr.
Sicinski and Mr. Link have terminated.
* Mr. Sicinski's (the former president) obligation to purchase Phoenix'
shares pursuant to the July 2002 agreement was terminated.
* Mr. Arthur P. Grider, III was elected as president, chief executive
officer and a director, and Mr. Sicinski retained his position as chairman of
the board.
* Mr. Sicinski and Mr. Link entered into new employment agreements. See
Note 8.
* The Company granted registration rights with respect to the shares of
common stock issued pursuant to the NAG agreement and any shares of common stock
issuable upon conversion of any share of preferred stock which may be issued
pursuant to the August agreement.
As a result of the issuance of the 8,000,000 shares to Phoenix and NAG and its
designees pursuant to the July and August agreements, there may be deemed to be
a change of control of the Company. The 8,000,000 shares of Common Stock issued
to Phoenix and NAG constitute 56.5% of the Company's Common Stock. As a result
of the change of control, certain available net operating loss carryforwards may
be limited in accordance with IRS Regulations.
(8) Employment Agreements
On August 12, 2002 Mr. Joseph G. Sicinski and Mr. Joseph E. Link entered into
new three-year employment agreements with the Company, pursuant to which they
receive a minimum base salary of $260,000 and $160,000, respectively, subject to
an annual increase of not less than 5%. Mr. Sicinski will continue as chairman
of the board and Mr. Link will continue as chief financial officer.
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations
Revenue from technical temporary staffing services is based on the hourly cost
of payroll plus a percentage. The success of our business is dependent upon our
ability to generate sufficient revenue to enable us to cover our fixed costs and
other operating expenses and to reduce our variable costs. Under our agreements
with our clients, we are required to pay our employees and pay all applicable
federal and state withholding and payroll taxes prior to the receipt of payment
from the clients. Furthermore, payments from our 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, our 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 we satisfy our payroll tax obligations, we will
have a lower gross margin than after such obligations are satisfied.
Furthermore, to the extent that we experience turnover in employees, our gross
margin will be adversely affected. For example, in 2002, Social Security taxes
are payable on the first $84,900 of compensation. Once that level of
compensation is paid with respect to any employee, there is no further
requirement for us to pay Social Security tax for such employee. Since many of
our employees receive compensation in excess of that amount, our costs with
respect to any employee are significantly higher during the period when we are
required to pay Social Security taxes than it is after such taxes have been
paid.
Three Months Ended September 30, 2002 and 2001
Our revenue, derived principally from the aircraft and aerospace industries,
totaled $5.7 million for the three months ended September 30, 2002 (the
"September 2002 quarter"), a decrease of 20% from the revenue of $7.1 million
for the three months ended September 30, 2001 (the "September 2001 quarter").
This decrease is attributable to a decline in the requirements from our existing
clients.
Our gross margins for the September 2002 quarter and the September 2001 quarter
were 7.9% and 8.8%, respectively. The decrease in gross margin during the
September 2002 quarter is attributed to the increase in lower margin business
from our aircraft and aerospace clients as well as the loss of higher margin
business in the information technology segment of our business.
Selling, general and administrative expenses declined approximately $50,000, or
7.2% from $680,000 in the September 2001 quarter to $630,000 in the September
2002 quarter. The decline in the selling, general and administrative expenses
reflects principally the effect of our continued cost reduction program.
As a result of the continued reduced level of revenue and the increase in
services generating a lower gross margin, our gross profit was not sufficient to
cover our selling, general and administrative expenses in either the September
2002 quarter or the September 2001 quarter, resulting in an operating loss of
$227,000 for the September 2002 quarter, as compared with an operating loss of
$120,000 for the September 2001 quarter.
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations (continued)
Interest expense during the September 2002 quarter decreased by 4.6% from the
September 2001 quarter. This decrease is primarily attributable to the decrease
in the Company's borrowings as a result of the decrease in the amount of
revenue.
As a result of the foregoing, we incurred a net loss of approximately $302,000,
or $.03 per share (basic and diluted), for the September 2002 quarter, compared
to a loss of approximately $192,000, or $.06 per share (basic and diluted) for
the September 2001 quarter. The per share loss for the September 2002 quarter
reflects the effect of the issuance of 8,000,000 shares of common stock during
the September 2002 quarter.
Nine Months Ended September 30, 2002 and 2001
We had revenues of $16.5 million for the nine months ended September 30, 2002,
reflecting a 21.7% decrease over the revenues of $21.0 million for the same
period one year earlier. During the nine months ended September 30, 2002 our
four largest customers, Lockheed-Martin, Bell Helicopter, Boeing and Gulfstream
Aerospace accounted for approximately 66.7% of our overall revenue. The gross
margin decreased to 7.3% in the nine months ended September 30, 2002 from 8.4%
for the nine months ended September 30, 2001. This decrease in gross margin is
attributed to the increase in lower margin business from our aircraft and
aerospace clients as well as the loss of high margin business in the Information
Technology segment of our business.
Selling, general and administrative expenses decreased by $354,000, or 16.1%, in
the nine months ended September 30, 2002 compared to the nine months ended
September 30, 2001. The decline reflects principally the effects of our
continued cost reduction program.
Interest expense during the nine months ended September 30, 2002 increased by
approximately $24,500 or 14.4% compared to the nine months ended September 30,
2001. This increase is primarily attributable to the higher interest costs
associated with the Company's having to utilize the financing services of an
asset-based lender rather than a commercial bank.
As a result of the foregoing, we incurred a net loss of approximately $1.7
million, or $.24 per share (basic and diluted), for the nine months ended
September 30, 2002, compared to a loss of approximately $800,000, or $.23 per
share (basic and diluted) for the comparable period in 2001. The per share loss
for the nine months ended September 30, 2002 reflects the effect of issuance of
8,000,000 shares of common stock during the September 2002 quarter.
Liquidity and Capital Resources
As of September 30, 2002, we had a working capital deficiency of approximately
$50,000 compared to a deficiency of $365,000 at December 31, 2001. The most
significant current asset at September 30, 2002 was our accounts receivable,
which were approximately $1.7 million. These receivables were offset by payroll
and related expenses of approximately $680,000 and $942,000 due to our
asset-based lender. The payroll and related taxes and expenses relate primarily
to compensation to our contract employees and related taxes, which were paid
during the first week of October 2002. During the nine months ended September
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations (continued)
Liquidity and Capital Resources (continued)
30, 2002, operating activities utilized cash flows of approximately $232,000.
Our principal source of cash during the nine month period ended September 30,
2002 was our credit facility with our asset-based lender plus the gorss proceeds
of $840,000 from the sales of common stock as discussed in Note 7.
On October 16, 2001 we entered into a one year agreement with an asset-based
lender. Under the agreement, we can borrow up to 85% of our qualified accounts
receivables at an interest rate of prime plus 2.5% plus a fee equal to .7% of
the value of the receivables financed with a maximum availability of $2.5
million. The minimum monthly fee on the credit agreement is $12,000 per month.
At September 30, 2002 and December 31, 2001, the maximum available under our
borrowing formula was $1,425,000 and $1,750,000 respectively. We are presently
engaged in discussions with certain lenders, and, our existing asset-based
lender has indicated its willingness to continue under our current agreement on
a month by month basis. However, if we do not find an alternative lender or
other source of funds, we may be unable to continue in business. Because of our
poor financial condition, we expect that it will be difficult for us to find a
new lender and we cannot give any assurance that we will be able to enter into
an agreement with another lender.
We expect that we will continue to incur losses, at least through the fourth
quarter of 2002 and losses may continue thereafter. The Company raised gross
proceeds of $840,000 through the sale of our equity securities to Phoenix and
NAG, and, as a result of the agreements with Phoenix and NAG and the other
agreements described in Note 7, and the issuance of such shares, Mr. Arthur P.
Grider III, who is the controling person for Phoenix and NAG has become the
Company's controlling stockholder. The proceeds from the sale of stock to
Phoenix and NAG, if combined with the credit availability under our credit
facility, which is currently on a month-by-month basis, will be sufficient to
enable us to meet our cash requirements for the balance of 2002.
Forward Looking Statements
The statements in this Form 10-Q that are not descriptions of historical facts
may be forward-looking statements that are subject to risks and uncertainties.
In particular, statements in this Form 10-Q that state our intentions, beliefs,
expectations, strategies, predictions or any other statements relating to our
future activities or other future events or conditions are "forward-looking
statements." Forward-looking statements are subject to risks, uncertainties and
other factors, including, but not limited to , those identified under "Risk
Factors", in our Form 10-K for the year ended December 31, 2001 and those
described in Management's Discussion and Analysis of Financial Conditions and
Results of Operations in our Form 10-K and this Form 10-Q, and those described
in any other filings by us with the Securities and Exchange Commission, as well
as general economic conditions, any one or more of which could cause actual
results to differ materially from those stated in such statements.
Item 4. Controls and Procedures
Our chief executive officer and chief financial officer have supervised and
participated in an evaluation of the effectiveness of our disclosure controls
and procedures as of a date within 90 days of the date of this report, and,
based on their evaluations, they believe that our disclosure controls and
procedures (as defined in Rule 13a-14(c) of the Securities Exchange Act of 1934,
as amended) are designed to ensure that information required to be disclosed by
us in the reports that we file or submit under the Securities Exchanges Act of
1934 is recorded, processed, summarized and reported, within the time periods
specified in the Commission's rules and forms. As a result of the evaluation,
there were no significant changes in our internal controls or in other factors
that could significantly affect these controls subsequent to the date of their
evaluation.
Part II.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Employment Agreement dated August 12, 2002 between the Registrant
and Joseph G. Sicinski.
10.2 Employment Agreement dated August 12, 2002 between the Registrant
and Joseph E. Link
(b) Reports on Form 8-K
None
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)
/s/ Arthur P. Grider III
-------------------------
Date: November 13, 2002 Arthur P. Grider III
(Chief Executive Officer)
/s/ Joseph E. Link
------------------------
Date: November 13, 2002 Joseph E. Link
(Chief Financial Officer)
CERTIFICATION OF CHIEF EXECUTIVE AND FINANCIAL OFFICERS
The undersigned chief executive officer and chief financial officer of the
Registrant do hereby certify that this Quarterly Report on Form 10-Q fully
complies with the requirements of Section 13(a) or 15(d) of the Securities Act
of 1934, as amended, and that the information contained in this report fairly
presents, in all material respects, the financial condition and results of
operations of the Registrant at the dates and for the periods shown in such
report.
/s/ Arthur P. Grider III
-------------------------
Date: November 13, 2002 Arthur P. Grider III
(Chief Executive Officer)
/s/ Joseph E. Link
------------------------
Date: November 13, 2002 Joseph E. Link
(Chief Financial Officer)
SARBANES-OXLEY SECTION 302(a) CERTIFICATION
I, Arthur P. Grider III certify that:
1. I have reviewed this quarterly report on Form 10-Q of Trans Global Services,
Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared.
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal controls;
and
b)any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 13, 2002
_________________________
Arthur P. Grider III
President and Chief Executive Officer
SARBANES-OXLEY SECTION 302(a) CERTIFICATION
I, Joseph E. Link certify that:
1. I have reviewed this quarterly report on Form 10-Q of Trans Global Services,
Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared.
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal controls;
and
b)any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 13, 2002
_________________________
Joseph E. Link
Chief Financial Officer
Trans Global Services, Inc.
Exhibit 10.1 Employment Agreement dated August 12, 2002 between the Registrant
and Joseph G. Sicinski
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT made this 12th day of August, 2002 by and among TRANS GLOBAL SERVICES,
INC., (COMPANY) and its subsidiary companies, Avionics Research Corporation, and
Resource Management International, Inc., herein referred to as TGS and Joseph G.
Sicinski, herein referred to as ("EXECUTIVE").
Whereas, TGS desires to retain the employ of the Executive as the President and
Chief Operating Officer of TGS and Executive is willing to perform the service
hereafter described upon the terms and conditions hereinafter set forth;
Now, therefore, it is mutually agreed as follows:
1.0 TERM:
The Company (TGS) hereby retains the employ of the Executive for a period of
three (3) years commencing as of the date of this Agreement and expires August
11, 2005.
2.0 DUTIES:
2.1 The Executive shall have the title of President and Chief Operating Officer.
2.2 The Executive shall have and exercise such duties, responsibilities,
privileges, powers and authority as are established by statute, as are set forth
in TGS by-laws and corporate minutes and as may be assigned to him by TGS's
CEO/President provided that such duties are reasonably consistent wit the
Executive's education, experience and background.
2.3 The Executive agrees to devote substantially all of his business time,
attention, skill and efforts to the business conducted by TGS. The Executive
shall report to the Board of Directors of TGS.
2.4 As a condition of the employment of the Executive pursuant to this
Agreement, TGS agrees that all decisions relating to distributions or dividends
or other major expenditures must be approved by the Executive as well as by a
majority of the Board of Directors of TGS.
2.5 At all times during the term of this Agreement, the Executive shall perform
his designated duties at TGS offices located in the county of Suffolk in the
State of New York.
3.0 COMPENSATION:
In consideration for the Executive entering into and executing this AGREEMENT
and for providing services hereunder, the Executive shall be entitled to receive
the following compensation plus such additional increases in salary,
compensation or benefits as the Board of Directors may direct:
AGREEMENT
PAGE 2
3.1 A minimum base salary of $ 260,000 per year payable in equal weekly
installments and shall increase annually by the greater of 5% or the increase in
cost of living index.
3.2 In addition to the base salary and annual increases set forth herein, the
Executive shall be entitled to an annual bonus of not less than 5% of the net
income before tax for TGS and its wholly or partially owned subsidiaries,
current and future.
3.3 REIMBURSEMENT OF EXPENSES:
The Executive is authorized to incur reasonable expenses for performing his/her
duties pursuant to this Agreement and TGS shall reimburse him/her for all actual
expenses, including entertainment, travel and other miscellaneous expenses
reasonably incurred in promoting the business of TGS and in performing his
duties as described herein.
3.4 VACATION:
The Executive shall be entitled to annual vacation time with full pay in
accordance with the Company's policies but not less than four (4) weeks per
year, which shall be accrued if not utilized in full.
3.5 The Executive shall be provided with a company automobile. Said compensation
shall be made by payment of monthly lease or car loan payment, insurance, gas,
service and maintenance costs. At the end of the lease or loan period and at the
discretion of TGS, the car will be transferred to the Executive at a fair and
reasonable market value or leases buy back value or at the option of TGS will
lease or finance another new car comparable to the initial car provided under
this provision. The Executive may elect to receive auto allowance of $600.00 per
month in lieu of Company automobile.
4.0 BENEFITS:
4.1 Nothing contained in this Agreement shall be construed to impair or limit
the Executive's rights to participate in all employee benefit plans of TGS of
every nature, and he/she shall, in fact, be entitled to participate in and be a
member of all such benefit plans in proportion to his total compensation
hereunder.
"Benefit plans" shall include:
Holidays
Life Insurance
Hospitalization
Medical and Major Medical (family)
Stock option (s)
Stock purchase or bonus plans
Retirement Programs
Automobile Expenses
AGREEMENT
PAGE 3
4.2 SPECIAL LIFE INSURANCE:
TGS shall maintain at its expense a life insurance policy, currently in
existence, upon the life of the Executive in the face amount of $500,000 payable
to such beneficiary as the Executive shall designate from time to time, in
writing, and in the absence of such designation to his estate.
5.0 TERMINATION AND SEVERANCE:
5.1 Nothing herein is intended to prohibit TGS from terminating this Agreement
for serious and willful misconduct on the part of the Executive, provided, that
in the event that the Executive's employment is terminated for cause by TGS,
nevertheless the Executive shall be entitled to receive such benefits under
TGS's employee benefit plans, in which he is a participant, or as are provided
by this Agreement.
5.2 If the employee shall become totally and permanently disabled and is unable
to work by reason of temporary or permanent disability, TGS will continue his
base salary for the full term of this Agreement at the rate as provided above
inclusive of all bonuses and incentives, including full payment of medical and
life insurance for the full term of this Agreement.
5.3 Termination at will. The Board of Directors may not terminate the
Executive's employment by TGS or diminish his duties, powers and
responsibilities pursuant to this Agreement without cause as set forth herein.
5.4 Any dispute or difference of opinion between the Executive and TGS s to the
latter's right to terminate this Agreement shall be submitted to and determined
by arbitration in accordance with the provisions of Section 7.4 hereof set forth
below. TGS shall notify the Executive of said actions in writing and provide at
least 30 days to remedy such failures.
5.5 Non-Curable Termination for Cause: Executive's employment with COMPANY may
be terminated "immediately" for cause if the Executive is determined to (1)
repeatedly have acted dishonestly or engaged in deliberate misconduct; (2)
repeatedly breached a fiduciary trust for the purpose of gaining personal
profits; (3) repeatedly neglected to perform customary duties of his position
after 30 days due written notice of said omission from the President of Board of
Directors; or (4) have been convicted of the commission of a felony.
In the event of termination, the President or Board of Directors are required to
give 10 days notice in writing to the Executive, by certified or registered mail
mailed to the Executives last known address and the same notice by ordinary
mail or courier to the Executive's principal office at COMPANY.
AGREEMENT
PAGE 4
6.0 NOTICE OF CHANGE(S) AND/OR REVISIONS(S):
Any notice, request or other communication required or permitted pursuant to
this Agreement shall be in writing and shall be deemed dully given when received
by the party to whom it shall be given or three days after being mailed by
certified, registered or express mail, postage prepaid, addressed as follows:
If to the COMPANY:
TRANS GLOBAL SERVICES, INC.
1393 Veterans Memorial Highway, Suite 307
Hauppauge, New York 11788
If to the Executive:
Joseph G. Sicinski
38 Woodhollow Road
Great River, New York 11739
Any part may change the address to which communications are to be mailed given
notice of such change on the manner provided above.
7.0 SPECIAL TERMS AND CONDITIONS:
7.1 The Board of Directors of COMPANY reserves the right to increase the
compensations and benefits specified in this contract at any time hereafter and
no such increase(s) or adjustment(s) shall operate as cancellation of the
Agreement but merely as an amendment hereto.
7.2 REORGANIZATION:
If the Company shall at any time be merged or consolidated substantially all
assets of TGS are transferred to another corporation or entity, the provisions
of this Agreement shall survive any such transaction and shall be binding upon
and inure to the benefit of the corporation resulting from such merger or
consolidation.
7.3 Nothing herein contained shall in any manner modify, imperil or affect
existing or future rights or interests of the Executive to receive any employee
benefits to which he/she would otherwise be entitled or as a participant in the
present or any future incentive, profit-sharing or bonus plan of TGS providing
for his participation, or in any present or future stock option plan of TGS, to
the extent such plans are applicable generally to salaried employees, it being
understood and agreed that the rights and interests of the Executive to any
employee benefits or as a participant or beneficiary in or under any or all said
plans, respectively, shall not be adversely affected hereby.
AGREEMENT
PAGE 5
7.4 ARBITRATION:
Any controversy or clam arising under this Agreement shall be settled by binding
arbitration in accordance with Rules of the American Arbitration Association
then in effect, and such arbitration shall be held either in Nassau or Suffolk
County in the State of New York. This shall be the exclusive remedy for the
violation of either party of the terms of this Agreement. The controversy or
claim shall be submitted to three arbitrators, one of whom shall be chosen by
COMPANY, one of whom shall be chosen by the Executive, and the third of whom
shall be chosen by the two so selected. The party desiring arbitration shall
give written notice to the other party of its desire to arbitrate the particular
matter in question, naming the arbitrator selected by it. If the other party
shall fail within a period of 15 days after such notice shall have been given to
reply in writing naming the arbitrator selected by them then the party not in
default may appoint an arbitrator to fill the place so remaining vacant. The
decision of any two of the arbitrators shall be final and binding upon the
parties hereto and shall be delivered in writing, signed in triplicate by the
concurring arbitrators to each of the parties hereto. Judgement upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
8.0 MISCELLANEOUS:
8.1 This Agreement shall become effective as of the day and date first above
written.
8.2 The heading or captions of sections or paragraphs are used for convenience
of reference merely and shall be ignored in the interpretation hereof.
8.3 As used herein, terms such as "herein", "hereof", "hereto", and similar
language shall be interpreted to refer to this entire instrument as not merely
the paragraph or sentence in which they appear, unless so limited by express
language.
8.4 Neither this Agreement nor any of his/her rights hereunder may be assigned
by the Executive without the written consent of TGS unless specifically
identified in this Agreement.
8.5 In the event of a suit or claim against the Executive arising out his
corporate duties, COMPANY will provide and pay for legal counsel approved by the
Executive, and hold the Executive harmless and indemnify the Executive for any
and all costs, fees, suits, judgements and settlements arising therein.
AGREEMENT
PAGE 6
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
on the day and date first above written:
Trans Global Services, Inc.
Avionics Research Corporation
Avionics Research Corporation of Fl.
Resource Management International, Inc.
By:
-----------------------------------------
Joseph E. Link, Chief Financial Officer
------------------------------------------
By:
-----------------------------------------
Joseph G. Sicinski , EXECUTIVE
Trans Global Services, Inc.
Exhibit 10.2 Employment Agreement dated August 12, 2002 between the Registrant
and Joseph E. Link
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT made this 12th day of August, 2002 by and among TRANS GLOBAL SERVICES,
INC., (COMPANY) and its subsidiary companies, Avionics Research Corporation, and
Resource Management International, Inc., herein referred to as COMPANY and
Joseph E. Link, herein referred to as (EXECUTIVE).
Now, therefore, it is mutually agreed as follows:
1.0 TERM:
The Company (COMPANY) hereby retains the employ of the Executive for a period of
three (3) years commencing as of the date of this Agreement.
2.0 DUTIES:
2.1 The Executive shall have the title of Chief Financial Officer (CFO).
2.2 The Executive shall have and exercise such duties, responsibilities,
privileges, powers and authority as are established by statute, as are set forth
in COMPANY by-laws and corporate minutes and as may be assigned to him by
COMPANY's CEO/President provided that such duties are reasonably consistent with
the Executive's education, experience and background.
2.3 The Executive agrees to devote substantially all of his business time,
attention, skill and efforts to the business conducted by COMPANY. The Executive
shall report to the CEO/President providing support in financial and other
matters as so designated by the CEO/President.
3.0 COMPENSATION:
In consideration for the Executive entering into and executing this AGREEMENT
and for providing services hereunder, the Executive shall be entitled to receive
the following compensation plus such additional increases in salary,
compensation or benefits as the Board of Directors may direct:
3.1 A minimum base salary of $160,000 per year payable in equal weekly
installments. The contract will be adjusted for cost of living increases
annually or the average percent raise to salaries given to other salaried
employees, whichever is greater, but in no case less than 5% annually.
AGREEMENT
PAGE 2
3.2 TERMINATION FOR DISABILITY. In the event that:
Executive is discharged from employment for being unable to work by reason of
disability, if in excess of 90 consecutive days, COMPANY will continue his/her
base salary for an additional 180 days at the rate as provided above inclusive
of all bonuses and incentives.
3.3 REIMBURSEMENT OF EXPENSES:
The Executive is authorized to incur reasonable expenses for performing his/her
duties pursuant to this Agreement and COMPANY shall reimburse him/her for all
actual expenses, including entertainment, travel and other miscellaneous
expenses reasonably incurred in promoting the business of COMPANY and in
performing his duties as described herein.
3.4 VACATION:
The Executive shall be entitled to annual vacation time with full pay in
accordance with the Company's policies but not less than four (4) weeks per
year, which shall be accrued if not utilized in full.
4.0 BENEFITS:
4.1 Nothing contained in this Agreement shall be construed to impair or limit
the Executive's rights to participate in all employee benefit plans of COMPANY
of every nature, and he/she shall, in fact, be entitled to participate in and be
a member of all such benefit plans in proportion to his total compensation
hereunder.
"Benefit plans" shall include:
Hospitalization
Medical and Major Medical (family)
Stock option (s)
Stock purchase or bonus plans
401K Program
Automobile Expenses
AGREEMENT
PAGE 3
5.0 TERMINATION AND SEVERANCE:
5.1 Nothing herein is intended to prohibit COMPANY from terminating this
Agreement for serious and willful misconduct on the part of the Executive,
provided, that in the event that the Executive's employment is terminated for
cause by COMPANY, nevertheless the Executive shall be entitled to receive such
benefits under COMPANY's employee benefit plans, in which he is a participant,
or as are provided by this Agreement.
5.2 Non-Curable Termination for Cause: Executive's employment with COMPANY may
be terminated "immediately" for cause if the Executive is determined to (1)
repeatedly have acted dishonestly or engaged in deliberate misconduct; (2)
repeatedly breached a fiduciary trust for the purpose of gaining personal
profits; (3) repeatedly neglected to perform customary duties of his position
after 30 days due written notice of said omission from the President of Board of
Directors; or (4) have been convicted of the commission of a felony.
In the event of termination, the CEO/President or Board of Directors are
required to give 10 days notice in writing to the Executive, by certified or
registered mail mailed to the Executive's last known address and the same notice
by ordinary mail or courier to the Executive's principal office at COMPANY.
6.0 NOTICE OF CHANGE(S) AND/OR REVISIONS(S):
Any notice, request or other communication required or permitted pursuant to
this Agreement shall be in writing and shall be deemed duly given when received
by the party to whom it shall be given or three days after being mailed by
certified, registered or express mail, postage prepaid, addressed as follows:
If to the COMPANY:
TRANS GLOBAL SERVICES, INC.
1393 Veterans Memorial Highway, Suite 307
Hauppauge, New York 11788
If to the Executive:
Joseph E. Link
34 Beaver Drive
Mastic, New York 11951
Any part may change the address to which communications are to be mailed given
notice of such change on the manner provided above.
AGREEMENT
PAGE 4
7.0 SPECIAL TERMS AND CONDITIONS:
7.1 The Board of Directors of COMPANY reserves the right to increase the
compensations and benefits specified in this contract at any time hereafter and
no such increase(s) or adjustment(s) shall operate as cancellation of the
Agreement but merely as an amendment hereto.
7.2 REORGANIZATION:
If the Company shall at any time be merged or consolidated substantially all
assets of COMPANY are transferred to another corporation or entity, the
provisions of this Agreement shall survive any such transaction and shall be
binding upon and inure to the benefit of the corporation resulting from such
merger or consolidation.
7.3 Nothing herein contained shall in any manner modify, imperil or affect
existing or future rights or interests of the Executive to receive any employee
benefits to which he/she would otherwise be entitled or as a participant in the
present or any future incentive, profit-sharing or bonus plan of COMPANY
providing for his participation, or in any present or future stock option plan
of COMPANY, to the extent such plans are applicable generally to salaried
employees, it being understood and agreed that the rights and interests of the
Executive to any employee benefits or as a participant or beneficiary in or
under any or all said plans, respectively, shall not be adversely affected
hereby.
7.4 ARBITRATION:
Any controversy or clam arising under this Agreement shall be settled by binding
arbitration in accordance with Rules of the American Arbitration Association
then in effect, and such arbitration shall be held either in Nassau or Suffolk
County in the State of New York. This shall be the exclusive remedy for the
violation of either party of the terms of this Agreement. The controversy or
claim shall be submitted to three arbitrators, one of whom shall be chosen by
COMPANY, one of whom shall be chosen by the Executive, and the third of whom
shall be chosen by the two so selected. The party desiring arbitration shall
give written notice to the other party of its desire to arbitrate the particular
matter in question, naming the arbitrator selected by it. If the other party
shall fail within a period of 15 days after such notice shall have been given to
reply in writing naming the arbitrator selected by them then the party not in
default may appoint an arbitrator to fill the place so remaining vacant. The
decision of any two of the arbitrators shall be final and binding upon the
parties hereto and shall be delivered in writing, signed in triplicate by the
concurring arbitrators to each of the parties hereto. Judgement upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
AGREEMENT
PAGE 5
8.0 MISCELLANEOUS:
8.1 This Agreement shall become effective as of the day and date first above
written.
8.2 The heading or captions of sections or paragraphs are used for convenience
of reference merely and shall be ignored in the interpretation hereof.
8.3 As used herein, terms such as "herein", "hereof", "hereto", and similar
language shall be interpreted to refer to this entire instrument as not merely
the paragraph or sentence in which they appear, unless so limited by express
language.
8.4 Neither this Agreement nor any of his/her rights hereunder may be assigned
by the Executive without the written consent of COMPANY unless specifically
identified in this Agreement.
8.5 In the event of a suit or claim against the Executive arising out his
corporate duties, COMPANY will provide and pay for legal counsel approved by the
Executive, and hold the Executive harmless and indemnify the Executive for any
and all costs, fees, suits, judgements and settlements arising therein.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
on the day and date first above written:
By:
-----------------------------------------
Joseph G. Sicinski, CEO/President
------------------------------------------
Joseph E. Link, EXECUTIVE