1

                                        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>


                                                                             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>

                                                                                                                     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>
                                                                                                      Deficit
                                                                                                      Accumulated
                                                                                      Additional      During the
                         Series A Preferred Stock Common 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
 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 to
continue to enhance and upgrade the web-site as appropriate.  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  budgeted  cost  of  launching  the  Company's   marketing
campaign,  which  includes  the  development  of  a  data  base  and  networking
capability,  is  expected  to  be  approximately  $1,342,000.  Of  such  amount,
approximately  $198,000 was allocated to complete  development  of the web-site,
which is currently
operational.  The Company  intends to use $75,000 of the $198,000 to continue to
enhance and upgrade the  web-site.  Such  improvements  will  include  providing
additional  features to the site, such as personal web pages for the independent
travel  consultants,  chat capability,  on-line  accounting  information for the
independent travel consultants as well as client profiling.  The Company expects
to  continue  upgrading  the  web-site  as  appropriate.  The  remainder  of the
$1,342,000 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.


                  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 to
enhance and upgrade the web-site as appropriate. 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  launching  the  Company's   marketing
campaign,  which  includes  the  development  of  a  data  base  and  networking
capability,  is  expected  to  be  approximately  $1,342,000.  Of  such  amount,
approximately  $198,000 was allocated to complete  development of the web -site,
which is currently

     operational. The Company intends to use $75,000 of the $198,000 to continue
     to enhance  and  upgrade  the  web-site.  Such  improvements  will  include
     providing  additional  features to the site, such as personal web pages for
     the independent  travel  consultants,  chat capability,  on-line accounting
     information  for the  independent  travel  consultants  as  well as  client
     profiling.  The  Company  expects to  continue  upgrading  the  web-site as
     appropriate.  The  remainder  of the  $1,342,000  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.


                  Mr.  Brian  Shuster  has  been   appointed  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,
Mr.  Brian  Shuster  has been  serving as a director  of the  Company  since the
transaction  closed and has been  nominated  for  election  as a director of the
Company.  Mr. 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)
                                               =====                             =====            =====                       =====


     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
</TABLE>

<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
     intends  to  continue  to  enhance  and  upgrade  the site as  appropriate.
     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) Mr. Brian Shuster will resign from any
                officer or director position held by him. 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 to continue to enhance and upgrade
                the site as appropriate. 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  launching   the   Company's
                marketing  campaign,  which  includes the  development of a data
                base and networking capability,  is expected to be approximately
                $1,342,000. Of such amount, approximately $198,000 was allocated
                to complete  development  of the  web-site,  which is  currently
                operational.  The Company intends to use $75,000 of the $198,000
                to  continue  to  enhance   and  upgrade  the   web-site.   Such
                improvements will include providing  additional  features to the
                site,  such as  personal  web pages for the  independent  travel
                consultants, chat capability, on-line accounting information for
                the independent  travel consultants as well as client profiling.
                The  Company  expects  to  continue  upgrading  the web- site as
                appropriate.  The  remainder of the  $1,342,000  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.


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.  These
efforts are expected to  significantly  increase  revenues.  The internet travel
business is currently operational,  and management of the Company is planning to
begin  television  marketing of the Company's  products in the fall of 1999. 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 June  ___, 1999                            ___________________________
                                                   Lawrence E. Burk
                                          President and Chief Executive Officer

Date June  ___, 1999                          _________________________
                                                   John H. Wasko
                                              Secretary, Treasurer and
                                                Chief Financial Officer