UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549
                                  FORM 10-KSB

                 ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

                     COMMISSION FILE NUMBER       33-4734-D

             GRAND ADVENTURES TOUR & TRAVEL PUBLISHING CORPORATION
                       (FORMERLY RILEY INVESTMENTS, INC.)
               (Exact name of registrant as specified in charter)

           OREGON                                                93-0950876
 (State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

1120 CAPITAL OF TEXAS HIGHWAY SOUTH, BLDG. 3,
     SUITE 300, AUSTIN, TEXAS                                         78746
  (Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code            (512) 329-7250

          Securities registered pursuant to section 12(b) of the Act:

    Title of Class                 Name of each exchange on which registered
         NONE                                      NONE

          Securities registered pursuant to section 12(g) of the Act:
                                      NONE
                                (Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
                 Yes  X                 No

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy of information
statements incorporated by reference in Part 10-KSB or any amendment to this
Form 10-KSB.

State issuer's revenues for its most recent fiscal year: $11,003,326.

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock as of a specified date within the past 60
days: As of March 26, 1997, the aggregate market price of the voting stock held
by non-affiliates was approximately $14,263,536.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of March 26, 1997, the Company had
outstanding 9,509,024 shares of its common stock, par value $0.0001.

Transitional Small Business Disclosure
Format (Check one):     Yes          No  X

<PAGE>
                                     PART I
ITEM 1. DESCRIPTION OF BUSINESS

Effective October 10, 1996, Grand Adventures Tour & Travel Publishing
Corporation, then operating as Riley Investments, Inc. (the "Company") acquired
as a wholly-owned subsidiary, Airfair Publishing, Inc. ("Airfair"), an Austin,
Texas based travel services group that includes Interline Travel, Interline
Representatives, and Interline Adventures magazine.  The acquisition was
accomplished by the merger (the "Merger") of a newly created, wholly-owned
subsidiary of the Company with and into Airfair, which was the surviving
corporation.  The Merger was effected by the conversion of the issued and
outstanding shares of common stock of Airfair (the "Airfair Stock") into new
shares of common stock of the Company (the "Common Stock") on the basis of one
share of Common Stock for each share of Airfair Stock issued and outstanding, or
an aggregate of 9,125,000 shares of common stock, which represents approximately
96% of the common stock of the Company.  Following the Merger, the executive
officers and directors of Airfair, who are now executive officers and directors
of the Company, own approximately 65% of the issued and outstanding Common
Stock.

To better reflect the nature of its business following the acquisition, Riley
changed its name to Grand Adventures Tour & Travel Publishing Corporation and
its trading symbol to "GATT".

The existing directors of Airfair joined the Company's board of directors and
the executive officers of Airfair were appointed to serve in similar positions
as executive officers of the Company following the Merger.  The principal
offices of the Company have relocated to 1120 Capital of Texas Highway South,
Building 3, Suite 300, Austin, Texas 78746.  The Company was previously based in
Lake Oswego, Oregon.

Before its activities under the name of Riley Investments, Inc., the Company was
known as Pace Group International, Inc., and operated until November 1, 1995,
through its then wholly-owned subsidiary, Pace International Research, Inc.("
PIR"), which globally marketed English language training programs developed by
the Company's founder, Edwin T. Cornelius, Jr.  Despite the proprietary nature
of PIR's products, the then operating Company continually failed to generate net
income.  Since disposing of its operating subsidiary in late 1995, the Company
has had no assets or operations until the Merger.

The Company now serves a portion of the travel industry known as "interliners"
through three divisions acquired by its wholly-owned subsidiary (and such
subsidiary's predecessor in interest) in late 1994 and early 1996.  See "CERTAIN
TRANSACTIONS." Interliners are the active employees and retirees of the airline
industry, who may fly on many carriers for free or at a very significantly
reduced fare, along with their families and the friends to whom they pass along
their allotments of no-cost or low-cost flying privileges.  Interliners are
generally able to procure hotel or resort accommodations in destination
locations, cabins on cruise ships and other travel products at rates
representing a courtesy discount of up to 50% off of established rates,
primarily because interliners have a high propensity to travel at the last
minute or during off-peak periods when "stand-by" space is available at hotels
and resorts and on cruise ships.  These factors have led the travel industry to
view interline bookings as incremental revenue that supplements normal marketing
revenue.  Unlike travel agencies, which generate commission income by retailing
travel products by third party wholesalers, Airfair has adopted a structure in
which it operates both as a wholesaler and a retailer of its own products, and
its business is not solely dependent upon commissions from selling its own
products.

The Company serves both interline travelers and operators (hotels, resorts,
cruise lines and others) through three distinct business units: Interline
Adventures (the "Magazine"), a publication formerly titled Airfair Magazine;
Interline Travel ("IT"), which markets hotel/resort space to interliners and
specializes in Mexican and Caribbean locations; and Interline Representatives,
Ltd. ("IRL"), which markets cruise and escorted tour packages to interliners.

Industry

A principal characteristic of the industry is that interliners are generally
unaware of the many opportunities, discounts and specials that are available to
them at any given time. The industry that exists to service the interline market
is highly fragmented, generally consisting of small operators serving the market
either as an adjunct to a retail tour operation or by concentrating on an
extremely narrow segment such as "European barge tours." There are a handful of
major interline companies that are established and offer relatively broad
service, yet none of these operations could be considered to have a dominant
position.

The Magazine

Interline Adventures (formerly Airfair Magazine), is a 27-year-old, 4-color, 96
plus-page magazine now published six times annually with general travel
editorial coverage and, in a section known as the Interline Vacation Guide, a
significant focus on cruise and tour opportunities for interliners.  The
Magazine serves as a marketing channel for the Company's other divisions.
Through the Magazine, the other Company divisions advertise their products and
services and generate inquiries and sales.  In addition, the Magazine provides
an advertising outlet for the cruise lines, hotels and resorts frequented by the
Company's clients. The Magazine currently sends approximately 15,000 copies to
subscribers, mails up to another 40,000 copies on a promotional basis, and
distributes up to 20,000 more copies through the Company's airline
representatives. Copies not delivered directly to subscribers are placed in
airport areas and rooms reserved for and frequented by airline employees
(hereinafter referred to as "Employee Areas").  Among these areas and rooms are
employee break rooms, reservation and office areas, and "pass bureaus." "Pass
bureaus" are offices maintained by each airline in an attempt to facilitate
employee travel on other airlines - i.e., a Continental employee wishing to make
travel arrangements on American Airlines may utilize the services of
Continental's pass bureau.  Airlines generally establish a pass bureau in their
"hub airports."

Interline Travel ("IT")

IT is a 7-year-old operation that specializes in providing interliners with
hotel and resort accommodations in all accessible Mexican resort destinations,
as well as in most major Caribbean destinations.  IT contracts with hotels and
resorts to offer their rooms or vacation packages consisting of rooms and some
combination of meals and amenities.  Having agreed with the hotel or resort on
the price to be paid to them (generally, equivalent to the standard interline
rate paid by all competitors in the interline industry less 20 to 30%), IT
typically sets prices for the rooms or packages and then advertises the rooms,
packages, and prices in the Magazine, in brochures placed in Employee Areas, and
occasionally in brochures distributed through bulk mailings.  The Company
maintains an extensive phone and computer system with which it handles the calls
generated by these advertisements and completes the reservation process through
it's reservation centers.

The average IT sale, typically booked less than two weeks prior to travel, is
approximately $600 with typical margins for the Company of 18% to 35%.  The most
popular destinations are: Cancun (36%), Jamaica (20%) and Cozumel (19%).  Sales
from this division in 1996 totaled $4.2 million.

Interline Representatives Ltd. ("IRL")

IRL is a 17-year-old travel operation that specializes in the sale of space on
cruises and escorted tours.  IRL currently offers cruises on 27 lines with over
100 ships in various worldwide destinations and a wide variety of escorted
tours, primarily to England, Europe and Africa.  Unlike IT, which typically sets
its own prices for the rooms or packages it sells, IRL negotiates with the
cruise line or tour operator to determine the price which IRL can quote for a
given cruise or tour and then collects the difference between the price charged
and the cost from the cruise line or tour operator on each reservation booked by
IRL.  Like IT, IRL advertises the cruises, tours and prices in the Magazine and 
in brochures placed in Employee Areas.  IRL utilizes the phone, computer system 
and reservation staff provided by the Company in selling cruise, tours and 
IRL's other products to those who respond to IRL's marketing efforts.

Airline retirees and the families of airline employees make up the majority of
IRL's clientele so, unlike the 'last-minute' nature of IT's purchase cycle, IRL
trips are more often planned in advance than taken impulsively.  Most bookings
are made, on average, approximately 45 days prior to departure, and sales are
for cruises/tours of seven days or more.  The average IRL sale is approximately
$1,600 with typical margins of 11% to 17%.  IRL works with all major cruise
lines, and no single line accounted for more than 15% of its $6.3 million in
sales in 1996.

Marketing

Interline Adventures

The Magazine derives revenue from sales of subscriptions to interliners and
sales of advertising to hotels, resorts, cruise lines and other service
providers located at or leaving from destination locations.

The Magazine is marketed to potential subscribers and to existing subscribers by
subscription renewals and through advertising and promotions.  Advertising and
subscription cards are placed within the brochures distributed by IT and IRL to
Employee Areas.  Complimentary copies of the Magazine are mailed to selected
interliners who have previously made purchases from or through IT or IRL and to
individuals who have previously inquired about the possibility of subscribing to
the Magazine.  As the Company more firmly establishes its frequent traveler
program discussed below, it anticipates that it will be able to more effectively
target its efforts to promote the Magazine.  See "Competition" below.  Airlines
do not provide lists of airline employees to interline companies and, at least
to date, airline employee unions have not provided such lists.   Airlines hire
distributors to transmit the airline's materials to its employees and, although
unwilling to provide employee lists to the Company, will permit the distributor
to mail the Company's promotional material to their employees if the Company
will provide the distributor the promotional materials and prepay both mailing
expenses and a nominal handling fee.  The Company has not yet undertaken this
sort of mailing because management perceives it to be relatively expensive,
cumbersome, and for a variety of reasons, inefficient as a means of procuring
subscriptions to the Magazine or sales of IT or IRL products.

Advertising space is marketed to hotels, resorts, cruise lines and tour
operators through direct telemarketing and distribution of media kits to the
advertisers and, on a selective basis, to agencies representing the advertisers.
Although many advertisers are hotels, resorts, cruise lines, and tour operators
who have rate agreements with IT or IRL, and their advertisements display the
phone number of IT or IRL, the Magazine also sells advertising space to
interline operators which have no agreement or arrangement with IT or IRL.
Recently, the Company launched a marketing effort to pursue both advertisers
that are only adjuncts to the interline travel industry, such as luggage
manufacturers, and those that have no connection to the travel industry.

Advertisers generally, and in particular advertisers who do not have rate
agreements with IT or IRL, focus on subscriber base and total distribution of
publications in determining both in which publications to place advertising and
how much to pay for advertising space.  The subscription base and total
distribution of the Magazine prior to its acquisition by the Company were too
small to attract significant advertising sales.  Management of the Company
believes that it is possible to increase the total distribution and, in
particular, the subscriber base of the Magazine to a point where significant
advertising revenues can be achieved, not just from hotels/resorts and cruise
operators but also from non-travel businesses.
The Company offers many advertisers the opportunity to purchase advertising
space within the Magazine in exchange for rooms in hotels, resort accommodations
and cruise cabins, which it then remarkets for cash at an additional profit.


IT and IRL

IT and IRL primarily market their hotel and resort rooms and packages, cruises,
and escorted tour products through advertisements within the Magazine, but also
advertise in the magazines and newsletters published by or for a given airline's
employees and distribute a brochures and flyers into airline Employee Areas.  IT
has a network of more than 500 current and former airline employees who
distributed IT's and IRL's brochures and information in airport Employee Areas
throughout the United States, Canada and United Kingdom and is beginning
distribution throughout western Europe.  Beginning in November, 1996, the
Company began to market and refer to IT and IRL under a unified brand
identification, "Interline TravelReps." The Company's other significant
marketing tools are its reservation center and the reservation agents there who
answer phone calls placed by interliners in response to IT's and IRL's
promotional activities.

The phone system and computer system maintained by the Company are critical
elements in IT's and IRL's marketing efforts.  The Company has installed an
extensive phone system and computer network which the Company believes will
handle IT's and IRL's needs for the foreseeable future.  IT's and IRL's ability
to service interliners will be dramatically reduced should either the phone or
computer system become inoperable.  The Company believes that it has taken
appropriate steps to assure that the phone and computer system are as reliable
and well-protected as electronic equipment can reasonably be expected to be.
There can be no assurances, however, that the Company's electronic equipment
will at all times be useable by IT and IRL in their efforts to service interline
customers.

Interline PERX Vacation Club

In July 1996, the Magazine, IT, and IRL collaborated in launching PERX, a
customer loyalty/referral program designed to generate repeat travel business
for IT and IRL, as well as subscribers to the Magazine.  Membership in PERX
allows eligible interliners to receive points for each trip taken with IT or IRL
in a manner similar to the many frequent flyer/guest programs operated by
airlines and hotels worldwide.  In addition, PERX members will receive points
for travel by anyone they directly refer to the program.   Points are redeemable
for discounts and/or free trips.  In July 1996, 300,000 brochures containing an
application for the PERX program were distributed.  Although there is no
enrollment fee for interliners who join PERX, the Company anticipates the
following benefits from wide enrollment in PERX:  (i) increase in the Company's
share of the interline market, (ii) increase in the Magazine's circulation,
enabling the Company to adjust advertising rates and underwrite the Magazine's
production and distribution costs; (iii) creation of  an enthusiastic sales team
not requiring additional compensation; and (iv) establishment of an IT and IRL
mailing list that will supplement the lists available through the Magazine and
IT's and IRL's own records and may contain the names of recipients that might
otherwise be reached only through more expensive channels (e.g., paid
advertising).  No assurances can be given that sufficient numbers of interliners
will enroll in PERX so as to permit the Company to realize any of the foregoing
benefits.

Suppliers

The Magazine

The Magazine is printed and distributed by a contract printing operation at
prices negotiated from time to time between the Company and printers.  There are
a number of printers who could print and distribute the Magazine.  Chief among
the factors influencing the Company's expenses in printing and distributing the
Magazine is the price of paper.  Paper prices are volatile and, although
currently higher than historical averages and, in the belief of the Company's
management, not likely to rise significantly in the foreseeable future, the
possibility that paper prices will rise further cannot be completely discounted.
Significant increases in paper prices could have a materially adverse effect on
the printing expenses of the Magazine and the profitability of the Company.


IT and IRL

IT and IRL primarily procure their supply of hotel and resort accommodations,
cruise ship cabins, and tour reservations directly from the operators of those
businesses.  IT negotiates the prices, terms and, in some cases, availability of
hotel and resort accommodations over the telephone or via facsimile machines
and, occasionally, at industry conferences where hotel and resort operators
within a given region meet with both interline companies and travel wholesalers
(which typically buy blocks of hotel rooms or resort accommodations and resell
them to travel agencies).  With some exceptions, IT usually procures the
interline rate quoted by a given hotel or resort operator to all interline
operators.

Cruise lines typically limit the interline companies that market their cabins to
those which have a demonstrated ability to effectively serve interline
travelers.  As a result of the Company's acquisition of IRL, the Company
obtained the opportunity  to market all of the major cruise lines serving the
interline market.  There is little if any negotiation with cruise lines with
respect to rates.  Most cruise lines simply inform IRL and the other interline
companies of the rates which the cruise lines will make available to
interliners.  The cruise lines pay interline companies such as IRL the
difference between the negotiated rate and the cost on each cruise ship cabin
sold to interliners.  Retention of the ability to sell cruise cabins to the
interline market is key to the continued success of IRL and is subject to the
continued satisfaction of the cruise lines with IRL's service.  The Company
maintains an office in Boca Raton, Florida, in order to facilitate its relations
with the substantial number of cruise lines that are located in that area.

IRL procures space on escorted tours in much the fashion that it procures cabins
on cruise ships.   Escorted tour operators limit the number of interline
companies which market their tours, inform (with little negotiation) the
interline companies of the interline rates applicable to their fares, and pay
interline companies such as IRL a commission on each tour space sold to
interliners.

On a limited basis, IT and IRL may also acquire access to travel accommodations
through barter arrangements.  No assurances can be given that barter
transactions will yield a significant supply of travel products for sale by IT
and/or IRL.  In addition to these direct barter transactions, the Company is
party to a marketing agreement with Inventory Merchandising Services, Inc.
("IMS"), a subsidiary of BEI Holdings, Inc., pursuant to which IMS has agreed to
permit IT and IRL, on an exclusive basis, to sell travel accommodations which
IMS acquires through barter transactions.  IMS conducts a barter exchange
business and, with some frequency, obtains travel accommodations through barter
transactions.  Pursuant to the marketing agreement, IMS makes the travel
accommodations available for sale by the Company and, upon sale, the Company
pays to IMS a sum equal to 25% of the proceeds received by the Company, net of
IMS cost of goods sold, with respect to the sale of such inventory.

Competition

The Magazine

The Magazine competes with other publications for readership and for
advertisers' patronage.  Most information available to interline travelers
consists of brochures distributed by other interline companies, hotel and resort
operators, cruise lines and escorted tour operators.  The Magazine is the only 4
color publication available which is updated and published six times annually.
The Magazine has one primary competitor, the ASU Travel Guide - a 400-page
guide, published quarterly, with the look and feel of a paperback novel.  It
competes with the Magazine for advertisements targeting interliners.  The ASU
Travel Guide has been published successfully for a number of years and enjoys
widespread circulation.  The Company hopes to compete for advertising sales by
increasing distribution and offering barter arrangements to advertisers.


IT and IRL

Management of the Company believes that competition within the interline
industry is based principally on market visibility and the nature and variety of
products and services offered.  As most interline companies are quoted the same
price by hotels, resorts, cruise lines and tour operators, price is not usually
the basis for a competitive advantage.  See "Marketing" above.

There are over 30 competitors in the interline travel industry.  None are
publicly held so reliable sales information is not available.  However, two
companies, Caesar's and Magellan, which have been in the travel business for
more than 20 years, currently may have greater sales, resources, and management
experience and depth than the combined IT and IRL and may be able to compete
very effectively with them.  The balance of GATT's competition is largely made
up of smaller organizations formed by former airline employees and retail travel
operators which view the interline market as merely a portion of their business.
Most interline companies tend to focus on a specific destination (Mexico and the
Caribbean, Ski Trips, etc.) or  specific airline (e.g., only Continental).
Others, like the Company, offer a more complete range of interline products and
services.

The Company's management has implemented several product features in an attempt
to improve the products of IT and IRL and differentiate them from the products
and services of competitors.  In doing so, the Company has attempted to
specifically tailor the products offered to the needs and concerns of
interliners.

The Company employs 57 people.  It is anticipated that up to 200 additional
personnel will be required to meet the demands of the projected market over the
next five years.  Most of these positions will be in the areas of reservations
and operations processing and servicing the Company's projected volume
increases.

ITEM 2. DESCRIPTION OF PROPERTY

The Company occupies approximately 8,000 square feet of office space at 1120
Capital of Texas Highway, Building 3, Suite 300, Austin, Texas 78746 and 630
square feet of office space at 1499 West Palmetto Park Road, Suite 222, Boca
Raton, Florida 33486.  The Company owns no property other than office furniture,
equipment and software.

ITEM 3. LEGAL PROCEEDINGS

The Company is not a party to any material legal proceedings, and no material
legal proceedings have been threatened by or, to the best of the Company's
knowledge, against the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

A special meeting of the shareholders of Riley Investments, Inc. (the former
name of the Company) was held on October 7, 1996, at 2:00 p.m., local time, at
1820 North Shore Road, Lake Oswego, Oregon.  There were a total of 384,024
shares of common stock issued and outstanding, after giving effect to a recent
15 for 1 reverse stock split of the Corporation's outstanding common stock.
There were 192,498 shares of the 384,024 issued and outstanding shares of common
stock of the Corporation present, in person or by proxy, constituting
approximately 50.1% of the shares issued and outstanding at the record date.
Therefore, a quorum was present and the meeting was duly called and noticed and
convened for the transaction of business.


The following resolutions were adopted by the indicated votes:

     Resolved, that the articles of incorporation be amended to change the
authorized capital of the  Corporation to consist of 30,000,000 shares of
common stock and 10,000,000 shares of preferred stock.    (The vote was
194,498 shares for adoption of this resolution and 191,526 shares either
against, withheld   or non-voting.)

     Resolved, that the articles of incorporation be amended to change the name
of the corporation from  "Riley Investments, Inc." to "Grand Adventures Tour &
Travel Publishing Corporation".

     (The vote was 194,498 shares for adoption of this resolution and 191,526
shares either against, withheld or non-voting.)

     Resolved, that the Long-Term Stock Incentive Plan be ratified, authorized,
adopted, and approved in all  respects.  The Plan is intended to aid the Company
in maintaining and developing a management team,  attracting qualified officers
and employees capable of assisting in the future success of the Company, and
rewarding those individuals who have contributed to the success of the Company.
It is designed to aid in retaining the services of qualified executives and
employees and in attracting new personnel when needed  for future operations and
growth and to provide such personnel with an incentive to remain employees of
the Company, to use their best efforts to promote the success of the Company's
business, and to provide them with an opportunity to obtain or increase a
proprietary interest in the Company.  It is also designed to permit the Company
to reward those individuals who are not employees of the Company but who are
perceived by management as having contributed to the success of the Company or
who are important to the continued business and operations of the Company.

     (The vote was 192,446 shares for adoption of this resolution and 191,578
shares either against, withheld or non-voting.)

                                    PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Common Stock is traded irregularly and infrequently in the over-the-counter
market and is quoted on the OTC EBB under the symbol "GATT".  Prior to the
Merger, the Common Stock was quoted under the symbol "RIBS".  The high and low
bids during the last quarter of 1996 were $3.50 and $2.50 , respectively.  The
Company believes that quotations and trades for the periods prior to the fourth
quarter of 1996, when the Company was not operating or operated a wholly
different business, are immaterial.

The Company has approximately 400 stockholders.

The Company has paid no dividends since its inception.  The Company does not
anticipate that it will pay any cash dividends in the future, even if it were
profitable.  Instead, the Company intends to retain earnings it might generate
to provide funds for further expansion in the future.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The financial information set forth in the following discussion should be read
in conjunction with, and qualified in its entirety by, the financial statements
of the Company included elsewhere herein.

On December 1, 1994, IMS, a subsidiary of BEI, acquired from an unrelated third
party the net assets that resulted in the IT division in consideration of the
assumption of $144,394 in liabilities.  BEI formed Airfair as a subsidiary on
January 5, 1996, in which to consolidate its interline industry activities.  On
January 13, 1996, Airfair acquired certain assets and assumed certain
liabilities that became the IRL and Magazine divisions of Airfair in
consideration of the assumption of $593,791 in liabilities, effective December
31, 1995. Following the organization of Airfair, IMS transferred the IT division
to Airfair, effective January 1, 1996.  Effective October 10, 1996, Airfair
merged into a newly created, wholly-owned subsidiary of Grand Adventures Tour &
Travel Publishing Corporation (formerly Riley Investments, Inc.).  Airfair
became the surviving operating corporation following the merger (SEE ITEM 1.
DESCRIPTION OF BUSINESS).  In view of the foregoing acquisitions and merger and
its  new management team, operating strategies, expansion plans, resources, and
other factors, management does not believe that a discussion of the operations
of the prior operating entity (Riley) would be meaningful.

FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION

The Company had a negative working capital of $1,569,859 as of December 31,1996,
as compared to a negative working capital of $496,437 at December 31,1995.  This
resulted in a decrease of $1,073,422 in working capital for the 1996 fiscal
year.  The primary causes for this large decrease were the loss from operations
of $872,655 and the payment of certain liabilities assumed in the IRL and
Magazine purchase previously mentioned.  The Company ended the fiscal year with
$2,464,269 in current liabilities as compared to $523,722 for the prior year.
This was a result of not being able to generate enough cash funds during the
year to adequately sustain the acquisitions and management's intent to grow
sales through increasing the number of publications, size, distribution and
quality of the magazine.  The largest components of current liabilities are
accounts payable of $578,988 (of which $413,271 are greater than 60 days past
due); accrued expenses of $179,868; due to affiliates (BEI/IMS, the former owner
of Airfair) of $88,213; current portion of notes payable of $502,573, and
deferred revenues relating to hotels, cruises and tours and magazine
subscriptions of $1,114,627.  A large portion of accounts payable are made up of
amounts due for telephone services, publication of the magazine and attorneys'
fees incurred in connection with the aforementioned merger.  The Company has
been diligently working with its primary vendors to work out payment schedules.
Subsequent to year end, the two largest publication vendors have agreed to
convert to longer term notes payable.  Accrued expenses of $179,868 are
comprised mainly of payroll, vacation and commissions of $89,173, note interest
of $17,612, negative cash balances of $50,723, and general administrative
expenses of $24,917.  The amount due BEI/IMS is the net balance due at the end
of the year for various transactions that occurred during the year, such as
management fees (SEE ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS).
Deferred revenues for hotels and cruises represent the moneys received from
passengers that are deferred for revenue recognition purposes until the
passenger has completed travel.  Amounts deferred for hotels were $385,852 and
for cruises $623,715 at December 31, 1996.  Deferred subscription revenue of
$105,060 represents subscription moneys received but not earned at year end.
Magazine subscriptions are normally paid in full in advance for the one- or two-
year subscription period.  Revenue is earned on a prorata basis as the magazines
are printed and shipped to the subscribers. Total notes payable of $756,796 is a
combination of eight notes totaling $400,000 due shareholders of the Company,
two notes incurred in connection with the previously mentioned acquisition of
the cruise and magazine divisions totaling $306,796 and a one $50,000 note from
a potential future investor.  The holder of the acquisition notes agreed to a
substantially discounted payoff on these notes in April, 1997.  The Company
completely extinguished this debt through the payment of $75,000 in cash in
April, 1997.  The discount amounted to a reduction of
$231,796 in the debt balance with the offset being a reduction in the amount of
goodwill created in the acquisition.  Of the total of $756,796 in notes, the
current portion amounts to $502,573 and the long term portion equals $254,223.
Included in other liabilities besides the long term debt is a deferred discount
of $54,644 that was received as a service discount from the Company's long
distance telephone carrier in 1996 upon the execution of a long term agreement.
The agreement requires the Company to use a minimum of $240,000 in annual long
distance services for a period of three years.  If the Company fails to utilize
the required minimum usage, the discount will be forfeited.  The Company
anticipates that it will exceed the annual requirements and will earn all
discounts by the end of the agreement term.

The Company had $1,579,489 in total assets at December 31, 1996 compared to
assets of $147,530 at the end of 1995.  Substantially all of the balance in the
cash account of $43,240 consists of an escrow deposit required by the Company's
bank as a reserve for Visa/Mastercard credit card processing.  The deposit
agreement requires the Company to fund a total of $125,000 to this account over
time.  The Company has funded $105,376 to this account to date.  Subsequent to
the date of the audit, the Company was notified by the bank that it will not
process the Company's credit cards after June 10, 1997.  The bank made a
determination that the travel industry in general and the Company's financial
condition at December 31, 1996 were not strong enough to warrant the risk for
the bank.  The bank will return all excess funds over $50,000 to the Company on
June 10, 1997, and will return the remainder of the funds at the end of 10
months ( April 1998 ) providing that the Company continues to honor any
chargebacks during that period.  The Company has had a history of minimal
chargebacks.  The Company is in the process of negotiating with the bank to
determine what avenues (such as increasing the reserve amount) can be taken in
order to continue credit card processing.  The Company is also looking at other
banking institutions for its processing needs.  Approximately 70% of the
Company's hotel and resort sales are generated through credit cards.  If the
Company is not able to work out an acceptable credit card processing arrangement
there will be a material adverse effect on the Company's ability to generate
adequate hotel sales to maintain its current level of operating needs.  The
accounts receivable of $19,911 is comprised primarily of advertising revenue
from vendors that advertised in the magazine and updates.  Prepaid tour cost and
prepaid cruise cost of $252,344 and $578,915, respectfully, represent funds paid
to hotels and cruise lines as of December 31, 1996 for travel dates that occur
after that date.  The largest increase in assets occurred in intangible assets
(goodwill) with a net unamortized balance of $622,009 at the end of the year.
This increase was the result of $558,791 of goodwill generated in connection
with the aforementioned purchase of the cruise and magazine divisions.
Subsequent to the audit, the Company has reduced this goodwill by $231,796 due
to the discounted payoff of the notes mentioned above.

RESULTS OF OPERATIONS

Overall Operating Results

The Company experienced a net loss for the year ended December 31, 1996 of
$872,655 as compared to a net loss of $364,744 for 1995.  One of the primary
causes for the increased loss in 1996 were expenses related to the acquisition
of the cruise and magazine divisions in January, 1996.  The Company incurred
approximately $34,000 in relocation expenses in moving personnel from Florida to
the Company's home office in Austin, Texas.  Interest expense on the acquisition
notes payable was $40,898.  Management also set a goal in 1996 of increasing
sales through increasing the size, quality and distribution of the magazine.
The magazine's production schedule was increased to every two months as opposed
to every three months before the Company's acquisition.  The magazine also
produces an update brochure promoting hotel and cruise specials in the months in
which the magazine is not produced.  The Company had expenses associated with
the publication, distribution, advertising and administration of the magazine
and updates of approximately $460,000 in excess of subscription and advertising
revenue generated.  Management believes that increased circulation will increase
the value of the publications to both advertisers and subscribers.  The Company
intends for the magazine division to increase both advertising and subscription
revenue to the point where this division will at least break even in 1997.  The
anticipated value of these publications should be felt through increased sales
in both the hotel and cruise and tour divisions.  The Company also incurred
approximately $85,000 of legal expenses during the year as result of the cruise
and magazine acquisitions and the merger with Riley.

Revenue

Gross revenue for the year ended December 31, 1996 was $11,003,326 an increase
of $8,676,434 over 1995 revenues of $2,326,892.  Hotel sales increased 86% in
1996 from $2,289,018 in 1995 to $4,249,454 in 1996.  This increase in hotel
sales was primarily caused by the Company being able to better advertise its
products and services in the magazine and update publications purchased at the
beginning of 1996.  The marketing department also substantially increased the
number of available properties to sell to the interline market during the year.
With the purchase of the cruise and tour division and the magazine division, the
Company was able to add new product line revenue in 1996 that it did not have in
1995.  Gross cruise and tour revenue equaled $6,339,179 in 1996.  The magazine
and update publications added another $374,789 in advertising and subscription
revenue for the year.  The Company also began selling cruise bump protection
insurance to passengers as a auxiliary product.  This produced $11,139 in earned
commissions in 1996.  The Company recognizes hotel and cruise revenues on a
"booked, paid, traveled" basis, (i.e. revenue is not earned until the passenger
has completed travel).

Cost of Goods Sold

The overall gross margin for 1996 was $2,089,438, or 19% of overall gross sales.
This compares to a gross margin of $561,151, or 24.5% of gross sales, for 1995.
The decrease in the gross margin percentage is due primarily to the addition of
the cruise division during the year.  While cruises typically have a much higher
dollar value per sale, the margin percentages are lower on the average than
hotel sales.  The hotel division had cost of sales of $3,273,552 on sales of
$4,249,454 in 1996 producing a gross margin of $975,902, or 23% of sales.  1995
hotel cost of sales was $1,751,919 generating a gross margin of $537,099, or
23.5% of sales of $2,289,018.  The margins on hotel sales remained very
consistent over the two year time frame.  The cruise division generated a gross
margin of $776,303 or 12.5% on sales of $6,339,179 in 1996.  As previously
mentioned, the Company did not have this division in 1995.  Average margins on
cruises can range from 10% to 18% depending on which cruise line is booked.  The
magazine division produced a margin of $297,329 for the year.  The Company only
recognizes those publishing costs directly associated with the subscriber and
advertising commitments as cost of goods sold. Any publishing cost for excess
production and distribution is recorded as Company advertising expense as it for
the benefit of the hotel and cruise sales.

Operating Expenses

Operating expenses for the year ended December 31, 1996 were $2,962,093 as
compared to $925,895 for 1995.  Again one of the major causes for such a large
increase was the expenses associated with the acquisition and operating of the
cruise and magazine divisions at the beginning of 1996.  Advertising expenses
were $468,078 for the year, an increase of approximately $422,000 over the prior
year.  This was caused by the increased production and distribution of the
magazine and updates.  Total interest expense for the year equaled $56,098 on
notes payable (See "Liquidity and Capital Resources" below).  Management
anticipates that interest expense will increase materially in 1997.  The Company
had no debt or interest expense in 1995.  The Company also incurred $85,602 in
legal expenses for the year due to the aforementioned acquisitions and the
merger with Riley.  The Company anticipates that legal expenses will be
drastically reduced in 1997. Contract service expenses of $64,167 were incurred
primarily for computer programming related to the enhancement of the hotel
reservation system and for writers who contracted to write travel stories for
the magazines.  The previously mentioned relocation expenses amounted to
approximately $34,000.  The largest expense item for the Company is salaries
which equaled $1,111,081 for 1996 as compared to $342,544 for the previous year.
This increase is attributable to the added staff acquired in the purchase of the
cruise division, the staffing up of the acquired magazine division and personnel
added in hotel reservations to handle the 86% increase in hotel sales over the
prior year.

The Company reduced salary expenses as of January 1, 1997 through the reduction
of personnel and attrition ( See "Liquidity and Capital Resources").  Credit
card processing fees for the year totaled $129,833.  Approximately 70% of the
Company's hotel and resort revenue is received via of credit card payment.  The
bank processing fees for handling credit cards approximates 2% of the credit
sale.  The Company entered into an agreement with its processing bank in
September, 1996 whereby the Company would no longer directly accept
Visa/Mastercard charges for cruises due to the high average ticket involved.
The bank felt at that time that this would substantially reduce the bank's
exposure to chargebacks if the Company was unable to honor these commitments.
The Company relies heavily on telephone usage because the interline passenger
base is widely dispersed throughout the United States and Europe and the supply
vendors are internationally situated.  Telephone expenses for 1996 were
$227,004.  These expenses for 1995 were $45,724.  The last major expense area
were management fees. Airfair entered into a management agreement with BEI and
IMS effective March 1, 1996. Under this agreement, BEI permits Airfair to use
office space and certain equipment leased by BEI, and BEI and IMS provide
Airfair insurance, payroll services, office supplies and other minor office
services.  IMS and BEI charge Airfair a management fee equal to 0.5% of
Airfair's gross revenue per month for these services. In addition, pursuant to
the terms of the management agreement, IMS, BEI, and Airfair agreed that Airfair
would reimburse BEI for a portion of the direct payroll expenses of certain
members of management who serve BEI, IMS, and Airfair (the "Shared Management
Members").  The proportion is intended to correspond with the amount of time
expended by the Shared Management Members on the business matters of Airfair.
These management fees and the payroll reimbursements for Shared Management
Members totaled $68,475 for the year ended December 31, 1996.  Prior to the
management agreement, all general and administrative expenses of BEI were
allocated to Airfair and IMS on a ratio basis. In February 1996, BEI incurred a
large one-time gain which exceeded its expenses. As such, both Airfair and IMS
were the beneficiaries of an expense credit for that month.  Airfair's portion
of that allocation was a credit of approximately $142,000.


LIQUIDITY AND CAPITAL RESOURCES

Since Airfair's inception, it has financed its business growth through
internally generated revenue, borrowings from its former sole stockholder, BEI,
and borrowings from new stockholders subsequent to its spin-off from BEI.  The
Company owed BEI/IMS $88,213 on December 31, 1996.  In September, 1996, the
Company borrowed $400,000 from seven shareholders ("bridge loans") that were
collateralized with 130,868 shares of equity securities that are owned by BEI.
BEI executed a Security Pledge Agreement in favor of the lenders.  In November,
1996, the Company initiated a private placement to qualified investors and
offered up to 2,000,000 shares of its common stock at a price of $1.00 per
share.  The Company has not raised any funds through this offering as of this
filing.  Thereafter, management has taken a different strategy in raising and
conserving funds needed for operations in 1997 and thereafter.  Since January 1,
1997, management has reduced expenses by approximately $40,000 per month through
a reduction in nonessential personnel, changing to a lower priced package
delivery service, obtaining more services such as small printing jobs on a trade
basis and reducing any other expenses that are not considered absolutely
necessary to the ongoing needs of the operation.  Subsequent to the audit
report, the Company has also raised funds through additional long-term
borrowings.  The bridge loans were restructured in a transaction whereby the
loanholders agreed to the release of the pledged equity securities in exchange
for the following: (1) payment of all accrued interest through April 10, 1997,
which was paid in the amount of approximately $29,000, (2) the loan broker
received a fee of $20,000, (3) 40,000 Company common stock warrants were issued
to the loan broker and 20,000 stock warrants were issued to a principal of the
loan broker, all exercisable at $1.00 per share, (4) the bridge loans were
converted to 3-year notes bearing 12% annual interest , with principal and
interest payable monthly, beginning in May, 1997, the outstanding principal
balance is convertible (at note holders' option) into Company common stock at
$.50 per share, and no prepayment penalties.  With the release of the equity
securities, the Company obtained a margin loan of $185,000 with the stock as
collateral with the Principal Financial Group in April, 1997.  Also in April and
May, 1997, the Company raised an additional $500,000 from ten investors through
the issuance of three-year convertible debentures.  The debentures carry an
annual interest rate of 7%.  Interest and principal are due and payable in
annual installments on each anniversary.  At the option of the Company, interest
payments due prior to the maturity date may be made in shares of common stock of
the Company at the rate one share for each $0.50 of interest accrued and
payable.  The debenture holder has the right at any time prior to maturity to
convert all or any portion of the then outstanding principal balance into fully
paid and non-assessable shares of common stock of the Company at a conversion
price of $0.25 per share of such outstanding principal amount, subject to
adjustment from time to time as provided for in the debenture.  The Company also
extinguished (in April, 1997) the $306,796 of notes payable that were incurred
in connection with the acquisition of the cruise and magazine division for a
cash settlement of $75,000 (See Financial Condition and Changes in Financial
Condition above).  As a result of the above, the Company has been able to expand
the distribution and number of publications advertising the Company's hotel and
cruise and tour packages which should substantially increase sales in both
areas.  Management has and is continuing to negotiate with its accounts payable
vendors in order to work out acceptable payment schedules for all parties.

As a result of the transactions described in the preceding paragraph, management
believes that its existing working capital levels, supplemented by cash expected
to be generated by existing operations, will be sufficient to fund the Company's
needs over the next 12 months.  Management's belief is based on a number of
assumptions including, without limitation, that increased gross sales will
result from increased distribution (both in terms of frequency and number of
issues) of the Company's publications and that the Company can continue to
operate effectively at reduced levels of operating expenses.  There can be no
assurance that the foregoing assumptions and the other assumptions relied upon
by management will prove accurate and any such inaccuracy may cause the Company
to need working capital.  Moreover, there are no assurances that the Company
will be able to procure any such capital should it be needed and any such
inability may have an adverse effect on the Company's business, financial
condition and future operating results.
INFLATION

The Company's results of operations have not been affected by inflation and
management does not expect inflation to have a significant effect on its
operations in the future because of the short time frame between reservation
bookings and the dates of travel.

FORWARD -LOOKING INFORMATION

From time to time, the Company or its representatives have made or may make
forward-looking statements, orally or in writing.  Such forward-looking
statements may be included in, but not limited to, press releases, oral
statements made with the approval of an authorized executive officer or in
various filings made by the Company with the Securities and Exchange Commission.
Words or phases "will likely result", "are expected to", "will continue", "is
anticipated", "estimate", "project or projected", or similar expressions are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 ("the Reform Act").  The
Company wishes to ensure that such statements are accompanied by meaningful
cautionary statements, so as to maximize to the fullest extent possible the
protections of the safe harbor established in the Reform Act.  Accordingly, such
statements are qualified in their entirety by reference to and are accompanied
by the following discussion of certain important factors that could cause actual
results to differ materially from such forward-looking statements.

Management is currently unaware of any trends or conditions other than those
previously mentioned in this management's discussion and analysis that could
have a material adverse effect on the Company's consolidated financial position,
future results of operations, or liquidity.


However, investors should also be aware of factors that could have a negative
impact on the Company's prospects and the consistency of progress in the areas
of revenue generation, liquidity, and generation of capital resources.  These
include: (i) variations in the mix of hotel, cruise, and magazine revenues, (ii)
possible inability to attract investors for its equity securities or otherwise
raise adequate funds from any source should the Company seek to do so, (iii)
increased governmental regulation, (iv) increased competition, (v) unfavorable
outcomes to litigation involving the Company or to which the Company may become
a party in the future and, (vi) a very competitive and rapidly changing
operating environment.  Furthermore, reference is also made to other sections of
this report that include factors that could adversely impact the Company's
business and financial performance.

The risks identified here are not all inclusive. New risk factors emerge from
time to time and it is not possible for Management to predict all of such risk
factors, nor can it assess the impact of all such risk factors on the Company's
business or the extent to which any factor or combination of factors may cause
actual results to differ materially from those contained in any forward-looking
statements.  Accordingly, forward-looking statements should not be relied upon
as a prediction of actual results.



ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements of the Company are included beginning immediately
following the index to the consolidated financial statements.  In connection
with the Merger, the Company's fiscal year was changed to conform to that of
Airfair, the operating entity.  Therefore, the Company's current fiscal year
ends December, 31, 1996.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Certified Public Accountants for the Period from November
1, 1995 through October 9, 1996

Report of Independent Certified Public Accountants

Consolidated Balance Sheets at December 31, 1996 and 1995

Consolidated Statements of Operations for the Two Years ended December 31, 1996
and 1995

Consolidated Statement of Stockholders' Equity for the Two Years ended December
31, 1996 and 1995

Consolidated Statements of Cash Flows for the Two Years ended December 31, 1996
and 1995

Notes to Consolidated Financial Statements

All schedules have been omitted because they are not applicable or not required,
because the information is shown in the consolidated financial statements or the
notes thereto, or because the information is immaterial.



     
                                                    Independent Auditor's Report

                                                                  April 28, 1997

The Board of Director
Riley Investments, Inc.
Lake Oswego, Oregon

          We have audited the accompanying balance sheet of Riley Investments,
Inc. as of October 9, 1996, and the related statement of operations,
stockholders' equity, and cash flows for the period from November 1, 1995
through October 9, 1996.  These financial statements are the responsibility of
the Company's management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

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

          In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Riley Investments,
Inc. at October 9, 1996, and the results of its operations and its cash flows
for the period from November 1, 1995 through October 9, 1996 in conformity with
generally accepted accounting principles.



                                   /S/ Isler & Co., L.L.C.
                                   Portland, Oregon


<PAGE>
To The Board of Directors
of Grand Adventures Tour & Travel Publishing Corporation and Subsidiary
Austin, Texas

We have audited the accompanying consolidated balance sheets of Grand Adventures
Tour & Travel Publishing Corporation (formerly Riley Investments, Inc.) for the
period November 1, 1996 through December 31, 1996, and its subsidiary (Airfair
Publishing, Inc.) for the years ended December 31, 1996 and 1995, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the periods then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
financial statements of Grand Adventures Tour & Travel Publishing Corporation
(formerly Riley Investments, Inc.), whose financial statements are immaterial in
relation to the consolidated financial statements, for the years ended October
31, 1996 and 1995. Those statements were examined by other auditors whose
reports have been furnished to us and our opinion expressed herein, insofar as
it relates to the amounts included for Grand Adventures Tour & Travel Publishing
Corporation, is based solely on the reports of the other auditors.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Grand Adventures
Tour & Travel Publishing Corporation and subsidiary  as of December 31, 1996 and
1995, and the results of their operations for the years then ended, in
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 15 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raise substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 15. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

/S/ Andersen Andersen & Strong, L.C.
April 4, 1997
(except for Note 15, as to which the date is May 1, 1997)
Salt Lake City, Utah

<PAGE>
             GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
                    CORPORATION AND SUBSIDIARY
                    CONSOLIDATED BALANCE SHEETS
                    DECEMBER 31, 1996 AND 1995





                                                        1996        1995
ASSETS
CURRENT ASSETS
   Cash and cash equivalents - restricted (Note 2)   $ 43,240           -
   Accounts receivable, net of allowance for
        doubtful accounts of $8,810 in 1996 (Note
        2)                                             19,911           -
   Prepaid hotel cost (Note 2)                        252,344      27,085
   Prepaid cruise and tour cost (Note 2)              578,915           -
        Total Current Assets                          894,410      27,085
PROPERTY AND EQUIPMENT, AT COST, NET OF
   accumulated depreciation (Notes 2 and 3)            63,070      48,179
OTHER ASSETS
   Intangible assets, net of accumulated
        amortization (Notes 2 and 5)                  622,009      72,266
                                                  $ 1,579,489   $ 147,530


LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable                               $   578,988       6,787
   Other current liabilities                          179,868           -
   Due to affiliate (Note 6)                           88,213     475,611
   Current portion of long-term debt (Note 7)         502,573           -
   Deferred hotel revenue (Note 2)                    385,852      41,124
   Deferred cruise and tour revenue (Note 2)          623,715           -
   Deferred subscription revenue                      105,060           -
        Total Current Liabilities                   2,464,269     523,522
OTHER LIABILITIES
   Long-term debt (Note 7)                            254,223           -
   Deferred discount (Note 9)                          54,644           -
        Total Other Liabilities                       308,867           -
STOCKHOLDERS' (DEFICIT)
   Preferred stock, no par value; authorized
        10,000,000 shares; none issued and                   
        outstanding                                         -           -
   Common stock $.0001 par value; authorized
        30,000,000 shares; issued and outstanding
        9,509,024 and 9,100,000 shares in 1996
        and 1995, espectively  (Note 11)                  951       9,100
   Additional paid-in capital (deficit)               598,209      (9,100)
   Accumulated deficit                             (1,792,807)   (375,992)
        Total Stockholders' (Deficit)              (1,193,647)   (375,992)
                                                  $ 1,579,489  $  147,530

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



             GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
                    CORPORATION AND SUBSIDIARY
               CONSOLIDATED STATEMENTS OF OPERATIONS
                    DECEMBER 31, 1996 AND 1995




                                                        1996       1995
REVENUES
   Hotel revenue                                  $ 4,249,454 $2,289,018
   Cruise and tour revenue                          6,339,179          -
   Magazine subscription and advertising revenue      374,789          -
   Merchandise and other revenue                       39,904     37,874
           Total Revenues                          11,003,326  2,326,892
COST OF SALES
   Hotel cost                                       3,273,552  1,751,919
   Cruise and tour cost                             5,562,876          -
   Magazine publishing cost                            75,120          -
   Merchandise cost                                     2,340     13,822
           Total Cost of Sales                      8,913,888  1,765,741
           Gross Profit                             2,089,438    561,151
OPERATING EXPENSES
   Selling, general and administrative expenses     1,816,025    530,488
   Wages                                            1,111,081    342,544
   Depreciation and amortization                       34,987     52,863
           Total Operating Expenses                 2,962,093    925,895
Net Loss Before Income Taxes                         (872,655)  (364,744)
Income Tax Expense                                          -          -
Net (Loss)                                        $  (872,655) $(364,744)
Net (Loss) Per Common Share (Note 2)              $   (0.09)   $  (0.04)
Weighted Average Common Shares Outstanding          9,530,007  9,100,000

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



                   GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
                          CORPORATION AND SUBSIDIARY
                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                          DECEMBER 31, 1996 AND 1995


<TABLE>
<CAPTION>

                                                     ADDITIONAL
                                   COMMON STOCK       PAID-IN     RETAINED
                                 SHARES     AMOUNT    CAPITAL     DEFICIT       TOTAL
<S>                           <C>           <C>      <C>        <C>          <C>
BALANCE AT OCTOBER 31, 1994    5,800,531     $  580   $543,580   $(764,168)   $(220,008)

Net loss                               -          -          -    (133,220)    (133,220)

BALANCE AT OCTOBER 31, 1995    5,800,531        580    543,580    (897,388)    (353,228)

Cancellation of shares          (588,674)       (59)        59           -            -
Effect of 1-for-15 reverse
stock split (exclusive of
   fractional shares)         (4,827,833)      (483)       483           -            -
Airfair shares converted to
shares in the Company          9,125,000        913     54,087           -       55,000
Net income (prior to merger)           -          -          -     353,228      353,228

BALANCE AT DECEMBER 31, 1996   9,509,024       $951   $598,209   $(544,160)     $55,000


AIRFAIR PUBLISHING, INC.

BALANCE DECEMBER 31, 1994              -       $  -          -    $(11,248)     (11,248)
Issuance of shares pursuant
  to spin-off of Airfair from
  IMS                          9,100,000      9,100     (9,100)          -            -
Net loss                               -          -          -    (364,744)    (364,744)

BALANCE AT DECEMBER 31, 1995   9,100,000      9,100     (9,100)   (375,992)    (375,992)
Contribution of capital                -          -     30,000           -       30,000
Issuance of common shares
   ($1.00 per share)               25,000         25    24,975           -       25,000
Exchange of Airfair shares
   for shares in the Compan y  (9,125,000)    (9,125)  (45,875)          -      (55,000)
Net loss                                -          -         -    (872,655)    (872,655)

BALANCE AT DECEMBER 31, 1996            -    $     -   $     - $(1,248,647) $(1,248,647)

CONSOLIDATED BALANCES AT
    DECEMBER 31, 1996           9,509,024    $   951   $598,209$(1,792,807) $(1,193,647)
</TABLE>
  The accompanying notes are an integral part of these consolidated financial
                                  statements.


       GRAND ADVENTURES TOUR & TRAVEL PUBLISHING CORPORATION
               CONSOLIDATED STATEMENTS OF CASH FLOWS
          FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995




                                                        1996        1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                         $   (872,655)  $(364,744)
Adjustments to reconcile net loss to cash
provided by operating activities:
        Depreciation and amortization                  34,987      21,355
        Provision for losses on accounts
          receivable                                    8,810           -
   Changes in operating assets and liabilities:
        Accounts receivable                           (28,720)          -
        Prepaid hotel cost                           (225,260)    (14,015)
        Prepaid cruise and tour cost                 (578,915)          -
        Accounts payable                              629,710           -
        Accrued expenses                              122,307    (137,607)
        Payroll taxes payable                              52           -
        Payable to affiliates and other              (387,397)     491,874
        Deferred hotel revenue                        344,728       3,137
        Deferred cruise and tour revenue              623,715           -
        Deferred subscription revenue                 105,060           -
        Deferred discount                              54,643           -
           Net Cash Provided (Used) by Operating
            Activities                               (168,935)          -
CASH FLOWS FROM INVESTING ACTIVITIES:
   Business acquisitions                             (575,128)          -
   Purchase of property and equipment                 (35,000)          -
   Proceeds from sale of equipment                     10,507           -
           Net Cash Provided (Used) by Investing
            Activities                               (599,621)          -
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from sale of common stock                  55,000           -
   Proceeds from notes payable                        909,465           -
   Repayments of notes payable                       (152,669)          -
           Net Cash Provided by Financing Activities  811,796           -
   Net Increase (Decrease) in Cash                     43,240           -
   Cash at Beginning of Period                              -           -
   Cash at End of Period                            $  43,240     $     -
SUPPLEMENTAL CASH FLOW INFORMATION
   Cash paid during the year for interest           $ 38,402      $     -

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



                   GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
                           CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1996 AND 1995

1. BUSINESS ACTIVITIES

The Company serves a portion of the travel industry known as "interliners".
Interliners are the active employees and retirees of the airline industry, who
may fly on many carriers for free or at a very significantly reduced fare, along
with their families and the friends to whom they pass along their allotments of
no-cost or low-cost flying privileges. Interliners are generally able to procure
hotel or resort accommodations in destination locations, berths on cruise ships
and other travel products at rates representing a courtesy of up to 50% off of
established rates, primarily because interliners have a high propensity to
travel and tend to travel during off-peak periods when "stand-by" space is
available at hotels and resorts and on cruise ships. These factors have led the
travel industry to view interline bookings as incremental revenue that
supplements normal marketing revenue.

The Company serves both interline travelers and operators (hotels, resort,
cruise lines and others) segments of the interline industry through three
distinct business units: Interline Adventures, a publication formerly titled
Airfair Magazine: Interline Travel, which markets hotel-resort space to
interliners and specializes in Mexican and Caribbean locations: and Interline
Representatives, Ltd., which markets cruise and escorted tour packages to
interliners.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

Travel revenue is recognized on a "booked, paid, traveled" basis. This means
that all client funds received and all funds paid to travel suppliers prior to
the travel date are deferred for income recognition until such time as the
client has traveled and the Company has completed its commitment to the client
and the travel suppliers. Subscription sales are deferred for income recognition
until magazines are delivered to subscribers. (See Note 8.)

The assets "Prepaid Hotel Cost" and "Prepaid Cruise and Tour Cost" represent
expenses paid for tours and cruises which have been booked but not yet taken by
the customer. The liabilities "Deferred Hotel Revenue" and "Deferred Cruise and
Tour Revenue" represent payments received for tours and cruises booked but not
recognized as revenue until the customer completes the tour or cruise.

Cash and Cash Equivalents

Substantially all of the balance in the cash account consists of an escrow
deposit required by Bank One as a reserve for credit card processing. The
Company has agreed to establish an escrow balance of $125,000 to be funded by
depositing amounts equal to 5% of the prior week's gross sales deposit activity
on a weekly basis commencing September 9, 1996, for a six week period.
Commencing the 7th week, the Company agreed to deposit $5,000 per week for a 4-
week period, and commencing the 11th week, a deposit of $10,000 per week until
the reserve is fully funded. As of December 31, 1996, the Company had funded the
escrow account to a balance of $42,876, and as of the date of the audit report,
the balance in the account is $105,376.

The Company considers all highly liquid instruments purchased with a maturity at
the time of purchase of less than three months to be cash equivalents.

Allowance for Uncollectible Accounts

The Company provides an allowance for accounts receivable which are doubtful of
collection. The allowance is based upon management's periodic analysis of
receivables, evaluation of current economic conditions, and other pertinent
factors. Ultimate losses may vary from the current estimates and, as additions
to the allowance become necessary, they are charged against earnings in the
period in which they become known. Losses are charged and recoveries are
credited to the allowance.

Income (Loss) Per Share

The computation of primary income (loss) per share of common stock is based on
the weighted average number of common shares outstanding during the period plus
(in periods in which they have a dilutive effect) the effect of common shares
contingently issuable from stock options and exercise of warrants.

Depreciation and Amortization

Property and equipment are stated at cost. Depreciation is computed on the
straight-line method for financial statement purposes. Estimated useful lives
range from 5 to 7 years. Intangibles, consisting of  "excess of cost over net
assets acquired" and non-compete covenants are stated at cost and are being
amortized over  40- year and 3-year periods, respectively.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary Airfair Publishing Company, Inc. All intercompany
transactions have been eliminated.

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the basis of certain assets and
liabilities for financial and tax reporting. The deferred taxes represent the
future tax return consequences of those differences, which will either be
taxable or deductible when the assets and liabilities are recovered or settled.

Stock-Based Compensation

In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No.123, Accounting for Stock-Based Compensation.
The Company currently accounts for its stock-based compensation plans using the
accounting prescribed by Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees. Since the Company is not required to adopt the
fair value based recognition provisions prescribed under SFAS No. 123, it has
elected to comply with the disclosure requirements set forth in the Statement,
which includes disclosing pro forma net income as if the fair value based method
of accounting had been applied. (See Note 14.)

Estimates and Assumptions

Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing the financial statements.

3. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1996 and 1995 is as follows:

                                         1996         1995
                                         ----         ----
     Property and equipment            $93,795      $69,302
     Less accumulated depreciation     (30,725)     (21,123)
                                        ------       ------
       Net property and equipment      $63,070      $48,179
                                        ======       ======

Depreciation expense for the years ending December 31, 1996 and 1995 was $9,601
and $19,498, respectively.

4. ACQUISITIONS

On December 1, 1994, Inventory Merchandising Services, Inc. (IMS) (a wholly
owned subsidiary of Barter Exchange, Inc. (BEI)), acquired the net assets of a
business owned by Lou and Claudia Nackos (Nackos) for the assumption of certain
liabilities in the amount of $144,394. This resulted in a new operating division
called Interline Travel (Interline).

Assets acquired from Nackos consist of the following:

   Cash                                      $    814
   Excess of cost over net assets acquired     74,278
   Furniture and fixtures                      69,302
                                              -------
   Total assets acquired                     $144,394
                                              =======

Airfair Publishing, Inc. (Airfair) is a Delaware corporation formed on January
6, 1996. Immediately subsequent to incorporation of Airfair, the assets and
liabilities of Interline were transferred by IMS into Airfair. Additionally,
existing shareholders of BEI received four shares of Airfair for each share held
in BEI, resulting in 8,500,000 shares issued. An additional 600,000 shares were
authorized by the Board of Directors and issued to two shareholders, resulting
in a total of 9,100,00 shares issued pursuant to the spin-off of the Interline
division in IMS to Airfair. Capital of $30,000 was contributed to Airfair by
BEI.

On January 13, 1996, (Closing Date) [effective December 31, 1995 (Effective
Date)] Airfair acquired certain assets and assumed certain liabilities of
Interline Representatives Ltd. and Airfair Publishing Corp. (IRL/APC) for
$593,791.

Assets acquired from IRL/APC consist of the following:

   Furniture and equipment                  $  35,000
   Covenant-not-to compete                     30,000
   Excess of cost over net assets acquired    528,791
                                              -------

   Total assets acquired                     $593,791
                                              =======

Liabilities (unadjusted) assumed from IRL/APC consist of the following:

   Subscription, prepaid advertising,
     and tour ledger                  $204,326
                                       -------

   Net assets acquired                $389,465
                                       =======

Payment for the net assets acquired from IRL/APC is as follows:
   Cash                               $ 30,000
   Note payable #1 (see below)         201,879
   Note payable #2 (see below)         157,586
                                       -------

   Total payments (unadjusted)        $389,465
                                       =======

Both of the promissory notes described above, have identical terms (except as
specified) as follows: The annual interest rate on unpaid principal is 12% per
annum. Interest only will be due on the unpaid balance on January 31, 1996,
February 29, 1996, and March 31, 1996. Thereafter, principal and interest shall
be due and payable in monthly installments of $5,593 on Note #1 and $4,366 on
Note #2, each payable on the last day of each month, beginning April 30, 1996,
until December 31, 1999, when the entire principal and accrued interest
remaining unpaid, shall be due and payable in full.

The purchase method of accounting was used to account for the above
transactions.

The following unaudited pro forma information has been prepared assuming that
the above acquisitions had occurred at the beginning of 1995. Permitted pro
forma adjustments include only the effects of events directly attributable to a
transaction that are factually supportable and expected to have a continuing
impact. Pro forma adjustments reflecting anticipated "efficiencies" in operation
resulting from a transaction are, under most circumstances, not permitted. As a
result of the limitations imposed with regard to the types of permitted pro
forma adjustments, the Company believes that this unaudited pro forma
information is not indicative of future results of operations, nor the results
of historical operations had the above acquisitions been consummated as of the
assumed date.

                                     Unaudited
                                       1995
                                    
   Revenues                         $ 9,077,000
   Gross profit                       1,825,000
   Net (loss)                          (414,000)
   Net (loss) per weighted average
      common share                       (.04)

Effective July 19, 1996, Riley Investments, Inc. (Riley)  and Airfair executed
an Agreement that provided for the merger of MergerCo, a newly-created, wholly-
owned subsidiary of Riley, with and into Airfair, which became the surviving
corporation, and the conversion of the issued and outstanding Airfair stock into
shares of Riley stock on the basis of one share of Riley stock for each share of
Airfair stock outstanding on the Effective date. On October 7, 1996, articles of
amendment were filed on behalf of Riley wherein the name was changed to Grand
Adventures Tour & Travel Publishing Corporation (the Company) with authority to
issue 10,000,000, no par, preferred shares and 30,000,000 common shares with a
par value of $.0001. The transaction was accounted for as a reverse acquisition.

5. INTANGIBLE ASSETS

Intangible assets at December 31, 1996 and 1995 are as follows:

As explained in Note 4 to the financial statements, on December 31, 1994, IMS
acquired the net assets of a business owned by Nackos (referred to herein as
Interline) and assumed certain liabilities. Of the $144,394 total purchase
price, $74,278 represented the excess of the cost over the fair value of net
assets acquired. The excess of cost over net assets acquired is amortized on a
straight-line basis over 40 years.
As explained in Note 4 to the financial statements, on January 13, 1996,
(Closing Date) [effective December 31, 1995 (Effective Date)] Airfair acquired
certain assets and assumed certain liabilities of Interline Representatives Ltd.
and Airfair Publishing Corp. (IRL/APC) . Of the $593,791 total purchase price,
$528,791 represented the excess of the cost over the fair value of net assets
acquired and $30,000 represented a covenant-not-to compete. Also amortizable are
$16,336 of additional legal and acquisition costs. The excess of cost over net
assets acquired is amortized on a straight-line basis over 40 years and the
covenant is amortized over 3 years.

At December 31, 1996 and 1995, the unamortized cost consists of the following:

                                          1996                1995
     Cost                              $649,405            $74,278
     Less accumulated amortization     ( 27,396)            (2,012)
                                       ---------           --------
     Net                               $622,009            $72,266
                                       =========           ========

Amortization expense for the years ended December 31, 1996 and 1995, was $25,386
and $1,857, respectively.

6. DUE TO AFFILIATE

The Company entered into a Management Services Agreement with BEI and IMS
whereby BEI agreed to permit the Company to use office space and certain
computer and telephone equipment leased by the Company, BEI and IMS agreed to
provide to the Company certain services including accounting, payroll, services,
and the services of certain executive officers and personnel who perform
services for Airfair, BEI, and IMS. The Company agreed to pay to BEI and IMS,
collectively, a cash sum equal to 1/2% of the Company's gross cash receipts
during any month in which the Agreement remains in effect.

The Company and IMS have also entered into an Inventory Marketing Agreement
whereby the Company sells certain IMS inventories. The Company is required to
make monthly payments to IMS equaling (i) the cash value of the inventory sold
plus (ii) 25% of the collected revenue generated from such sales less such cash
value.

In order to provide short-term financing for the Company's operations, BEI has
advanced certain amounts to the Company for the above services. At December 31,
1996 and 1995, the Company owed BEI $88,213 and $475,611, respectively.

7. LONG-TERM DEBT

At December 31, 1996 and 1995 long-term debt consisted of the following:

                                                      1996      1995

Notes payable to shareholders, due September 30,
1997 including accrued interest at 14% per annum,
collateralized by marketable securities and other
property pursuant to a Security-Agreement Pledge
executed by BEI in favor of the lenders.        $  400,000    $        -

Note payable at $1,163 per month, including
interest at 14% per annum, convertible into
common stock at the conversion price of $1.00
principal amount for each share of common
stock, subordinated to senior indebtedness.         50,000             -

Note payable (acquisition of IRL/APC - see Note
4) at $5,593 per month, including interest at
12% per annum, collateralized by assets acquired.  172,300             -

Note payable (acquisition of IRL/APC - see Note
4) at $4,366 per month, including interest at
12% per annum, collateralized by assets acquired.  134,496             -
                                                 ---------     ------------
                                                   756,796             -
Less current portion                             (502,573)             -
                                                 --------      ------------

Total                                           $  254,223     $        -
                                                 =========     ============


The annual maturities of long-term debt for the next five years are as follows:

     Year ending
     December 31,                                  Amount
     ------------                               -----------

     1997                                        $502,573
     1998                                         108,048
     1999                                         121,944
     2000                                          11,274
     2001                                          12,957
                                                ---------

     Total                                      $ 756,796
                                                =========

8. DEFERRED SUBSCRIPTION REVENUE

Subscription sales are deferred as unearned income at the time of sale. Magazine
customers normally pay for a one-year or two-year subscription in advance. As
magazines are delivered to subscribers, the proportionate share of the
subscription price is taken into revenue. Magazine subscription selling expenses
are deferred and charged to operations over the same period as the related
subscription income is earned.

9. DEFERRED DISCOUNT

In April of 1996, the Company entered into an agreement with a telephone long-
distance service provider wherein the Company receives a discount (credit)
against its telephone charges provided that its annual volume of telephone usage
is equal to at least $240,000 for a period of three years. If the Company fails
to meet the minimum usage requirement, the discount will be forfeited. The
discount credit balance as of December 31, 1996 is $54,644.

10 . INCOME TAXES

The components of the provision for income taxes at December 31, 1996 and 1995
are as follows:

                                             1996      1995
                                             ----      ----

   Current tax expense                    $     -     $    -
   Deferred tax expense                         -          -
                                          --------   ---------

   Income tax expense                     $     -     $     -
                                          ========   =========
The tax effects of temporary differences and carryforwards that give rise to
significant portions of  deferred tax assets and liabilities consist of the
following:
                                             1996      1995
                                             ----      ----
   Deferred tax assets:
      Accounts receivable               $   2,995  $      -
      Net operating loss carryforwards    299,517         -
                                         --------  ---------

   Gross deferred tax assets              302,512         -
      Valuation allowance               (290,770)         -
                                         --------  ---------

   Total deferred tax assets               11,742         -
                                         --------  ---------

   Deferred tax liabilities:
      Fixed assets                          4,513         -
      Intangible assets                     7,229         -
                                         --------  ---------

   Total deferred tax liabilities          11,742         -
                                         --------  ---------

   Net deferred tax asset (liability)    $      -      $  -
                                         ========  =========

There are no reconciling items between the statutory U.S. federal rate and
effective rates for the years ended December 31, 1996 and 1995.
At December 31, 1996, Interline has a net operating loss  carryforward totaling
approximately $880,000 that may be offset against future taxable income. If not
used, the carryforward  will expire in 2011.

11. COMMON STOCK

Riley Investments, Inc. was incorporated as Pace Group International, Inc.,
("Pace") in October, 1987 under the laws of the State of Oregon. On September
20, 1995, the stockholders approved a name change of the Company to Riley
Investments, Inc. As of November 1, 1995, after the effects of the transaction
described below, the Company had no operating assets and was dormant.

On May 23, 1995, the Chairman of the Board, Edwin T. Cornelius, Jr.
("Cornelius"), the Secretary/Treasurer, Joanne Cornelius, and two sons of Mr.
and Mrs. Cornelius entered into an option agreement to sell 2,905,486 common
shares of Pace they owned to Bridgeworks Capital. The above shareholders,
together with another shareholder who was also the son of Mr. and Mrs.
Cornelius, owned an aggregate of 3,984,000 common shares of Pace. The option
agreement, among other provisions, was subject to shareholder approval of a 1-
for-15 reverse stock split of the outstanding shares of Pace common stock and an
exchange of substantially all net assets of Pace, including its ownership of
100% of the outstanding common stock of Pace International Research, Inc., for
notes payable and unpaid accrued interest thereon owed to Cornelius which
approximated $422,000 as of October 31, 1995. The above transaction was approved
by the shareholders on September 20, 1995 and became effective November 1, 1995.

Prior to the consummation of the option agreement, Cornelius also transferred
450,000 shares of Pace common stock to two investors who had previously advanced
the Company $525,000 in 1987 pursuant to profit-sharing agreements. Under the
term of those profit-sharing agreements, the investors were to be paid in full
from certain Pace profits. As of October 31, 1995, those investors had not been
repaid for their advances.

The remaining Pace common stock owned by the Cornelius family, which aggregated
628,514 shares, were returned to the Company and 588,674 shares were canceled as
of December 31, 1996.

Airfair Publishing, Inc. (Airfair) is a Delaware corporation formed on January
6, 1996. Immediately Subsequent to incorporation of Airfair on January 6, 1996,
the existing shareholders of BEI received four shares of Airfair for each share
held in BEI, resulting in 8,500,000 shares issued. An additional 600,000 shares
were authorized by the Board of Directors and issued to two shareholders,
resulting in a total of 9,100,000 shares issued pursuant to the spin-off of the
Interline division in IMS to Airfair. (See Note 4.) Capital of $30,000 was
contributed to Airfair by BEI.

In September of 1996, 25,000 shares of common stock were issued for $25,000.

Effective July 19, 1996, Riley and Airfair executed an Agreement that provided
for the merger of MergerCo, a newly-created, wholly-owned subsidiary of Riley,
with and into Airfair, which became the surviving corporation, and the
conversion of the issued and outstanding Airfair stock into shares of Riley
stock on the basis of one share of Riley stock for each share of Airfair stock
outstanding on the Effective date. Airfair shares outstanding on the Effective
date totaled 9,125,000. On October 7, 1996, articles of amendment were filed on
behalf of Riley wherein the name was changed to Grand Adventures Tour & Travel
Publishing Corporation with authority to issue 10,000,000, no par, preferred
shares and 30,000,000 common shares with a par value of $.0001. Existing
shareholders in Riley at the date of conversion held 384,024 shares.

12. LEASING ARRANGEMENTS

As part of the Management Services Agreement with BEI (see Note 6), the Company
is allowed access and use of (i) approximately 8,000 square feet of space leased
by BEI and (ii) all common areas within the building to which BEI is permitted
access. The fees for usage are included in the management services fee
calculation under the Management Services Agreement.

13. SUBSEQUENT EVENTS

On February 13, 1997, the Company borrowed $40,000, payable to a trust
established by a stockholder of the company. Interest accrues at the rate of 12%
per annum. Payments shall be due from time to time as follows: (i) immediately
after ascertaining that any check received in payment of any Pledged Account, as
designated in the Pledge Agreement, the Company shall make a payment in the
amount of such check; (ii) immediately after the Company utilizes any credit
issued by any advertiser in payment of any Pledged Account, the Company shall
make a payment in the amount of such utilization; and (iii) on May 15, 1997 (the
maturity date), the Company shall pay the entire unpaid principal and interest.
The promissory note is secured by (i) the secured interest granted in the
Pledged Accounts and intangible assets, and (ii) the security interests granted
in certain marketable securities and warrants pursuant to the provisions of the
Security Agreement-Pledge executed by the Company and BEI Holdings, Inc. in
favor of the lender.

On January 31, 1997, an account payable in the amount of $36,906 was converted
into a note payable with the following terms: Nine Monthly payments of $4,246,
including interest at 6% per annum. (Also, see Note 15.)

14. STOCK OPTION PLAN

The Company has a long-term stock incentive plan (LTSIP) that authorizes an
aggregate of 1,000,000 shares of common stock for future grants. Options to
purchase shares of Airfair common stock granted under the previous Airfair stock
option plan were exchanged for comparable options granted under the LTSIP for an
equivalent number of shares pursuant to the terms of the Merger as explained in
Note 4 to the financial statements. Under the plan, the exercise price of each
employee option is $1.00 and the exercise price of options granted to
shareholders  range from $.50 to $1.00. An option's maximum term is five years.
Employee options were granted on August 1, 1996 and vest in three years. Other
options are fully vested. The fair value of each option grant is estimated on
the grant date using an option-pricing model with the following weighted-average
assumptions used for grants in 1996: risk-free interest rate of 6%, and expected
lives of 5 years for the options.

A summary of the status of the Company's stock option plan as of December 31,
1996, and the changes during the year ending December 31, 1996 is presented
below:
                                                               Weighted Average
Fixed Options                                        Shares    Exercise Price

Balance - January 1, 1996                                 -          $     -
Granted - Stockholders                            1,014,466             0.94
Granted - Employees                                 305,000             1.00
Exercised                                                 -                -
Forfeited                                                 -                -
                                                  ---------
Balance, - December 31, 1996                      1,319,466
                                                  =========

Exercisable at December 31, 1996                  1,116,133
                                                  =========
Weighted-average fair value of options
    granted during the year                        $    .38
                                                  =========

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

<TABLE>
<CAPTION>

                               Weighted-
                                 Average
                   Number      Remaining     Weighted-         Number     Weighted-
   Range of      Outstanding  Contractual  Average Exer-    Exercisable    Average
Exercise Prices   12/31/96        Life      cise Price       12/31/96    Exercise Price
<S>            <C>            <C>          <C>            <C>            <C>
      $1.00     1,014,466        4 years          $ .94     1,014,466         $ .94
       1.00       305,000        4 years           1.00       101,667          1.00
               ----------                                  ----------

                1,319,466                                   1,116,133
                =========                                   =========
</TABLE>

If the Company had used the fair value based method of accounting for its
employee stock option plan, as prescribed by Statement of Financial Accounting
Standard No. 123, compensation cost in net loss for the year ended December 31,
1996 would have increased by $38,400, resulting in a net loss of $911,055, net
of tax, and a loss per common share of $.10.

15. GOING-CONCERN

As shown is the accompanying financial statements, the Company incurred net
losses during the years ended December 31, 1996 and 1995 of $872,655 and
$364,744, respectfully, and as of December 31, 1996 and 1995, current
liabilities exceeded its current assets by $1,569,859 and $496,437,
respectively. Those factors could create an uncertainty about the Company's
ability to continue as a going concern. Since January 1, 1997, management has
reduced expenses by approximately $40,000 per month through a reduction in
nonessential personnel, changing to a lower priced package delivery service,
obtaining more services such as  small printing jobs on a trade basis and
reducing any other expenses that are not considered absolutely necessary to the
ongoing needs of the operation. Subsequent to the date of the audit report, the
Company raised funds through additional long-term borrowings. Loans to
shareholders in the amount of $400,000 (see Note 7) were restructured whereby,
the loan holders agreed to release the equity securities held as collateral
pursuant to a Security-Agreement Pledge executed by BEI in favor of the
loanholders in exchange for the following conditions: (1) payment of all accrued
interest as of April 10, 1997 (which amounted to approximately $29,000), (2) the
loan broker (Avonwood Capital) is to receive a fee of $20,000, (3) 40,000
Company common stock warrants to be issued to Avonwood Capital and 20,000 stock
warrants to Stan Moyer (a principal of Avonwood), all exercisable at $1.00 per
share, (4) conversion of the existing $400,000 notes to new 3 year notes at a
12% annual interest rate, with principal and interest payable monthly, beginning
in May, 1997, (5) the outstanding principal balance is convertible (at the note
holders' option) to Company common stock at $.50 per share, and (6) no
prepayment penalties.

With the release of the equity securities, the Company obtained a margin loan of
$185,000 with the equity securities as collateral with the Principal Financial
Group in April, 1997. Also in April, 1997, the Company raised an additional
$500,000 from ten investors through the issuance of three-year convertible
debentures. The debentures carry an annual interest rate of 7%. Interest and
principal are due and payable in annual installments on each anniversary. At the
option of the Company, interest payments due prior to the maturity date may be
made in shares of common stock of the Company at the rate one share for each
$.50 of interest accrued and payable. The debenture holder has the right at any
time prior to maturity, to convert all or any portion of the then outstanding
principal balance into fully paid and non-assessable shares of common stock of
the Company at a conversion price of $.25 per share of such outstanding
principal amount, subject to adjustment from time to time as provided for in the
debenture. The Company also extinguished in April, 1997, the $306,796 of notes
payable that were incurred in connection with the acquisition of the cruise and
magazine division for a cash settlement of $75,000. With these cash resources,
the Company has been able to expand the distribution and number of publications
advertising the Company's hotel and cruise and tour packages which management
believes should substantially increase sales in both areas. Management has, and
is continuing to negotiate with its accounts payable vendors in order to work
out acceptable payment schedules for all parties.

Management believes that its working capital after accomplishing the above
financing arrangement, together with cash generated from existing operations
will be sufficient to satisfy anticipated sales growth. There can be no
assurance that even with the provided financing that the Company will not
encounter adverse effects on its business, financial conditions or results of
operations in the future. The financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.



ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
              ACCOUNTING AND FINANCIAL DISCLOSURE

In connection with the Merger, the Company has dismissed Isler & Co., certified
public accountants, as the Company's independent auditor and has selected
Andersen Andersen & Strong, L.C., to audit and report on the Company's financial
statements for the year ended December 31, 1996, which date shall be the end of
the Company's fiscal year. See Item 7. "Financial Statements and Supplementary
Data."

The board of directors has approved the change of auditors.
The report of Isler & Co. on the Company's financial statements, consisting of
consolidated balance sheets as of October 31, 1995 and 1994, and the related
statements of operations, statements of net capital deficiency, and cash flows
for each of the two years in the period ended October 31, 1995, did not contain
an adverse opinion or disclaimer of opinion and was not qualified of modified as
to uncertainty, audit scope, or accounting principles.

During the Company's two most recent fiscal years and the subsequent interim
period preceding the dismissal of Isler & Co., the Company was not advised by
Isler & Co. that internal controls necessary for the Company to develop reliable
financial statements did not exist nor that information came to its attention
that led it to no longer be able to rely on management's representations or that
made it unwilling to be associated with the financial statements prepared by
management.  The Company has not been advised by Isler & Co. of the need to
expand significantly the scope of the Company's audit, or has the Company been
advised that during the two fiscal years preceding its dismissal, information
has come to the attention of Isler & Co. that on further investigation may (i)
materially impact the fairness or reliability of either a previously issued
audit report or the underlying financial statements of financial statements
issued covering the fiscal period immediately subsequent to October 31, 1995, or
(ii) cause Isler & Co. to be unwilling to rely on management's representations
or be associated with the Company's financial statements.  The Company has not
been advised by Isler & Co. that information has come to its attention that it
concluded materially impacts the fairness or reliability of either (i) a
previously issued audit report or the underlying financial statements, or (ii)
the financial statements issued covering the fiscal period immediately
subsequent to October 31, 1995, and, due to the dismissal of Isler & Co., such
issue was not resolved to its satisfaction prior to its dismissal.

No consultations occurred between the Company and Andersen Andersen & Strong,
L.C.' s appointment regarding the application of accounting principles to a
specific completed or contemplated transaction, the type of audit opinion, or
other information considered by the Company in reaching a decision as to an
accounting, auditing, or financial reporting issue.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; 
        COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

The following is a list of the current directors and executive officers of the
Company and their age and position with the Company.  Each director holds office
until the next annual stockholders' meeting and thereafter until the
individual's successor is elected and qualified.  Officers serve at the pleasure
of the board of directors.

Matthew O'Hayer, age 41, has served as Chairman and Chief Executive Officer of
the Company since its inception.  Mr. O'Hayer founded Barter Exchange, Inc. in
1983, served as its President and Chief Executive Officer from its founding
until 1995 and has served as its Chairman and Chief Executive Officer since
1995.  Mr. O'Hayer also serves on the boards of several small businesses and
non-profit organizations.

Jay Juba, age 33, has served as President and Chief Operating Officer of Airfair
since its formation in January 1996.  He was elected to the same offices of BEI
in January, 1996.  Mr. Juba joined the Company in 1991 as Director of
Advertising after working for more than five years in the advertising industry.
From May 1994 through December 1995, Mr. Juba served as Senior Vice President of
BEI.

Darrell Barker, age 48, a Certified Public Accountant, has served as Chief
Financial Officer of the Company and BEI since March 1996.  Mr. Barker provided
consulting services with respect to accounting from October 1995 through
February 1996.  From June 1994 to October 1995, Mr. Barker served as Senior
Vice-President of Finance for USA Health Network of Phoenix, Arizona.  From May
1993 until June 1994, Mr. Barker was President and co-owner of Texas Medical
Billing Administrators, Inc., a physician services company located in San
Antonio, Texas.  Mr. Barker served as Vice-President of Finance and was  a
director for Texas Savings Life Insurance Company in Austin, Texas from October
1987 until April 1993.

Fernando Cruz Silva, age 36, serves as Senior Vice President of Sales and
Marketing .  Prior to joining the Company in January 1996, Mr. Silva held the
same titles at IMS, a subsidiary of BEI Holdings, Inc.  Mr. Silva became
employed by IMS in May of 1994 after having worked as Director of Sales and
Marketing at the Fiesta Americana Hotel in Cancun, Mexico, and the Las Brisas
resort in Acapulco, Mexico and served in senior sales capacities at the Hyatt
and Fiesta Americana hotels in Puerto Vallarta, Mexico City, and Cancun.

Robert Sandner, age 43, has served as a director of Airfair since February 1996
and of the Company since the Merger.  A co-founder of BEI, Mr. Sander has served
as director of BEI and IMS throughout the last five years.  Mr. Sandner served
as President of Cellular Resources, Inc. of South Texas  a cellular service
provider based in Uvalde, Texas from its inception in 1991 and until its sale in
August 1996.  Prior to the organization of Cellular Resources, Inc., Mr. Sandner
held various offices within BEI and operated a barter franchise office in San
Antonio, Texas.

Mark T. Waller, age 46, currently serves as a director of the Company.  Prior to
the Merger, he was the sole director and officer of the Company.  Mr. Waller is
the founder of BridgeWorks Capital, an Oregon-based merchant banking operation
that also provides strategic business planning and financial public relations
counsel to clients.

The following is a list of other significant employees of the Company:
Joe F. Brummer, age 31, became director of Marketing in January, 1996.  Mr.
Brummer served in the same capacity within IT since June 1995.  Prior to
becoming IT's Director of Marketing, Mr. Brummer served as an account executive
with IMS since joining IMS in 1992.  Prior to this employment with IMS, Mr.
Brummer worked for the Honolulu advertising agency of Peck Sims Mueller.  Mr.
Brummer is responsible for overseeing the Company's marketing communication
efforts including collateral development, list management, advertising, public
relations, and promotions.

Shannan Rivers, age 29, serves as General Manager of the Company's Reservation
Center, which fields all incoming reservation and information calls and
processes all booked reservations for both Interline Travel and Interline
Representatives, Ltd.  Ms. Rivers joined the Company in February of 1995 after
spending seven years with Adventure Tours, USA, most recently as Destination
Manager.

Patti Macchi, age 50, is Vice President of Sales for IRL but also contributes
editing and marketing expertise to the magazine.  Ms. Macchi joined IRL in 1990
after working for six years with Norwegian Caribbean Line.  Ms. Macchi is
responsible for negotiating rates and maintaining relationships with the 27
cruise lines represented in IRL's product offering.


ITEM 10. EXECUTIVE COMPENSATION

The following tables reflect the reporting requirements for Executive
Compensation:

                                            Table No. 1
                               Summary Compensations Table
<TABLE>
<CAPTION>
                                                                    LONG TERM COMPENSATION
                                                              ----------------------------------
                                      ANNUAL COMPENSATION             AWARDS           PAYOUTS
                                   -----------------------     ----------------------------------
    (A)                   (B)      (C)       (D)       (E)         (F)           (G)         (H)        (I)
                                                      OTHER                  SECURITIES
                                                     ANNUAL    RESTRICTED    UNDERLYING              ALL OTHER
                         YEAR                        COMPEN-      STOCK       OPTIONS/      AWARD     COMPEN-
NAME AND                 ENDED   SALARY(1)  BONUS    SATION     AWARD(S)        SARS        PLAN      SATION
PRINCIPAL               DEC. 31    ($)       ($)       ($)         ($)           (#)       PAYOUTS      ($)
POSITION                                                                                    ($)
---------------------  --------  -------  --------  ---------  ----------  -------------  --------   ----------

<S>                    <C>       <C>      <C>       <C>        <C>          <C>           <C>       <C>
Matthew O'Hayer         1996     $91,476   $0         $0        $0           0             $0        $0
Chairman & CEO

Joseph Juba             1996     $67,200   $0         $0        $0           0             $0        $0
President & COO

Darrell Barker          1996     $30,000   $0         $0        $0           65,000        $0        $0
CFO

Fernando Cruz           1996     $60,000   $0         $0        $0           0             $0        $0
Senior Vice President
</TABLE>

(1) The above compensation schedule reflects that portion of shared management
members compensation allocated to the Company within the terms of the management
agreement that is set out in ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.

                                          Table No. 2
                      Options/SARS Granted in Last Fiscal Year

                                                                 
                                                                 
                       INDIVIDUAL GRANTS                         
                                                                 
---------------------------------------------------------------- 
      (A)             (B)           (C)        (D)       (E)     
                                   % OF
                   NUMBER OF       TOTAL
                   SECURITIES    OPTIONS/   EXERCISE
                   UNDERLYING      SARS      OR BASE
                  OPTIONS/SARS    GRANTED     PRICE    EXPIRA-
     NAME         GRANTED (#)       TO      ($/SHARE) TION DATE 
                                 EMPLOYEES
                                  DURING
                                  FISCAL
                                   YEAR
-------------   --------------- ---------- --------- ---------  
[S]             [C]             [C]        [C]        [C]       
Darrell Barker   65,000          21.3%      $1.00       August, 2003


Compensation of Directors

Mark T. Waller, a Director of the Company, entered into an advisory services
agreement in October 10, 1996.  Mr. Waller was also granted a non-qualified
stock in August, 1996.  These documents are incorporated by reference from Form
8-K filed October 15, 1996 ( ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K)

The Company does not currently compensate directors for any services provided as
a director.

Employment Contracts

The following individuals entered into employment contracts with Airfair
Publishing, Inc. ( a wholly-owned subsidiary of the Company) prior to the
merger.  Employment contracts dated as of March 1, 1996 were signed with Joseph
S. Juba, President/Chief Operating Officer; Fernando Cruz, Senior Vice-
President, and Tim Valentine, President of Inventory Merchandising Services,
Inc..  Mr. Valentine is not an officer or employee of Airfair but provides
varying marketing services on behalf of the Company.  He is a stockholder of the
Company and does not receive any compensation from the Company.
An employment contract was signed with Mark Steward, Senior Product Manager, on
July 1, 1996. Mr. Steward terminated his employment with the Company in January
1997. The Company has fulfilled all its employment obligations with Mr. Steward.


The form of the employment agreements executed by Messrs. Juba and Cruz Silva
differ only as to the contents of the exhibits to such employment agreements,
which exhibits set forth the job description, compensation and other benefits
for each of the two officers.

In accordance with the management agreement (the "Management Agreement")
executed by Airfair, BEI Holdings, Inc. ("BEI") and Inventory Merchandising
Services, Inc. ("IMS" and, together with Airfair and BEI, the "Employers"), (see
ITEM 12 - "CERTAIN TRANSACTIONS", infra), each employment agreement is executed
by the individual officer, Airfair, BEI and IMS.  The following is a description
of the terms and conditions of the employment agreements:

          The employee is required to devote his full time and attention to the
     affairs of the Employers (the amount of time to be devoted to any one of
     the Employers is governed by the Management Agreement).  The employee is
     subject to three-year prohibitions (commencing with the date of employment
     termination) on competition, non-disclosure and non-use of proprietary
     information, contact with current or future customers or interference with
     the Employers' relationship with any current or future customers.  The
     agreement can be terminated by the Employers or the employee thirty days
     after giving notice of termination to the other party.  If the Employers
     terminate the agreement for cause (defined within the employment agreement
     as including the employee's breach of the employment agreement, breaches of
     Employers' company policy, certain criminal conduct, material breaches of
     fiduciary obligations owed to the Employers and conflict of interest
     transactions), the agreement may be terminated by the Employers upon
     delivery of notice to the employee.  If the Employers terminate the
     agreement without cause or if the Employer materially reduces the
     responsibilities of the employee, (i) the prohibitions on competition and
     interference are terminated (the remaining post employment prohibitions
     survive any such termination), (ii) the employee is to be paid all non-
     salary monetary compensation accrued through the date of termination and
     (iii) the employee is to receive, for a period of months equal to the
     number of years of the employee's service to one or more of the Employers
     since March 1, 1995, a monthly cash severance payment equal to the highest
     monthly salary paid to the employee.  The employee is indemnified against
     any lawsuits or claims by any third party arising out of any action taken
     in good faith by the employee in the performance of his duties.

     The following is a summary description of the contents of the exhibits to
the employment agreements of Messrs. Juba and Cruz Silva, respectively (the
exhibits set forth the job description, compensation and other benefits for each
employee):


JOSEPH S. JUBA
Job Title: President/Chief Operating Officer, Airfair Publishing, Inc.
               President/ Chief Operating Officer. BEI Holdings, Inc.
               Senior Vice President, Inventory Merchandising Services, Inc.
Compensation Package:
Base Salary: $84,000 per year with 7% annual increases.
Bonuses: 2% of both company's Pre-Tax Net Income after Corporate Allocation
based upon audited financial statements. This bonus to be calculated on an
annual basis, with quarterly draws of up to 50% of bonus due from each quarters
net income.
Restricted Stock Grants and Stock Options: Granted 150,000 shares of common
stock in BEI Holdings, Inc. prior to the dividend of shares in Airfair
Publishing, Inc. to BEI shareholders. Also another 500,000 shares of common
stock in Airfair Publishing, Inc. will be granted. All aforementioned shares are
to be subject to a restricted stock grant agreement, which, among other things,
will require certain periods of employment with the Company before the stock can
be sold.
Auto Allowance: $420 per month for two years commencing in April, 1996.


FERNANDO CRUZ
Job Title: Senior Vice President, Airfair Publishing, Inc.
Compensation Package:
Base Salary: $60,000 per year with 7% annual increases.
Bonuses: 1% of Airfair Publishing, Inc.' s Pre-Tax Net Income after Corporate
Allocation based upon audited financial statements.
Commissions: .1% of the Gross Revenues of the currently existing divisions of
Airfair Publishing, Inc., payable on a monthly basis.  5% of the collected
income on sales of advertising and/or advertising services agreements.
Restricted Stock Grants and Stock Options: Granted 50,000 shares of common stock
in BEI Holdings, Inc. prior to the dividend of shares in Airfair Publishing,
Inc. to BEI shareholders. Also another 100,000 shares of common stock in Airfair
Publishing, Inc. will be granted. All aforementioned shares are to be subject to
a restricted stock grant agreement, which, among other things, will require
certain periods of employment with the Company before the stock can be sold.


TIM VALENTINE
Job Title: President, Inventory Merchandising Services, Inc.
Compensation Package:
Mr. Valentine's compensation package is the direct responsibility of IMS,
however, Airfair will assume responsibility if IMS is unable to fulfill its
obligations.  Airfair has not had to assume any responsibility for Mr.
Valentine's compensation as of this filing.
Base Salary: $54,000 per year with 7% annual increases.
Bonuses: 20% of the Divisional "Cash" Net Income after Corporate Allocation, for
IMS.  This bonus to be calculated on an annual basis, with quarterly draws up to
50% of bonus due from each quarter's net income.  An additional requirement to
earn the bonus is that IMS and BEI maintain a net positive trade balance in its
year end balance sheet.
Expense Accounts: Business development related expenses will be reimbursed at up
to 2,500 trade dollars per month.
Restricted Stock Grants and Stock Options: Granted 25,000 shares of common stock
in BEI Holdings, Inc. prior to the dividend of shares in Airfair Publishing,
Inc. to BEI shareholders. Also another 50,000 shares of common stock in BEI
Holdings, Inc. will be granted following the dividend. All aforementioned shares
are to be subject to a restricted stock grant agreement, which, among other
things, will require certain periods of employment with the Company before the
stock can be sold.

ITEX Incentive Stock & Warrants: Any proceeds derived from the liquidation of
ITEX Corporation shares or options as earned under the Incentive Agreement
amendment to the ILB Agreement will be counted as regular income for purposes of
the bonus calculation.

Net Remarketing Proceeds: Commissions under existing Referral Broker Agreement
as they relate to liquidation of The Study Game, Flushbusters and Aggie
Commemorative Statues will be paid at 30%;  however, any proceeds from such
sales will be excluded as income for purposes of calculating bonus.

The Company also has an Advisory Services Agreement with Mark T. Waller, one of
the Company's directors dated October 10, 1996.  A summary of the basic
conditions of this agreement are as follows:
During the term of this Agreement, the Company will engage the Consultant to
provide advisory services to assist in designing and implementing a long-term
strategic plan to enhance the Company's ability to attain its goals following
the merger. In connection with the foregoing, Consultant will provide to the
Company the following advisory and consulting services:
a.  Undertake a study and analysis of the business, operations, financial
condition, management, marketing direction, and current position of the Company;
b.  Assist and develop employee incentive programs to aid in recruiting and
retaining qualified executive, marketing, and other personnel;
c.  Review the Company's corporate and marketing documentation and literature
with a view toward improving Airfair's identification and recognition outside
its specific industry, particularly including the business, financial, and
investment communities;
d.  Review the Company's corporate structure and advise respecting the Company's
capitalization to enhance its ability to obtain outside debt and/or equity
capital as the need may arise;
e.  Direct the Company toward possible sources of additional capital;
f.  Suggest possible revisions to the Company's corporate governance structure
and assist
in identifying possible candidates as outside directors; and
g.  In general, devote expertise to the business affairs if the Company.
The term of the Agreement is for 5 years from October 10, 1996, unless
terminated earlier in accordance with the provisions of the Agreement.
Compensation for advisory services is $100 per year plus reimbursement for
Company approved actual expenses incurred when performing the above services.
The consultant also remains an independent contractor under this Agreement.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                 AND MANAGEMENT

PRINCIPAL STOCKHOLDERS

The following table sets forth, as of the Record Date, the name and
shareholdings, including options to acquire the Common Stock, of each person who
owns of record, or was known by the Company to own beneficially, 5% or more of
the shares of the Common Stock currently issued and outstanding; the name and
shareholdings, including options to acquire the Common Stock, of each director;
and the shareholdings of all executive officers and directors as a group.   The
address of each of the individuals listed below is the address of the Company.
                         Nature of    Number of        Percentage of
Name of Person or Group  Ownership      Shares Owned        Ownership

Matthew O'Hayer               Direct      3,904,000           41.2%
Joseph S. "Jay" Juba          Direct      1,100,000           11.6%
Fernando Cruz Silva           Direct        310,000            3.3%
Robert Sandner                Direct        800,000            8.4%
Mark T. Waller                Direct        193,699            2.0%
                              Options       800,000            7.8%

All executive officers and    Direct      6,307,699           64.4%
directors as a group (eight   Options        945,000           9.3%
persons)
                              Total       7,242,699           75.2%


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions occurring prior to the Merger
------------------------------------------

Exchange of assets and liabilities of the Company for extinguishment of debt
owed Edwin T. Cornelius, Jr.:

As of October 31, 1995, the Company owed Edwin T. Cornelius, Jr., the Company's
founder, principal shareholder, and chief executive officer, approximately
$407,000, excluding unpaid salary, for amounts advanced to the Company by Mr.
Cornelius.  Given the Company's continuing losses and lack of operating capital,
it was unlikely that such amount would have ever been repaid.  Further, the
Company did not have sufficient resources to pay Mr. Cornelius' salary.
Therefore, the board of directors adopted a plan to exchange substantially all
of the assets and liabilities of the Company in settlement of the obligations
owed Mr. Cornelius.  On October 31, 1995, pursuant to an Asset Transfer
Agreement, the Company transferred all of its assets, including all equipment,
inventory, receivables, and all other assets of the Company, excluding only
corporate records to Pace International Research, Inc. ("PIR"), which assumed
all liabilities and obligations related to such assets including trade payables,
bank debt, unpaid taxes and wages, and all other outstanding liabilities related
to the assets and the operations of the Company.  On November 1, 1995, pursuant
to a Stock Transfer Agreement, the Company transferred its right, title, and
interest in and to the shares of common stock of PIR to Mr. Cornelius in
consideration of his guaranty of payment of all liabilities and obligations of
PIR, including the liabilities and obligations assumed by it in connection with
the transfer of assets from the Company, and the release and discharge of all
liabilities and obligations owed to Mr. Cornelius.  Following consummation of
the foregoing, the Company had no operating assets to continue operations.

On November 1, 1995, Bridgeworks Capital, owned and operated by Mark Waller,
acquired 2,905,486 shares of common stock of the Company (193,699 shares after
giving effect to the 15 to 1 reverse stock split) for $10 from Edwin T.
Cornelius, Jr., Joanne K. Cornelius, Edwin T. Cornelius, III, and James D.
Cornelius, ( collectively, the "Selling Shareholders") pursuant to an option for
the purchase of such shares.  Prior to such purchase, the shareholders approved
(a) the 15 to 1 reverse stock split, (b) the exchange of the Company's assets
and liabilities in consideration of the cancellation of the obligations and
liabilities owed Edwin T. Cornelius, Jr., and (c) the amendment to the articles
of incorporation to opt out of the Oregon statutes prohibiting voting by
controlling shares of an Oregon corporation when a controlling block of such
corporation's shares are acquired in connection with Mr. Waller's purchase of a
majority of the issued and outstanding shares of common stock of the Company
from the Selling Shareholders.  Edwin T. Cornelius, Jr., and Joanne Cornelius
resigned as directors and officers of the Company after appointing Mark Waller a
director.

In addition to the shares sold to Bridgeworks, the Selling Shareholders retained
an aggregate of 480,914 shares of common stock (Edwin T. Cornelius, Jr., and
Joanne K. Cornelius each retained 5,000 shares and Edwin T. Cornelius, III and
James D. Cornelius each retained 235,457 shares).  Edwin T. Cornelius, Jr., is
founder of the Company and PIR.  Joanne K. Cornelius is his wife, and Edwin T.
Cornelius, III, and James Cornelius are his sons.

Transactions occurring with the new operating company, Airfair Publishing, Inc.

Unless otherwise indicated, the terms of the following transactions were not the
results of arm's length negotiations, but in the opinion of management of the
Company each transaction is on terms as fair to the Company as could be obtained
in arm's length negotiations in similar circumstances.

Organization of the Company

Airfair, the Company's operating subsidiary, was initially organized as a
subsidiary of BEI Holdings, Inc. ("BEI").  In anticipation of distributing its
shares of Airfair Common Stock to the shareholders of BEI, and in order to
provide Airfair's executive officers with an increased equity stake in Airfair,
BEI granted 500,000 shares of Common Stock to Joseph S. Juba and 100,000 shares
to Fernando Cruz Silva.  At the time of the grant, Mr. Juba was President, Chief
Operating Officer and Secretary of BEI and Airfair, and Mr. Cruz Silva was
Senior Vice-President of Sales and Marketing for both companies.

From organization of the Company through March 1, 1996, the Company obtained the
services of its principal executives, Matthew O'Hayer, Jay Juba, and after his
employment on March 25, 1996, Darrell Barker, together with computer access,
accounting services, rental space and related administrative support, from BEI,
which allocated the direct costs of such items between the Company and IMS on a
ratio basis.  Effective March 1, 1996, the Company entered into a management
agreement with IMS under which it agreed to provide the Company with such
executive services and administrative support for a fee equal to .5% of the
Company's gross revenue per month plus a portion of the direct payroll expenses
of certain members of management who serve BEI, IMS, and Airfair (the shared
management members). These management fees amounted to approximately $68,475 for
the year ended December 31, 1996.   Such management fees include reimbursement
for an allocable portion of the time of such executives devoted to the business
affairs of the Company as follows: Matthew O'Hayer, approximately 70% of his
time at an annual salary of $130,680; Jay Juba, approximately 80% of his time at
an annual salary of $84,000; and Darrell Barker, approximately 50% of his time
at an annual salary of $60,000.

Airfair and IMS have also entered into an inventory marketing agreement whereby
Airfair sells certain IMS inventories.  Airfair is required to make monthly
payments to IMS equaling (i) the cash value of the inventory sold (representing
IMS's acquisition cost in the inventory) plus (ii) 25% of the collected revenue
generated from such sales less such cash value.

In order to provide short-term financing for Airfair, BEI advanced certain
amounts to it prior to the Merger.  At December 31, 1996, Airfair owed BEI
$88,213 in connection with such advances.

Acquisition of Interline Travel Division

On December 1, 1994, IMS acquired certain interline travel operating assets from
Louis J. and Claudia Nackos in exchange for the assumption by IMS of $144,394 in
liabilities.  These assets are the basis of the IT operating division.  In
connection with the formation of Airfair on January 6, 1996, IMS transferred the
assets acquired to the Company in exchange for the Company's assumption of the
related liabilities.  Louis J. Nackos, the previous owner of what became the IT
division, was employed by the Company as Vice President of Sales of the IT
Division until January, 1997.

Acquisition of Interline Representatives, Ltd., and Airfair Publishing Corp.

On January 13, 1996, effective January 1, 1996, Airfair acquired the assets of
IRL and Airfair Publishing Corp. by assuming liabilities of $204,326 (which
assumed liabilities have been substantially paid), paying $30,000 in cash, and
delivering promissory notes aggregating $359,465, bearing interest at 12% per
annum, and payable interest only due the first quarter of 1996 and amortization
payments of $9,959 due monthly thereafter, with the entire unpaid balance due
December 31, 1999.  The promissory notes are personally guaranteed by Matthew
O'Hayer.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

a)  1.  Financial Statements
        --------------------

    The following financial statements are filed as a part of this Form 10-KSB:

    The Index to Consolidated Financial Statements is set out in Item 7 herein.

    The following financial statements are incorporated by reference from Form
      8-K filed October 15, 1996:
    FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
     Report of Andersen Andersen & Strong, L.C., independent public accountants
     Airfair Publishing, Inc., condensed balance sheet as of December 31, 1994
     Airfair Publishing, Inc., pro forma condensed balance sheet as of December
     31, 1995
     Airfair Publishing, Inc., pro forma condensed statement of operations for
     the year ended December 31,1994
     Airfair Publishing, Inc., pro forma condensed statement of operations for
     the year ended December 31, 1995
     Airfair Publishing, Inc., notes to condensed historical financial
     statements as of December 31, 1995 and 1994
     Airfair Publishing, Inc., notes to condensed pro forma financial statements
     ( unaudited) as of December 31, 1995 and 1994
     Airfair Publishing, Inc., condensed balance sheet as of June 30, 1996
     Airfair Publishing, Inc., condensed statement of operations for the six
     months ended June 30, 1996
     Airfair Publishing, Inc., notes to condensed financial statements

    PRO FORMA FINANCIAL INFORMATION
     Unaudited pro forma condensed financial statements
     Unaudited pro forma condensed combined balance sheet as of July 31, 1996
     Unaudited pro forma condensed combined statement of operations for the six
     months ended July 31, 1996
     Notes to unaudited pro forma condensed combined financial statements

    2.  Employment Contracts are set out in Item 10 herein.

b)      Reports on Form 8-K
       --------------------

    The following exhibits are incorporated by reference from Form 8-K filed
October 15, 1996:

    Exhibits
    2.01  Agreement and Plan of Merger entered into effective July 19,1996, by
          and between Riley Investments, Inc, and Airfair Publishing, Inc.
    3.01  Restated Articles of Incorporation of Grand Adventures Tour & Travel
          Publishing, Corporation
    10.01 Advisory Services Agreement effective October 10, 1996 by and between
          Riley Investments, Inc. to Mark Waller
    10.02 Long Term Stock Incentive Option Plan
    10.03 Non-Qualified Stock Option granted effective August 19, 1996 by Riley
          Investments, Inc. to Mark Waller
    10.04 Indemnification and Pledge Agreement
    16.01 Letter from Isler & Co., former Company auditors
    12.01 Consent of Andersen Andersen & Strong, L.C.


                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


         (Registrant)  Grand Adventures Tour & Travel Publishing Corporation


                        By     /s/  Joseph S. Juba
                               President/ Chief Operating Officer
                        Date   May 16, 1997

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

                        By     /s/  Darrell W. Barker
                               Chief Financial Officer
                        Date   May 16, 1997

                        By     /s/  Matthew O'Hayer
                               Chairman of the Board and Chief Executive Officer
                        Date   May 16, 1997

                        By     /s/  Robert Sandner
                               Director
                        Date   May 16, 1997

                        By     /s/  Mark T. Waller
                               Director
                        Date   May 16, 1997