SECURITIES AND EXCHANGE COMMISSION
                                              Washington, D.C. 20549

                                                  Form 10-QSBA-2

                                                    (Mark One)
                                    X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                                      OF THE SECURITIES EXCHANGE ACT OF 1934

                                    TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                                      OF THE SECURITIES EXCHANGE ACT OF 1934

                                    (For the Quarter ended September 30, 1998)

                                          Commission File Number 1-12689

                         Genisys Reservation Systems, Inc. And Subsidiaries
                                              _______________________ 
                     (Exact Name of registrant as specified in its charter) 

                                               New Jersey 22-2719541 
                        (State or other jurisdiction of (I.R.S. employer 
                           incorporation or organization) Identification no.) 

                              2401 Morris Avenue, Union, New Jersey 07083 
                          (Address of principal executive offices) (Zip Code) 

                                                  (908) 810-8767 
                                  Issuer's Telephone Number including Area Code 


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 periods 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 

                            APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY 
                                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS 

Check          whether the registrant  filed all documents and reports  required
               to be filed by Section 12, 13 or 15(d) of the  Exchange Act after
               the distribution of securities under a plan confirmed by a court.

                                                      Yes No 

                                       APPLICABLE ONLY TO CORPORATE ISSUERS 

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest  practicable date: As of September 30, 1998:  5,655,594
shares of Common Stock

          Transitional Small Business Disclosure Format (check one)

                                                     Yes X No 


<PAGE>
<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                             GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARIES
                                              Development Stage Companies
                                          CONSOLIDATED BALANCE SHEETS 






                                                                             September          September           December
                                                                              30, 1998           30, 1998           31, 1997
                                                                           ---------------    ---------------    ---------------
                                                                             (Proforma)        (unaudited)
                                                                 ASSETS
CURRENT ASSETS:
       Cash and cash equivalents                                                 $431,121           $606,121         $2,207,841
       Accounts receivable                                                         32,615             32,615              8,784
       Prepaid expenses                                                             5,029             12,448              5,127
                                                                           ---------------
              Total Current Assets                                                468,765            651,184          2,221,752
                                                                           ---------------    ---------------    ---------------
EQUIPMENT, NET OF ACCUMULATED
       DEPRECIATION                                                                71,708            285,918            261,643
   
                                                                             ---------------    ---------------    ---------------
INVESTMENT IN AND ADVANCES TO GEN02, INC.                                         962,390            -                  -

OTHER ASSETS:
        Computer software costs, less accumulated
             amortization                                                       1,417,964          1,992,376            581,193
        Debt issue costs, less accumulated amortization                            12,521             12,521             26,609
        Deposits and Other                                                         56,555             56,555             61,669
        Licenses and Intellectual Property, less
             accumulated amortization                                             975,000            975,000                  -
                                                                           ---------------    ---------------    ---------------
                                                                                2,462,040          3,036,452            669,471
                                                                           ===============    ===============    ===============
                                                                               $3,964,903         $3,973,554         $3,152,866
                                                                           ===============    ===============    ===============
    
                                                                               LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES:                                                                                              
        Current maturities of long-term debt                                     $103,114           $103,114           $114,957
        Accounts payable and accrued expenses                                     214,872            223,523            189,712
        Accrued interest payable - related party                                  177,006            177,006            163,296
        Accrued consulting fees - related party                                     3,000              3,000              3,000
                                                                           ---------------    ---------------    ---------------
                 Total current liabilities                                        497,992            506,643            470,965

LONG-TERM DEBT:
         Long-term debt, less current maturities                                   63,542             63,542            982,742
                                                                           ---------------    ---------------    ---------------

                  Total Liabilities                                               561,534            570,185          1,453,707
                                                                           ---------------    ---------------    ---------------
COMMITMENTS
STOCKHOLDERS EQUITY (DEFICIENCY):
     Preferred Stock, $.0001 par value: 25,000,000 shares
          authorized                                                                     -                     -              -
     Series A preferred stock, 706,000 shares                                                                     
        authorized   381,177 issued and outstanding                                    38                 38                  -

     Common Stock, $.0001 par value; 75,000,000 shares
          authrized:;6,755,5944sharessandd4,365,5944 shares
          issued and outstanding                                                      676                676                436
      Additional paid in capital                                                8,281,073          8,281,073          4,933,851
      Deficit Accumulated During the Development Stage                         (4,878,418)        (4,878,418)        (3,235,128)
                                                                           ---------------    ---------------    ---------------

Total Stockholders Equity                                                       3,403,369          3,403,369          1,699,159
                                                                           ---------------    ---------------    ---------------

                                                                               $3,964,903         $3,973,554         $3,152,866
                                                                          ===============    ===============    ===============
                                                               See Accompanying Notes to Financial Statements

                                                                    2


<PAGE>
                                GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARIES
                                    DEVELOPMENT STAGE COMPANIES
                                 CONSOLIDATED STATEMENTS OF OPERATIONS
                                    DURING THE DEVELOPMENT STAGE
                                         (Unaudited)
                                                                                                                     From Inception
                                                     Nine Months     Nine Months     Three Months     Three Months    March 7, 1994
                                                        Ended           Ended            Ended           Ended           Through
                                                    Sept. 30,1998   Sept. 30,1997    Sept. 30,1998   Sept. 30,1997    Sept. 30,1998


            SERVICE REVENUE                              $ 52,002          $ 2,225        $ 22,128          $ 2,225          $77,865


            EXPENSES:
                       Cost of Service                     111,490            6,800          64,276            6,800         136,482
                       General and Administrative        1,205,173          927,670         421,330          454,432       3,881,071
                       Depreciation and Amortization       397,091          128,230         201,014           64,174         730,985
                       Interest Expense (Income), net      (18,462)          52,648          (15,461)          (2,102)       207,745
                                                         1,695,292        1,115,348         671,159          523,304       4,956,283

            NET (LOSS) INCURRED DURING
                 THE DEVELOPMENT STAGE                 ($1,643,290)      ($1,113,123)      ($649,031)      ($521,079)   ($4,878,418)


            WEIGHTED AVERAGE NUMBER OF
                 COMMON SHARES OUTSTANDING               4,961,089          4,042,041       5,655,594      4,355,594       3,091,315


            BASIC AND DILUTED LOSS PER
                 COMMON SHARE                               ($0.33)          ($0.28)         ($0.11)            ($0.12)     ($1.58)



                                                                                     See Accompanying Notes to Financial Statements

                                                                                   3

<PAGE>
                                GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARIES
                                       DEVELOPMENT STAGE COMPANIES
                                    CONSOLIDATED STATEMENT OF CHANGES IN 
                                       STOCKHOLDERS EQUITY
                                           (Unaudited)





                                                                                                              Deficit
                                                                                                            Accumulated
                                                                                              Additional      During the
                                     Common Stock             Series A Preferred Stock        Paid-in       Development
                                    Shares       Par Value      Shares       Par Value        Capital          Stage          Total


BALANCE - DECEMBER 31, 1997      4,355,594         $436             -              -      $4,933,851     ($3,235,128)    $1,699,159

CONVERSION OF LONG-TERM
DEBT INTO SERIES A PREFERRED
STOCK AT $2.125 PER SHARE    
  IN MARCH 1998                        -            -           381,177           38         809,962             -         810,000

CONVERSION OF NOTES PAYABLE
INTO COMMON STOCK AT
$0.09375 PER SHARE IN MARCH 1998    400,000          40             -              -          37,460             -          37,500

ISSUANCE OF COMMON STOCK
AT $1.25 PER SHARE
FOR ACQUISITION OF UNITED
LEISURE INTERAINTERACTIVE'S ASSETS                                                                                               
AS OF JUNE 30, 1998                 2,000,000*       200             -             -        2,499,800             -      $2,500,000

NET LOSS                                  -            -             -             -               -      (1,643,290)   ($1,643,290)

BALANCE AT SEPTEMBER 30, 1998       6,755,594       $676       381,177            $38      $8,281,073      ($4,878,418)  $3,403,369

*2,000,000 SHARES ISSUED ARE SUBJECT TO SHAREHOLDER APPROVAL (NOTE 4).

                                                             See Accompanying Notes to Financial Statements

                                                                                   4

<PAGE>

                                                            GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARIES
                                                                               Development Stage Companies
                                                                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                           (UNAUDITED)
                                                                                                   Period From
                                                                                                 March 7, 1994
                                                                                                (Commencement of
                                                                                                Development Stage
                                                        Nine Months Ended   Nine Months Ended   Activities to
                                                        Sept. 30,1998       Sept. 30,1997       Sept. 30,1998
                                                        ------------------  ------------------  -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                    (1,643,290)         (1,113,123)          (4,878,418)
   Adjustments to reconcile net loss to net
    cash flows from operating activities:
      Depreciation and amoritization                              397,091             128,230              730,985
      Contribution to capital of services rendered                   -               -                      49,600
      Changes in operating assets and liabilities
        Accounts receivable                                       (23,831)                  0              (32,615)
        Prepaid expenses                                           (7,321)             (1,729)             (12,448)
        Deposits and other                                          4,934                  -               (58,703)
        Accounts payable and accrued expenses                      47,521            (256,069)             403,529
                                                         ------------------  ------------------  -------------------
          Net cash flows from operating acctivities            (1,224,896)         (1,242,691)          (3,798,070)
                                                        ------------------  ------------------  -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of equipment and software                           (293,281)           (333,232)          (1,611,207)
   Acquisition of Prosoft, Inc.                                         0             (34,602)             (34,602)
                                                        ------------------     ------------------  -------------------
           Net cash flows from investing activities              (293,281)           (367,834)          (1,645,809)
                                                        ------------------  ------------------  -------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from long-term debt                                     9,652              70,000               14,652
   Payments on long-term debt                                          -              (65,000)            (925,840)
   Proceeds from public offering of common stock
       and warrants net of deferred offering costs               4,661,124            4,705,915
   Conversion of convertible notes payable
       to common stock                                                 -                 -                  67,500
   Conversion of long-term debt to Series A
       Preferred Stock                                            810,000                -                 810,000
   Issuance of common stock upon exercise of option                    -               15,000               15,000
   Loans and advances from related parties                                           -(14,518)                                -
   Proceeds from issuance of notes payable                                           -      -              955,000
   Payments under computer equipment leases                       (93,195)            (71,260)            (156,271)
   Proceeds from sale and lease-back                                                 -                   - 294,644
   Proceeds from issuance of common stock                                            -                   - 110,000
   Contribution to capital - stockholder/officer                                     -128,700              205,400
   Proceeds from issuance of 10% promissory notes
      and related warrants, less related costs                                       (563,500)             517,500
   Payments on 10% promissory notes and related
      warrants                                                                       -                   -(563,500)
                                                                                                -------------------
          Net cash flows from financing activities                (83,543)          4,160,546            6,050,000
                                                        ------------------  ------------------  -------------------

NET CHANGE IN CASH AND EQUIVALENTS                             (1,601,720)          2,550,021              606,121
CASH AND EQUIVALENTS, BEGINNING OF YEAR                         2,207,841              91,548                                 -
                                                        ------------------  ------------------  -------------------
CASH AND EQUIVALENTS, END OF PERIOD                             $ 606,121         $ 2,641,569            $ 606,121
                                                        ------------------  ------------------  -------------------
SUPPLEMENTAL CASH FLOW INFORMATION
   Interest paid                                                 $ 29,000            $ 65,699            $ 169,498
                                                        ------------------  ------------------  -------------------
   Net liabilities assumed in reverse acquisition        $                   $      -                   - $ 14,087
                                                        ------------------  ------------------  -------------------
   Conversion of related party debt to common stock      $                   $      -                   - $ 20,109
                                                        ------------------  ------------------  -------------------
   Conversion of long-term debt to Series A Preferred
       Stock                                                    $ 847,500    $                        -  $ 847,500
                                                        ------------------  ------------------  -------------------
   Conversion of notes payable to common stock                   $ 37,500    $                30,000      $ 67,500
                                                        ------------------  ------------------  -------------------
    Issuance of common stock and preferred stock
        to acquire travel related assets                      $ 2,500,000    $                         $-2,500,000
                                                        ------------------  ------------------  -------------------

                                                                        See Accompanying Notes to Financial Statements

                                                        5
<PAGE>


                                 GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARIES
                                            DEVELOPMENT STAGE COMPANIES
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                    (unaudited)



Note 1 Basis of Presentation

                  The  consolidated  balance  sheet at the end of the  preceding
fiscal  year has  been  derived  from the  audited  consolidated  balance  sheet
contained  in the  Company's  Form  10-KSB  and  is  presented  for  comparative
purposes.  All other  financial  statements  are  unaudited.  In the  opinion of
management,  all  adjustments  which include only normal  recurring  adjustments
necessary to present  fairly the financial  position,  results of operations and
cash flows of all periods  presented  have been made.  The results of operations
for interim periods are not necessarily  indicative of the operating results for
the full year.

                  Footnote disclosures normally included in financial statements
prepared in accordance with the generally  accepted  accounting  principles have
been omitted in  accordance  with the  published  rules and  regulations  of the
Securities and Exchange  Commission.  These  consolidated  financial  statements
should be read in  conjunction  with the financial  statements and notes thereto
included in the Company's Form 10-KSB for the most recent fiscal year.

                  In  accordance  with AICPA  Statement  of Position  98-1,  the
Company capitalizes the direct cost of materials, services and interest consumed
in the  development  of computer  software.  Such costs,  as well as the cost of
acquired  technology  licenses and related assets, are being amortized over five
years, subject to periodic evaluation for impairment.


Note 2            Activities of the Company


                  Through June,  1998 the principal  activity of the Company has
been the development of a computerized  limousine reservation and payment system
for the business traveler.  The Company's  proprietary software enables a system
of limousine  reservations  to be completely  computerized  and operate  without
human  intervention,  except for the initial  inputting  of travel  information.
Although planned  operation of this system has commenced,  revenues to date have
not been significant;  accordingly, the Company and its subsidiaries continue to
be in development stage.

                  Pursuant to an Asset Purchase  Agreement  dated as of June 30,
1998, NetCruise  Interactive,  Inc.  ("NetCruise") (a wholly owned subsidiary of
the Company  formed on July 21, 1998 for the  purpose of  operating  an internet
travel  agency)  acquired a technology  license and certain  related assets from
United Leisure  Interactive Inc. ("UIT") in consideration of 2,000,000 shares of
the Company's  Common Stock and two warrants  ("Warrants"),  each  entitling the
holder to purchase  800,000  shares of the Common Stock of the Company (the "UIT
Transaction").  One warrant is exercisable for 800,000 shares at $2.50 per share
and may be  exercised  between  April 1,  2002 and  June 30,  2002,  but only if
NetCruise achieves profits equal to or exceeding  $5,000,000 for the years 1999,
2000 and 2001. The other Warrant is exercisable  for 800,000 shares at $6.00 per
share and may be exercised  between April 1, 2002 and June 30, 2002, but only if
NetCruise achieves profits equal to or exceeding $10,000,000 for the years 1999,
2000 and 2001.  No value has been placed on the warrants  since the warrants are
each contingent upon future earnings.

   
                  As a result  of the  transaction,  the  Company  acquired  the
internet  travel  web  site  called "  NetCruise"  and a  perpetual,  world-wide
technology  license for "Parallel  Addressing  Video  Technology" for all travel
related applications,  along with all of the related software,  computer systems
and  intellectual  properties.  No  royalty  payments  are  required  under  the
licensing agreement for the "Parallel Addressing Video
Technology"  and the license is  exclusive  as it relates to the  technology  as
applied to the travel industry. UIT has retained the right to the technology for
all other  uses  outside  of the  travel  industry.  The  intellectual  property
acquired  consists of a license for the "Parallel  Addressing Video  Technology"
which includes the NetCruise  name,  logo,  trade-marks and  service-marks.  The
Company  did  not  acquire  the  patent  to  the  "Parallel   Addressing   Video
Technology." Also included as part of the intellectual property was an agreement
between  UIT and  Internet  Travel  Network  (ITN),  of Palo Alto,  CA which UIT
transferred to the Company.  This agreement  provides for a "private label" site
on  the  ITN  "booking  engine".  The  agreement  expires  in  April,  1999  and
automatically  renews for  successive one year periods unless either party gives
notice,  no later than 30 days prior to the end of the period, of its intent not
to renew.  The Company has renewed this agreement under the terms and conditions
of the original agreement.  The ITN "booking engine" is essentially a world wide
web based  graphical  user  interface to the airline  owned Apollo  computerized
reservation  system.  This  technology  allows a  layperson  with  access to the
internet to access the  databases  and pricing  systems used by travel agents to
research  and  procure  air,  car rental  and hotel  reservations.  By  "private
labeling"  this  functionality,   the  Company  is  able  to  offer  its  travel
consultants  access to a leading travel  system,  while not having to expend the
Company's  capital  resources  which would be required to create its own access.
The custom software  acquired by the Company  consists of a video player program
(called a ULI player) that  permits the end user to view video  files,  a cruise
database, a CD-ROM video disc database containing video images of travel-related
information and miscellaneous commercially purchased software. The technological
feasibility  of  the  custom  software  was  established  at  the  time  of  the
acquisition,  as a working  model had been  completed at that time.  The Company
formed  NetCruise as a wholly owned  subsidiary  for the purpose of operating an
internet  travel  business  featuring  the  technology   obtained  through  this
acquisition.

     The purchase of these  assets has been  recorded as of the date of purchase
at the total purchase price of  $2,500,000,  which  represents the fair value of
the assets  acquired.  The purchase  price  allocated to the individual assets
acquired,  based on the  estimated  fair  value at the date of the
acquisition, is as follows: (i) $1,450,000 of computer software; (ii) $1,000,000
for the license to the "Parallel Addressing Video Technology"; (iii) $10,000 for
the agreement between ITN and UIT and (iv) $40,000 for computer  equipment.  The
purchase  price  consisted of 2,000,000  shares of the  Company's  Common Stock,
which at the time of the purchase was trading at  approximately  $2.50 per share
on The Nasdaq SmallCap Market. For accounting purposes the Company estimated the
fair value of the shares at  $2,500,000  since the shares  were  restricted.  No
goodwill resulted from this transaction, as no business was acquired.

                  Although the Company only has a limited  number of individuals
who have  subscribed  to be  independent  travel  consultants  and therefore few
customers,  the Company intends to launch,  through television  advertising,  an
aggressive  marketing campaign inviting the general public,  along with existing
travel  agents,  to  become  NetCruise  travel  consultants  . The  goal  of the
Company's   marketing  campaign  is  to  encourage   individuals  to  enroll  as
independent travel consultants by paying an annual fee to the Company.  Each new
independent travel consultant will receive a start-up kit consisting of a CD ROM
library  of video  destinations;  a  marketing  kit  which  includes  a guide to
marketing an at-home business, a training manual describing the travel industry,
a welcome  letter  containing  a  password  for the web site and an  outline  of
NetCruise  policies and procedures and  full-service  support from the Company's
live travel agents. The independent travel consultants will then be able to make
reservations  either through the password protected section of the NetCruise web
site or via  telephone  conversations  with travel  agents who work directly for
NetCruise.  Non-members  who visit the  non-password  protected  section  of the
NetCruise  web-site (the "Visitor's  Section") shall have access to a portion of
the site which contains  general  information  about the Company,  describes the
independent   travel  consultant  program  and  allows  the  public  to  request
information or enroll as an independent travel consultant.
    

                  The  internet  web-site is  currently  operational  , although
management   expects  web-site   development  to  continue   through   mid-1999.
Independent travel consultants, through the password protected
   
section of the site, can currently book car, air and hotel reservations directly
through  the  web-site,  as  well  as  research  vacation  packages  and  cruise
itineraries.  At the present time the Company's  independent  travel consultants
are not able to book  vacation  and  cruise  packages  in an  automated  fashion
through  the  web-site.  In  order to make  these  types  of  reservations,  the
independent  travel  consultant is  instructed to contact the Company's  service
center, (operated through Sammy's Travel World, a wholly owned subsidiary of the
Company) via toll-free telephone, fax or e-mail, whereby a live NetCruise travel
agent will then make the cruise or vacation reservation.  The Company intends to
continually  enhance its  technology to automate the booking  process for cruise
and vacation  reservations  through its website.  There can be no assurance that
the Company will to be able to achieve the necessary technological advancements.
To date, the Visitor's  Section of the web-site is being used for  demonstration
to  potential  travel  consultants.  The  password  protected  section  is  only
accessible  by company  personnel and  independent  travel  consultants  using a
password. See Note 4.
    

                  The Company has  budgeted  approximately  $198,000 to complete
the  web-site.  Additional  costs  of  bringing  the  internet  travel  business
operational  are  expected  to  be  approximately  $1,144,000,   which  includes
producing a television video  infomercial and purchasing media time. The Company
believes it will be able to finance such development substantially from proceeds
of a recent  private  placement,  but there can be no assurance  that such funds
will be  sufficient.  In the event the Company  decides to purchase  significant
amounts  of media  time for the  television  infomercial,  it will need to raise
additional  funds.  No  assurance  can be made that the Company  will be able to
raise such funds.
<PAGE>

                  In order to  concentrate  its  resources  and  efforts  on its
NetCruise internet travel business, in November, 1998 the Company agreed to sell
the assets of its computerized  limousine  reservation and payment system to Gen
O2, Inc., a company newly formed by a management  group lead by Mark A. Kenny, a
former director and founder of the Company. The Company owns a minority interest
in the new company and will receive  royalties on transactions  processed by the
new company for a period of five years. See Note 6.

                  The  Company  is  conducting  a  comprehensive  review  of its
computer  systems to identify  the  systems  that could be affected by the "Year
2000" issue and has developed an  implementation  plan to resolve the issue. The
Year 2000 problem is the result of computer  programs  being  written  using two
digits  rather than four to define the  applicable  year.  Any of the  Company's
programs  that have  time-sensitive  software may recognize a date using "00" as
the year 1900 rather  than the year 2000 which  could cause a system  failure or
other  computer  errors,  leading  to  a  disruption  in  operations.   No  easy
technological  "quick fix" has yet been  developed for this  problem.  This Year
2000 problem  creates risk for the Company from  unforeseen  problems in its own
computer systems and from third parties with whom the Company deals on financial
transactions.  Such  failures of the  Company's  and/or third  parties  computer
systems  could have a material  impact on the  Company's  ability to conduct its
business,  and  especially  to process  and  account  for the  transfer of funds
electronically.

         With the goal of making the Company  Year 2000  compliant,  the Company
has developed a four phase implementation plan as follows:

         Inventory phase
         Vendor contact phase
         Reintegration phase
         Testing phase

         The Company has budgeted  approximately  $15,000 to implement this plan
and has assigned overall  responsibility for the project to its Systems Manager.
All software  currently  being  developed by the Company or through  third party
contractors is being written to be Year 2000  compliant.  The Company,  with the
assistance of outside  software  contractors,  is in the process of changing its
accounting  system from non- compliant  MAS-90 software to a compliant  software
system. Final implementation of fully tested and operational Year 2000 compliant
systems is projected  to be completed by the end of the second  quarter of 1999.
The Company's  banks and lenders have  communicated  that they will be Year 2000
compliant by the end of 1999.  No other third  party's Year 2000  compliance  is
expected to have a material impact on the operations of the Company.




Note 3            Stockholders Equity

Preferred  Stock - The Company's  Certificate  of  Incorporation  authorizes the
issuance of up to 25,000,000  shares of Preferred  Stock. On March 10, 1998, the
Board of Directors  designated  706,000 shares of Series A Preferred Stock which
are convertible,  in whole or in part, into fully paid and nonassessable  Common
Shares on a one-for-one  basis at the option of the respective  holders thereof.
Holders of Series A Preferred Stock are entitled to receive  dividends on a pari
passu basis with the holders of the Company's Common Stock. The Company,  at its
sole  option,  has the right to redeem all or, from time to time,  any number of
the then outstanding shares of Series A Preferred Stock at a redemption price of
$2.125 per share plus a 10% per year increase in the redemption rate.

                  In March 1998, the holder of two Term  Promissory  Convertible
Notes in the principal  amounts of $475,000 and $237,500  converted  $400,000 of
the principal  amount of the former note and $200,000 of the principal amount of
the latter note into 188,235 shares and 94,118 shares respectively of the Series
A Preferred Stock of the Company at a price of $2.125 per share.

                  In March 1998, the holder of four eighteen  month  Convertible
Promissory Notes aggregating  $210,000,  converted the total principal amount of
the four notes  ($210,000) into 98,824 shares of the Series A Preferred Stock of
the Company at a price of $2.125 per share.



Note 4            Asset Acquisition

   
                  Pursuant to an Asset Purchase  Agreement  dated as of June 30,
1998, NetCruise  Interactive,  Inc. (" NetCruise") (a wholly owned subsidiary of
the Company  formed on July 21, 1998 for the  purpose of  operating  an internet
travel agency) acquired a technology license and certain related assets from UIT
in  consideration  of  2,000,000  shares of the  Company's  Common Stock and two
warrants  ("Warrants"),  each entitling the holder to purchase 800,000 shares of
the  Common  Stock of the  Company  (the  "UIT  Transaction").  One  warrant  is
exercisable  for 800,000 shares at $2.50 per share and may be exercised  between
April 1, 2002 and June 30, 2002, but only if NetCruise achieves profits equal to
or exceeding  $5,000,000 for the years 1999, 2000 and 2001. The other Warrant is
exercisable  for 800,000 shares at $6.00 per share and may be exercised  between
April 1, 2002 and June 30, 2002, but only if NetCruise achieves profits equal to
or exceeding  $10,000,000  for the years 1999,  2000 and 2001. No value has been
placed on the  warrants  since the  warrants  are each  contingent  upon  future
earnings.

                  As a result  of the  transaction,  the  Company  acquired  the
internet  travel  web  site  called "  NetCruise"  and a  perpetual,  world-wide
technology  license for "Parallel  Addressing  Video  Technology" for all travel
related applications,  along with all of the related software,  computer systems
and  intellectual  properties.  No  royalty  payments  are  required  under  the
licensing  agreement  for the "Parallel  Addressing  Video  Technology"  and the
license is  exclusive as it relates to the  technology  as applied to the travel
industry.  UIT has  retained  the right to the  technology  for all  other  uses
outside of the travel industry. The intellectual property acquired consists of a
license for the  "Parallel  Addressing  Video  Technology"  which  includes  the
NetCruise name, logo, trade-marks and service-marks. The Company did not acquire
the patent to the "Parallel  Addressing Video Technology." Also included as part
of the  intellectual  property was an agreement  between UIT and Internet Travel
Network  (ITN),  of Palo Alto,  CA which UIT  transferred  to the Company.  This
agreement  provides for a "private label" site on the ITN "booking engine".  The
agreement  expires in April,  1999 and  automatically  renews for successive one
year periods  unless either party gives  notice,  no later than 30 days prior to
the end of the period,  of its intent not to renew. The Company has renewed this
agreement  under the terms and  conditions  of the original  agreement.  The ITN
"booking  engine" is essentially a world wide web based graphical user interface
to the airline owned Apollo  computerized  reservation  system.  This technology
allows a layperson  with  access to the  internet  to access the  databases  and
pricing  systems  used by travel  agents to research and procure air, car rental
and hotel reservations. By "private labeling" this functionality, the Company is
able to offer its travel  consultants  access to a leading travel system,  while
not having to expend the Company's  capital resources which would be required to
create its own access. The custom software acquired by the Company consists of a
video  player  program  (called a ULI player)  that permits the end user to view
video files, a cruise  database,  a CD-ROM video disc database  containing video
images of travel-related  information and miscellaneous  commercially  purchased
software.  The technological  feasibility of the custom software was established
at the time of the  acquisition,  as a working model had been  completed at that
time. The Company formed  NetCruise as a wholly owned subsidiary for the purpose
of operating an internet  travel  business  featuring  the  technology  obtained
through this acquisition.

                  Although the Company only has a limited  number of individuals
who have subscribed to be independent travel consultants and therefore a limited
number  of  customers,   the  Company  intends  to  launch,  through  television
advertising, an aggressive marketing campaign inviting the general public, along
with existing travel agents,  to become NetCruise travel  consultants . The goal
of the Company's  marketing  campaign is to encourage  individuals  to enroll as
independent travel consultants by paying an annual fee to the Company.  Each new
independent travel consultant will receive a start-up kit consisting of a CD ROM
library  of video  destinations;  a  marketing  kit  which  includes  a guide to
marketing an at-home business, a training manual describing the travel industry,
a welcome  letter  containing  a  password  for the web site and an  outline  of
NetCruise  policies and procedures and  full-service  support from the Company's
live travel agents. The independent travel consultants will then be able to make
reservations  either through the password protected section of the NetCruise web
site or via  telephone  conversations  with travel  agents who work directly for
NetCruise.  Non-members  who visit the  non-password  protected  section  of the
NetCruise  web-site (the "Visitor's  Section") shall have access to a portion of
the site which contains  general  information  about the Company,  describes the
independent   travel  consultant  program  and  allows  the  public  to  request
information or enroll as an independent travel consultant.
    

                  The  internet  web-site  is  currently  operational,  although
management   expects  web-site   development  to  continue   through   mid-1999.
Independent travel consultants, through the password protected
   
section of the site, can currently book car, air and hotel reservations directly
through  the  web-site,  as  well  as  research  vacation  packages  and  cruise
itineraries.  At the present time the Company's  independent  travel consultants
are not able to book  vacation  and  cruise  packages  in an  automated  fashion
through  the  web-site.  In  order to make  these  types  of  reservations,  the
independent  travel  consultant is  instructed to contact the Company's  service
center, (operated through Sammy's Travel World, a wholly owned subsidiary of the
Company) via toll-free telephone, fax or e-mail, whereby a live NetCruise travel
agent will then make the cruise or vacation reservation.  The Company intends to
continually  enhance its  technology to automate the booking  process for cruise
and  vacation  reservations  through its  web-site.  There can be no  assurance,
though, that the Company will be able to achieve the technological  advancements
necessary to automate the booking of cruise and vacation reservations.  To date,
the  Visitor's  Section  of the  web-site  is being  used for  demonstration  to
potential travel consultants.  The password protected section is only accessible
by company personnel and independent travel consultants using a password.

     The purchase of these  assets has been  recorded as of the date of purchase
at the total purchase price of  $2,500,000,  which  represents the fair value of
the assets  acquired.  The purchase  price  allocated to the individual  assets
acquired,  based on the estimated  fair  value at the date of the
acquisition, is as follows: (i) $1,450,000 of computer software; (ii) $1,000,000
for the license to the "Parallel Addressing Video Technology"; (iii) $10,000 for
the agreement between ITN and UIT and (iv) $40,000 for computer  equipment.  The
purchase  price  consisted of 2,000,000  shares of the  Company's  Common Stock,
which at the time of the purchase was trading at  approximately  $2.50 per share
on The Nasdaq SmallCap Market. For accounting purposes the Company estimated the
fair value of the shares at  $2,500,000  since the shares  were  restricted.  No
goodwill resulted from this transaction, as no business was acquired.

     The budgeted cost of the internet travel business  becoming  operational is
     expected to be  approximately  $1,342,000.  Of such  amount,  approximately
     $198,000 was  allocated to complete the  development  of the web site.  The
     remainder  will be used to  produce  a  television  video  infomercial  and
     purchase media time.  The Company  believes it will be able to finance such
     development  substantially  from proceeds of a recent private  placement in
     the amount of  $1,500,000,  but there can be no  assurance  that such funds
     will  be  sufficient.   In  the  event  the  Company  decides  to  purchase
     significant amounts of media time for the television  infomercial,  it will
     need to raise  additional  funds. No assurance can be made that the Company
     will be able to raise such funds.
    

                  Harry  Shuster has been  appointed  Chairman and Brian Shuster
the President of NetCruise.  Pursuant to the  acquisition  agreement,  Mr. Brian
Shuster  will receive  $5,000 per month for his services as a consultant  to the
Company. In addition,  Messrs. Harry Shuster and Brian Shuster have been serving
as  directors  of the Company  since the  transaction  closed and both have been
nominated  for  election as directors  of the  Company.  Brian  Shuster has been
issued  two  warrants  to  purchase  restricted  common  shares of the  Company,
exercisable  between  April 2, 2002 and June 30,  2002,  if  NetCruise  achieves
certain  profit levels,  as defined in the warrants.  One warrant is exercisable
for 200,000 shares at $2.50 per share and the other warrant is  exercisable  for
200,000  shares at $6.00 per  share.  The  Company's  wholly  owned  subsidiary,
NetCruise  Interactive,  has assumed UIT's lease of  approximately  1,617 square
feet (including  tenant's pro rata share of common area) at 1990 Westwood Blvd.,
Penthouse,  Los  Angeles,  CA  90025.  The  term  of this  lease  is for 5 years
commencing  on March 1, 1996 and ending on February 28,  2001.  During the first
through  2nd year of the term of the  lease,  the rent is  $2,587  per month and
during the 3rd  through 5th year of the term of the lease the rent is $2,846 per
month.


Note 5            Contingencies

                  On April 17,  1997, a former  officer of the Company  filed an
action in the United States District Court, District of New jersey,  against the
Company,  Travel Link,  the officers of both  companies and various  related and
unrelated parties seeking,  among other things, a declaratory  judgment that the
former  officer is the owner of 333,216  shares of Common  Stock of the  Company
which had been issued to him at the inception of Travel Link for services he was
to have provided and for  unspecified  compensatory  and punitive  damages.  The
Company  believes that the  plaintiff's  claims are without merit and intends to
vigorously  defend the action and to assert numerous  defenses and counterclaims
in its answer.

         On December 23,  1997,  an  individual  filed an action in the Superior
Court of New Jersey against the Company and the former President of the Company,
alleging that the former  President of the Company  induced such person to leave
her place of employment to assume  employment with the Company.  The claim seeks
monetary damages based upon an oral promise of employment  allegedly made by the
same officer of the Company.  The Company believes that the plaintiff's claim is
without merit and intends to vigorously defend the action and to assert numerous
defenses in its answer. The same officer has agreed to hold the Company harmless
and  indemnify  the Company from any and all claims.  Management  believes  that
there will be no material effects on the Company as a result of this action.

Note 6                     Subsequent  Events

                  At the beginning of the third quarter 1998,  Management of the
Company set revenue objectives for the limousine  reservation  business and made
the  decision  to  review  the  operation  at the end of the  third  quarter  to
determine the best approach to maximize  utilization of the Company's resources.
The limousine  reservation  business did not meet its revenue  objectives and in
early  September  1998,  the  Company  decided to seek a buyer or joint  venture
partner for its limousine reservation business.

   
                  On November 6, 1998 the Company  entered  into an  Acquisition
Agreement  (the "Sales  Agreement")  by and  between  the Company and  Corporate
Travel Link, Inc. ("Travel Link"), a wholly owned subsidiary of the Company (the
sellers in the transaction) and TranspoNet (a non-affiliated  company),  Mark A.
Kenny, Paul Murray and Gen 02, Inc. ("Purchaser"), a newly organized corporation
formed by Mark A. Kenny, a former director and founder of the Company. This sale
will allow the Company to concentrate its resources and efforts on the continued
build-up of its internet travel business.

                  Under the terms of the Sale  Agreement,  the sellers  sold and
transferred  certain  contractual rights and obligations of the Company,  all of
the assets of Travel Link which are utilized in connection  with the  ownership,
operation and marketing of Genisys  Reservation  System and its entire ownership
interest  in  ProSoft  to  the  purchaser  in  the   transaction,   constituting
approximately  20% of the total assets of the  Company.  ProSoft is an 80% owned
subsidiary  of the Company  which was  acquired  by the  Company in June,  1997.
ProSoft is a software  development  company which developed the software for the
Company's  computerized limousine reservation and payment system. Paul Murray, a
former employee of the Company and President and Shareholder of ProSoft, is also
a shareholder of Gen O2, Inc.
    

                  The  Company  sold  these  assets,  which had a book  value of
$744,122 at November 6, 1998, net of $83,000 of indebtedness  assumed by Gen O2,
Inc. for (i) 2,450  shares of Series A  Convertible  Preferred  Stock of Gen O2,
Inc.,  constituting  a  32.66%  interest  in Gen  O2,  Inc.;  and  (ii)  certain
contingent  payments payable until December 10, 2003, totaling $1,080,000 if all
payments  to the  Company  are  realized,  however,  since  there are no minimum
contingent payments, it is possible that the Company will receive no significant
contingent payments from GEN 02, Inc. The terms are as follows:

         a. For each completed limousine  transaction through the current system
         from  corporate  users,  a  payment  of $0.20  per  transaction  with a
         $100,000  maximum  payment per year.  b. For each  completed  limousine
         transaction  through the Almost  Real Time  System  (the "ART  System")
         which was under  development  by the sellers  prior to the execution of
         the sale
   
                  agreement  and is to be completed by GEN 02, Inc. that will be
                  directed  toward  leisure  customers,  a payment  of $0.20 per
                  transaction  with a $100,000 maximum payment in the first year
                  and a $0.30 payment per  transaction  with a $120,000  maximum
                  payment per year thereafter.
    
     c. If the system  and the ART System are merged at any time in the  future,
     the sellers shall receive a payment of $0.25 per completed transaction with
     a $200,000 maximum payment in the first year and a $220,000 maximum payment
     per year thereafter.

         d. If the payments are not reached in a particular  year,  the payments
         defined in letters a-c above will have a  carry-over  to the  following
         year.
         e. In no event shall any payments defined in letters a-c above be
         due to the sellers for transactions  completed after December 10, 2003.
         f. For the transfer of the assets by the sellers and the  assumption of
         certain  liabilities of the sellers by the purchaser as described above
         along with the agreement by the sellers to
   
                  provide the  purchaser  with a series of loans,  the purchaser
                  granted an equity  interest  to the  sellers  in GEN O2,  Inc.
                  equal to  32.66%  of the  equity  of GEN O2,  Inc.  The  loans
                  provided  by the  sellers  will  include a ninety day  secured
                  bridge loan in the amount of $40,000  secured by 22,857 shares
                  of Common Stock of the Company owned by Mr.  Kenny,  a secured
                  loan of  $135,000  payable  commencing  in the second year and
                  secured by 77,143  shares of Common Stock of the Company owned
                  by Mr. Kenny.  Mr. Kenny has also pledged 23,428 shares of the
                  Company's  Common Stock owned by him to secure the return of a
                  security  deposit  to the  Company  and  68,000  shares of the
                  Company's  Common Stock to secure  minimum  payments which are
                  required to be made by the  Company  under  certain  contracts
                  which were transferred to the purchaser in connection with the
                  sale.
        
          g. A  second  32.66%  shareholder  of GEN  O2,  Inc.,  TranspoNet  has
          committed  to provide  funding for the  purchaser of up to $240,000 in
          the form of a series of loans.  TranspoNet  has a right to convert the
          unpaid  principal  of the loans at any time  into a maximum  number of
          shares of common stock of the purchaser not to exceed an additional 6%
          equity interest in the purchaser.

                  This  transaction  is being  reported as an exchange of assets
for a  non-controlling  interest in a new  company;  accordingly  for  financial
reporting  purposes it is being treated as a change from being  consolidated  to
being  reported  on the  equity  method  requiring  restatement  of prior  years
statements of operations. No gain or loss was recognized since the investment is
in an equity method investment in a non-public entity. The accompanying proforma
balance  sheet at September  30, 1998 assumes that the exchange of the Company's
assets in exchange  for common  stock of GEN O2, Inc. had occurred on that date,
and  reflects an  anticipated  $175,000  loan by the Company to GEN O2, Inc. The
effects on the  historical  consolidated  statement  of  operations  would be to
reclassify  all service  revenue and cost of service,  as well as a  significant
portion of general and administrative expenses and depreciation and amortization
to a separate  line item,  as the Company will report GEN O2, Inc. on the equity
basis.  There would be no impact on net income,  as the Company  will absorb all
losses to the extent of assets  transferred since the only other  capitalization
of GEN O2, Inc. was $50.00.  (See  proforma  Statement of  Operations  elsewhere
herein.)

          The Series A Preferred  Stock issued to the Company and  TranspoNet in
          accordance with the transaction are part of a class of preferred stock
          of GEN O2, Inc.  designated as "Series A Preferred  Convertible Stock"
          and the number of shares of preferred stock constituting such class is
          4,900.  The shares of Series A Preferred  Stock  issued to the Company
          together  with the  shares  of  Series A  Preferred  Stock  issued  to
          TranspoNet  constitute  all of the  authorized  shares of the Series A
          Preferred  Stock of GEN O2,  Inc.  So long as any  share  of  Series A
          Preferred Stock remains outstanding,  GEN O2, Inc. shall not authorize
          the  issuance  or issue any  additional  shares of Series A  Preferred
          Stock or any shares of any series or class of stock ranking senior to,
          or on a parity  with,  the Series A Preferred  Stock as to rights upon
          liquidation,  dissolution  or winding up of GEN O2,  Inc.  without the
          prior  written  consent of at least a majority  of the  holders of the
          Series A Preferred Stock.

                  The par value of the Series A  Preferred  Stock is $0.0001 per
share and no  dividends  shall be  declared  or paid on the  Series A  Preferred
Stock.  In the event of a voluntary or involuntary  liquidation,  dissolution or
winding up of GEN O2, Inc., the holders of the Series A Preferred Stock shall be
entitled to receive out of the assets of GEN O2, Inc. available for distribution
to stockholders, before any distribution of assets is made to the holders of any
other  series  or class of stock of GEN O2,  Inc.,  a  liquidating  preferential
distribution  in an amount  equal to  $400.00  per  share of Series A  Preferred
Stock.  The holders of the Series A Preferred Stock shall be entitled to vote on
all matters submitted to a vote of the shareholders of GEN O2, Inc. and shall be
entitled to one vote for each share of Series A Preferred  Stock. The holders of
the Series A Preferred  Stock shall not have  cumulative  voting rights.  At any
time and from time to time,  upon  notice to GEN O2,  Inc.,  the  holders of the
Series A Preferred  Stock  shall be  entitled to convert  each share of Series A
Preferred Stock into one fully paid and non-assessable  share of common stock of
GEN O2, Inc.  subject to  adjustments  for any stock  splits,  stock  dividends,
reverse stock splits or recapitalization.

                  Upon  conversion  of the Series A Preferred  Stock into common
stock of GEN O2, Inc., the Company and TranspoNet  will each own 2,450 shares or
32.66%  of the  issued  and  outstanding  common  stock  of GEN O2,  Inc.  It is
anticipated  that the Purchaser will issue an additional  2,500 shares of common
stock in the near future, thereby diluting the ownership interest of the Company
and TranspoNet in GEN O2, Inc. to 24.5%. The Company's influence in GEN O2, Inc.
is  limited  to the right to elect  one  member  of a five (5)  member  Board of
Directors.

          The primary  capitalization  of GEN 02, Inc. is being  provided by the
          loans from the Company and TranspoNet.  In addition, the sole asset of
          GEN 02, Inc. is the limousine  reservation  business. As a result, the
          Company   will   absorb  all  losses  to  the  extent  of  the  assets
          transferred.  Since there are no minimum  contingent  payments,  it is
          possible  that the  Company  will  receive no  significant  contingent
          payments from GEN O2, Inc.

    

                  On November 5 , 1998, in order to augment the Company's  entry
into the internet  travel  business,  the Company entered into an Asset Purchase
Agreement with Sterling AKG Corp. d/b/a Sterling Travel  ("Sterling") , in which
the  Company  purchased  all  the  assets  relating  to  Sterling's  network  of
independent  travel  consultants  ("Sterling  Travel  Consultants")  for a total
purchase  price of 25,000  shares  of the  Company's  Common  Stock  which,  for
accounting  purposes,  is being  valued at $1.50 per share for an  aggregate  of
$37,500. An additional 17,500 shares ("Escrow Shares") will be held in escrow by
counsel to the  Company.  If the Company  does not achieve  $3,000,000  of gross
sales  from  the sale of  travel  services,  including  renewal  fees,  from the
Sterling Travel  Consultants  over the initial twelve month period  beginning on
November  1, 1998 and ending on  October  31,  1999,  the  Escrow  Shares  shall
immediately be returned to the Company.  If the Company  achieves  $3,000,000 of
gross sales from  Sterling  Travel  Consultants  over the initial  twelve  month
period as described herein, the Escrow Shares will be released by the Company.

     Included  in the assets  purchased  by the  Company  was a list of Sterling
Travel  Consultants  (both  active  and  inactive)  that had done or were  doing
business with Sterling.  Also included in the assets  purchased were  contracts,
files,  correspondence,  earning  records,  a data  base of former  and  current
customers of Sterling  estimated at approximately  20,000 entries,  property and
equipment,  including  desks,  chairs,  fax and copy machines,  filing cabinets,
computers and miscellaneous office supplies. The data base of former and current
customers also included the Sterling Travel Consultants, as they were considered
customers, not employees of Sterling and the names of travel agents who had done
business with Sterling as Sterling  Travel  Consultants.  In addition,  included
were  agreements  with  such  Sterling  Travel  Consultants  setting  forth  the
commissions  they could earn and operational  matters relating to their position
as an independent travel consultant.

                  The Company's current  independent  travel consultants are all
former Sterling Travel  Consultants whose contracts were assigned to the Company
from Sterling as part of the acquisition and who paid their  subscription fee to
Sterling. In the event the independent travel consultants (formerly the Sterling
Travel Consultants) desire to renew their contracts,  a renewal subscription fee
will be paid to the Company.





                                                         6

<PAGE>



               PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                    (Unaudited)

The following statements are based upon the historical  statements of operations
appearing  elsewhere  herein and in the Company's Form 10-KSB for the year ended
December 31, 1997 to show the effect on the Company's statement of operations as
if the sale of the limousine  reservation  business occurred as of the beginning
of the periods indicated (reference should be made to Note 6 appearing elsewhere
herein).  These  statements  should be read in  conjunction  with the  Company's
financial  statements  and notes thereto  appearing,  or referred to,  elsewhere
herein.



                                                    Nine Months Ended                                   Year Ended
                                                        September 30, 1998                             December 31, 1997  
                                                                                      -------------------------------------------

                                    Historical    Reclassifications    Pro Forma       Historical    Reclassifications    Pro Forma 
                                                       (Note A)                                              (Note A)

SERVICE REVENUE                   $     52,002      $  (52,002)  $        -          $     25,863   $    (25,863)   $       -
                                    ------------      -----------  ---------------     ------------   -------------   ---------

EXPENSES:
   Cost of service                      111,490        (111,490)           -                24,992        (24,992)          -      
   General and administrative         1,205,173        (607,285)          597,888        1,318,203       (736,858)     581,345
   Depreciation and amortization        397,091        (287,589)          109,502          217,386       (195,700)      21,686
   Interest expense (income), net       (18,462)              -           (18,462)           55,407              -       55,407
                                       -------               -----       -------            ------        -----        ------
                                      1,695,292      (1,006,364)          688,928        1,615,988       (957,550)    658,438
                                      ---------      -----------          -------        ---------       ---------    -------

   LOSS BEFORE EQUITY IN GEN O2, INC.
                                     (1,643,290)        (954,362)        (688,928)      (1,590,125)       (931,687)   (658,438)

EQUITY IN LOSS OF GEN O2, INC.             -             954,362        (954,362)            -             931,687   (931,687)
                                         ------        -------        --------             -----         -------   -------- 

   NET LOSS INCURRED DURING THE DEVELOPMENT STAGE
                                     $(1,643,290) $           -        $(1,643,290)     $(1,590,125) $         -    $(1,590,125)
                                      ===========  ==================   ===========      ===========  ==============  =========== 

   WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
                                       4,961,089                         4,961,089        4,121,000                  4,121,000
                                      ===========                       ===========      ===========                 ==========

   BASIC AND DILUTED LOSS PER COMMON SHARE
                                           $(.33)                            $(.33)           $(.39)                          $(.39)
                                            =====                             =====            =====                          ===== 

</TABLE>

   
               Note A - The proforma statements reflect the  reclassification of
               balances   applicable   to  the   operations   of  the  limousine
               reservation  business  and  ProSoft  to reflect  the change  from
               majority ownership to minority ownership.  There will be a change
               from  consolidation to equity basis  reporting.  There will be no
               impact on net income,  as the  Company  will absorb all losses to
               the extent of the carrying amount of the assets transferred since
               the only other capital being contributed to GEN O2, Inc. is $50.
                                                  
    

               The proforma  amounts  reflect the Company's  corporate  expenses
               (officers' and office  compensation,  professional fees, rent and
               similar  costs) and,  since June 30, 1998,  the operations of its
               Internet  travel  business.   Such  general  and   administrative
               expenses were incurred during the periods indicated and relate to
               all  of  its  business  activities.  Common  expenses  have  been
               allocated to the limousine reservation and ProSoft business on an
               incremental  basis and all other ongoing  corporate  expenses are
               reflected in proforma amounts. In the opinion of management, this
               allocation approximates costs which would have been incurred on a
               stand alone basis.  However,  proforma  operating results are not
               necessarily  indicative  of results which would have occurred had
               the  Company's  operations  been  conducted  as  a  separate  and
               independent company.



                                                             7

<PAGE>


                            MANAGEMENT'S DISCUSSION AND ANALYSIS
                     OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


                Results of Operations

                           Through September 30, 1998, the principal activity of
                the Company has been the development of a computerized limousine
                reservation  and  payment  system  for  the  business  traveler.
                Although  planned  operation of this system  commenced in August
                1997,  revenues to date have not been significant;  accordingly,
                the  Company  and  its  subsidiaries   continue  to  be  in  the
                development  stage.  The  Company  has been  unprofitable  since
                inception and expects to incur additional operational losses. As
                reflected in the accompanying financial statements,  the Company
                has incurred losses totaling  $4,878,418  since inception and at
                September 30, 1998, had working capital of $144,541.

                           Revenues for the three and nine month  periods  ended
                September 30, 1998, for the limousine  reservation business were
                $22,128  and  $52,002,  as compared to $2,225 and $2,225 for the
                1997 periods.  The  corresponding  cost of service for the three
                and nine month  periods  ending  September 30, 1998 were $64,276
                and  $111,490  as  compared  to $6,800  and  $6,800 for the 1997
                periods.  To date the Company has not yet  commenced  generating
                revenues  from its  internet  travel  business,  however,  as of
                November 1998,  the Company has begun to generate  revenues from
                shared  commissions  earned by the  network of  Sterling  Travel
                Consultants recently acquired.

                           General and  administrative  expenses were $1,205,173
                for the nine months ended  September  30,  1998,  as compared to
                $927,670  during the nine months ended  September 30, 1997. Cost
                increases  during the 1998 period consist of payroll and payroll
                related costs ($175,000),  professional  fees ($57,200),  travel
                costs  ($5,600),   insurance  costs  ($8,200),  marketing  costs
                ($28,300) and other administrative  costs ($72,100).  Consulting
                costs decreased $68,900 during the 1998 period.  The increase of
                approximately $175,000 in payroll cost for the nine months ended
                September  30,  1998 was due in large  part to the fact that the
                three highest paid employees of the Company,  Thomas Gregory and
                Paul  Murray,  President  and  Vice  President  respectively  of
                Prosoft and Lawrence E. Burk the Company's President were on the
                payroll  for the full nine months of the 1998  period,  but were
                only on the  payroll  for  less  than  four  months  of the 1997
                period.   The  $28,300  increase  in  marketing   activities  is
                primarily  due to sales  and  marketing  costs  incurred  by the
                limousine reservation business in an attempt to meet its revenue
                objectives.

                           General and administrative expenses were $421,330 for
                the  three  months  ended  September  30,1998,  as  compared  to
                $454,432  during the three months ended September 30, 1997. Cost
                increases  during the 1998  period  consist of  marketing  costs
                ($3,600)  and  other   administrative   costs  ($25,700).   Cost
                decreases  during the 1998 period consist of payroll and payroll
                related costs ($16,200), consulting fees ($10,000), professional
                fees  ($27,000),  travel  costs  ($8,700)  and  insurance  costs
                ($500).

   
                           On  November  6,  1998 the  Company  entered  into an
                Acquisition Agreement (the "Sales Agreement") by and between the
                Company and  Corporate  Travel Link,  Inc.  ("Travel  Link"),  a
                wholly  owned  subsidiary  of the  Company  (the  sellers in the
                transaction) and TranspoNet (a non-affiliated  company), Mark A.
                Kenny,  Paul  Murray  and GEN 02,  Inc.  (the  purchaser  in the
                transaction),  a newly organized  corporation  formed by Mark A.
                Kenny, a former  director and founder of the Company.  This sale
                will allow the Company to concentrate
                its  resources  and  efforts on the  continued  build-up  of its
                internet travel business. Under the terms of the Sale Agreement,
                the sellers sold and transferred  certain contractual rights and
                obligations  of the  Company,  all of the assets of Travel  Link
                which are utilized in connection  with the ownership,  operation
                and  marketing  of  Genisys  Reservation  System  and its entire
                ownership   interest  in  ProSoft  to  the   purchaser   in  the
                transaction,  constituting approximately 20% of the total assets
                of the  Company.  ProSoft  is an  80%  owned  subsidiary  of the
                Company which was acquired by the Company in June, 1997. ProSoft
                is a software  development  company which developed the software
                for the Company's computerized limousine reservation and payment
                system.  Paul  Murray,  a former  employee  of the  Company  and
                President and  Shareholder of ProSoft,  is also a shareholder of
                GEN O2, Inc.

                           The Company sold these assets, which had a book value
                of $744,122 at November 6, 1998, net of $83,000 of  indebtedness
                assumed  by GEN O2,  Inc.  for (i)  2,450  shares  of  Series  A
                Convertible  Preferred  Stock of GEN O2,  Inc.,  constituting  a
                32.66%  interest in GEN O2, Inc.;  and (ii)  certain  contingent
                payments,  totaling  $1,080,000  if all payments  payable  until
                December 10, 2003 to the Company are  realized,  however,  since
                there are no minimum  contingent  payments,  it is possible that
                the Company  will not receive  significant  contingent  payments
                from GEN 02, Inc. The terms are as follows:
    

               a. For each completed  limousine  transaction through the current
               system from corporate  users, a payment of $0.20 per  transaction
               with a $100,000 maximum payment per year.
   
                  b.       For each completed limousine  transaction through the
                           Almost Real Time System (the "ART System")  which was
                           under   development  by  the  sellers  prior  to  the
                           execution  of  the  sale   agreement  and  is  to  be
                           completed  by GEN 02,  Inc.  that  will  be  directed
                           toward  leisure  customers,  a  payment  of $0.20 per
                           transaction  with a $100,000  maximum  payment in the
                           first year and a $0.30 payment per transaction with a
                           $120,000 maximum payment per year thereafter.
    
     c. If the system  and the ART System are merged at any time in the  future,
the sellers shall receive a payment of $0.25 per  completed  transaction  with a
$200,000  maximum  payment in the first year and a $220,000  maximum payment per
year thereafter.

                  d. If the payments are not reached in a particular  year,  the
                  payments  defined in letters a-c above will have a  carry-over
                  to the  following  year.  e. In no event  shall  any  payments
                  defined  in  letters  a-c  above  be due to  the  sellers  for
                  transactions  completed  after  December 10, 2003.  f. For the
                  transfer of the assets by the sellers  and the  assumption  of
                  certain  liabilities  of  the  sellers  by  the  purchaser  as
                  described above along with the agreement by the
   
                           sellers to  provide  the  purchaser  with a series of
                           loans,  the purchaser  granted an equity  interest to
                           the  sellers in GEN O2,  Inc.  equal to 32.66% of the
                           equity  of GEN O2,  Inc.  The loans  provided  by the
                           sellers will include a ninety day secured bridge loan
                           in the amount of $40,000  secured by 22,857 shares of
                           Common  Stock of the Company  owned by Mr.  Kenny,  a
                           secured loan of $135,000  payable  commencing  in the
                           second  year and  secured by 77,143  shares of Common
                           Stock of the Company  owned by Mr.  Kenny.  Mr. Kenny
                           has  also  pledged  23,428  shares  of the  Company's
                           Common  Stock  owned by him to secure the return of a
                           security  deposit to the Company and 68,000 shares of
                           the Company's Common Stock to secure minimum payments
                           which are  required to be made by the  Company  under
                           certain  contracts  which  were  transferred  to  the
                           purchaser in connection with the sale.

               g. A second 32.66%  shareholder  of GEN O2, Inc.,  TranspoNet has
               committed to provide  funding for the purchaser of up to $240,000
               in the form of a series of loans.

               TranspoNet  has a right to convert  the unpaid  principal  of the
               loans at any time into a maximum number of shares of common stock
               of the purchaser  not to exceed an additional 6% equity  interest
               in the  purchaser.  The Series A  Preferred  Stock  issued to the
               Company and  TranspoNet in accordance  with the  transaction  are
               part of a class of preferred stock of GEN O2, Inc.  designated as
               "Series A Preferred  Convertible  Stock" and the number of shares
               of preferred stock  constituting  such class is 4,900. The shares
               of Series A Preferred  Stock issued to the Company  together with
               the  shares  of Series A  Preferred  Stock  issued to  TranspoNet
               constitute all of the authorized shares of the Series A Preferred
               Stock of GEN O2,  Inc. So long as any share of Series A Preferred
               Stock remains  outstanding,  GEN O2, Inc. shall not authorize the
               issuance  or issue any  additional  shares of Series A  Preferred
               Stock or any  shares  of any  series  or  class of stock  ranking
               senior to, or on a parity with,  the Series A Preferred  Stock as
               to rights upon liquidation,  dissolution or winding up of GEN O2,
               Inc.  without the prior written consent of at least a majority of
               the holders of the Series A Preferred Stock.

                           The par  value  of the  Series A  Preferred  Stock is
                $0.0001 per share and no dividends  shall be declared or paid on
                the Series A Preferred  Stock.  In the event of a  voluntary  or
                involuntary  liquidation,  dissolution  or winding up of GEN O2,
                Inc.,  the  holders of the  Series A  Preferred  Stock  shall be
                entitled to receive out of the assets of GEN O2, Inc.  available
                for  distribution to  stockholders,  before any  distribution of
                assets is made to the  holders  of any other  series or class of
                stock of GEN O2, Inc., a liquidating  preferential  distribution
                in an amount  equal to $400.00  per share of Series A  Preferred
                Stock.  The  holders of the Series A  Preferred  Stock  shall be
                entitled  to  vote  on all  matters  submitted  to a vote of the
                shareholders  of GEN O2, Inc.  and shall be entitled to one vote
                for each share of Series A Preferred  Stock.  The holders of the
                Series  A  Preferred  Stock  shall  not have  cumulative  voting
                rights.  At any time and from time to time,  upon  notice to GEN
                O2, Inc.,  the holders of the Series A Preferred  Stock shall be
                entitled to convert each share of Series A Preferred  Stock into
                one fully paid and  non-assessable  share of common stock of GEN
                O2, Inc.  subject to  adjustments  for any stock  splits,  stock
                dividends, reverse stock splits or recapitalization.

                           Upon  conversion of the Series A Preferred Stock into
                common  stock of GEN O2 , Inc. the Company and  TranspoNet  will
                each own 2,450  shares or 32.66% of the issued  and  outstanding
                common  stock  of  GEN  O2,  Inc.  It is  anticipated  that  the
                Purchaser will issue an additional  2,500 shares of common stock
                in the near future,  thereby diluting the ownership  interest of
                the  Company  and  TranspoNet  in GEN O2,  Inc.  to  24.5%.  The
                Company's  influence  in GEN O2, Inc. is limited to the right to
                elect one member of a five (5) member Board of Directors.

                           Although  the  Company  only has a limited  number of
                individuals  who  have  subscribed  to  be  independent   travel
                consultants  and therefore a limited  number of  customers,  the
                Company intends to launch,  through television  advertising,  an
                aggressive marketing campaign inviting the general public, along
                with  existing  travel  agents,   to  become   NetCruise  travel
                consultants . The goal of the Company's marketing campaign is to
                encourage   individuals   to   enroll  as   independent   travel
                consultants  by paying an annual  fee to the  Company.  Each new
                independent  travel  consultant  will  receive  a  start-up  kit
                consisting  of  a  CD  ROM  library  of  video  destinations;  a
                marketing  kit which  includes a guide to  marketing  an at-home
                business,  a training manual  describing the travel industry,  a
                welcome  letter  containing  a password  for the web site and an
                outline of NetCruise  policies and procedures  and  full-service
                support from the Company's live travel agents.  The  independent
                travel consultants will then be able to make reservations either
                through the password protected section of the NetCruise web site
                or via  telephone  conversations  with  travel  agents  who work
                directly for NetCruise.  Non-members who visit the  non-password
                protected  section of the  NetCruise  web-site  (the  "Visitor's
                Section")  shall  have  access  to a portion  of the site  which
                contains general  information  about the Company,  describes the
                independent  travel consultant  program and allows the public to
                request   information  or  enroll  as  an   independent   travel
                consultant.
    

                           The  internet  web-site is  currently  operational  ,
                although  management  expects web- site  development to continue
                through mid-1999.  Independent travel  consultants,  through the
                password  protected section of the site, can currently book car,
                air and hotel reservations
   
                directly  through the  web-site,  as well as  research  vacation
                packages  and  cruise  itineraries.  At  the  present  time  the
                Company's  independent  travel  consultants are not able to book
                vacation and cruise packages in an automated fashion through the
                web-site.  In order to make  these  types of  reservations,  the
                independent  travel  consultant  is  instructed  to contact  the
                Company's  service  center,  (operated  through  Sammy's  Travel
                World,  a wholly owned  subsidiary of the Company) via toll-free
                telephone,  fax or e-mail, whereby a live NetCruise travel agent
                will then make the cruise or vacation  reservation.  The Company
                intends to  continually  enhance its  technology to automate the
                booking process for cruise and vacation reservations through its
                web-site.  There can be no assurance,  though,  that the Company
                will be able to achieve the technological advancements necessary
                to automate the booking of cruise and vacation reservations.  To
                date,  the  Visitor's  Section of the web-site is being used for
                demonstration  to  potential  travel  consultants.  The password
                protected  section is only  accessible by company  personnel and
                independent travel consultants using a password. See Note 4.
    

                Liquidity and Capital Resources

                           The Company's  funds have  principally  been provided
                from Loeb Holding Corp. as escrow agent, Loeb Holding Corp., LTI
                Ventures Leasing Corporation, two private offerings and a public
                offering.

                           In March 1998,  Loeb Holding  Corp.,  as escrow agent
                for Warren D.  Bagatelle,  Managing  Director of Loeb  Partners,
                Corp.,  HSB  Capital,  trusts for the benefit of families of two
                principals of Loeb Holding  Corporation  and three  unaffiliated
                individuals  of two  Term  Promissory  Convertible  Notes in the
                principal amounts of $475,000 and $237,500 converted $400,000 of
                the  principal  amount of the former  note and  $200,000  of the
                principal  amount of the  latter  note into  188,235  shares and
                94,118 shares  respectively  of the Series A Preferred  Stock of
                the Company at a price of $2.125 per share.

                           In March 1998,  Loeb Holding  Corp.,  as escrow agent
                for Warren D.  Bagatelle,  Managing  Director of Loeb  Partners,
                Corp.,  HSB  Capital,  trusts for the benefit of families of two
                principals of Loeb Holding  Corporation  and three  unaffiliated
                individuals of four eighteen month Convertible  Promissory Notes
                aggregating  $210,000,  converted the total principal  amount of
                the four notes  ($210,000)  into  98,824  shares of the Series A
                Preferred Stock of the Company at a price of $2.125 per share.

                           In March 1998,  Loeb Holding  Corp.,  as escrow agent
                for Warren D.  Bagatelle,  Managing  Director of Loeb  Partners,
                Corp.,  HSB  Capital,  trusts for the benefit of families of two
                principals of Loeb Holding  Corporation  and three  unaffiliated
                individuals of two Term Promissory Convertible Notes aggregating
                $37,500,  converted  the  total  principal  amount  of the notes
                ($37,500) into 400,000 shares of the Common Stock of the Company
                at a price of $0.09375 per share.

   
                           In September  1995,  January 1996 and December  1996,
                the  Company  entered  into  sale  and  lease-back  arrangements
                whereby the Company sold the bulk of its  computer  hardware and
                commercially purchased software to a lessor for amounts totaling
                $295,000  and agreed to lease back such  equipment  for  initial
                terms  ranging  from 24 to 30 months.  Pursuant to the  November
                1998 Sales Agreement,  GEN 02 has assumed all obligations  under
                these sale and lease-back arrangements.
    

               The financing of Loeb Holding Corp.  and the sale and  lease-back
               arrangements  entered  into  by the  Company  contributed  to the
               original capitalization of the Company.


                           Pursuant to an Asset Purchase Agreement, NetCruise (a
                wholly owned  subsidiary of the Company  formed on July 21, 1998
                for the purpose of operating an internet travel agency) acquired
                a  technology  license  and certain  related  assets from UIT in
                consideration  of 2,000,000 shares of the Company's Common Stock
                and two  warrants  ("Warrants"),  each  entitling  the holder to
                purchase  800,000 shares of the Common Stock of the Company (the
                "UIT  Transaction").  One  warrant is  exercisable  for  800,000
                shares at $2.50 per share and may be exercised  between April 1,
                2002 and June 30, 2002, but only if NetCruise  achieves  profits
                equal to or exceeding  $5,000,000  for the years 1999,  2000 and
                2001.  The other Warrant is  exercisable  for 800,000  shares at
                $6.00 per share and may be exercised  between  April 1, 2002 and
                June 30, 2002, but only if NetCruise  achieves  profits equal to
                or exceeding  $10,000,000  for the years 1999, 2000 and 2001. No
                value has been placed on the  warrants  since the  warrants  are
                each contingent upon future earnings.

                           The Company has since been  advised that the issuance
                of such securities has caused the Company to inadvertently be in
                violation of a Nasdaq  MarketPlace  Rule because the issuance of
                the 2,000,000  shares and Warrants  amounted to more than 20% of
                the issued and  outstanding  shares of the  Company and were not
                approved  by  Shareholders  as  required  by such  Rule.  Nasdaq
                advised the Company  that the  Company's  Common  Stock would be
                delisted as a result of such violation.  The Company requested a
                hearing on the  delisting  which was held on November  20, 1998.
                Nasdaq issued its written  determination  on January 12, 1999 to
                continue listing the Company's securities on The Nasdaq SmallCap
                Market  pursuant  to  the  following  conditions:  (i)  the  UIT
                Transaction  must be  unwound in the event  shareholders  do not
                ratify the  acquisition  of the  technology  license and certain
                related  assets from UIT and  approve  the  issuance of 1,100,00
                shares of Common Stock and two Stock  Purchase  Warrants to UIT;
                (ii) the Company must file a Definitive Proxy Statement with the
                Securities  and  Exchange  Commission  and  Nasdaq  on or before
                February   15,   1999;   and  (iii)  the  Company   must  submit
                documentation  to Nasdaq on or before April 15, 1999  evidencing
                either the receipt of  shareholder  approval of the  issuance of
                additional  shares to UIT or the  unwinding  of the  issuance of
                additional  shares to UIT and purchase of a  technology  license
                and certain  related  assets from UIT.  The Company  received an
                extension  to April 15,  1999 for  filing the  Definitive  Proxy
                Statement. The Company has requested a further extension to July
                31, 1999 and is awaiting a response from Nasdaq.

                           The Company and UIT have restructured the transaction
                so that UIT will return to the Company  1,100,000  shares of the
                Company's Common Stock (retaining 900,000 shares that are not in
                violation of the Nasdaq MarketPlace Rule) and the Warrants.  The
                Company will issue to UIT 1,100,000 shares of Convertible Series
                B Preferred Stock (the "Series B Preferred Stock"), which Series
                B Preferred Stock is  automatically  convertible  into 1,100,000
                shares of the Company's Common Stock upon  Shareholder  approval
                of the issuance of the 1,100,000  shares of Common Stock and the
                Warrants.  The Series B Preferred Stock is non-voting  stock and
                carries a mandatory  dividend of $275,000,  payable on September
                30,  1999  and a  mandatory  quarterly  dividend  at the rate of
                $68,750  commencing with the quarter ended December 31, 1999. No
                dividend  will  be  payable  if  the  Shareholders  approve  the
                issuance of the 1,100,000 shares Common Stock and Warrants prior
                to the time that the dividend is payable.  Therefore,  the total
                purchase  price in the UIT  Transaction is 900,000 shares of the
                Company's  Common Stock and  1,100,000  shares of the  Company's
                Series B Convertible Preferred Stock. If shareholders ratify the
                acquisition,  the Series B Preferred Stock will automatically be
                converted  into 1,100,000  shares of the Company's  Common Stock
                and the  Company  will  issue  two  warrants,  each to  purchase
                800,000 shares of Common Stock, as outlined above.

                           In  the  event   shareholders   do  not   ratify  the
                acquisition  of  the  assets  and  approve  the  issuance,   the
                transaction will be unwound. In such event the Company estimates
                that the cost to undo the  transaction  will not exceed $50,000.
                This estimate  includes  accounting fees, legal fees,  recording
                fees and employee  termination  fees.  In the event that the UIT
                Transaction  must be undone,  the following shall occur: (i) the
                Company  shall  reassign the  technology  license and return the
                related  assets to UIT;  (ii) UIT will return to the Company all
                stock certificates  received pursuant to the UIT Transaction and
                (iii) Mr. Brian  Shuster will return the warrants  issued to him
                by the Company;  and (iv) Messrs.  Brian and Harry  Shuster will
                resign from any officer or director  position  held by them.  In
                addition,  Mr. Brian Shuster's consulting fee shall be pro-rated
                to the date of his  resignation and shall cease as of such date.
                Reference  should  be made to Pro Forma  Condensed  Consolidated
                Financial  Statements  as of September 30, 1998 and for the nine
                months then ended for the effect of undoing the UIT Transaction.

   
                           As a result of the transaction,  the Company acquired
                the  internet   travel  web  site  called  "  NetCruise"  and  a
                perpetual,   world-wide   technology   license   for   "Parallel
                Addressing   Video    Technology"   for   all   travel   related
                applications,  along with all of the related software,  computer
                systems and  intellectual  properties.  No royalty  payments are
                required  under  the  licensing   agreement  for  the  "Parallel
                Addressing Video  Technology" and the license is exclusive as it
                relates to the technology as applied to the travel industry. UIT
                has  retained  the right to the  technology  for all other  uses
                outside  of  the  travel  industry.  The  intellectual  property
                acquired  consists  of a license  for the  "Parallel  Addressing
                Video  Technology"  which  includes the  NetCruise  name,  logo,
                trade-marks and  service-marks.  The Company did not acquire the
                patent  to the  "Parallel  Addressing  Video  Technology."  Also
                included as part of the  intellectual  property was an agreement
                between UIT and Internet  Travel Network (ITN), of Palo Alto, CA
                which UIT  transferred to the Company.  This agreement  provides
                for a "private  label"  site on the ITN  "booking  engine".  The
                agreement expires in April,  1999 and  automatically  renews for
                successive one year periods unless either party gives notice, no
                later than 30 days prior to the end of the period, of its intent
                not to renew.  The Company has renewed this agreement  under the
                terms and conditions of the original agreement. The ITN "booking
                engine" is  essentially  a world wide web based  graphical  user
                interface to the airline owned Apollo  computerized  reservation
                system.  This  technology  allows a layperson with access to the
                internet to access the  databases  and pricing  systems  used by
                travel  agents to research and procure air, car rental and hotel
                reservations.  By "private  labeling"  this  functionality,  the
                Company  is able to offer  its  travel  consultants  access to a
                leading travel system,  while not having to expend the Company's
                capital  resources  which  would be  required  to create its own
                access.  The custom software acquired by the Company consists of
                a video  player  program  (called a ULI player) that permits the
                end user to view video files, a cruise database,  a CD-ROM video
                disc  database   containing   video  images  of   travel-related
                information and miscellaneous commercially purchased software.
    
               The   technological   feasibility  of  the  custom  software  was
               established  at the time of the  acquisition,  as a working model
               had been completed at that time. The Company formed  NetCruise as
               a  wholly  owned  subsidiary  for the  purpose  of  operating  an
               internet  travel  business  featuring  the  technology   obtained
               through this acquisition.

   
                           Although  the  Company  only has a limited  number of
                individuals  who  have  subscribed  to  be  independent   travel
                consultants and therefore few customers,  the Company intends to
                launch, through television advertising,  an aggressive marketing
                campaign inviting the general public, along with existing travel
                agents, to become NetCruise travel consultants . The goal of the
                Company's  marketing  campaign is to  encourage  individuals  to
                enroll as independent travel consultants by paying an annual fee
                to the Company.  Each new  independent  travel  consultant  will
                receive a start-up kit  consisting  of a CD ROM library of video
                destinations;   a  marketing  kit  which  includes  a  guide  to
                marketing an at-home business,  a training manual describing the
                travel industry,  a welcome letter containing a password for the
                web site and an outline of NetCruise policies and procedures and
                full-service  support from the Company's live travel agents. The
                independent  travel  consultants  will  then  be  able  to  make
                reservations  either through the password  protected  section of
                the  NetCruise  web  site or via  telephone  conversations  with
                travel agents who work directly for NetCruise.  Non-members  who
                visit  the  non-password  protected  section  of  the  NetCruise
                web-site  (the  "Visitor's  Section")  shall  have  access  to a
                portion of the site which contains general information about the
                Company, describes the independent travel consultant program and
                allows  the  public  to  request  information  or  enroll  as an
                independent travel consultant.
    

                           The  internet  web-site is  currently  operational  ,
                although  management  expects web- site  development to continue
                through mid-1999.  Independent travel  consultants,  through the
                password  protected section of the site, can currently book car,
                air and hotel reservations
   
                directly  through the  web-site,  as well as  research  vacation
                packages  and  cruise  itineraries.  At  the  present  time  the
                Company's  independent  travel  consultants are not able to book
                vacation and cruise packages in an automated fashion through the
                web-site.  In order to make  these  types of  reservations,  the
                independent  travel  consultant  is  instructed  to contact  the
                Company's  service  center,  (operated  through  Sammy's  Travel
                World,  a wholly owned  subsidiary of the Company) via toll-free
                telephone,  fax or e-mail, whereby a live NetCruise travel agent
                will then make the cruise or vacation  reservation.  The Company
                intends to  continually  enhance its  technology to automate the
                booking process for cruise and vacation reservations through its
                web-site.  There can be no assurance,  though,  that the Company
                will be able to achieve the technological advancements necessary
                to automate the booking of cruise and vacation reservations.  To
                date,  the  Visitor's  Section of the web-site is being used for
                demonstration  to  potential  travel  consultants.  The password
                protected  section is only  accessible by company  personnel and
                independent travel consultants using a password. See Note 4.

                           The  budgeted  cost of the internet  travel  business
                becoming operational is expected to be approximately $1,342,000.
                Of such amount, approximately $198,000 was allocated to complete
                the web-site. The remainder will be used to produce a television
                video  infomercial and purchase media time. The Company believes
                it will be able to finance such development  substantially  from
                proceeds  of a recent  private  placement,  but  there can be no
                assurance that such funds will be  sufficient.  In the event the
                Company  decides to purchase  significant  amounts of media time
                for the television infomercial, it will need to raise additional
                funds. No assurance can be made that the Company will be able to
                raise such funds.
    

                  On September  30,  1998,  the Company had cash of $606,121 and
                working capital of $144,541. As of November 1, 1998, the Company
                has begun to generate revenues from shared commissions earned by
                the network of Sterling Travel  Consultants  recently  acquired,
                although these  revenues are not expected to be significant  for
                the balance of the fourth  fiscal  quarter  ending  December 31,
                1998.  Management  of the Company  expects the  internet  travel
                business to be fully  operational in mid 1999 and is planning to
                begin  television  marketing  of the  Company's  products in mid
                1999.  These  efforts  are  expected to  significantly  increase
                revenues. The Company plans to continue the aggressive marketing
                campaign  as well as expand its  network  of travel  consultants
                throughout  1999. The Company  expects its operations to achieve
                break-even  by the end of fiscal 1999.  The Company  completed a
                private  placement  of common  stock in January  1999 whereby it
                sold  1,000,000  shares of  common  stock  for an  aggregate  of
                $1,500,000.  Therefore including anticipated cash to be received
                from  revenues,   the  Company   estimates  that  it  will  have
                sufficient  resources to provide for its planned  operations for
                the next twelve months. At the present time the Company does not
                have any alternative  plans to raise  additional funds needed to
                market or complete development of the web site.




                                                         8

<PAGE>


                PART II             OTHER INFORMATION


                ITEM 6.    Exhibits and Reports on Form 8-K

                           (a) Report on Form 8-K dated October 29, 1998




                SIGNATURES

                           Pursuant to requirements  of the Securities  Exchange
                Act of 1934,  the  Registrant  has duly caused this report to be
                signed  on  its  behalf  by  the  undersigned,   thereunto  duly
                authorized.

                                          GENISYS RESERVATION SYSTEMS, INC.


 Date  May 17, 1999                       ____________________________________
                                                 Lawrence E. Burk
                                         President and Chief Executive Officer

 Date  May 17, 1999                       ____________________________________
                                                 John H. Wasko
                                              Secretary, Treasurer and
                                                 Chief Financial Officer