RTC CRUISES LTD, S-1/A, 1996-12-02

RTC CRUISES LTD
S-1/A, 1996-12-02
WATER TRANSPORTATION

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As filed with the Securities and Exchange Commission on December 2, 1996
Registration No. 333-12769

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
----------------

AMENDMENT NO. 2 ON FORM S-1 TO

FORM SB-2

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------

RTC CRUISES, LTD.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

CAYMAN ISLANDS
BRITISH WEST INDIES 4400 65-0613844
(State or jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification No.)

RTC CRUISES, LTD.
GABLES WATERWAY EXECUTIVE CENTER
1390 SOUTH DIXIE HIGHWAY, SUITE 2114
CORAL GABLES, FLORIDA 33146
(305) 663-9072
(Address and telephone number of principal executive offices)

DOUGLAS H. MACGARVEY
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
RTC CRUISES, LTD.
GABLES WATERWAY EXECUTIVE CENTER
1390 SOUTH DIXIE HIGHWAY, SUITE 2114
CORAL GABLES, FLORIDA 33146
(305) 663-9072
(Name, address, and telephone number of agent for service)

Copies to:
LESLIE J. CROLAND, ESQ.
LUCIO, MANDLER, CROLAND, BRONSTEIN & GARBETT, P.A.
701 BRICKELL AVENUE, SUITE 2000
MIAMI, FLORIDA 33131
(305) 579-0012

Approximate date of commencement of proposed sale
to public: As soon as practicable after the effective date
of this Registration Statement.

If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box [X]

CALCULATION OF REGISTRATION FEE

TITLE OF EACH PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
REGISTERED REGISTERED PER SHARE (1) PRICE(1) FEE
---------- ---------- ------------- ------------------ ------------

<S> <C> <C> <C> <C>
Convertible Redeemable Preferred
Stock, par value $.00003 per share 1,400,000 $5.00 $7,000,000 $2,413.80

Common Stock, par value $.00003
per share 1,400,000(2) -- -- --

TOTAL $2,413.80
=========

<FN>
- ----------------
(1) In accordance with Rule 457, the registration fee is based upon the
proposed offering price of the Convertible Redeemable Preferred Stock.

(2) Represents shares of Common Stock issuable upon conversion of the
Convertible Redeemable Preferred Stock. Pursuant to Rule 457, no
additional registration fee is required.

The Company hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Company shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
</FN>
</TABLE>

<PAGE>

Subject to Completion - Dated December 2, 1996
PROSPECTUS
1,400,000 SHARES OF CONVERTIBLE REDEEMABLE PREFERRED STOCK
RTC CRUISES, LTD.

RTC Cruises, Ltd. (the "Company") hereby offers for sale outside of the
United States (the "Offering") 1,400,000 shares of Convertible Redeemable
Preferred Stock, par value $.00003 per share (the "Preferred Stock"), at a
purchase price of $5.00 per share.

The estimated net proceeds of this Offering are expected to be
sufficient to finance the Company's currently comtemplated operations for a
period of approximately six months from the date that the Company obtains a
passenger cruise vessel and is required to commence charter payments. The
Company may be required after that time to obtain additional financing if the
Company's cruise line operations do not generate adequate revenues to cover
operating expenses. See Risk Factor No. 3, "Use of Proceeds," and "Proposed
Business-Charter of Vessel."

From the closing of this Offering, the Company has the right, at any
time, to redeem all or any part of the Preferred Stock at $7.50 per share,
subject to the right of the holders of the Preferred Stock to convert their
shares of Preferred Stock into Common Stock, par value $.00003 per share (the
"Common Stock"), within seven days of receipt of the notice of redemption.

Holders of the Preferred Stock have the option, during each six months
from the closing of this Offering, to convert up to 25% of the shares of
Preferred Stock beneficially owned by each holder into shares of Common Stock.
In addition, all Preferred Stock will be automatically converted into Common
Stock two years from the closing of this Offering.

The number of shares of Common Stock issuable upon the conversion of
Preferred Stock will be the lesser of either (a) one share of Common Stock for
each share of Preferred Stock, or (b) that number of shares determined by
multiplying the number of shares of Preferred Stock to be converted by $5.00 and
then divided by the average closing bid price of the Common Stock as quoted on
the NASDAQ system or in the over-the-counter market for the five business days
prior to the date that the certificate evidencing the Preferred Stock is mailed
to the Company's transfer agent for conversion, discounted by 20% and rounded to
the nearest whole number. In the case of an automatic conversion, the average
closing bid price of the Common Stock is based upon the five business days
trading price prior to the date of automatic conversion. See "Description of
Securities."

The conversion formula of the Preferred Stock could cause significant
variations in the number of shares of Common Stock received upon conversion of
the Preferred Stock. If the average closing bid price of the Common Stock at the
relevant time is more than $6.25 per share, holders of Preferred Stock will
receive less than one share of Common Stock for each share of converted
Preferred Stock. However, if such bid price of Common Stock is $6.25 per share
or less, conversion will occur on a one-for-one basis. See Risk Factor No. 15.

This Offering is being conducted by the Company on a "best efforts, all
or none" basis. All proceeds from the sale of the Preferred Stock will be placed
in an escrow account at __________________________________________ ("Escrow
Agent") until the earlier to occur of January 15, 1997 or the date that all of
the shares offered hereby are sold. If all of the securities offered hereby are
not sold, all funds in escrow will be promptly returned to the purchasers
without interest or deduction. The Company will be assisted in its efforts to
sell the Preferred Stock by London Manhattan International Ltd., a company
incorporated under the laws of The Commonwealth of the Bahamas ("London
Manhattan"). See "Certain Transactions-London Manhattan."

After the completion of this Offering, it is anticipated that the
Common Stock will initially be traded on the National Association of Securities
Dealers, Inc.'s ("NASD") electronic bulletin board. As a result, as compared to
other markets, an investor may find it difficult to dispose or to obtain
accurate quotations for the Common Stock. If and when the Company meets the
NASD's listing requirement, an event of which there can be no assurances, the
Company intends to apply to list the Common Stock on the NASDAQ SmallCap Market.
There can be no assurances that an active trading market will develop even if
the securities are accepted for quotation. Even if an active trading develops,
the Company is still required to maintain certain minimum criteria established
by NASDAQ, of which there can be no assurance that the Company will be able to
do so. No trading market is expected to develop for the Preferred Stock. See
Risk Factor Nos. 12 and 13.

Prior to this Offering, there has been no public market for the
Preferred Stock or the Common Stock. The initial public offering price of the
Preferred Stock has been determined by the Company, and bears no relationship to
the book value of the Preferred Stock or the Common Stock or to any other
generally accepted criteria of value. See "Description of Securities."

THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE
SUBSTANTIAL DILUTION AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE
LOSS OF THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER
THE MATTERS SET FORTH UNDER THE CAPTION "RISK FACTORS" COMMENCING ON PAGE 5 OF
THIS PROSPECTUS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

PROCEEDS TO
PRICE TO PUBLIC COMMISSIONS(1) COMPANY(2)
--------------- -------------- ----------

Per Share $5.00 $.50 $4.50
---------- -------- ----------
Total $7,000,000 $700,000 $6,300,000

<PAGE>

(FOOTNOTES FROM PREVIOUS PAGE)

(1) In addition to paying a commission to London Manhattan equal to
10% of the gross proceeds of this Offering, the Company has agreed to:
(a) pay London Manhattan a nonaccountable expense allowance in an
amount equal to 3% of the gross proceeds of this Offering, (b) issue to
London Manhattan 376,000 shares of Common Stock, (c) issue to London
Manhattan warrants to purchase an additional 282,000 shares of Common
Stock, at an exercise price of $7.50 per share, which are exercisable
commencing six months from, and ending three years from, the closing of
this Offering, and (d) indemnify London Manhattan against certain
liabilities, including liabilities under the Securities Act of 1933.
See "Certain Transactions-London Manhattan."

(2) Before deducting estimated expenses of approximately $300,000
payable by the Company (including the nonaccountable expense allowance
of London Manhattan equal to 3% of the gross proceeds from this
Offering.)

SERVICE AND ENFORCEMENT OF LEGAL PROCESS

Although the Company is incorporated in Cayman Islands, British West
Indies, the Company does not expect that the ability of investors to enforce
civil liabilities under the U.S. federal securities laws is presently adversely
affected thereby since: (i) all of the Company's officers and directors are
residents of the United States; (ii) the Company's principal executive offices
are located in the United States; and (iii) a substantial portion of all of the
Company's assets are not located outside the United States. To the extent that
in the future a substantial portion of the Company's assets are located outside
the United States, investors may encounter difficulty in enforcing judgments of
U.S. courts predicated upon civil liability under the U.S. federal securities
laws, depending upon the laws of the particular jurisdiction in which such
assets are located.

ADDITIONAL INFORMATION

Following consummation of this Offering, the Company will become
subject to the reporting requirements of the Securities Exchange Act of 1934
(the "Exchange Act") and in accordance therewith will file periodic reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such periodic reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
NW, Washington, D.C. 20549, at its Chicago Regional Office at Northwestern
Atrium Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661-2511, and
at its New York Regional Office at 7 World Trade Center, Suite 1300, New York,
New York 10007, and copies of such materials can be obtained from the Public
Reference Section at prescribed rates. The Company intends to furnish its
shareholders with annual reports containing financial statements certified by
independent auditors and quarterly reports for the first three quarters of each
fiscal year containing unaudited financial statements. The Commission maintains
a Web site that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the Commission and
the address of such site is http://www.sec.gov.

<PAGE>

PROSPECTUS SUMMARY

THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN
THIS PROSPECTUS. EACH PROSPECTIVE INVESTOR IS URGED TO READ THIS PROSPECTUS IN
ITS ENTIRETY. UNLESS OTHERWISE INDICATED HEREIN, ALL DOLLAR AMOUNTS ARE IN
UNITES STATES DOLLARS.

THE COMPANY

RTC Cruises, Ltd. (the "Company") is a development stage enterprise
that has been formed to operate and market a premium class cruise ship and land
tours in French Polynesia, popularly known as Tahiti, on a year round basis. The
Company, which will operate under the name Royal Tahitian Cruises, plans to
offer seven day cruises between the islands of Tahiti, Raiatea, Tahaa, Bora,
Huahine, Rangiaroa, and Moorea. The Company will also offer three, four and
seven day land vacation packages in conjunction with its cruises. The Company's
business strategy is to emphasize its French Polynesian destination as well as
the luxury and convenience of travelling by cruise ship. The Company believes
that French Polynesia is an ideal location to establish a cruise line. Tahiti
has a strong name recognition with the public and possesses a sub-tropical
climate with exotic islands relatively untouched by modern development.
Distances between island destinations are short, which will be traveled at night
to afford passengers the opportunity to experience the various islands and to
partake in onshore activities during the day. Although the Company is aware of
at least two companies that presently offer cruise services in Tahiti and one
ship presently under construction by another company, the Company believes that
the Tahitian market is underdeveloped and that, in any event, the Company will
be able to compete effectively against these better capitalized and established
competitors. The Company, however, will periodically review its cruise itinerary
and may deploy its vessel in other areas if financially attractive opportunities
develop.

Passenger fares for a seven day cruise are expected to range from
$1,600 to $2,400 (not including airfare), although the Company may in the future
be required to adjust these fares due to competitive pressures. The Company will
perform all marketing services for the cruise line. The Company believes that by
operating year round in a single geographical area it will develop a strong
market awareness of its product and will avoid the expenses associated with
multiple destination programs that require the repositioning of the vessel from
one geographic region to another.

The Company intends to charter a cruise ship from Concorde Shipping,
Ltd., a Cayman Islands, British West Indies corporation in which Douglas H.
MacGarvey and Thomas G. Rader, directors and the principal stockholders of the
Company, own 50% of the outstanding stock, and commence operations upon the
completion of this Offering. The remaining 50% of the stock of Concorde is owned
by Herbert Peintner, who was granted options by Messrs. MacGarvey and Rader to
purchase an aggregate of 1,065,333 shares of Common Stock from them. The Company
may also attempt to charter or acquire additional cruise ships and to engage in
other cruise line related activities if the Company is successful in completing
this Offering and thereafter obtains the necessary funds either from operations
or from additional financing of which there can be no assurance. See "Proposed
Business-Possible Additional Activities."

The Company has not yet received a license from the Government of
French Polynesia to operate a passenger cruise vessel in French Polynesia,
although the Company has received a commitment from such Government to issue
such a license for a period of five years from the commencement of the Company's
passenger cruise operations if the Company complies with certain conditions. See
"Proposed Business-License and Description of Tahiti." The Company intends to
charter its passenger cruise vessel from a Company in which the principal
stockholders of the Company own 50% of the Stock. Such affiliated Company does
not presently own or charter a vessel which is available for use by the Company.
The estimated net proceeds of this Offering are expected to be sufficient to
finance the Company's currently contemplated operations for a period of
approximately six months from the date that the Company obtains a passenger
cruise vessel from its affiliated company and is required to commence charter
payments. Further, the Company requires a passenger load factor of 65% of
capacity in order to generate sufficient revenues from operations to cover
operating expenses. See Risk Factor Nos. 2, 3, 6, and 9, "Use of Proceeds" and
Management's Discussion and Analysis of Financial Condition-Liquidity."

The Company was originally incorporated in July 1994 as a Florida
corporation with the name of Royal Tahitian Cruises, Inc. and was continued in
the Cayman Islands, British West Indies on August 23, 1996. Its principal
executive offices are presently located at 1390 South Dixie Highway, Suite 2114,
Coral Gables, Florida 33146, and its telephone number is (305) 663-9072.

3
<PAGE>

THE OFFERING
<S> <C>
Securities Offered ...................................1,400,000 shares of Preferred Stock.

Securities Outstanding Prior to Offering..............No shares of Preferred Stock and 3,442,000 shares of Common Stock. An
additional 376,000 shares of Common Stock are issuable to London
Manhattan upon completion of this Offering.

Securities Outstanding After Offering.................1,400,000 shares of Preferred Stock and 3,818,000 shares of
Common Stock.

Use of Proceeds ......................................Proceeds estimated to be approximately $6,000,000 are intended to be used
to charter a passenger cruise vessel, purchase capital equipment, for
marketing and advertising, payment of salaries, including officers' salaries,
start-up expenses, overhead, general and administrative expenses, and
working capital. See "Use of Proceeds."

Risk Factors and Dilution ............................An investment in the securities offered hereby is highly speculative,
involves significant risks and immediate and substantial dilution. See "Risk
Factors" and "Dilution."

Proposed NASD Electronic Bulletin Board Symbol........Common Stock - RTCCF
</TABLE>
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>

SUMMARY OF DEVELOPMENT STAGE ACTIVITIES
THREE MONTHS ENDED CUMULATIVE FROM JULY 5,
AUGUST 31, JULY 5, 1994 1994 (INCORPORATION)
------------------- YEAR ENDED MAY 31 (INCORPORATION) THROUGH
1996 1995 1996 THROUGH MAY 31, 1995 AUGUST 31, 1995
---- ---- ----------------- -------------------- -----------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>

INCOME STATEMENT DATA:
Net sales .......................... -- -- -- -- --
Selling, general and
administrative expenses ........... $ 48,422 80,490 191,136 173,045 412,603
Net Loss ........................... $ (48,422) (80,490) (191,136) (173,045) (412,603)
Loss per common share:
Net loss ......................... $ (0.01) (0.02) (0.05) (0.05) --
Average common shares .............. 3,435,944 3,435,944 3,435,944 3,452,000 --

BALANCE SHEET DATA

ACTUAL ACTUAL ACTUAL PRO FORMA AS ADJUSTED
AUGUST 31, 1996 MAY 31, 1996 MAY 31, 1995 AUGUST 31, 1996(1) AUGUST 31, 1995(2)
--------------- ------------ ------------ --------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Total Assets 650 1,650 750 218,630 6,218,930
Long-term debt 410,281 342,034 166,050 410,281 410,281
Deficit Accumulated During Development Stage (412,603) (364,181) (173,045) (440,603) (440,603)
Stockholders' Equity (Deficiency) (409,631) (361,209) (170,073) (191,351) 5,808,549
<FN>
- -----------------
(1) Gives effect to the issuance of 188,000 shares of Common Stock to
London Manhattan Communications L.L.C. valued at $1.00 per share for
strategic business services to be provided over two years under a
consulting agreement, the issuance of 30,000 shares in a private
placement offering at $1.00 per share and the issuance of 28,000 shares
in a private placement offering at $.01 per share to four persons,
including two directors of the Company.
(2) Gives effect to the proceeds from the sale of Common Stock offered
hereby, net of approximately $1,000,000 in offering expenses, in the
amount of $6,000,000.
</FN>
</TABLE>

4
<PAGE>

RISK FACTORS

Prospective investors should carefully consider, along with the other
information contained in this Prospectus, the following risk factors relating to
the Company, the cruise line industry in general and this Offering.

1. RECENT FORMATION; NO OPERATING HISTORY; REQUIREMENTS FOR
COMMENCEMENT OF OPERATIONS

The Company was originally incorporated in Florida in July 1994, and
continued in the Cayman Islands, British West Indies in August 1996. The Company
has not begun actual cruise line operations, has had no sales to date and will
not have any revenues until such time as a passenger cruise vessel is chartered
and the Company commences marketing efforts and ticket sales, which are
anticipated to occur 90 days after the closing of this Offering. The Company
will incur substantial expenses until it commences passenger cruise line
operations. The Company is also subject to all of the risks inherent in the
creation of a new business. There can be no assurance that the Company's efforts
will result in a commercially viable business or that the Company will ever
operate at a profit. The Company's ability to deliver quality services at a
competitive price is uncertain. Further, the level of acceptance of the
Company's services by consumers and the travel and tourism industry cannot be
predicted. As a result of its small size and capitalization and lack of
operating history, the Company is particularly susceptible to adverse effects of
changing economic conditions and consumer tastes, competition, and other
contingencies beyond the Company's control. Due to changing circumstances, the
Company may be forced to change dramatically or even terminate its planned
operations.

2. LOSSES FROM OPERATIONS AND NEED FOR FINANCING

Since the Company's incorporation in July 1994 through to August 31,
1996, the Company incurred a net loss of $412,603 as not generated any revenues.
The Company estimates that the net proceeds from this Offering and operating
cash flow from its cruise ship operation will be sufficient to satisfy its
anticipated cash requirements for a period of approximately 12 months following
the consummation of this Offering. The Company believes a passenger load factor
of 65% will be required to operate profitably. In the event that proceeds from
this Offering prove to be insufficient, and the Company does not generate
sufficient cash flow from operations to satisfy cash requirements, the Company
may find itself in the position in which it will be required to seek additional
equity or debt financing to support its ongoing operations. No assurance can be
given that such funds, if required, will be available on terms that are
satisfactory to the Company, if they are available at all. If the Company is
unable to obtain such financing when needed, the Company may be forced to cease
its operations. See "Use of Proceeds" and Management's Discussion and Analysis
of Financial Condition-Liquidity."

In their opinion regarding their audit of the Company's financial
statements, the Company's independent accounting firm has stated that because
the Company has been dependent upon an affiliate of the Company to support its
development activities and has incurred losses since inception, substantial
doubts are raised about the Company's ability to continue as a going concern.
The Company's financial statements do not include any adjustments that might
result from the outcome of this uncertainty. See "Certain Transactions-Officers
and Directors" and the financial statements and related notes appearing
elsewhere in this Prospectus.

3. POSSIBLE NEED FOR ADDITIONAL FINANCING

The estimated net proceeds of this Offering are expected to be
sufficient to finance the Company's currently contemplated operations for a
period of approximately six months from the date that the Company obtains a
passenger cruise vessel and is required to commence charter payments. The
Company may be required after that time to obtain additional financing if the
Company's cruise line operations do not generate adequate revenues to cover
operating expenses. In such event, the Company would be required to seek
additional equity or debt financing to support its operations. No assurance can
be given that such funds, if required, will be available, or will be available
on terms deemed to be acceptable to the Company. See "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition-Liquidity."
<PAGE>

4. COMPETITION

The cruise ship business is highly competitive. The Company will be in
competition with approximately 134 passenger cruise ships operating worldwide
and owned by approximately 33 different cruise lines, the vast majority of which
have established their positions in the market and have substantially greater
resources that the Company. In Tahiti, the Company is aware of two firms that
currently offer luxury cruises on large sailing vessels and one cruise line that
is presently constructing a vessel for operation in the area. Each of these
firms is significantly larger than the Company and has greater financial and
other resources than the Company. Although the Company expects to compete with
these firms by operating a traditional passenger vessel (i.e., without sails) at
lower cruise fares that the Company believes will be more attractive and
familiar to older passengers which comprise the largest segment of the cruise
market, no assurances can be given that the Company will be successful in its
efforts to compete against established and better capitalized firms. See
"Proposed Business-Competition."

5
<PAGE>

5. OPERATING LEVERAGE

The cruise industry is characterized by a high degree of operating
leverage. Specifically, fixed costs represent the major portion of a cruise
line's operating expenses and cannot be significantly reduced when outside
factors, such as a downturn in the economy or competition, cause reduction in
load factors or passenger fares. While the Company believes that its operating
costs (including fixed costs) of $58,000 per day, or $1,740,000 per month, will
be manageable given its planned operations, the Company may not be able to
reduce or decrease these costs on a timely basis in the event that passenger
levels drop or fares must be lowered because of poor economic conditions or
competitive pressures. The Company will be dependent upon passenger revenues to
meet the expenses of chartering and operating its vessel. Accordingly, no
assurances can be given that the results of the Company's operations will not be
affected adversely by competition, unsatisfactory occupancy percentages or
accidents, or that the Company will be able to operate profitably.

6. CHARTER AND DELIVERY OF THE SHIP

The charter and delivery of a passenger cruise vessel suitable for the
Company's operations is contingent upon the successful completion of this
Offering. The Company will charter a passenger cruise vessel from Concorde
Shipping, Ltd. ("Concorde"), a Cayman Islands, British West Indies corporation,
50% of the stock of which is owned by Messrs. Thomas G. Rader and Douglas H.
MacGarvey, who are the principal stockholders of the Company. The other 50% of
the stock of Concorde is owned by Herbert Peintner. Such affiliated company does
not presently own or charter any cruise ships. See Risk Factor No. 20 herein.
After Concorde has identified and purchased or chartered a vessel suitable for
the Company's plan of operations, the Company will charter such vessel from
Concorde pursuant to a charter party agreement to be entered into between the
Company and Concorde. The Company has been advised by Concorde that such vessel
should be located and available for charter by the Company by no later than the
Fall of 1997. The Company is aware of approximately 10 vessels which are
available for charter and which would be suitable for the Company's planned
operations. Such vessels are owned by different persons and have a broad price
range based upon the age, size and condition of the vessel. No assurance,
however, can be given that Concorde will deliver a suitable vessel on a timely
basis or at all. In such event, the Company would not be able to begin
operations and could suffer material adverse consequences.

The Company will not own any cruise ships. Consequently, after the
expiration of the term of the charter party agreement, the Company may be unable
to renew the charter. If the Company has not expanded its cruise line activities
through additional charters or the acquisition or construction of other ships,
it will be unable to engage in cruise line activities.

7. AVAILABILITY AND PRICE OF ENERGY

One of the major expenses of operating cruise ships is the cost of
fuel. Future increases in the cost of fuel would significantly increase the cost
of cruise ship operations. Although cruise lines historically have been able to
raise prices to cover higher fuel costs, economic and political conditions in
certain areas of the world make it difficult to predict whether fuel will
continue to be available at prices that will make operation of the Company's
cruise ship economically viable.

8. CERTAIN RISKS OF OPERATIONS

The Company's operations may be adversely affected by numerous factors,
some of which are common to all business and some of which are unique to the
cruise line industry. Such factors include, among others: (i) labor disturbances
or strikes, either by shipboard employees or land-based personnel, causing a
delay or forcing the cancellation of cruises; (ii) government regulatory orders
or rules adversely affecting the Company's operations; (iii) severe damages to
the Company's cruise ship as a result of natural or man-made causes, which would
temporarily or permanently prevent the ship from operating; and (iv) decreased
demand for luxury items such as cruises during economic recessions.

9. LICENSE TO OPERATE IN TAHITI

6
<PAGE>

of products locally per year. In addition to such sum, the Company anticipates
that its annual costs to comply with the conditions of the license will be
approximately $240,000 to cover the salaries and benefits of the 12 jobs and the
training for three local residents of French Polynesia. The Company has been
verbally informed by the Government of French Polynesia that the license will be
issued to the Company if it can demonstrate compliance with such conditions.
However, there can be no assurances that the Company will remain in compliance
with such conditions or that the license can be renewed on terms satisfactory to
the Company.

10. LIABILITY CLAIMS

The Company faces an inherent risk of exposure to liability claims in
the event that the operation of its cruise ships results in accidents or other
adverse effects. While the Company will take appropriate precautions by
purchasing liability and indemnity insurance for the vessel as well as coverage
for passage money due to loss of hire in the event it is unable to operate
during scheduled cruise periods due to loss or damage arising from certain
covered perils, such as fire and mechanical breakdowns. In addition, it is
anticipated that the chartered vessel will be covered by policies for war risk,
hull and machinery and oil pollution. It is anticipated that the premiums for
such insurance will be approximately $985,000 per annum, which can be paid
quarterly. However, there can be no assurance that the Company will avoid
exposure to material liability claims or that the Company will be able to
maintain adequate liability insurance at reasonable rates. Failure to maintain
adequate insurance could place the Company at great financial risk in the event
of accidents and could adversely affect the Company's ability to do business.
Further, even if the Company were to maintain adequate insurance, adverse
publicity from accidents could have a material adverse effect on the Company's
business.

11. IMMEDIATE SUBSTANTIAL DILUTION

Investors participating in this Offering will incur an immediate and
substantial dilution of $3.92 per share. See "Dilution."

12. NO ASSURANCE OF PUBLIC MARKET FOR COMMON STOCK AND THERE WILL BE NO
PUBLIC MARKET FOR PREFERRED STOCK

Prior to this Offering, no public market for the Preferred Stock or
Common Stock existed and no public market is expected to develop for the
Preferred Stock. Because of the limited number of non-affiliated holders of
Common Stock, it is anticipated that the Common Stock will initially be traded
on the NASD electronic bulletin board rather than on the NASDAQ SmallCap Market.
As a result, as compared to other markets, such as the NASDAQ SmallCap Market,
an investor may find it difficult to dispose of or to obtain accurate quotations
for the Common Stock. If and when the Company meets the NASD's listing
requirements, an event of which there can be no assurance, the Company intends
to file an application to list the Common Stock on the NASDAQ Small Cap Market.
Such market's present minimum listing requirements include minimum total assets
of $4,000,000, total stockholders equity of $2,000,000, a market value of public
float of at least $1 million, a minimum bid price for at least 30 days of $3.00
per share, and registration of the Common Stock under the Securities Exchange
Act of 1934 (the "1934 Act"). NASDAQ is proposing to increase the listing
standards to: (a) $4 million in net tangible assets or $750,000 in net income in
two of the last three years or a market capitalization of at least $50 million,
(b) a market value of public float of at least $5 million and (c) a minimum bid
price for at least 30 days of $4.00 per share.

13. RISK OF COMMON STOCK TRADING AT BELOW $5.00 PER SHARE

If the trading price of the Common Stock is less than $5.00 per share,
trading in the Common Stock would be subject to certain rules promulgated
under the 1934 Act, which require additional disclosure by broker-dealers in
connection with any trades involving a stock defined as a penny stock
(generally, any non-NASDAQ equity security that has a market price of less than
$5.00 per share, subject to certain exceptions). Such rules require the
delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated therewith, and impose
various sales practice requirements on broker-dealers who sell penny stock to
persons other than established customers and accredited investors. For these
types of transactions, the broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser's written
consent to the transaction prior to sale. The additional burdens imposed upon
broker-dealers by such requirements may discourage broker-dealers from effecting
transactions in the Common Stock, which could severely limit the market
liquidity of the Common Stock and the ability of persons to sell the Preferred
Stock, the Common Stock, or both.

14. ARBITRARY DETERMINATION OF OFFERING PRICE

The price at which the Preferred Stock is being offered to potential
investors has been arbitrarily determined by the Company, and bears no
relationship to the book value of the Preferred Stock or the Common Stock or to
any other generally accepted criteria of value. The offering price of $5.00 per
share is substantially in excess of the net tangible book value of the Common
Stock.

15. CONVERSION FORMULA OF PREFERRED STOCK COULD CAUSE SIGNIFICANT
VARIATIONS IN NUMBER OF SHARES OF COMMON STOCK RECEIVED UPON
CONVERSION OF PREFERRED STOCK

The number of shares of Common Stock issuable upon the conversion of
Preferred Stock will be the lesser of either (a) one share of Common Stock for
each share of Preferred Stock, or (b) that number of shares determined by
multiplying the number of shares of Preferred Stock to be converted by $5.00
and then divided by the average closing bid price of the Common Stock as quoted
on the NASDAQ system or in the over-the-counter market for the five business
days prior to the date that the certificate evidencing the Preferred Stock is
mailed to the Company's transfer agent for conversion, discounted by 20% and
rounded to the nearest whole number. In the case of an automatic conversion, the
average closing bid price of the Common Stock is based upon the five business
days trading prior to the date of automatic conversion. See "Description of
Securities."

The conversion formula of the Preferred Stock could cause significant
variations in the number of shares of Common Stock received upon conversion of
the Preferred Stock. If the average closing bid price at the relevant time is
more than $6.25 per share, holders of Preferred Stock will receive less than one
share for each share of converted Preferred Stock. However, if such bid price of
Common Stock is $6.25 per share or less, conversion will occur on a one-for-one
basis. For example, if the average closing bid price of the Common Stock is
$7.00 per share at the relevant time, a holder of 100 shares of Preferred Stock
will receive 90 shares of Common Stock upon conversion.

16. NO DIVIDENDS

The Company has not paid any cash dividends since its inception, does
not anticipate paying any cash dividends in the foreseeable future and intends
to retain earnings, if any, to provide funds for general corporate purposes and
the expansion of the Company's cruise line business. Any future dividends will
be dependent upon the earnings of the Company, its financial requirements and
other relevant factors. In addition, pursuant to a shareholder loan agreement
among Thomas G. Rader, International Maritime Group, Inc., the Company and
Douglas H. MacGarvey, the Company is precluded from making

7
<PAGE>

any distribution of cash dividends to its stockholders until all principal and
accrued interest owed to Mr. Rader is repaid. As of August 31, 1996, the Company
borrowed $410,281 from Mr. Rader under the shareholder loan agreement. See
"Certain Transactions-Officers and Directors."

17. RELIANCE ON PRINCIPAL OFFICERS AND NEED TO RETAIN ADDITIONAL EXECUTIVE
OFFICERS

The Company is largely dependent upon the continued services of Douglas
H. MacGarvey, the Chairman of the Board of Directors and Chief Executive Officer
of the Company. The loss of the services of Mr. MacGarvey before a qualified
replacement is retained could have a material adverse effect on the Company and
its future prospects. Although Mr. MacGarvey has a five-year employment
agreement with an option to extend the agreement for an additional five years,
there can be no assurance that Mr. MacGarvey will remain employed with the
Company during the term of his agreement. See "Certain Transactions-Officers and
Directors."

Prior to commencing cruise line operations, the Company intends to hire
a President, a Controller, one senior sales/marketing executive and four sales
executives plus 25 to 30 administrative employees. Although the Company does not
believe that it will encounter inordinate difficulty in attracting and retaining
qualified personnel to fill these and other positions, no assurance can be given
that the Company will be able to do so. Any inability on the Company's part in
attracting and retaining qualified personnel would adversely affect the
Company's development and growth.

18. CONTROL BY PRINCIPAL STOCKHOLDERS

Douglas H. MacGarvey and Thomas G. Rader, the principal stockholders of
the Company, own 92.8% of the shares of Common Stock. After the completion of
this Offering, such persons will own approximately 83.7% of the outstanding
Common Stock and taking into account the issuance of 1,400,000 shares of
Preferred Stock offered hereby, approximately 61.3% of all of the outstanding
voting securities of the Company. Herbert Peintner has options to acquire
one-third of the shares of Common Stock owned by Messrs. MacGarvey and Rader.
See "Principal Stockholders." Since the Company's Memorandum of Association does
not provide for cumulative voting rights, Messrs. MacGarvey and Rader will be in
a position to elect all of the Company's directors and to control the Company.

19. DISCRETION IN USE OF PROCEEDS

The Company presently intends to use the net proceeds of this Offering
for the purposes set forth in "Use of Proceeds." The Company, however, retains
broad discretion to adjust the application and allocation of the net proceeds of
this Offering in order to address changed circumstances and opportunities. As a
result, the success of the Company will be dependent upon the discretion and
judgment of the management of the Company with respect to the application and
allocation of the net proceeds of this Offering.

20. CONFLICT OF INTEREST REGARDING CHARTER PARTY AGREEMENT AND PURCHASE OF
FOOD

The Company intends to charter a passenger cruise vessel from Concorde
in which Douglas H. MacGarvey, the Company's Chairman of the Board and Chief
Executive Officer, and Thomas G. Rader, the Company's Vice-Chairman of the
Board, own 50% of the outstanding shares. The other 50% of the stock of Concorde
is owned by Herbert Peintner, who has been granted an option by each of Messrs.
MacGarvey and Rader to acquire an aggregate of 1,065,333 shares of Common Stock
owned by them. The Company anticipates that it will be obligated to make charter
payments of approximately $10,000 to $15,000 per day depending on the level of
charter services provided to the Company by Concorde under the charter party
agreement. The Company also intends to purchase "sous vide" cuisine primarily as
dinner entrees from Quisine Sous Vide, Inc. ("Quisine") which is a Company
controlled by Messrs. MacGarvey and Rader.

While the Company believes that its contemplated agreements with
Concorde and Quisine will contain commercially reasonable terms comparable to
those which would be available from unaffiliated parties, there can be no
assurance that the Company will not suffer material adverse consequences from
the inherent conflict of interest and lack of arms-length negotiations with
Concorde and Quisine. Further, in the event that disputes arise between
Concorde, Quisine and the Company, resolutions of such disputes, whether through
legal action or otherwise, could be severely complicated by Messrs. MacGarvey,
Rader and Peintner having significant interests in the Company and Concorde and
Messrs. MacGarvey and Rader having a controlling interest in Quisine. Regardless
of any conflict of interest, Messrs. MacGarvey and Rader understand that they
have fiduciary obligations to the Company and its stockholders.

8
<PAGE>

21. BOARD OF DIRECTORS AUTHORITY TO ISSUE PREFERRED STOCK

The Company's Memorandum of Association authorizes the issuance of
10,000,000 shares divided into 8,600,000 shares of Common Stock and 1,400,000
shares of Preferred Stock. If this Offering is completed, there will be issued
and outstanding 3,818,000 shares of Common Stock and 1,400,000 shares of
Preferred Stock, leaving a balance of shares of capital stock authorized to be
issued by the Company of 4,782,000, including the 1,000,000 shares of Common
Stock reserved for issuance under the Company's 1996 Stock Option Plan. These
shares may be issued as "blank check" preferred stock with such designations,
rights and preferences as may be determined from time to time by the Company's
Board of Directors, or a combination of Common Stock and "blank check" preferred
stock totalling 8,600,000 shares. The Board of Directors is empowered, without
action by the stockholders, to issue additional shares of preferred stock with
dividend, liquidation, conversion, voting, or other rights which could adversely
affect the voting power or other rights of the holders of the Preferred Stock
and Common Stock. In the event of issuance, the preferred stock could be
utilized, under certain circumstances, as a method of discouraging, delaying, or
preventing a change of control in the Company. See "Description of Securities."

22. SHARES ELIGIBLE FOR FUTURE SALE AND REGISTRATION RIGHTS

Of the 3,442,000 shares of Common Stock outstanding as of the date of
this Prospectus, 246,000 shares of Common Stock were issued pursuant to Rule 504
promulgated under the 1933 Act and are therefore unrestricted and 3,196,000
shares of restricted Common Stock are deemed to have been held by affiliates of
the Company for more than two years and can be sold by such affiliates in
accordance with Rule 144 promulgated under the Securities Act of 1933 (the "1933
Act"). See "Principal Stockholders." In general, under Rule 144, a person,
including an affiliate, who has beneficially owned shares of Common Stock for at
least two years is entitled to sell, within any three-month period, a number of
shares that does not exceed the greater of 1% of the total number of outstanding
shares of the same class, or if the Common Stock is quoted on NASDAQ, the
average weekly trading volume during the four calendar weeks preceding the sale.
A person who has not been an affiliate of the Company for at least three months
immediately preceding the sale and who has beneficially owned shares of Common
Stock for at least three years is entitled to sell such shares under Rule 144
without regard to any of the volume limitations described herein. No prediction
can be made as to the effect, if any, that sales of shares or the availability
of such shares will have on the market price of the Common Stock prevailing from
time to time. In addition, upon completion of this Offering, the Company will
issue to London Manhattan warrants to purchase 282,000 shares of Common Stock.
London Manhattan will have the right to demand registration of such shares. The
Company also intends to register the 1,000,000 shares of Common Stock reserved
for issuance pursuant to the Company's 1996 Stock Option Plan. See
"Management-Stock Option Plan" and "Certain Transactions-London Manhattan." The
possibility that substantial amounts of Common Stock may be sold in the public
market may adversely affect the prevailing market prices for the Common Stock
and could impair the Company's ability to raise capital in the future through
the sale of equity securities.

9
<PAGE>

23. BEST EFFORTS OFFERING; ESCROW OF INVESTORS' FUNDS

The shares of Preferred Stock are being offered by the Company on a
"best efforts, all or none" basis. All of the shares offered hereby must be sold
or none of them will be sold. Since this Offering is being made on a "best
efforts" basis, there can be no assurance that any of the Preferred Stock will
be sold and no commitment exists by any person to purchase all or any of the
shares of Preferred Stock. Consequently, subscribers' funds may be escrowed and
then returned without interest thereon or deduction therefrom in the event all
of the Preferred Stock offered hereby is not sold by January 15, 1997. Investors
will not have the use of any subscription funds during the subscription period.

24. TAX STATUS OF THE COMPANY

The Company will be a Controlled Foreign Corporation ("CFC") if Herbert
Peintner does not fully exercise the options granted to him by Messrs. MacGarvey
and Rader. See "Certain Transactions-Officers and Directors." In the event that
Mr. Peintner does not fully exercise such options and the Company remains a CFC
for United States income tax purposes, then certain United States stockholders
of the Company (i.e. any United States persons owning, directly or indirectly,
10% or more of the voting securities of the Company), will be subject to United
States taxation on such stockholder's pro-rata share of the Company's Subpart F
income. The amount of the United States stockholder's pro-rata share of the
Company's Subpart F income is deemed to be distributed to such stockholder and
includable in the stockholder's gross income whether or not there has been an
actual distribution of cash from the Company to its stockholders. A United
States stockholder of the Company would then be required to pay taxes on income
which has not been received. See "Certain Tax Considerations."

Although the Company does not anticipate that it will be deemed to be a
passive foreign investment company ("PFIC"), it is conceivable that at some time
the Company will so qualify. In the event that the Company is designated a PFIC
for U.S. income tax purposes,then any individual who is a United States citizen
or resident who owns stock in the Company will be potentially subject to
interest charges that may be imposed on dividend distributions from the Company
and that if imposed may materially increase the tax cost of the dividend to the
stockholder. See "Certain Tax Considerations-Passive Foreign Investment
Company."

25. BOARD APPROVAL OF THE ACQUISITION OF SHARES OF COMMON STOCK BY CERTAIN
STOCKHOLDERS

In accordance with the Articles of Association of the Company, all
transfers of shares of capital stock of the Company are subject to the approval
of the Board of Directors at their sole discretion. This provision has been
incorporated into the Company's Articles of Association in order to ensure that
the Company does not become a Controlled Foreign Corporation, as such term is
defined in the United States Internal Revenue Code. See "Certain Tax
Considerations." Although not intended as such, this provision may discourage or
prevent a change in control of the Company. As a result, the Company's
stockholders may be deprived of an opportunity to sell their securities at a
higher market price, which, at least temporarily, typically accompanies attempts
to acquire control of a company through a tender offer, open market purchases or
otherwise. The Company has received verbal confirmation from a representative of
the NASD that the Board of Directors' power to approve or disprove of transfers
of shares of capital stock will not prevent the Common Stock from being listed
on NASDAQ.

10
<PAGE>
USE OF PROCEEDS

The Company estimates that the net proceeds of this Offering, after
deducting commissions and other expenses of the Offering to be paid by the
Company (including legal, accounting and printing costs), will be approximately
$6,000,000. The Company intends to use these proceeds for the purposes and in
the approximate amounts set forth below:

AMOUNT PERCENTAGE
------ ----------

Charter of Vessel(1) $2,000,000 33.3%
Ship Start-up Expenses(2) 1,000,000 16.7%
General and Administrative
Expenses and Overhead(3) 500,000 8.3%
Officers' Salaries (4) 450,000 7.5%
Marketing and Advertising(5) 1,200,000 20.0%
Working Capital(6) 725,000 12.1%
Repayment of Indebtedness to Stockholder(7) 125,000 2.1%

TOTAL NET PROCEEDS $6,000,000 100%
========== =====

(1) Letter of credit to be issued in favor of Concorde to guarantee the
Company's performance under the charter party
agreement for a period of six months. See "Proposed Business-Charter
of Vessel."
(2) Prepaid insurance expenses, cost of the ship's positioning voyage to
Tahiti, including charter payments and salaries of the on-board ship
personnel.
(3) Employee salaries, and general overhead, including office equipment,
furnishings and data processing equipment.
(4) Represents anticipated salaries to be paid for a period of 12 months
from the Closing of this Offering to the Chief Executive Officer and
one of the other executive officers to be hired during such period.
(5) Includes marketing materials, advertising, business travel for
attendance at trade shows and conventions and entertainment expenses.
(6) Working capital will be utilized by the Company to enhance and
otherwise stabilize cash flow during the Company's development stage,
such that any shortfalls between operating revenues and costs will be
covered by working capital. Although the Company prefers to retain its
working capital in reserve, the Company may be required to expend part
or all of these proceeds as financial demands dictate.
(7) Represents the estimated amount to be repaid to Thomas G. Rader, the
Vice-Chairman of the Board of the Company, who will be advancing funds
to the Company pursuant to a shareholder loan agreement to cover the
Company's expenses relating to this Offering. Mr. Rader is not
obligated to loan funds to the Company and does not presently intend
to do so after the completion of this Offering. See "Certain
Transactions-Officers and Directors."

The amounts set forth above represent the Company's best estimate of
its allocation of proceeds of this Offering based upon the Company's current
plans. The actual allocation of proceeds may vary substantially from these
estimates depending upon economic conditions and the success, if any, of the
Company's proposed business.

Pending application of the net proceeds of the Offering, such funds
will be invested in short-term bank certificates of deposit, interest bearing
savings accounts, United States government obligations or other short-term
interest bearing investments.

The Company anticipates commencing passenger cruise ship operations in
Tahiti in the Fall of 1997. A significant amount of the net proceeds of this
Offering allocated for the $2 million letter of credit, ship start-up expenses
and general and administrative expenses and overhead will not be expended by the
Company until after the Company charters a vessel and commences the vessel's
positioning voyage to Tahiti, which is expected to occur in the late Summer of
1997. After the Company obtains its license to operate in Tahiti and charters a
vessel, which is expected to occur several months prior to the positioning
voyage, the Company will begin its marketing and advertising campaign for
passengers and expects to receive passenger revenues from advance reservations
and prepaid ticket sales. Because a substantial amount of the net proceeds of
this Offering will not be used until the late Summer of 1997, the Company
believes such proceeds, along with the anticipated cash flow from operations,
will be sufficient to meet its expected cash requirements for a period of at
least 12 months following the consummation of this Offering. See Risk Factor No.
3 and "Management's Discussion and Analysis of Financial Condition-Liquidity."

<PAGE>

DILUTION

Persons purchasing the Preferred Stock offered hereby will experience
immediate and substantial dilution in their investment in the Company.
"Dilution" is the reduction in the value of a purchaser's investment and
represents the difference between the public offering price and the net tangible
book value per share immediately upon completion of this Offering.

11
<PAGE>

At August 31 1996, the Company had a negative net tangible book value
of $(409,631) or $(.13) per share of Common Stock. Net tangible book value per
share represents the Company's total tangible assets less total liabilities,
divided by the number of outstanding shares of Common Stock.

Assuming the sale of 1,400,000 shares of Preferred Stock and conversion
to Common Stock, less commissions and estimated offering expenses, the pro forma
net tangible book value of the Company at August 31, 1996 would have been
$5,620,369 or $1.08 per share of Common Stock. This represents an immediate
increase in net tangible book value of $1.19 per share to existing stockholders
and an immediate dilution of $3.92 per share to new investors.

The following table illustrates this dilution on a per share basis:
<S> <C> <C>
Public Offering Price............................................... 5.00
August 31, 1996 Net Tangible Book Value Per Share................... $ (.13)
Increase Attributable to Post Balance Sheet Transactions(1)......... .02
--------
Net Tangible Book Value Before Offering............................. (.11)
Increase Per Share Attributable to New Investors ................... 1.19
--------
Pro Forma Net Tangible Book Value After Offering ................... 1.08
----------
Dilution Per Share to New Investors................................. $3.92
<FN>
- ---------------

(1) In September 1996, the Company issued 188,000 shares of Common Stock to
London Manhattan Communications L.L.C. valued at $1.00 per share for
strategic business services. Additionally, 30,000 shares and 28,000
shares were issued in a private placement at $1.00 and $.01 per share,
respectively. These transactions increased the net tangible book value
before the Offering to $(379,631) or $(.11) per share of Common Stock.
</FN>
</TABLE>

The following table sets forth, as of September 25, 1996, the number of
shares of Common Stock purchased from the Company, the total consideration paid
and the average price per share paid by present stockholders and by new
investors purchasing shares in this Offering (assuming a conversion of Preferred
Stock to Common Stock):

NUMBER OF PERCENT TOTAL PERCENT AVERAGE
SHARES OF TOTAL CONSIDERATION OF TOTAL PRICE
PURCHASED SHARES PAID CONSIDERATION PER SHARE
--------- -------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Present stockholders ...... 3,442,000 71% $ 30,280 0.4% $ .009
New investors ............. 1,400,000 29 7,000,000 99.6 5.00
Total . . ................ 4,842,000 100% $7,030,280 100.0%
========= ====== ========== =======
</TABLE>

SELECTED FINANCIAL DATA

CUMULATIVE FROM
SUMMARY OF DEVELOPMENT STAGE ACTIVITIES THREE MONTHS JULY 5,1994 JULY 5, 1994
ENDED AUGUST 31, (INCORPORATION) (INCORPORATION)
------------------------- YEAR ENDED THROUGH THROUGH
1996 1995 MAY 31, 1996 MAY 31, 1995 AUGUST 31, 1996
---- ---- ------------ -------------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales ..................................... $ -- -- -- -- --
Cost of sales ................................. -- -- -- -- --
Gross profit .................................. -- -- -- -- --
Selling, general and administrative expenses .. 48,422 80,490 191,136 173,045 412,603
Net Loss ...................................... $ (48,422) (80,490) (191,136) (173,045) (412,603)
Loss per common share:
Net loss .................................... $ (0.01) (0.02) (0.06) (0.05) --
Average common shares ......................... 3,435,944 3,435,944 3,435,944 3,435,944 --
Dividends...................................... $ -- -- -- -- --

BALANCE SHEET DATA
ACTUAL PRO FORMA
AUGUST 31, 1996 ACTUAL ACTUAL PRO FORMA AS ADJUSTED
(UNAUDITED) MAY 31, 1996 MAY 31, 1995 AUGUST 31, 1996(1) AUGUST 31, 1996(2)
---------------- ------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Total Assets 650 1,650 750 218,930 6,218,930
Long-term debt 410,281 342,034 166,050 410,281 410,281
Deficit Accumulated During Development Stage (412,603) (364,181) (173,045) (440,603) (440,603)
Stockholders' Equity (Deficiency) (409,631) (361,209) (170,073) (191,351) 5,806,649
<FN>
- -----------------
(1) Gives effect to the issuance of 188,000 shares of Common Stock to
London Manhattan Communications L.L.C. valued at $1.00 per share for
strategic business services to be provided over two years under a
consulting agreement, the issuance of 30,000 shares in a private
placement offering at $1.00 per share and the issuance of 28,000 shares
in a private placement offering at $.01 per share to four persons,
including two directors of the Company.
(2) Gives effect to the proceeds from the sale of Common Stock offered
hereby, net of approximately $1,000,000 in offering expenses, in the
amount of $6,000,000.
</FN>
</TABLE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

Development Stage Activities and Liquidity

The Company is in its development stage, and it has had no cruise
operations. The Company has not had any revenue from operations and it has had
accumulated losses of $412,603 for the period from July 5, 1994 (incorporation)
through August 31, 1996. The Company expects such losses to continue as least
through commencement of its full cruise operations in the Fall of 1997, and
perhaps thereafter. Since inception through August 31, 1996, the Company's
activities have been funded by borrowings from a stockholder of the Company, the
cash proceeds from which have totaled $382,712. See "Certain Transactions-
Officers and Directors." On September 4, 1996, the Company entered into an
agreement with an investment banking firm in connection with raising equity
through this Offering. If this Offering is completed, the Company will raise
$7,000,000 and has agreed to pay a 10% sales commission and a 3% non-accountable
expense allowance ($910,000) of the proceeds raised to the investment banking
firm. See "Certain Transactions-London Manhattan."

The Company anticipates commencing full cruise service in the Fall of
1997. Until full service is commenced, the Company does not expect to generate
any material earned voyage revenue. The Company, however, expects to collect
cash from advance reservations and prepaid ticket sales. Nevertheless, if this
Offering is successful, then during the next twelve months the Company expects
to have significant capital expenditures for the charter of a vessel, ship start
up costs, and significant operating expenses for salaries and marketing. See
"Use of Proceeds."

Three Months ended August 31, 1996 and 1995

During these periods the Company incurred expenses relating to, among
other things, management fees, legal fees, and general and administrative
expenses relating to the development activities for the passenger cruise vessel
and capital raising activities. The most sigificant variation pertains to
professional fees charged to expense relating to a public offering that was not
completed.

Period July 5, 1994(Incorporation) to May 31, 1995

The Company was initially capitalized with $100 in services and
received capital contributions of $2,872. During the period the Company borrowed
$166,050 from a stockholder. The aggregate funds were primarily used to pay
management fees, legal fees, consulting fees and general and administrative
expenses, all of which related to development activities for the passenger
cruise vessel and capital raising activities.

Year Ended May 31, 1996

The Company explored various financing alternatives; however, no
additional capital was raised during this period. Instead, it borrowed an
additional $175,984 from a stockholder in order to support its operations.
During this period, the Company had a net loss of $191,136, of which $25,000
were expenses of an offering of securities which was terminated prior to
commencing any efforts to offer securities to prospective investors. The
remainder of the expenses related to management fees, legal fees, consulting
fees and general and administrative expenses all of which related to development
activities for the passenger cruise vessel and capital raising activities.

Subsequent to August 31, 1996

On September 11, 1996, the Company increased its authorized capital
from 100 shares, par value $1.00 per share, to 10,000,000 shares, par value
$.00003 per share, and the existing stockholders converted 100 shares of their
then-owned common stock into 3,196,000 newly authorized shares of Common Stock.
The components of stockholders' capital deficiency have been retroactively
adjusted to reflect the foregoing transaction.

In September 1996, the Company sold 30,000 shares of Common Stock for
$1.00 per share and 28,000 shares of Common Stock for $.01 per share to certain
investors in a private placement. The Company also issued 188,000 shares of
Common Stock in connection with an agreement to retain the services of a
consulting company. These shares were reflected in the weighted average number
of shares outstanding, as adjusted, for the effects of the application of
Securities and Exchange Commission Staff Accounting Bulletin (SAB) No. 83.
Pursuant to SAB No. 83, Common Stock issued by the Company at a price less than
the contemplated public offering price is treated as outstanding for all periods
presented.
<PAGE>

Liquidity

At August 31, 1996, the Company has incurred losses totaling $412,603,
and has negative working capital, stockholders' capital deficit and has no cash
in its accounts. These matters raise substantial doubt regarding the Company's
ability to continue as a going concern. In order to attain full service
operations, the Company's future cash requirements will be significant. The
Company plans to use the funds of this Offering, if successful, to (i) pay the
expenses in connection with the commencement of the operations of the cruise
ship and (ii) provide working capital to support the Company's initial
operations to the extent that cash flow from such operations is insufficient.
The Company intends to obtain a $2 million letter of credit in order to
guarantee its anticipated charter hire payments for approximately six months and
expects to incur an additional $1,000,000 in ship start up expenses. The Company
anticipates paying, to an affiliate, charter fees of approximately $10,000 to
$15,000 a day for the vessel. See "Proposed Business-Charter of Vessel."

The Company has not yet received its license from the Government of
French Polynesia to operate a passenger cruise vessel in French Polynesia.
However, the Company has received a commitment from the Government of French
Polynesia to license the Company to operate a passenger cruise vessel in French
Polynesia for a period of five years from commencement of the Company's
operations, if the Company complies with certain conditions including, but not
limited to, providing a minimum of 12 jobs for local residents, training a
minimum of three local residents per year, promoting local entertainment and
activities companies through information made available aboard the Company's
vessel, and buying approximately $512,000 of products locally per year. In
addition to such sum, the Company anticipates that its annual costs to comply
with the conditions of the license will be approximately $240,000 to cover the
salaries and benefits of the 12 jobs and the training for three local residents.
Although the Company believes that it will be able to comply with all conditions
precedent to the issuance of a license to operate in French Polynesia, there can
be no assurances that such license will ultimately be issued to the Company, or
if the license is issued, that the Company can remain in compliance with the
terms of the license or that it can be renewed on terms satisfactory to the
Company.

The Company anticipates commencing passenger cruise ship operations in
Tahiti in the Fall of 1997. At such time, the Company anticipates deposits from
customers for prepaid ticket sales of $3 million. In addition, a significant
amount of the net proceeds of this Offering allocated for the $2 million letter
of credit, ship start-up expenses and general and administrative expenses and
overhead will not be expended by the Company until after the Company charters a
vessel and commences the vessel's positioning voyage to Tahiti, which is
expected to occur in the late Summer of 1997. If there is any delay in the
Company obtaining a license to operate in Tahiti or the vessel for cruise
operations, the proceeds of this Offering allocated to such uses will be held in
short-term interest bearing investments. After the Company obtains its license
and vessel, which is expected to occur several months prior to the positioning
voyage, the Company will hire approximately 30 employees, including a president,
controller, one senior sales/marketing executive, four sales executives and an
administrative staff of 22 employees, and rent an office in South Florida and
lease or purchase office equipment and data processing equipment in order to
support the Company's marketing and advertising campaign for passengers. The
Company expects these costs aggregating $2 million will be incurred during a six
month period. Although there can be no assurances, this effort is expected to
generate passenger revenues and prepaid ticket sales several months before the
Company hires the approximately 40 employees required to staff the vessel's
positioning voyage to Tahiti. The approximately 138 additional employees
required to manage on-board ship operations for passenger cruises will not be
hired until approximately two weeks prior to the Company's first passenger
cruise in Tahiti. Because a substantial amount of the net proceeds of this
Offering will not be used until the late Summer of 1997, the Company believes
such proceeds, along with the anticipated cash flow from operations, will be
sufficient to meet its expected cash requirements for a period of at least 12
months following the consummation of this Offering. See Risk Factor No. 3 and
"Use of Proceeds."

There can be no assurance, however, that operations will in fact
commence as scheduled. In addition, unanticipated problems may arise which may
necessitate the need for additional financing until the Company can generate
revenues sufficient to meet operating expenses. For example, the Company
believes a passenger load factor of 65% will be required to operate profitably.
Further, there can be no assurance that the Company will not experience adverse
changes in its business prospects, its proposed operations, or in the
transportation or tourism industries, or the U.S. economy. See Risk Factor Nos.
1 through 9.

Realization of any portion of the approximate $137,000 deferred tax asset at May
31, 1996, resulting from the future amortization of start up costs and accrued
interest on related party loans, is not considered more likely than not and,
accordingly, a valuation allowance has been established for the full amount of
such asset.

<PAGE>

As of August 31, 1996, the Company had borrowed $382,712 from a stockholder of
the Company. The loan bears interest at 6% and is payable at such time as the
Company has available cash flow after the repayment of its current obligations,
or after January 15, 1999, on demand. See "Certain Transactions- Officers and
Directors."

<PAGE>

Future Accounting Pronouncement

The Company will be required to apply the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 123 "Accounting for Stock Based Compensation."
This statement establishes a fair value method for accounting for stock-based
compensation plans. The Company will apply the provisions of SFAS No. 123
involving any transaction for stock-based compensation.

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The Company does not expect to spend material amounts on research and
development during its development stage of operations.

PROPOSED BUSINESS

GENERAL

RTC Cruises, Ltd. (the "Company") was originally incorporated in July
1994 as a Florida corporation with the name of Royal Tahitian Cruises, Inc. and
was continued under the laws of the Cayman Islands, British West Indies, on
August 23, 1996. Since its original incorporation, the Company has developed its
plan to operate and market a premium class cruise ship and land tours in French
Polynesia, more commonly referred to as Tahiti.

The Company plans to offer seven day cruises between the islands of
Tahiti, Raiatea, Tahaa, Bora Bora, Huahine, Rangiaroa, and Moorea. The Company
will also offer three, four and seven day land vacation packages in conjunction
with its cruises. The Company's business strategy is to emphasize its French
Polynesian destination as well as the luxury and convenience of travelling by
cruise ship. The Company believes that French Polynesia is an ideal location to
establish a cruise line. Tahiti has a strong name recognition with the public
and possesses a sub-tropical climate with exotic islands relatively untouched by
modern development. Distances between island destinations are short, which will
be traveled at night to afford passengers the opportunity to experience the
various islands and to partake in onshore activities during the day. Although
the Company is aware of at least two companies that presently offer cruise
services in Tahiti and one ship presently under construction, the Company
believes that this market is underdeveloped and that, in any event, the Company
will be able to compete effectively against these better capitalized and
established competitors. See "Proposed Business-Competition." The Company,
however, will periodically review its cruise itinerary and may deploy its vessel
in other areas if financially attractive opportunities develop.

Passenger fares for a seven day cruise are expected to range from
$1,600 to $2,400 (not including airfare), although the Company may in the future
be forced to adjust these fares due to competitive pressures. The Company will
perform all marketing services for the cruise line. The Company believes that it
will develop a strong market awareness of its product and reduce its operating
costs by operating year-round in a single geographical area.

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After the completion of this Offering, the Company intends to charter a
cruise ship from Concorde, a Cayman Islands, British West Indies corporation in
which Douglas H. MacGarvey and Thomas G. Rader, directors and principal
stockholders of the Company, own 50% of the outstanding stock, and commence
operations. The remaining 50% of the stock of Concorde is owned by Herbert
Peintner, who was granted an option by each of Messrs. MacGarvey and Rader to
purchase an aggregate of 1,065,333 shares of Common Stock from them. See
"Proposed Business-Charter of Vessel," and "Principal Stockholders." The Company
may also attempt to charter or acquire additional cruise ships and to engage in
other cruise line related activities if the Company is successful in completing
this Offering and thereafter obtains the necessary funds either from operations
or from additional financing, of which there can be no assurance.

THE CRUISE VESSEL

The Company intends to charter a 450 to 550 passenger cruise ship in
the premium class from Concorde. See Risk Factor Nos. 6 and 20. Cruises are
generally divided into three classes: standard, premium and luxury. Standard
class cruises are characterized by shorter itineraries (one to seven days),
standard cabins, double seatings at meals and passenger fares of less than $250
per person per day. Premium class cruises typically offers 7 to 10 day vacation
plans ranging in price from $250 to $450 per person per day, diversified
worldwide itineraries, two seating dining and attention to product quality.
Luxury class service offers cruises from seven days to up to three months with
the highest quality of service, large cabins, and single seating dining. The
passenger fares on luxury cruises typically exceeds $450 per person per day.

The premium class vessel that the Company seeks to charter would
typically have the following features: four to six passenger decks, a swimming
pool, a health club, a casino, a duty free shop, three to four bars, a dining
area sufficient to accommodate all passengers in one sitting, a boutique, a
beauty parlor, a main lounge for live entertainment as well as standard
facilities and amenities traditionally offered on standard cruise ships.

The Company intends to offer premium quality on-board entertainment,
service and cuisine aboard the ship. Consistent with the Company's business
strategy of emphasizing its cruise destination, the on-board activities will
include entertainment featuring French Polynesian performers and lectures by
guest speakers covering the history, culture and geography of French Polynesia
and several other Polynesian cultures. Cruise personnel primarily will be
Pacific Basin country nationals and will include some Tahitians. The Company
plans to offer a restaurant with one-sitting dining, a service typically offered
by luxury cruises.

The Company presently intends to offer its passengers "sous vide"
cuisine primarily as dinner entrees. Sous vide cuisine is vacuumed packed frozen
gourmet food. The Company presently intends to serve sous vide cuisine because
it is easy to ship and store and is prepared by rethermalizing the vacuumed
sealed product in simmering hot water for several minutes. By utilizing such
product, the Company will be able to hire fewer on-board chefs, thereby reducing
the Company's operating expenses. The Company presently intends to purchase the
sous vide cuisine from Quisine Sous Vide, Inc., a Vermont corporation controlled
by Messrs. Rader and MacGarvey. The Company believes that the price it will pay
for the sous vide cuisine will be comparable to the price which could have been
negotiated with an unaffiliated third party. See Risk Factor No. 20. The Company
also believes that the quality of sous vide cuisine will meet the demands of its
cruise passengers. However, if such food does not satisfy its cruise passengers,
the Company will revise its menu to accommodate passenger tastes.

The Company's vessel will comply with all international licensing
standards for passenger cruise vessels, including the International Convention
Regarding Safety of Life at Sea (S.O.L.A.S.), as developed by the International
Maritime Organization. All required classification certificates will be in force
in accordance with the international rules of shipping and managed by a
recognized vessel classification society. The Company further intends to obtain
protection and indemnity insurance for the vessel as well as coverage for
passage money due to loss of hire in the event the vessel is unable to operate
during scheduled cruise periods due to loss or damage arising from certain
covered perils, such as fire and mechanical breakdowns. In addition, it is
anticipated that the chartered vessel will be covered by policies for war risk,
hull and machinery and oil pollution. No assurance can be given, however, that
the Company will be able to maintain adequate insurance at reasonable rates.
Failure to maintain adequate insurance could place the Company at great
financial risk in the event of accidents and adversely affect the Company's
ability to do business. Further, even if the Company were to maintain adequate
insurance, adverse publicity from accidents could have a material adverse effect
on the Company's business.

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THE CRUISE MARKET

Since its modern inception in the 1970's, cruising has grown in
popularity in the United States and abroad. According to statistics compiled by
the Cruise Line International Association ("CLIA"), the number of North American
passengers embarking on deep-water cruises of two or more days since 1970 is
estimated to be 53 million and has increased from 1.4 million in 1980 to 4.5
million in 1994. This represents a 8.6% annual average rate of growth for the 14
year period. CLIA foresees continued growth in passenger volumes and has
predicted that by the year 2000 as many as 8 million people a year will be
taking cruises. Presently, the fastest growing segments of the business are the
three to four day and the six to eight day cruises and the premium/luxury class
of products as a percentage of available berths.

The Company's primary market will be passengers from the United States.
North Americans presently account for approximately 81% of the world cruise
market for cruises of three days or more. On the demand side, the Company
believes that there exists a potential customer pool for the Company's premium
cruise product of over 4.5 million people in the United States, based upon CLIA
age, income and propensity guidelines.

The cruise industry has sought to keep pace with increased demand by
constructing new and larger passenger ships. At least 28 ships are scheduled for
launching by 1999, of which all but four are 1,000 to 2,000 passenger vessels.
Despite some concerns in the industry over potential over-capacity, the
passenger cruise industry has been strong, and load factors over the past
several years have been high, ranging from 80% to 95%. Passenger capacity of
100% is generally considered in the cruise industry to mean all passenger cabins
are occupied with two passengers per cabin.

The Company believes its primary market will be persons who have
previously taken cruises and are 50 to 70 years old. CLIA statistics indicate
that this market is 50% of the 53 million people who have cruised between 1970
and 1994. CLIA statistics further reflect that over 50%, or 2.6 million of the
4.5 million people who cruised in 1994, took a one-week cruise, which is the
proposed length of the Company's cruise itinerary.

COMPETITION

The passenger cruise industry is highly competitive. Worldwide , there
were approximately 134 passenger ships owned by approximately 33 cruise lines at
the end of 1994, the vast majority of which have established their positions in
the market place and are owned by companies that have financial resources
substantially greater than the Company. Recent increases in capacity in the
industry have created a highly competitive environment both in terms of
passenger bookings and fare discounts. Although the Company believes that demand
for cruises is currently strong, there is no assurance that such demand will
continue, or that the Company will be able to compete successfully for cruise
passengers.

The cruise market in Tahiti is, to the Company's knowledge, presently
only serviced by two passenger vessels--the Wind Song and Club Med 2. The Wind
Song is a four-masted sailing vessel operated by Windstar Sail Cruises, a
Holland America Line Company. Operating in French Polynesia since 1985, the Wind
Song has a capacity of approximately 150 passengers and advertised fares ranging
from $2,795 to $2,995 per person per week, plus airfare, exclusive of premiums
for peak travel time and discounts for early ticket purchases. The Club Med 2 is
a five-masted sailing vessel operated by Club Mediterranee. The Club Med 2 has a
capacity of approximately 400 passengers and advertised fares ranging from
$2,100 to $2,500 per person per week, plus airfare. The Club Med 2 commenced
service in Tahiti in 1995 for a six month period each year and operating from
Noume, New Caledonia the other six months of each year. Management of the
Company is not aware whether Club Med 2 will continue to operate from Tahiti on
a permanent basis. The Company is also aware of at least one firm, Exploration
Cruises, which previously offered cruises in Tahiti but which has since ceased
to do business there. It is the Company's understanding that a 330 passenger
luxury cruise ship is being constructed for operation in French Polynesia in
1998. The vessel will be operated by Radisson Seven Seas Cruises ("Radisson"), a
company which currently operates three luxury cruise vessels. The Company
believes cruise prices for this vessel will be significantly higher than those
offered by the Company.

The Wind Song and the Club Med 2 are targeted at younger, affluent
consumers looking for a sailing experience but with the comfort and convenience
of a modern cruise vessel. It is the Company's understanding that the ship which
will be operated by Radisson Seven Seas Cruises will be marketed to luxury
cruise consumers who are generally 50 years of age and

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<PAGE>

older and have taken luxury cruises frequently over the past five years. The
Company intends to compete with the Wind Song, the Club Med 2 and Radisson by
offering a traditional passenger cruise vessel (i.e., no sails) of premium
class, which the Company believes will be more familiar and attractive to
experienced cruise passengers over the age of 50 years who wish to avoid the
more formal and structured atmosphere of luxury vessels and are not attracted to
sailing vessels. Worldwide, customers over the age of 50 account for
approximately 50% of cruise passengers. In addition, the Company believes that
it will be able to offer a similar one-week cruise experience to the Wind Song,
Club Med 2 and Radisson at a lower price.

Cruise lines also compete with other vacation alternatives, and the
Company will be competing with air, sea, land and combination packages from a
variety of sources. The Company will seek to penetrate the cruise and
alternative vacation markets with competitive pricing and a marketing and
advertising campaign which will emphasize the excitement and adventure of
cruising, the attractive and exotic waters of the Tahitian destination and other
factors.

LICENSE AND DESCRIPTION OF TAHITI

The Company has not yet obtained a license from the Government of
French Polynesia to operate a passenger cruise vessel in French Polynesia.
However, the Company has received a written commitment from the Government of
French Polynesia to license the Company to operate a passenger cruise vessel in
French Polynesia for a period of five years from the commencement of the
Company's operations, if the Company complies with certain conditions,
including, but not limited to, acquiring a vessel to operate in French
Polynesia, providing a minimum of 12 jobs for local residents, training a
minimum of three local residents per year, promoting local entertainment and
activities companies through information made available aboard the Company's
vessel, and buying approximately $512,000 of products locally per year. In
addition to such sum, the Company anticipates that its annual costs to comply
with conditions of the license will be approximately $240,000 to cover the
salaries and the benefits of the 12 jobs and training for three local residents
of French Polynesia. The license to be entered into with the Government of
French Polynesia will exempt the Company from import duties and taxes for
passenger ships (except for port toll taxes and airport dues), corporate income
tax, bonding requirements for passenger ships, and will permit a foreign flagged
vessel to operate in Tahitian waters. All such benefits will be for a term of
five years, except for the exemption from payroll taxes for Tahitian employees,
which will run for a term of 24 months. Although the Company believes that it
will be able to comply with all conditions precedent to the issuance of a
license to operate in French Polynesia, there can be no assurances that such
license will ultimately be issued to the Company, or if the license is issued,
that the Company will remain in compliance with the conditions of the license or
that it can be renewed on terms satisfactory to the Company.

Located seven and one-half hours by air from Los Angeles in the Pacific
Ocean midway between Peru and Japan, French Polynesia is comprised of five
archipelagoes with 130 islands covering an area of 2 million square miles equal
to the size of Europe. The largest of these is the island of Tahiti in the
Society Islands archipelagoes, where the capital city of Papeete is located. The
total population is approximately 216,000, with over 130,000 inhabitants on the
island of Tahiti. The islands are 10 hours behind Greenwich Mean Time, the same
as the State of Hawaii.

French Polynesia has been a French Overseas Territory since 1957 and
has been internally autonomous since 1984. As such, it is headed by a High
Commissioner representing the French Republic. French Polynesia has its own
democratically elected President and Parliament. Tourism is the primary industry
and Tahiti is accordingly serviced by a number of international airlines,
including Air France, Air Outre Mer (AOM), Air New Zealand, Hawaiian Airlines
and Lan Chile. In 1993, almost 150,000 persons visited the islands. The United
States produced 31% of the visitors, followed by France (21%), Japan (11%),
Germany (6.5%) , Australia (5%) and New Zealand (3.6%). A number of other
countries produced the balance of the visitors to French Polynesia. French and
Tahitian are the official languages, although English is spoken in the hotels
and shops servicing tourists.

SALES AND MARKETING

Sales and marketing efforts will be concentrated in the United States
in the northeast, midwest, and west coast, especially California. The Company
also intends to retain general sales agents to market and sell the Company's
cruises in Australia, England, France, Germany, Italy, Japan, New Zealand, Spain
and Switzerland. The Company intends to engage four sales executives experienced
in the sales and marketing of cruise vessels to develop sales through retail
travel agents, tour operators, specialty group travel companies and charters. An
additional sales person will be engaged to specialize in developing travel
industry stand-by business. Because the majority of cruise sales are made
through travel agents, the Company will initiate a campaign aimed at
familiarizing travel agents with the Company and its cruises. There will also be
a heavy emphasis on tour operators who market the Tahiti destination.

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<PAGE>

Marketing efforts will consist of:

(1) Brochures--The Company will publish color brochures containing full
description of the vessel, ports visited, on board activities and
applicable rates.

(2) Media Advertising--The advertising message will be communicated
through trade publications to travel agents and through national
magazines and newspapers to travel agents and the public.

(3) Public Relations--The Company will issue press releases, hold
seminars and will seek to have major articles appear in the trade and
public press.

(4) Direct Mail--To support the group travel program, mail solicitation
will be initiated to members of various organizations such as alumni
associations and professional groups.

The sales and marketing efforts will be coordinated from the Company's
principal offices in Florida.

CHARTER OF VESSEL

The Company intends to charter a passenger cruise vessel from Concorde
Shipping Ltd. ("Concorde"), a Cayman Islands company, 50% of the stock of which
is owned by Douglas MacGarvey, the Company's Chairman of the Board and Chief
Executive Officer, and Thomas Rader, the Company's Vice-Chairman of the Board.
The other 50% of the stock of Concorde is owned by Herbert Peintner. Mr.
Peintner has presently exercisable options to acquire one-third of the shares of
Common Stock owned by Messrs. MacGarvey and Rader. See "Principal Stockholders."

Concorde does not presently own or charter any passenger vessels. After
Concorde has identified and purchased (or chartered from the owner) a vessel
suitable for the Company's needs, the Company will charter such vessel from
Concorde pursuant to the terms and conditions of a charter party agreement to be
entered into between the Company and Concorde. The charter party agreement will
set forth the charter fee to be paid by the Company to charter the vessel as
well as the division of responsibility between Concorde and the Company. No such
agreement presently exists.

The amount of the charter fee will depend upon the type of charter
provided by Concorde to the Company. In the event that Concorde makes a
"bareboat" charter available to the Company, it is anticipated that the charter
fees for a vessel acceptable to the Company would be approximately $10,000 to
$15,000 per day. In general, a bareboat charter is one where the charterer is
provided the vessel and is responsible for the personnel for the vessel, pays
all costs relating to operation, maintenance and insurance. The term of the
charter is anticipated to be for five years with an option on the Company's part
to extend the charter for an additional five years. Although the Company
believes the terms of the charter party agreement will contain comparable terms
to those which could have been negotiated with an unaffiliated third party,
there can be no assurance that the Company will not suffer material adverse
consequences from the inherent conflict of interest and lack of arms-length
negotiations with Concorde. In the event that disputes arise between Concorde
and the Company, resolutions of such disputes, whether through legal action or
otherwise, could be complicated by Messrs. MacGarvey, Rader and Peintner having
an interest in both companies.

Concorde has advised the Company that as part of any charter party
agreement, the Company will be required to obtain a letter of credit in favor of
Concorde in order to guarantee the Company's performance under such agreement.
It is anticipated that the letter of credit will need to cover six months
charter payments or approximately $2 million. If for any reason the Company does
not make timely payments of its monthly charter fee, Concorde will be able to
draw against the letter of credit, which will then have to be restored to the
original amount by the Company.

POSSIBLE ADDITIONAL ACTIVITIES

Provided that the Company obtains the necessary funds either from
operations or from additional financing, of which there can be no assurance, the
Company may, to the extent opportunities are available, expand its operations
and engage in other activities that would be compatible with its passenger
cruise operations. The Company may expand its operations by chartering or
purchasing additional vessels. No specific plans with respect to additional
financing have yet been formulated.

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Additional financing would be required to expand the Company's activities and
there can be no assurances that the Company's operations can be expanded.

PROPERTIES

The Company presently conducts all of its operations in approximately
600 square feet of office space located at 1360 South Dixie Highway, Suite 2114,
Coral Gables, Florida 33146. The office space is leased in the name of
International Maritime Group, Inc. ("IMG"), a company controlled by Douglas H.
MacGarvey, the Chief Executive Officer of the Company. The Company is not liable
under the terms of the lease but fully reimburses IMG for all expenditures
incurred under the lease amounting to approximately $700 per month. The lease
expires in April 1997. The Company will likely require a larger space (estimated
at approximately 5,000 square feet) in South Florida shortly prior to the
commencement of cruise line operations. The Company presently intends to lease
space in its own name and believes that there is an adequate supply of
commercial space in the South Florida area to accommodate this need.

EMPLOYEES

During the pre-operating stage, the Company expects to have
approximately 30 employees, including the Chief Executive Officer, who has
already been hired, the president, controller, one senior sales/marketing
executive, four sales executives and 22 administrative staff employees. The
Company believes that such employees will be sufficient to meet its needs during
the pre-operating stage of the Company and that none will be covered by a
collective bargaining agreement. At the time the Company commences full
passenger cruise operations, the Company will hire approximately 178 additional
employees, in order to manage on-board ship operations. See "Plan of
Operations." The Company believes that it will not encounter inordinate
difficulty in attracting and retaining qualified personnel.

LEGAL PROCEEDINGS

The Company is not party to any pending legal proceedings, and to the
best of its knowledge and belief, none is contemplated or threatened.

CERTAIN TAX CONSIDERATIONS

The following discussion is based upon the legal opinion of Eric J.
Kaplan, P.A. and summarizes certain U.S. federal income tax consequences to
the Company and to the U.S. persons holding the Company's equity securities.
This discussion is not a complete analysis of the tax considerations that may be
applicable to the Company or to a prospective investor. This discussion also
does not address the tax consequences that may be relevant to income of the
Company other than from the international operation of ships, as defined in the
U.S. Internal Revenue Code of 1986 (the "Code"), nor to particular categories of
the Company's stockholders subject to special treatment under certain federal
income tax laws, such as dealers in securities, tax exempt entities, banks,
insurance companies and foreign individuals and entities. In addition, it does
not describe any tax consequences arising out of the tax laws of any state,
locality or foreign jurisdiction. The discussion is based upon currently
existing provisions of the Code, existing and proposed regulation thereunder and
current administrative rulings and court decisions. All of the foregoing are
subject to change and any such change could affect the continuing validity of
this discussion. In connection with the foregoing, investors should be aware
that the Tax Reform Act of 1986, as amended (hereinafter, the "1986 Tax Act")
changed significantly the U.S. federal income tax rules applicable to the
Company and, in certain cases, to certain holders of its Common Stock, including
the principal stockholders. Although the relevant provisions of the 1986 Tax Act
are discussed herein, those provisions have not yet been subject of extensive
administrative or judicial interpretation. Accordingly, there can be no
assurances that such interpretation will not have an adverse impact on an
investment in the Company's equity securities.

PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO
PARTICULAR TAX CONSEQUENCES TO THEM OF ANY INVESTMENT IN THE COMPANY'S EQUITY
SECURITIES, INCLUDING THE APPLICATION OF FEDERAL, STATE, LOCAL AND FOREIGN TAX
LAWS.

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TAXATION OF THE COMPANY

U.S. TAXATION

Since the Company is governed under the laws of the Cayman Islands,
British West Indies, it will be considered to be a foreign corporation for
purposes of U.S. income taxation. This is so regardless of the composition of
the stockholders of the Company or the location of its management.

Foreign corporations are subject to U.S. taxation under two different
regimens. First under IRC Section 881(a), (section references are to the
Internal Revenue Code of 1986, as amended (IRC), or to the Treasury Regulations
issued thereunder (Treas. Reg.) by the Department of the Treasury), a foreign
corporation is subject to U.S. taxation on its fixed, determinable, annual or
periodic (FDAP) income from U.S. sources. The tax rate imposed by this section
is 30% of the U.S. source FDAP received by the Company without deductions of any
kind. FDAP income is generally thought of as passive, investment type income
such as dividends, interest, rents and royalties that are not connected (as that
term is defined in the Code) to any U.S. trade or business. Since the Company
will be earning income from its business activities, these provisions, if
applicable at all, should have minimal impact on the Company.

Foreign corporations are also potentially subject to U.S. taxation at
the net rates of Section 11 (applicable to U.S. corporations) and the 30% branch
profits tax of IRC Section 884 imposed on a foreign corporation's net after tax
earnings. These taxes are applied to a foreign corporation's income that is
deemed to be effectively connected to the conduct (by such foreign corporation)
of a United States trade or business. Since the Company will have management
offices in the United States as well as offices through which marketing,
reservation, and sales activities are conducted, it is likely that the Company,
to some extent, will be deemed to be conducting a U.S. trade or business.

However, in the Company's case, it is unlikely that the above taxes
will apply. Under IRC Section 863(c)(3), the Company is deemed to be earning
transportation income from its cruise activities. Under IRC Section 863(c)(1)
and (c)(2) such income is "US source" transportation income only if the
transportation activity begins and/or ends in the United States. In the case of
the Company, the cruises neither begin nor end in the United States.
Accordingly, since the Company is not earning U.S. source transportation
income, it will be deemed to be earning "foreign source" transportation income
from its cruises in French Polynesia.

A foreign corporation's foreign source income is deemed to be
effectively connected to a U.S. trade or business (and hence subject to U.S.
taxation) only under the limited circumstances described in IRC Section
864(c)(4). IRC Section 864(c)(4)(A) provides that unless the foreign
corporation's foreign source income is described in subsection (B) (dealing with
dividends, interest, rents and royalties and income from the sale of inventory)
or subsection (C), (dealing with foreign insurance companies), it will not be
deemed to be effectively connected to the conduct of a U.S. trade or business.
Since the Company will be earning foreign source transportation income which is
not a class of income described in the above sections, its income will not be
deemed to be effectively connected under these rules. If they are not so
connected, the earnings will be free from U.S. taxation under the above cited
sections.

FOREIGN INCOME TAXATION

The Cayman Islands - There are presently no taxes imposed on profit,
income, capital gains, or appreciations of the Company and no taxes are
currently imposed in the Cayman Islands on profit, income, capital gains, or
appreciations of the holders of the Company's securities or in the nature of
estate duty, inheritance or a capital transfer tax.

French Polynesia - Ordinarily, corporate income taxes are imposed by
the Government of French Polynesia on the type of activities proposed by the
Company. However as part of the license to be issued to the Company, the
Government of French Polynesia has agreed, among other things, to waive such
taxes for a period of five years in order to induce the Company to operate in
the territory. See "Proposed Business-License and Description of Tahiti." Absent
such a waiver the income of the Company will be subject to taxation in French
Polynesia.

U.S. TAXATION OF THE COMPANY'S STOCKHOLDERS

DIVIDENDS. Generally, a United States person whose holdings of a
foreign corporation's stock (including shares such person is considered to own
under applicable constructive ownership rules) is less than 10% of the Company's
outstanding stock generally is not required to recognize income by reason of the
Company's earnings until such earnings have

19
<PAGE>

been distributed. Dividends paid by the Company to such a stockholder will be
taxable to such stockholder as dividend income to the extent of the Company's
current or accumulated earnings and profits. Such dividends generally will not
be eligible for any dividends-received deduction.

However, if the Company is a Controlled Foreign Corporation ("CFC") (as
that term is defined in IRC Section 957) then certain types of income earned by
the Company would be immediately subject to U.S. taxation in the hands of any
"U.S. Shareholder" of the Company regardless of whether there was an actual cash
distribution to such shareholder. A U.S. Shareholder is defined as a United
States citizen or resident who owns (or is considered to own) 10% or more of the
Company's voting power on the last day of such taxable year on which the
Company's is a CFC.

If the Company is a CFC for an uninterrupted period of 30 days during
any taxable year, a U.S. Shareholder of the Company will generally be required
to include in ordinary income his pro rata share of the Company's "Subpart F
income" for that taxable year and, in addition, certain other items, including,
under certain circumstances, the Company's increase in earnings invested in
United States Property, and amounts of previously excluded Subpart F income
withdrawn by the Company from investment in certain shipping and related assets,
whether or not any amounts are actually distributed to stockholders. (The
Company's stockholders who are not U.S. Shareholders will not be affected by the
CFC and Subpart F income provisions).

"Subpart F income" includes among other things, "foreign base shipping
income," which is defined to include income derived from using or chartering a
vessel in foreign commerce or from the sale, exchange or other disposition of a
vessel. Accordingly, if the Company is a CFC, all but an insubstantial part of
the Company's earnings is expected by the Company to be "Subpart F income" which
will be taxable currently to the Company's U.S. Shareholders to the extent of
their pro rata share. This is so regardless of whether there in fact was a cash
distribution of those earnings to the Company's stockholders. Earnings and
profits of the Company already included in income by a U.S. Shareholder by
reason of the CFC provisions discussed above are not again included in income by
such U.S. Shareholder or his assignee when an actual distribution is made. Other
distributions by the Company by way of dividends with respect to the Common
Stock out of current or accumulated earnings and profits will be taxed to a U.S.
Shareholder as ordinary income.

The Company believes that Herbert Peintner will exercise the options
issued to him by Messrs. MacGarvey and Rader. See "Principal Stockholders" and
"Certain Transactions-Officers and Directors." If such options are fully
exercised,the Company believes that it will not be a CFC. In addition, because
the Board of Directors of the Company has the right to approve transfers of
capital stock, the Company does not believe that, in the future, it will become
a CFC after Mr. Peintner fully exercises such options. However, Mr. Peintner may
not exercise the options in full. Moreover, due to the complex nature of the
attribution rules and the possibility of inter-stockholders purchases and sales,
as well as the unpredictability of the affects of the conversion ratios of the
Preferred Stock into Common Stock as well as other unforeseen events, it is
conceivable that at some future time the Company may become a CFC.

DISPOSITIONS OF COMMON STOCK. In general, any gain or loss on the sale
or exchange of Common Stock of the Company by a stockholder will be capital gain
or loss, provided such stock is held as a capital asset. However, if contrary to
the Company's expectations, the Company has been a CFC, any person who was a
U.S. Shareholder of the Company at any time during the five year period ending
on the date of sale or exchange (or a distribution liquidation) when the Company
was a CFC may be required to treat all of a portion of the gain from a sale or
exchange of Common Stock as ordinary income (to the extent of his proportionate
share of certain earnings and profits of the Company's) rather than as capital
gain. Any capital gain or loss recognized on a sale or exchange of Common Stock
will be long-term capital gain or loss if the stockholder has held the Common
Stock for more than one year.

PASSIVE FOREIGN INVESTMENT COMPANY. A passive foreign investment
company ("PFIC") is any foreign corporation if (i) 75% or more of its gross
income for its tax year is passive income, or (ii) the average percentage of
assets held by the corporation during the tax year which produce, or are held
for production of, passive income is at least 50%, IRC Sections 1296(a)(l) and
1296(a)(2). If a company is deemed to be a PFIC, then any U.S. person who owns
shares in the company may be subject to the interest charges imposed on the
"excess distributions" (as that term is defined in IRC Section 1291) received by
the stockholder of the company. In effect, in addition to the normal tax that
applies on the dividend distribution, annual interest is charged on that tax for
the time that it has been deferred (i.e. for the period of time between when the
money was earned by the company and the time it was distributed to its
stockholders as a dividend). This could have the result of significantly
increasing the amount of total tax payable as a result of receiving a dividend
distribution from the Company.

20
<PAGE>

Moreover, if at any time during the taxpayer's holding period for stock
in a foreign company, that company or its predecessor was a PFIC which was not a
qualified electing fund, the taxpayer's stock is treated as stock in a PFIC.
This rule applies even though the company no longer qualifies as a PFIC. The
above rule does not apply, however, if the taxpayer elects to recognize gain as
of the last day of the last tax year for which the company was a PFIC or if the
stockholder elects to treat the company as a "Qualifying Electing Fund."

For the "asset" test of a PFIC, an asset is characterized as passive if
it has generated (or is reasonably expected to generate in the reasonably
foreseeable future) passive income in the hands of the foreign corporation. Cash
and other current assets readily convertible into cash, including the working
capital of an active business, are passive assets. In applying the tests
described above, tangible personal property leased by a foreign company for a
term of at least 12 months is treated as though it were owned by the company.
The rule which treats leased property as though it were owned by the leasee does
not apply (i) if the lessor is a related person or (ii) a principal purpose of
leasing the property is to avoid the PFIC provisions or the CFC excess passive
assets provisions.

In the Company's case, after this Offering, the sole asset of the
Company (for purposes of this test) will be cash, a passive asset. Its sole
income until cruises begin will be interest off the working capital, passive
income. Therefore, unless the below described exception applies, the Company
will be a PFIC.

However, a foreign company that is starting up in business is excluded
from PFIC classification for its first tax year in which it has gross income
(its start-up year) if (i) no predecessor was a PFIC, (ii) it can demonstrate to
the Internal Revenue Service that it will not be a PFIC for either of the first
two tax years after the start-up year; and (iii) it is not in fact a PFIC for
either of those first two years. IRC Section 1297(b)(2). Based on this
exception, the Company believes that it can avoid being classified as a PFIC.
However, the rules governing this area are extremely complex and there is no
guarantee that PFIC status will be avoided.

If the Company is a PFIC in the start-up phase, a U.S. person who is a
stockholder in a foreign company that was a PFIC may elect to remove the PFIC
taint from that stock by recognizing gain on that stock as if it were sold for
its fair market value on the last day of the taxable year in which the Company
was a PFIC. Alternatively, the interest charge on distributions can be avoided
if the stockholder makes an election to treat the company as a Qualified
Electing Fund. In such case, the stockholder of the Company who makes such an
election will include the following in gross income: (i) as ordinary income,
such stockholder's pro rata share of the ordinary earnings of such fund for such
year, and (ii) as long-term capital gain, such stockholder's pro rata share of
the net capital gain of such fund for such year, whether or not there is a
distribution from the Company.

OTHER ANTI-DEFERRAL RULES. The United States also imposes various
anti-tax deferral rules to passive foreign investment companies, personal
holding companies, foreign personal holding companies, foreign investment
companies, and foreign corporations unreasonably accumulating taxable United
States earnings. These rules can apply to the foreign corporation, and to a U.S.
Shareholder of a foreign corporation, even if the foreign corporation is not a
CFC, and even if the foreign corporation is publicly traded. Where applicable,
these rules can directly cause the stockholder to be taxed on the undistributed
income of the foreign corporation, or they can impose an interest charge on a
U.S. Shareholder's deferred tax liability when dividends are actually received
or the foreign corporation's stock is sold; or they can impose an additional tax
on the foreign corporation on its undistributed income, thereby practically
forcing current dividend distributions. However, these rules generally do not
apply where substantially all of a foreign corporation's activities consist of
conducting an active business rather than earning a passive income. The Company
therefore does not believe that any of these rules will apply to the Company.
However, these rules are quite technical and depend heavily on factual
determinations, and thus conceivably could apply at some time in the future.

21
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table set forth certain information regarding the
executive officers and directors of the Company:

NAME AGE POSITION
---- --- --------

Douglas H. MacGarvey 54 Chairman of the Board ,
Chief Executive Officer,
and Secretary

Thomas G. Rader 50 Vice-Chairman of the Board
and Treasurer

Ronald Kurtz 54 Director

Albert W. Van Ness, Jr. 53 Director

DOUGLAS H. MACGARVEY, one of the founders of the Company, has served as
the Chairman of the Board, Chief Executive Officer and Secretary of the Company
since its inception in July 1994. Mr. MacGarvey was also the Treasurer of the
Company from incorporation until September 1996. Since June 1996, Mr. MacGarvey
has been the President and a principal stockholder of Qusine Sous Vide, Inc., a
specialty food manufacturing firm. Since 1991, he has served as the President of
International Maritime Group, Inc., a consulting firm which is owned by Mr.
MacGarvey and specializes in advising cruise line companies with respect to
acquisitions, development, marketing and business plans, and other
cruise-related transactions. Mr. MacGarvey has more than 20 years of experience
in the cruise and travel industries, which includes senior management positions
with five cruise line companies. From December 1989 to August 1991, Mr.
MacGarvey was the president and chief executive officer of Sea Escape Cruises.
During the period from 1986 to 1989, he founded and served as the president of
two cruise line start-up companies, Tropic Cruise Line Ltd. and Sea
Venture/Tropicana Cruises. From 1972 to 1986, Mr. MacGarvey held various
management positions with Regency Cruises and Cunard Line Limited, respectively.

THOMAS G. RADER is one of the founders of the Company and has been a
Vice-Chairman of the Board of Directors of the Company since its incorporation
and Treasurer since September 1996. Since 1982, Mr. Rader has been the President
of Rader Railcar, Inc. in Denver, Colorado, which custom designs and builds
unique railcars for tourism applications. Since 1994, he has also served as a
director of First American Railways, Inc. which is developing passenger rail
service in the South and Central Florida tourist markets. Mr. Rader has more
than 20 years of experience in the travel and tourism industry. Since June 1996,
Mr. Rader has been the Chairman of the Board of Directors and a principal
stockholder of Qusine Sous Vide, Inc. From 1970 to 1975, he served as vice
president and director of Sheraton Hawaii (a subsidiary of ITT-Sheraton
Corporation) and from 1978 to 1982 he served as vice president and general
manager of Holland America/Westours (a division of Holland America Line, Inc.).
In 1982, he founded Tour Alaska, a privately-held Alaska tour company, which he
subsequently sold to the corporate parent of Princess Cruises, Inc. The Alaska
Visitor's Association named Mr. Rader "Man of the Year" in 1989.

RONALD KURTZ was appointed a Director of the Company in September 1996.
Since 1991, Mr. Kurtz has been the President and Chief Executive Officer of
Management Resource Group, Inc., a Florida corporation that provides strategic
management and marketing consulting services for companies primarily in the
travel and hospitality industry. Prior thereto, Mr. Kurtz was the Senior Vice
President of Windstar Cruises, Inc. (1987 through 1989), President of Sea
Goddess Cruises (1982 through 1986) and Senior Vice President of Marketing and
Sales for Norwegian Cruise Lines (1980 through 1981), all of which are in the
cruise line business.

22
<PAGE>

ALBERT W. VAN NESS, JR. was appointed a Director of the Company in
September 1996. Since October 1992, Mr. Van Ness has served as the President of
Club Quarters, L.L.C., a hotel development and management company. From June
1990 until October 1992, Mr. Van Ness served as a Director Consultant of
Managing People Productivity, a consulting firm. From 1982 until June 1990, Mr.
Van Ness held various executive officer positions with Cunard Line Limited, a
travel and lodging company, including Executive Vice President and Chief
Executive Officer of the Cunard Leisure Division and Managing Director and
President of the Hotels and Resorts Division. Prior thereto, Mr. Van Ness served
as the President of Seatrain Intermodal Services, Inc., a transportation
company. Since December 1995, Mr. Van Ness has been a director of Consolidated
Delivery and Logistics, Inc., a public company engaged in the same day package
delivery business.

EXECUTIVE COMPENSATION

Set forth below is certain information concerning the compensation paid
to the Company's chief executive officer for the fiscal year ended May 31, 1996.
No executive officer of the Company received compensation in excess of $100,000
for such fiscal year.

SUMMARY COMPENSATION TABLE

The following table provides the cash and other compensation paid or
accrued by the Company to its chief executive officer for the fiscal year ended
May 31, 1996:
<TABLE>
<CAPTION>

ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------

SECURITIES
RESTRICTED UNDERLYING
FISCAL OTHER ANNUAL STOCK STOCK LTIP ALL OTHER
NAME YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
---- ------ ------ ----- ------------- ------ ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Douglas H. MacGarvey(1) 1996 $81,826 0 $0 0 0 0 0
<FN>

- ------------------
(1) See "Executive Compensation-Employment Agreement."
</FN>
</TABLE>

EMPLOYMENT AGREEMENT

Since July 1994, the Company has had a verbal agreement with
International Maritime Group, Inc. ("IMG") whereby IMG, through the efforts of
Mr. MacGarvey, manages the Company's operations. The Company pays IMG $7,000 per
month for such services, and IMG distributes such amount to Mr. MacGarvey. After
the closing of this Offering, the verbal agreement will be replaced with the
written employment agreement described in the following paragraph.

On September 11, 1996, Mr. MacGarvey, the Chairman of the Board of
Directors and Chief Executive Officer of the Company, entered into a five-year
employment agreement with the Company. Under the agreement, which will become
effective upon the closing of this Offering, the Company will be required to pay
Mr. MacGarvey a base annual salary of $200,000, which will increase annually by
the increase in the consumer price index. The Company will also be obligated to
pay Mr. MacGarvey a quarterly bonus in an amount equal to 3% of the Company's
quarterly operating income as determined in accordance with generally accepted
accounting principles. Mr. MacGarvey will also be provided with an automobile
expense allowance of $600 per month. Mr. MacGarvey's employment agreement is
renewable at the option of the Company for an additional five-year term.

STOCK OPTION PLAN

In September 1996, the Board of Directors of the Company adopted the
Company's 1996 Stock Option Plan (the "Plan"). The Plan provides for the grant
by the Company of options to purchase up to an aggregate of 1,000,000 of the
Company's authorized but unissued shares of Common Stock (subject to adjustment
in certain cases including stock splits, recapitalizations and reorganizations)
to officers, directors, consultants, and other persons rendering services to the
Company. No options have been issued under the Plan. The Company, however,
intends to register all shares of Common Stock issuable under the Plan with the
Commission on Form S-8.

23
<PAGE>

The purposes of the Plan are to provide incentive to employees,
including officers, directors and consultants of the Company, to encourage such
persons to remain in the employ of the Company and to attract to the Company
persons of experience and ability. The Plan terminates on April 15, 2006.

Options granted under the Plan may be either incentive stock options
within the meaning of the Internal Revenue Code of 1986, as amended ("incentive
options"), or options that do not qualify as incentive options ("nonqualified
options"). The exercise price of incentive options must be at least equal to the
fair market value of the shares of Common Stock on the date of grant; provided,
however, that the exercise price of any incentive option granted to any person
who, at the time of the grant of the option, owns stock aggregating 10% or more
of the total combined voting power of the Company or of any parent or subsidiary
of the Company ("Ten Percent Shareholder"), must not be less than 110% of the
fair market value of such shares on the date of grant of the incentive option.
No incentive option may be granted under the Plan to any individual if the
aggregate fair market value of the shares (determined as of the time the option
is granted) which vest (i.e. first become exercisable) during any calendar year,
under all incentive options held by such optionee exceeds $100,000. There is no
limitation on the amount of nonqualified stock options which may be granted to
any participant in the Plan. Options may be granted under the Plan for terms of
up to ten years; provided, however, that the term of any incentive option
granted to any Ten Percent Shareholder, may not exceed five years. Options
granted under the Plan to officers, directors or employees of the Company may be
exercised only while the optionee is employed or retained by the Company.
However, options which are exercisable at the time of termination may be
exercised within three months of the date of termination, and twelve months
after termination of the employment relationship or directorship if such
termination was by reason of death or permanent disability of the optionee.

LIMITATION OF DIRECTORS' LIABILITY

Under the laws of the Cayman Islands, directors and officers owe their
fiduciary duties to the Company and must exercise the care and skill of a
reasonably prudent person of business. The Company's Articles of Association
provide that a director must disclose at the first opportunity at any meeting of
the directors or in writing to the directors any interest in any material
contract or any material interest in any person or entity with whom the Company
has dealings. In addition, a director and officer must exercise the care,
diligence and skill that may be reasonably expected from a person of his or her
knowledge and experience in discharging his or her duties to the Company.

Pursuant to the Company's Articles of Association, the Company will
indemnify the directors and officers of the Company from and against all
actions, proceedings, costs, charges, losses, damages and expenses incurred in
connection with such person's service as a director or officer, unless the
director or officer incurs such actions, proceedings, costs, charges, losses,
damages and expenses as a result of his or her willful neglect or a default of
his or her obligations to the Company.

Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provision, or otherwise, the Company has been advised
that in the opinion of the Commission such indemnification is against public
policy as expressed in the 1933 Act and is, therefore, unenforceable.

PRINCIPAL STOCKHOLDERS

The following table sets forth the beneficial ownership of the Common
Stock as of September 20, 1996 by: (i) each of the Company's officers and
directors; (ii) each person who is known by the Company to own beneficially more
than 5% of the outstanding shares of Common Stock; and (iii) all of the
Company's officers and directors as a group:
<TABLE>
<CAPTION>

NAME AND ADDRESS OF SHARES OWNED PERCENTAGE OF CLASS
BENEFICIAL OWNER BENEFICIALLY BEFORE OFFERING AFTER OFFERING(1)
- ---------------- ------------ --------------- -----------------
<S> <C> <C> <C>
Douglas H. MacGarvey 1,598,000(2) 46.4 41.8
c/o RTC Cruises, Ltd.
1390 South Dixie Highway
Suite 2114
Coral Gables, FL 33146

Thomas G. Rader 1,598,000(2) 46.4 41.8
c/o RTC Cruises, Ltd.
1390 South Dixie Highway
Suite 2114
Coral Gables, FL 33146

24
<PAGE>

Ronald Kurtz 10,000 * *
c/o RTC Cruises, Ltd.
1390 South Dixie Highway
Suite 2114
Coral Gables, FL 33146

Albert W. Van Ness, Jr 10,000 * *
c/o RTC Cruises, Ltd.
1390 South Dixie Highway
Suite 2114
Coral Gables, FL 33146

Herbert Peintner 1,066,333(2)(3) 31.0 27.9
Moon Bay Development
P.O. Box 866
Grand Cayman, British West Indies

London Manhattan 188,000 5.5 4.9
Communications L.L.C
360 West 22nd St., Suite 16B
New York, N.Y 10011

All officers and directors as a 3,216,000(2) 93.4 84.2
group (4 persons)
<FN>

- ----------
* Represents less than one percent of the then-outstanding Common Stock.

(1) Does not take into account the conversion of the Preferred Stock into
Common Stock, but does include the 376,000 shares of Common Stock to be
issued to London Manhattan International, Ltd. at the closing of this
Offering. See "Certain Transactions-London Manhattan" and "Description
of Securities."

(2) Messrs. MacGarvey and Rader have each granted Mr. Peintner a presently
exercisable option to purchase an aggregate of 1,065,333 shares of
Common Stock owned by them. See "Certain Transactions-Officers and
Directors."

(3) Includes 1,065,333 shares of Common Stock that Mr. Peintner has the
option to acquire from Messrs. MacGarvey and Rader and 1,000 shares
of Common Stock owned by Mr. Peintner.
</FN>
</TABLE>

CERTAIN TRANSACTIONS

OFFICERS AND DIRECTORS

When the Company was formed in July 1994, 100 shares of Common Stock
were issued for nominal consideration to each of Douglas H. MacGarvey and Thomas
G. Rader. On September 11, 1996, the Company was recapitalized, which resulted
in Messrs. MacGarvey and Rader each owning 1,598,000 shares of Common Stock.

Since July 1994, Douglas H. MacGarvey has had a verbal employment
compensation arrangement with the Company, whereby he has been receiving $7,000
per month for his services as Chief Executive Officer of the Company. After the
completion of this Offering, Mr. MacGarvey's compensation will be based on a
five-year written employment agreement with the Company. For a description of
such agreement, see " Executive Compensation- Employment Agreement."

On September 11, 1996, the Company entered into a five-year consulting
agreement with Thomas G. Rader, the Vice-Chairman of the Board of the Company.
During the term of the agreement, Mr. Rader will provide such consulting
services as the Chief Executive Officer or the Board of Directors of the Company
may, from time to time, request. Such services will include all aspects of the
management and operation of the Company, including, but not limited to,
international and domestic sales and marketing, management information systems,
and strategic planning to develop the Company's business and increase revenues.
In consideration for such services, Mr. Rader will be entitled to receive annual
compensation of $100,000 payable exclusively in shares of Common Stock. The
value of the Common

25
<PAGE>

Stock will be determined by taking the average of the daily market price of the
Common Stock as reported by the exchange or over-the-counter market on which the
Common Stock may then be listed. The Company, at its expense, has agreed to
register all of the shares to be issued to Mr. Rader with the Commission.

On July 1, 1994, Thomas G. Rader, International Maritime Group, Inc., a
company owned by Douglas H. MacGarvey, the Company and Mr. MacGarvey entered
into a shareholder loan agreement, pursuant to which Mr. Rader has agreed to
advance monies to or for the benefit and use of the Company from time to time.
Mr. Rader is not obligated to loan funds to the Company and does not presently
intend to do so after the completion of this Offering. All loans made to the
Company pursuant to this agreement accrue interest at the rate of 6% per year
without compounding of interest. As of July 31, 1996, the Company has borrowed
$392,373 from Mr. Rader under the agreement. The Company may repay loans made to
it under this agreement at such time as the Company has available cash flow
after the repayment of its current obligations, the creation of adequate
reserves and taking into account any other restrictions or covenants in any bank
or other investment documents. All principal and accrued interest owed to Mr.
Rader by the Company must be repaid prior to any distribution of dividends to
the stockholders of the Company. All principal and accrued interest shall be
payable upon the demand of Mr. Rader on or after January 15, 1999.

In September 1996, Ronald Kurtz and Albert W. Van Ness, Jr., two
directors of the Company, each purchased 10,000 shares of Common Stock at a
purchase price of $.01 per share.

On September 12, 1996, Douglas H. MacGarvey and Thomas G. Rader,
executive officers, directors and the principal stockholders of the Company,
granted Herbert Peintner, a citizen of Austria and resident of the Cayman
Islands, a three-year option to purchase an aggregate of 1,065,333 shares of
Common Stock owned by Messrs. MacGarvey and Rader. The aggregate purchase price
for such shares is $5,326.68, or $.005 per share. Under the terms of the option
agreements with Mr. Peintner, the Company will not change its capital structure
without the written consent of Mr. Peintner and no shares of capital stock,
warrants or other stock rights will be issued to Mr. MacGarvey or Mr. Rader
without the written consent of Mr. Peintner. The option agreements may, at the
discretion of Messrs. MacGarvey and Rader, be extended for consecutive one year
periods.

LONDON MANHATTAN

On September 4, 1996, the Company entered into a consulting agreement
with London Manhattan Communications L.L.C., an Arizona limited liability
company ("London Manhattan (Arizona)"). The Company retained London Manhattan
(Arizona) to perform services related to strategic business matters, including,
but not limited to, short-range and long-term strategic planning, advising the
Company with respect to the recruitment and employment of key executives,
providing recommendations to the Company regarding additional services and
products to be offered by the Company, and assisting in establishing and
advising the Company with respect to shareholder meetings and shareholder
relations. In consideration for the services to be rendered to the Company by
London Manhattan (Delaware), the Company issued 188,000 shares of Common Stock
to London Manhattan (Arizona) pursuant to Rule 504 promulgated under the 1933
Act. In addition, the Company has agreed to pay London Manhattan (Arizona) a
monthly fee of $10,000, commencing after the closing of the Offering. London
Manhattan (Arizona) will be responsible for using a portion of such fee to
retain a reputable financial public relations firm to provide services for the
Company. The agreement is for an initial term of 24 months, subject to the right
of the Company to cancel the agreement on or after January 15, 1997, in the
event that this Offering is not completed. London Manhattan (Arizona) is
controlled by James V. Hackney and Christopher d'Arnaud-Taylor, who is the
brother of Geoffrey Taylor. Geoffrey Taylor controls London Manhattan
International Limited. Christopher d'Arnaud Taylor owns no stock in London
Manhattan International Limited, and his brother, Geoffrey Taylor, owns no
stock in London Manhattan (Arizona).

On September 4, 1996, the Company entered into an investment banking
agreement with London Manhattan International Ltd., a company incorporated under
the laws of the Commonwealth of the Bahamas ("London Manhattan"). Under the
agreement, London Manhattan is acting as the exclusive agent of the Company with
respect to structuring and coordinating this Offering. If this Offering is
completed, the Company has agreed to pay London Manhattan a sales commission of
10% and a nonaccountable expense allowance of 3% of the gross proceeds of this
Offering. In addition, if this Offering is completed, the Company will issue to
London Manhattan 376,000 restricted shares of Common Stock and warrants to
purchase an additional 282,000 restricted shares of Common Stock. Such warrants
are exercisable commencing six months after the closing of this Offering for a
period of 36 months from such closing. The exercise price of the warrants will
be $7.50 per share. Commencing six months from, and ending three years from, the
closing of this Offering, London Manhattan shall have the right to demand
registration with the Commission of the 282,000

26
<PAGE>

shares of Common Stock underlying the warrants. London Manhattan has agreed to
pay all costs and expenses associated with such registration, including, but not
limited to, all reasonable legal and accounting fees relating thereto.

The investment banking agreement between the Company and London
Manhattan provides for a reciprocal indemnification between the parties against
certain liabilities, including liabilities under the 1933 Act. The agreement
further provides that if this Offering is completed, London Manhattan shall have
a right of first refusal for the period of the earlier to occur of the
termination of the agreement or two years from the date of the agreement to
assist the Company in any private placement of its debt securities or equity
securities.

The Company has also granted London Manhattan, for the term of the
agreement, the right to nominate one person to serve on the Board of Directors
of the Company. London Manhattan has not named such a nominee as of the date
hereof.

None of the officers and directors of the Company has a relationship
with London Manhattan or its affiliates other than the agreements described in
this Prospectus.

The foregoing is a summary of the principal terms of the investment
banking agreement between the Company and London Manhattan and does not purport
to be complete. Reference is made to a copy of the investment banking agreement,
which is on file as an exhibit to the Registration Statement of which this
Prospectus is a part.

DESCRIPTION OF SECURITIES

The authorized capital of the Company consists of 10,000,000 shares,
par value $.00003 per share, divided into 8,600,000 shares of Common Stock and
1,400,000 shares of Preferred Stock. In accordance with the Articles of
Association of the Company, all transfers of shares of capital stock of the
Company are subject to the approval of the Board of Directors at their sole
discretion. See Risk Factor No. 25.

The following summary of the material provisions of the Company's securities
does not purport to be complete and is subject to, and qualified in its
entirety by, the provisions of the Company's Memorandum of Association and
Articles of Association, copies of which have been incorporated by reference in
this Registration Statement, of which this Prospectus forms a part.

COMMON STOCK

As of September 25, 1996, there were 3,442,000 shares of Common Stock
issued and outstanding to 37 stockholders of record.

The holders of Common Stock are entitled to one vote for each share of
record on all matters submitted to a vote of stockholders. Subject to
preferences that may be applicable to any outstanding shares of preferred stock,
the holders of Common Stock are entitled to receive ratably such dividends, if
any, as may be declared by the Board of Directors out of funds legally available
for the payment of dividends. In the event of a liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to share
ratably in all assets remaining after payment of liabilities and liquidation
preferences of any outstanding shares of Preferred Stock. Holders of Common
Stock have no preemptive rights or rights to convert their Common Stock into any
other securities. There are no redemption or sinking fund provisions applicable
to the Common Stock. All outstanding shares of Common Stock are fully paid and
are non-assessable.

PREFERRED STOCK

27
<PAGE>
The Company is authorized to issue 1,400,000 shares of convertible
redeemable preferred stock, par value $.00003 per share (the "Preferred Stock"),
as part of this Offering. The following is a summary of the principal features
of the Preferred Stock.

The Preferred Stock is entitled to a preference with respect to the
liquidation or a distribution of the assets of the Company over the Common
Stock. In the event of any such liquidation or distribution of assets, the
holders of the Preferred Stock will receive $5.00 per share of Preferred Stock
before the holders of the Common Stock receive any distribution of the Company's
assets. Except as otherwise stated herein, the rights and preferences of the
holders of the Preferred Stock are identical to the rights and preferences of
the holders of the Common Stock.

The Company has the right, at any time, to redeem all or any part of
the Preferred Stock at $7.50 per share, subject to the right of the holders of
the Preferred Stock to convert their shares of Preferred Stock into Common Stock
within seven days of receipt of the Company's notice of conversion.

The holders of the Preferred Stock have the option, during each six
months from the date that this Offering is completed, to convert up to 25% of
the shares of the Preferred Stock beneficially owned by each holder into shares
of Common Stock. In addition, all of the Preferred Stock will be automatically
converted into Common Stock two years after the closing of this Offering.

The number of shares of Common Stock, issuable upon the conversion of
Preferred Stock will be the lesser of either (a) one share of Common Stock for
each share of Preferred Stock, or (b) that number of shares determined by
multiplying the number of shares of Preferred Stock to be converted by $5.00 and
then divided by the average closing bid price of the Common Stock as quoted on
the NASDAQ system or in the over-the-counter market for the five business days
prior to the date that the certificate evidencing the Preferred Stock is mailed
to the Company's transfer agent for conversion, discounted by 20% and rounded to
the nearest whole number. In the case of an automatic conversion, the average
closing bid price of the Common Stock is determined based upon the five business
days trading price prior to the date of automatic conversion. See Risk Factor
No. 15.

Pursuant to the Company's Memorandum of Association, the Board of
Directors presently has the authority, without further action by the
stockholders, to issue up to 4,782,000 shares of Common Stock, preferred stock
with terms identical to the Preferred Stock being offered hereby, or preferred
stock upon such terms as the Board of Directors may determine in one or more
series and with the designations, powers, preferences, privileges, and relative
participating, optional or special rights and the qualifications, limitations or
restrictions thereof, including dividend rights, conversion rights, voting
rights, terms of redemption and liquidation preferences, any or all of which may
be greater than the rights of the Common Stock and the Preferred Stock offered
hereby. The Board of Directors, without action by the stockholders, can issue
undesignated preferred stock with voting, conversion or other rights that could
adversely affect the voting power and other rights of the holders of Common
Stock and the Preferred Stock offered hereby. Undesignated preferred stock could
thus be issued quickly with terms calculated to delay or prevent a change in
control of the Company or make removal of management more difficult.
Additionally, the issuance of undesignated preferred stock may have the effect
of decreasing the market price of the Common Stock, if any market should
develop, and may adversely affect the voting and other rights of the holders of
Common Stock. At present, there are no shares of undesignated preferred stock
outstanding.

CAYMAN ISLANDS MATTERS

The Cayman Islands presently impose no taxes on profit, income, capital
gains, or appreciations of the Company and no taxes are currently imposed in the
Cayman Islands on profit, income, capital gains, or appreciations of the holders
of the Company's securities or in the nature of estate duty, inheritance, or
capital transfer tax. There is no income tax treaty between the United States
and the Cayman Islands.

The Company is not subject to any governmental laws, decrees, or
regulations in the Cayman Islands which restrict the export or import of
capital, or that affect the remittance of dividends, interest or other payments
to non-resident holders of the Company's securities. The Cayman Islands does not
impose any limitations on the right of non-resident owners to hold or vote the
Company's securities. There are no exchange control restrictions in the Cayman
Islands.

SHARES ELIGIBLE FOR FUTURE SALE

Of the 3,442,000 shares of Common Stock outstanding as of the date of
this Prospectus, 246,000 shares of Common Stock were issued pursuant to Rule 504
promulgated under the 1933 Act and are therefore unrestricted and 3,196,000
shares of restricted Common Stock are deemed to have been held by affiliates of
the Company for more than two years and can be sold by such affiliates in
accordance with Rule 144. In general, under Rule 144, a person, including an
affiliate, who has beneficially owned shares of Common Stock for at least two
years is entitled to sell, within any three-month period, a number of shares
that does not exceed the greater of 1% of the total number of outstanding shares
of the same class, or if the Common Stock is quoted on NASDAQ, the average
weekly trading volume during the four calendar weeks preceding the sale. A
person who has not been an affiliate of the Company for at least three months
immediately preceding the sale and who has beneficially owned shares of Common
Stock for at least three years is entitled to sell such shares under Rule 144
without regard to any of the volume limitations described herein. No prediction
can be made as to the effect, if any, that sales of shares or the availability
of such shares will have on the market price of the Common Stock prevailing from
time to time. In addition, upon completion of this Offering, the Company will
issue to London Manhattan warrants to purchase 282,000 shares of Common Stock.
London Manhattan will have the right to demand registration of such shares. The

27
<PAGE>
Company also intends to register the 1,000,000 shares of Common Stock reserved
for issuance pursuant to the Company's 1996 Stock Option Plan. See
"Management-Stock Option Plan" and "Certain Transactions-London Manhattan." The
possibility that substantial amounts of Common Stock may be sold in the public
market may adversely affect the prevailing market prices for the Common Stock
and could impair the Company's ability to raise capital in the future through
the sale of equity securities.

28
<PAGE>

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the securities of the Company is
American Stock Transfer & Trust Company, 40 Wall Street, New York, New York
10005.

DETERMINATION OF PUBLIC OFFERING PRICE

Prior to this Offering, there has been no public market for the
Preferred Stock or the Common Stock. The initial public offering price for the
Preferred Stock and the conversion features thereof have been determined by the
Company. Among the factors considered by the Company were an analysis of the
industry in which the Company intends to be engaged, the present state of the
Company's business, the Company's financial condition, the Company's prospects,
the general condition of the securities market at the time of this Offering and
the demand for similar securities of companies engaged in the passenger cruise
business. The public offering price of the Preferred Stock does not necessarily
bear any relationship to assets, earnings, book value or other criteria of value
which may be applicable to the Company.

LEGAL MATTERS

The validity of the Preferred Stock will be passed upon by Charles
Adams, Ritchie and Duckworth, Zephyr House, Mary Street, Grand Cayman, Cayman
Islands, British West Indies. Lucio, Mandler, Croland, Bronstein & Garbett,
P.A., 701 Brickell Avenue, Suite 2000, Miami, Florida 33131 has acted as counsel
to the Company with respect to certain matters of U.S. law in connection with
this Offering. Leslie J. Croland, a stockholder in such firm, beneficially owns
1,000 shares of Common Stock. Eric J. Kaplan, P.A., 1110 Brickell Avenue,
Seventh Floor, Miami, Florida 33131, has acted as special U.S. tax counsel to
the Company with respect to the U.S. federal income tax matters set forth in
"Certain Tax Considerations."

EXPERTS

The financial statements included in this Prospectus and in the
Registration Statement have been audited by BDO Seidman, LLP, independent
certified public accountants, to the extent and for the periods set forth in
their report (which contain an explanatory paragraph regarding the Company's
ability to continue as a going concern) appearing elsewhere herein and in the
Registration Statement, and is included in reliance upon such report given
upon the authority of said firm as experts in auditing and accounting.

ADDITIONAL INFORMATION

The Company has filed with the Commission an S-1 Registration
Statement under the 1933 Act with respect to the securities offered by this
Prospectus. This Prospectus does not contain all of the information set forth in
the Registration Statement and exhibits, to all of which reference is hereby
made. Statements contained in this Prospectus as to the contents of any contract
or other document referred to are not necessarily complete. With respect to each
such contract or document filed or incorporated by reference as an exhibit to
the Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed to
be qualified in its entirety by such reference. All of such documents may be
inspected without charge at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549.

<PAGE>

RTC CRUISES, LTD.
(A DEVELOPMENT STAGE COMPANY)

CONTENTS

PAGE
----

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS..........................F-2

BALANCE SHEETS..............................................................F-3

STATEMENTS OF OPERATIONS....................................................F-4

STATEMENTS OF STOCKHOLDERS' CAPITAL DEFICIENCY..............................F-5

STATEMENTS OF CASH FLOWS....................................................F-6

SUMMARY OF ACCOUNTING POLICIES..............................................F-7

NOTES TO FINANCIAL STATEMENTS...............................................F-9

F-1

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of RTC Cruises, Ltd.
(A Development Stage Company)
Miami, Florida

We have audited the accompanying balance sheets of RTC Cruises, Ltd., (a
development stage company) as of May 31, 1996 and 1995, and the related
statements of operations, stockholders' capital deficiency and cash flows for
the year ended May 31, 1996, the period from July 5, 1994 (incorporation) to May
31, 1995 and for the cumulative period from July 5, 1994 (incorporation) to May
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of RTC Cruises, Ltd., at May 31,
1996 and 1995, and the results of its operations and its cash flows for the year
ended May 31, 1996, the period from July 5, 1994 (incorporation) to May 31, 1995
and for the cumulative period from July 5, 1994 (incorporation) to May 31, 1996
in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. The Company is a development stage enterprise.
As discussed in Note 1 to the financial statements, the Company's operating
losses since inception, negative working capital and stockholders' capital
deficiency raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans concerning these matters are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.

BDO Seidman, LLP

Miami, Florida
August 26, 1996, except for Note 5
which is as of October 10, 1996

F-2

<PAGE>

RTC CRUISES, LTD.
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

AUGUST 31, MAY 31, MAY 31,
1996 1996 1995
---------- --------- ----------
ASSETS (UNAUDITED)
<S> <C> <C>

CURRENT
Employee advance $ -- $ 1,000 100

DEPOSITS 650 650 650
--------- --------- ----------
$ 650 $ 1,650 750
========= ========= ==========

LIABILITIES AND STOCKHOLDERS' CAPITAL DEFICIENCY

CURRENT LIABILITIES
Accrued interest $ 27,569 $ 20,825 4,773

LOANS FROM RELATED PARTIES (Note 3) 382,712 342,034 166,050
--------- --------- ----------
TOTAL LIABILITIES 410,281 362,859 170,823
--------- --------- ----------
STOCKHOLDERS' CAPITAL DEFICIENCY (Notes 4 and 5)
Preferred stock, $.00003 par value; 1,400,000
authorized; none issued -- --
Common stock, $.00003 par value; 8,600,000 shares
authorized; 3,196,000 shares outstanding 100 100 100
Additional paid-in capital 2,872 2,872 2,872
Deficit accumulated during the development stage (412,603) (364,181) (173,045)
--------- --------- ----------
Total stockholders' capital deficiency (409,631) (361,209) (170,073)
--------- --------- ----------
$ 650 $ 1,650 750
========= ========= ==========
</TABLE>

SEE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AND NOTES TO FINANCIAL STATEMENTS.

F-3

<PAGE>

<TABLE>
<CAPTION>
RTC CRUISES, LTD.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS
(UNAUDITED WITH RESPECT TO THE THREE-MONTHS
ENDED AUGUST 31, 1996 AND 1995)

FOR THE PERIOD
FROM JULY 5, 1994 CUMULATIVE FROM
FOR THE THREE YEAR (INCORPORATION) JULY 5, 1994
MONTHS ENDED AUGUST 31, ENDED TO (INCORPORATION)
----------------------- MAY 31, MAY 31, TO AUGUST 31,
1996 1995 1996 1995 1996
----------- ---------- ----------- ----------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING EXPENSES:
Management fees (Note 3) 24,000 20,775 $ 81,826 $ 78,392 $ 184,218
General and administrative 9,885 6,052 26,126 32,153 68,164
Legal fees 3,500 22,000 22,000 27,912 53,412
Consulting fees 2,217 1,326 11,824 25,312 39,353
Interest (Note 3) 6,743 3,261 16,053 4,773 27,569
Rent (Note 3) 2,077 2,076 8,307 4,503 14,887
Expenses from offerings not completed -- 25,000 25,000 -- 25,000
---------- ---------- ----------- ----------- -----------
Total expenses 48,422 80,490 191,136 173,045 412,603
---------- ---------- ----------- ----------- -----------
NET LOSS, representing deficit
accumulated during the development
stage $ (48,422) $ (80,490) $ (191,136) $ (173,045) $ (412,603)
========== ========== =========== =========== ===========
Weighted average
number of common
shares outstanding 3,435,944 3,435,944 3,435,944 3,435,944 --
---------- ---------- ----------- ----------- -----------
Net loss per common share $ (.01) $ (.02) $ (.06) $ (.05) --
========== ========== =========== =========== ===========
</TABLE>

SEE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AND NOTES TO FINANCIAL STATEMENTS.

F-4

<PAGE>

<TABLE>
<CAPTION>
RTC CRUISES, LTD.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF STOCKHOLDERS' CAPITAL DEFICIENCY
(UNAUDITED WITH RESPECT TO THE THREE-MONTHS
ENDED AUGUST 31, 1996 AND 1995)

DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE
-------------------------- PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
--------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Initial capitalization (Note 4(a)) 3,196,000 $ 100 $ -- $ -- $ 100
Capital contribution (Note 4(b)) -- -- 2,872 -- 2,872
Net (loss) -- -- -- (173,045) (173,045)
--------- --------- --------- --------- ---------

Balance at May 31, 1995 3,196,000 100 2,872 (173,045) (170,073)
NET (LOSS) -- -- -- (191,136) (191,136)
--------- --------- --------- --------- ---------

Balance AT MAY 31, 1996 3,196,000 $ 100 $ 2,872 $(364,181) $(361,209)
NET (LOSS) (UNAUDITED) -- -- -- (48,422) (48,422)
--------- --------- --------- --------- ---------
Balance AT AUGUST 31, 1996 3,196,000 $ 100 $ 2,872 $(412,603) $(409,631)
========= ========= ========= ========= =========
</TABLE>

SEE ACCOMPANYING SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES AND NOTES TO FINANCIAL STATEMENTS.

F-5

<PAGE>

RTC CRUISES, LTD.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS
(UNAUDITED WITH RESPECT TO THE THREE-MONTHS
ENDED AUGUST 31, 1996 AND 1995)

FOR THE PERIOD
FROM JULY 5, 1994 CUMULATIVE FROM
THREE MONTHS ENDED YEAR (INCORPORATION) JULY 5, 1994
AUGUST 31, ENDED TO (INCORPORATION)
---------------------- MAY 31, MAY 31, TO AUGUST 31,
1996 1995 1996 1995 1996
--------- --------- ------- ----------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
NET LOSS $ (48,422) (80,490) $(191,136) $(173,045) $(412,603)

Adjustments to reconcile net loss to cash
flows (used) in operating activities:
Compensation through issuance of stock -- -- 100 100
Increase in employee advance 1,000 (6,900) (900) (100) --
Increase in deposits -- -- (650) (650)
Increase in accrued interest 6,744 3,261 16,052 4,773 27,569
--------- --------- --------- --------- ---------
Net cash (used) in operating activities (40,678) (84,129) (175,984) (168,922) (385,584)
--------- --------- --------- --------- ---------
FINANCING ACTIVITIES:
Loans from related parties 40,678 87,400 175,984 166,050 382,712
Contributions to capital -- -- -- 2,872 2,872
--------- --------- --------- --------- ---------
Net cash provided by financing activities 40,678 87,400 175,984 168,922 385,584
--------- --------- --------- --------- ---------
Net increase in cash -- 3,270 -- -- --
Cash, beginning of period -- -- -- -- --
--------- --------- --------- --------- ---------
Cash, end of period $ -- $ 3,270 $ -- $ -- $ --
========= ========= ========= ========= =========
</TABLE>

SEE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AND NOTES TO FINANCIAL STATEMENTS.

F-6

<PAGE>

RTC CRUISES, LTD.
(A DEVELOPMENT STAGE COMPANY)

SUMMARY OF ACCOUNTING POLICIES
(UNAUDITED WITH RESPECT TO THE THREE-MONTHS
ENDED AUGUST 31, 1996 AND 1995)

ORGANIZATION AND
BUSINESS

RTC Cruises, Ltd., was originally incorporated in 1994, in the state of Florida
and continued in the Cayman Islands, British West Indies in August 1996 . The
Company was organized for the purpose of developing and marketing a passenger
cruise vessel in French Polynesia. Since inception, the Company's efforts have
been devoted to the development of its principal product and raising capital.
The Company has not received any revenues from the sale of its services.
Accordingly, through the date of these financial statements, the Company is
considered to be in the development stage and the accompanying financial
statements represent those of a development stage enterprise.

ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.

INCOME TAXES

The Company has incurred losses since inception and accordingly has not provided
for income taxes.

NET LOSS PER
COMMON SHARE

Net loss per common share is based on the weighted average number of shares of
common stock outstanding, as adjusted, for the effects of the application of
Securities and Exchange Commission Staff Accounting Bulletin (SAB) No. 83.
Pursuant to SAB No. 83, common stock issued by the Company at a price less than
the contemplated public offering price is treated as outstanding for all periods
presented.

F-7

<PAGE>

RTC CRUISES, LTD.
(A DEVELOPMENT STAGE COMPANY)

SUMMARY OF ACCOUNTING POLICIES
(UNAUDITED WITH RESPECT TO THE THREE-MONTHS
ENDED AUGUST 31, 1996 AND 1995)

FUTURE ACCOUNTING
PRONOUNCEMENTS

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 121 "Accounting for Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS No.
121"). SFAS No. 121 requires, among other things, impairment loss of assets to
be held and gains or losses from assets that are expected to be disposed of be
included as a component of income from continuing operations before taxes on
income. The Company has adopted SFAS No. 121 as of June 1, 1995 and its
implementation did not have a material effect on the financial statements.

In October 1995, FASB issued SFAS No. 123 "Accounting for Stock Based
Compensation." SFAS No. 123 established a fair value method for accounting for
stock-based compensation plans. The Company will apply the provisions of SFAS
No. 123 involving any transaction for stock-based compensation.

F-8

<PAGE>

RTC CRUISES, LTD.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED WITH RESPECT TO THE THREE-MONTHS
ENDED AUGUST 31, 1996 AND 1995)

1. GOING CONCERN
AND LIQUIDITY

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. This basis of accounting contemplates the
recovery of the Company's assets and the satisfaction of its liabilities in the
normal course of operations. Through August 31, 1996, the Company has incurred
losses totalling $412,603 and at August 31, 1996 has negative working capital
and a stockholders' capital deficit. As of August 31, 1996 and May 31, 1996 and
May 31, 1995 the Company has had no cash balances and has been dependent
substantially upon obtaining funds from a principal shareholder of the Company
(note 3). Continuance of such funding for operations of the Company from this
principal shareholder of the Company will be necessary until such time, if any,
as the Company is successful from the "best efforts" basis, of a public offering
of the preferred stock. These matters raise substantial doubt regarding the
Company's ability to continue as a going concern, and the financial statements
do not include any adjustments that may result from the outcome of this
uncertainty. The Company's ability to continue as a going concern and,
ultimately, complete its development activities operations is dependent upon
obtaining additional financing and successfully completing the development of
its product. As discussed in Note 5, the Company has entered into an agreement
with an investment banker, on a "best efforts" basis, for a public offering (the
"Offering") of preferred stock. The net proceeds of this Offering are expected
to be sufficient to finance the Company's currently contemplated operations for
a period of approximately six months from the date the Company obtains a
passenger cruise vessel and is required to commence charter payments. Because a
substantial amount of the net proceeds of this Offering will not be used until
the summer of 1997, the Company believes that such proceeds, along with
anticipated cashflow from operations (including advance ticket reservations and
prepaid ticket sales) will be sufficient to meet its expected cash requirements
for at least 12 months following the consumation of this Offering. Should the
Company's cruise line operations not generate adequate revenues to cover
operating expenses the Company will be required to obtain additional financing.
However, there can be no assurance that the Company will not encounter
substantial delays and unexpected expenses relating to research, development,
production and marketing or other unforeseen difficulties, which may cause the
Company to require additional funding to accomplish its business plan. Further,
there is no assurance that such funding will be readily available to the
Company.

2. INCOME TAXES

At May 31, 1996, the Company has temporary differences relating to the basis
differentials in the carrying amounts, substantially pertaining to start up
costs and accrued interest on related party loans, for financial reporting and
income tax purposes aggregating approximately $364,000.

Realization of any portion of the approximate $137,000 deferred tax assets
arising from the available temporary differences, is not considered more likely
than not and, accordingly, a valuation allowance has been established for the
full amount of such asset.

Effective August 1996, the Company will be governed under the laws of the Cayman
Islands, British West Indies, and will be considered a foreign corporation for
purposes of U.S. taxation.

F-9

<PAGE>

RTC CRUISES, LTD.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED WITH RESPECT TO THE THREE-MONTHS
ENDED AUGUST 31, 1996 AND 1995)

3. RELATED PARTY
TRANSACTIONS

All of the Company's borrowings are from a principal shareholder of the Company.
The loan bears interest at 6% and is payable at such time as the Company has
available cash flow after the repayment of its current obligations, or after
January 15, 1999, on demand. It is not practical to determine the fair value of
the loan since it is a related party payable.

The office space occupied by the Company is leased in the name of an affiliated
company. The Company is not liable under the terms of the lease but fully
reimburses the affiliate for all expenditures incurred under the lease; such
amounts approximate $700 a month. The lease expires April 1997.

The Company intends to charter for five years, a passenger cruise vessel and
purchase meals from affiliated companies that are owned by the Company's
principal shareholders. The Company anticipates that the charter fees will
approximate $10,000 to $15,000 a day. In addition, the Company will be required
to obtain a $2 million letter of credit in favor of this affiliate to cover six
months of charter payments.

The Company has a verbal management agreement with a related Company owned by an
officer-shareholder to provide the services of a chief executive officer to the
Company. The term of the agreement is for the period in which the Company is in
the development stage. Under the terms of the agreement, the related Company is
entitled to receive $84,000 per year. (See Note 5(e)).

4. STOCKHOLDERS'
CAPITAL
DEFICIENCY

a) During 1994, the Company issued 100 shares of common stock in return for
$100 in services as the initial capitalization of the Company. On
September 11, 1996, the Company increased its authorized capital from 100
shares, $1 par value to 10,000,000 shares, $.00003 par value and the
existing shareholders converted 100 shares of their then owned common
stock into 3,196,000 newly authorized $.00003 par value shares of common
stock. Of the 10,000,000 shares, 1,400,000 shares are $.00003 par value
preferred stock. The preferred stock is entitled to a preference with
respect to the liquidation or a distribution of the assets of the Company
over the Common Stock. In the event of any such liquidation or
distribution of assets, the holders of the Preferred Stock will receive
$5.00 per share of Preferred Stock before the holders of the Common Stock
receive any distribution of the Company's assets. The components of
stockholders' capital deficiency have been retroactively adjusted to
reflect the foregoing transaction.

b) During 1995, the Company received $2,872 in additional capital
contributions.

F-10

<PAGE>

RTC CRUISES, LTD.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED WITH RESPECT TO THE THREE-MONTHS
ENDED AUGUST 31, 1996 AND 1995)

5. SUBSEQUENT
EVENTS

a) On September 4, 1996, the Company entered into an agreement with an
investment banking firm in connection with raising equity, on a best
effort basis, through the sale of 1,400,000 shares of convertible
redeemable preferred stock, par value $.00003 per share, at a price of
$5.00 per share (Offering). Under the agreement, the investment banking
firm will act as exclusive agent of the Company with respect to
structuring and coordinating the Offering. If this Offering is completed,
the Company will raise $7,000,000 and has agreed to pay a 10% sales
commission and a 3% non-accountable expense allowance ($910,000) of the
proceeds raised to the investment banking firm and issue the investment
firm 376,000 shares of common stock plus warrants to purchase an
additional 282,000 shares of common stock at $7.50 per share.

b) On September 4, 1996, the Company entered into an agreement to
retain the services of a consulting company, which is owned by the brother
of the owner of the investment banking firm referred to in 5(a) above, to
perform services related to strategic business matters. In consideration
for the services rendered, the consulting company was issued 188,000
shares of common stock. In addition, the Company has agreed to pay the
consulting company a monthly fee of $10,000 commencing on the 10th day
following the closing of the Offering. The agreement is for an initial
term of 24 months, subject to the right of the Company to cancel the
agreement on or after January 15, 1997, in the event that the Offering is
not completed.

c) In September 1996, the Company sold 30,000 shares of $.00003 par value,
common stock for $1.00 per share.

d) In September 1996, the Company sold 28,000 shares of $.00003 par value,
common stock for $.01 per share to certain officers and directors of the
Company.

e) On September 11, 1996, the Company entered into a five year employment
agreement with a principal shareholder, who is also the Company's Chairman
of the Board and Chief Executive Officer, which will become effective upon
the closing of the Offering. The agreement

F-11

<PAGE>

RTC CRUISES, LTD.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED WITH RESPECT TO THE THREE-MONTHS
ENDED AUGUST 31, 1996 AND 1995)

will continue for successive five year terms, unless cancelled by either
party. Under the agreement, he will receive a base salary of $200,000,
which will increase annually based upon increases in the consumer price
index. The Company will be obligated to pay quarterly bonuses in an amount
equal to 3% of the Company's quarterly operating income (as defined). In
addition, he will be provided an automobile expense allowance of $600 per
month.

On the same date, the Company entered into a five year consulting
agreement with another of its principal shareholders who is also Vice
Chairman of the Board, which will become effective upon the closing of the
Offering. The agreement will continue for successive five year terms,
unless cancelled by either party. During the term of the agreement, the
consultant will be entitled to annual compensation of $100,000, payable
exclusively in shares of the Company's common stock.

f) In September 1996, the Board of Directors of the Company adopted the
Company's 1996 Stock Option Plan (the "Plan"). The Plan provides for the
grant by the Company of options to purchase up to an aggregate of
1,000,000 of the Company's common stock (subject to adjustment in certain
cases including stock splits, recapitalizations and reorganizations) to
officers, directors, consultants, and other persons rendering services to
the Company. Options granted may be either "incentive stock options,"
within the meaning of Section 422A of the Internal Revenue Code, or
non-qualified options. No options have been issued under the Plan.

The purposes of the Plan are to provide incentives to employees, including
officers, directors and consultants of the Company, to encourage such
persons to remain in the employ of the Company and to attract to the
Company persons of experience and ability. The Plan terminates on April
15, 2006.

g) On October 10, 1996, the shareholders adopted a special resolution that
changed the preferred stock conversion rights so that the number of shares
of Common Stock issuable upon the conversion will be the lesser of either
(a) one share of Common Stock for each share of Preferred Stock, or (b)
that number of shares determined by multiplying the number of shares of
Preferred Stock to be converted by $5.00 and then divided by the average
closing bid price of the Common Stock (as defined) discounted by 20%.

F-12

<PAGE>

RTC CRUISES, LTD.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED WITH RESPECT TO THE THREE-MONTHS
ENDED AUGUST 31, 1996 AND 1995)

6. CONTINGENCY

The Company has not yet received its license from the Government of French
Polynesia to operate a passenger cruise vessel in French Polynesia. However, the
Company has received a commitment from the Government of French Polynesia to
license the Company to operate a passenger cruise vessel in French Polynesia for
a period of five years from the commencement of the Company's operations, if the
Company complies with certain conditions including, but not limited to,
providing a minimum of 12 jobs for local residents, training a minimum of three
local residents per year, promoting local entertainment and activities companies
through information made available aboard the Company's vessel, and buying
approximately $512,000 of products locally. Although the Company believes that
it will be able to comply with all conditions precedent to the issuance of a
license to operate in French Polynesia, there can be no assurances that such
license will ultimately be issued to the Company, or if the license is issued,
that it can be renewed on terms satisfactory to the Company.

F-13

<PAGE>

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY
OTHER THAN THE SECURITIES OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE ANY
IMPLICATION THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO ITS DATE.

-------------

TABLE OF CONTENTS

PAGE
----
Prospectus Summary...........................................................3
Selected Financial Data..................................................... 4
Risk Factors.................................................................5
Use of Proceeds.............................................................11
Dilution....................................................................11
Management's Discussion and Analysis of Financial Condition.................12
Proposed Business...........................................................13
Certain Tax Consideration................................................. 18
Management..................................................................22
Executive Compensation......................................................23
Principal Stockholders......................................................24
Certain Transactions........................................................25
Description of Securities...................................................27
Legal Matters...............................................................29
Experts.....................................................................29
Additional Information ................................................... 29
Index to Financial Statements..............................................F-1

-------------

Until __________________, 1996 (25 days after the date of this Prospectus),
all broker-dealers effecting transactions in the registered securities, whether
or not participating in this distribution, may be required to deliver a
Prospectus. This is in addition to the obligation of dealers to deliver a
Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.

1,400,000 SHARES
OF CONVERTIBLE REDEEMABLE
PREFERRED STOCK

RTC CRUISES, LTD.

-----------------
PROSPECTUS
-----------------

_________________, 1996

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Expenses in connection with the issuance and distribution of the
securities being registered will be borne by the Registrant and are estimated as
follows:

Securities and Exchange Commission registration fee....... $ 2,413.80
NASDAQ filing fee ........................................ $10,000.00
Legal fees and expenses................................... $50,000.00
Blue Sky expenses......................................... $ 1,500.00
Accounting fees and expenses.............................. $17,000.00
Printing fees............................................. $ 3,000.00
Transfer Agent's fees..................................... $ 2,000.00
Miscellaneous............................................. $ 4,000.00

Total.............................................. $89,913.80*

* All amounts except the Commission registration fee are estimated.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

ITEM 15. RECENT SALE OF UNREGISTERED SECURITIES.

Described below is information regarding all securities that have been
issued by the Company since its incorporation:

When the Company was incorporated in July 1994, Douglas H. MacGarvey
and Thomas G. Rader were each issued, for nominal consideration, 100 shares of
the Company's common stock. In September 1996, the Company was recapitalized and
each of the 100 shares issued to Messrs MacGarvey and Rader were converted into
1,598,000 shares of Common Stock. These transactions were considered exempt from
the registration requirements of the 1933 Act under Section 4(2) of the 1933 Act
since the transactions did not involve any public offering.

Pursuant to Rule 504 promulgated under the 1933 Act, the Company in
September 1996 sold 30,000 shares of Common Stock to 30 persons for $1.00 per
share, 28,000 shares of Common Stock to four persons for $.01 per share and
188,000 shares to London Manhattan Communications L.L.C. for strategic business
services to be provided over a two-year period under a consulting agreement.

II-1

<PAGE>

ITEM 16. EXHIBITS.

EXHIBIT DESCRIPTION
- ------- ----------
<S> <C>
3.1 Memorandum of Association.*

3.2 Articles of Association.*

4.1 Form of Preferred Stock certificate.

4.2 Form of Common Stock certificate.

5 Opinion and Consent of Charles Adams, Ritchie and Duckworth.**

8 Opinion and Consent of Eric J. Kaplan, P.A.

10.1 Employment Agreement, dated September 11, 1996, between the Company and Douglas H. MacGarvey.*

10.2 Consulting Agreement, dated September 4, 1996, between the Company and Thomas G. Rader.*

10.3 Shareholder Loan Agreement, dated July 1, 1994, among Thomas G. Rader, International Maritime
Group, Inc., the Company and Douglas H. MacGarvey.*

10.4 Stock Purchase Option, dated September 12, 1996, between Douglas H. MacGarvey and Herbert
Peintner.*

10.5 Stock Purchase Option, dated September 12, 1996, between Thomas G. Rader and Herbert Peintner.*

10.6 Consulting Agreement, dated September 4, 1996, between the Company and London Manhattan
Communications L.L.C.*

10.7 Investment Banking Agreement, dated September 4, 1996, between the Company and London Manhattan
International Limited ("London Manhattan International").*

10.8 Form of Warrant to be issued to London Manhattan International pursuant to Exhibit 10.7 hereof.*

10.9 Form of Escrow Agreement to be entered into between the Company and the Escrow Agent.**

10.10 1996 Stock Option Plan and Forms of Stock Option Agreements.*

10.11 Decree from the President of the Government of French Polynesia regarding License for the Company
and Letter from the Head of the Tourism Department.*

23 Consent of BDO Seidman, LLP

24 Power of Attorney*

27 Financial Data Schedule. (For SEC purposes only).
<FN>
- ---------------------
*Previously filed with the Registration Statement.
**To be filed by amendment to the Registration Statement.
</FN>
</TABLE>

II-2

<PAGE>

ITEM 17. UNDERTAKINGS.

(a) The Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;

provided, however, that paragraphs (a) (1) (i) and (a) (1) (ii) hereof do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.

(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in that Act and will be governed by the final adjudication
of such issue.

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-3

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Amendment No. 2 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Miami, State of Florida, on November 27, 1996.

Registrant: RTC CRUISES, LTD.

By: /s/ DOUGLAS H. MACGARVEY
----------------------------
Douglas H. MacGarvey
Chief Executive Officer

In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.

SIGNATURE TITLE DATE
- --------- ----- ----
/s/ DOUGLAS H. MACGARVEY Chairman of the Board, November 27, 1996
- ------------------------------ Chief Executive Officer,
Douglas H. MacGarvey and Secretary (principal
executive, financial
and accounting officer)

/s/ * Vice Chairman of the Board November 27, 1996
- ------------------------------ and Treasurer
Thomas G. Rader

/s/ * Director November 27, 1996
- ------------------------------
Ronald Kurtz

/s/ * Director November 27, 1996
- ------------------------------
Albert W. Van Ness, Jr.

/s/ DOUGLAS H. MACGARVEY
- ------------------------------
*By: Douglas H. MacGarvey
Attorney-in-Fact

II-4

<PAGE>

INDEX TO EXHIBITS

NUMBER DESCRIPTION
- ------ -----------

4.1 Form of Common Stock Certificate.

4.2 Form of Preferred Stock Certificate.

8 Opinion and Consent of Eric J. Kaplan, P.A.

23 Consent of BDO Seidman, LLP.

27 Financial Data Schedule. (For SEC purposes only).

EXHIBIT 4.1

NUMBER RTC CRUISES, LTD. SHARES

INCORPORATED UNDER THE LAWS OF THE CAYMAN ISLANDS

COMMON STOCK

THIS CERTIFIES THAT CUSIP G7703Q 10 0

is the registered holder of

FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK,
PAR VALUE $.00003 PER SHARE, OF

RTC CRUISES, LTD.

(the "Corporation") transferable only on the books of the Corporation by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Certificate properly endorsed.

This Certificate and the shares represented hereby are issued and
subject to all of the provisions of the Memorandum of Association and Articles
of Association of the Corporation, and all amendments thereto, to all of which
the holder, by the acceptance hereof, assents.

This Certificate is not valid unless countersigned by the Transfer
Agent.

Witness the facsimile Seal of the Corporation and the facsimile
signatures of its duly authorized officers and directors.

Dated: RTC CRUISES, LTD.
CORPORATE SEAL
FLORIDA

Secretary Director

COUNTERSIGNED AND REGISTERED:

AMERICAN STOCK TRANSFER & TRUST COMPANY
(NEW YORK, NEW YORK)

TRANSFER AGENT AND REGISTRAR

BY
--------------------------------------------
AUTHORIZED SIGNATURE

<PAGE>

RTC CRUISES, LTD.

The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>

<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT -_______ Custodian _______
(Cust) (Minor)

TEN ENT - as tenants by the entireties under Uniform Gifts to Minors

JT TEN - as joint tenants with right of Act _______________________________
of survivorship and not as tenants (State)
in common
</TABLE>

Additional abbreviations may also be used though not in the
above list.

FOR VALUE RECEIVED, _______________________ HEREBY SELL, ASSIGN AND
TRANSFER UNTO

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

[ ]

_____________________________________________________________________
Please print or typewrite name and address of assignee

______________________________________________________________ SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY
CONSTITUTE AND APPOINT________________________________________________
TO TRANSFER THE SAID SHARES ON THE BOOKS OF THE WITHIN-NAMED
CORPORATION WITH FULL

POWER OF SUBSTITUTION IN THE PREMISES.

DATED: __________________________________

SIGNATURE GUARANTEED

____________________________________

______________________________________________________________________
NOTICE: The signature to this assignment must correspond with the name
as written upon the face of the certificate in every particular without
alteration or enlargement or any change whatever.

IMPORTANT: SIGNATURE(S) MUST BE GUARANTEED BY A COMMERCIAL BANK OR
TRUST COMPANY OR A MEMBER FIRM OF THE AMERICAN STOCK EXCHANGE, NEW YORK
STOCK EXCHANGE, PACIFIC STOCK EXCHANGE, OR MIDWEST STOCK EXCHANGE.

EXHIBIT 4.2

RTC
NUMBER RTC CRUISES, LTD. SHARES

INCORPORATED UNDER THE LAWS OF THE CAYMAN ISLANDS
CONVERTIBLE REDEEMABLE
PREFERRED STOCK,
PAR VALUE $.0003 PER SHARE

CUSIP G7703Q 20 9

THIS CERTIFIES THAT

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF THE CONVERTIBLE REDEEMABLE
PREFERRED STOCK, PAR VALUE $.00003 PER SHARE ("PREFERRED STOCK"), OF
RTC CRUISES, LTD. (thereinafter called the "Corporation") transferable only on
the books of this Corporation by the holder hereof in person or by attorney,
upon surrender of this Certificate properly endorsed. This Certificate is issued
by the Corporation subject to all the terms and conditions pertaining to the
Preferred and Common Stocks of the Corporation contained in its Memorandum of
Association and Articles of Association, each as amended, copies of which are in
the office of the Corporation, to which reference is hereby made. This
Certificate is not valid until countersigned and registered by the transfer
agent and registrar.
Witness the facsimile Seal of the Corporation and the facsimile
signatures of its duly authorized officers and directors.

Dated: RTC CRUISES, LTD. RTC CRUISES, LTD.
CORPORATE SEAL
FLORIDA

Secretary Director

COUNTERSIGNED AND REGISTERED:

AMERICAN STOCK TRANSFER & TRUST COMPANY
(NEW YORK, NEW YORK)
TRANSFER AGENT AND REGISTRAR

BY __________________________________________
AUTHORIZED SIGNATURE

<PAGE>

RTC CRUISES, LTD.

<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT -_______ Custodian _______
(Cust) (Minor)

TEN ENT - as tenants by the entireties under Uniform Gifts to Minors

JT TEN - as joint tenants with right of Act ______________________________
of survivorship and not as tenants (State)
in common
</TABLE>

Additional abbreviations may also be used though not in the
above list.

FOR VALUE RECEIVED, _________________HEREBY SELL, ASSIGN AND TRANSFER
UNTO

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

[ ]

______________________________________________________________________
Please print or typewrite name and address of assignee

_______________________________________________________________ SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY
CONSTITUTE AND APPOINT______________________________________________ TO
TRANSFER THE SAID SHARES ON THE BOOKS OF THE WITHIN-NAMED CORPORATION
WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.

DATED: _____________________________________

SIGNATURE GUARANTEED

________________________________________

November 18, 1996

Board of Directors
RTC Cruises, Ltd.
1300 South Dixie Highway
Building II, Suite 2114
Coral Gables, Florida 33146

RE: TAX OPINION

Dear Sirs:

You have requested the opinion of the undersigned with regard to the
possible United States tax consequences of your planned cruise line.

The facts upon which this opinion are based are as set forth in the
Registration Statement (the "Registration Statement") on Form S-1 (SEC File No.
333-12769) filed with the Securities and Exchange Commission in connection with
the planned public sale of shares in RTC Cruises, Ltd. (the "Company"). This
opinion is based on the Internal Revenue Code of 1986 as amended (IRC), the
Regulations issued thereunder, and relevant court decisions and Internal Revenue
Service pronouncements through the date of this letter. If the facts should
materially change from those upon which this letter is based, or if there should
be a change in the law after the date hereof, this letter would have to be
reviewed in light of such changes for its continued accuracy.

Subject to the above, it is the opinion of the undersigned that:

1. It is unlikely that the Company will be subject to direct US
corporate taxation on the income earned by it from its cruise operations in
Tahiti.

2. Unless the Company is a Controlled Foreign Corporation ("CFC"),
as that term is defined in IRC Section 957, no part of its earnings will be
includable in the income of any US citizen or resident shareholder until those
earnings are distributed as a dividend, or until the shares are sold or
otherwise disposed of by the shareholder.

<PAGE>
RTC CRUISES, LTD
PAGE TWO
NOVEMBER 18, 1996

3. If the Company is a CFC, those rules as set out in the "Tax
Status of the Company" risk factors of the Registration Statement will apply to
any US shareholder (as that term is defined in the Internal Revenue Code) in the
company.

4. The rules concerning Passive Foreign Investment Companies
(PFIC"s) will apply to the Company unless the Company can qualify for the
exception described in IRC Section 1297(b)(2). If the Company is a PFIC, those
rules as set out in the "Tax Status of the Comapny" risk factors of the
Registration Statement will apply to any US citizen or resident owner of shares
in the Company.

Since the applicability of the CFC rules and PFIC rules depend on facts
and circumstances that will not occur until after the date hereof, no opinion is
expressed by the undersigned as to whether the Company will be considered to be
either a Controlled Foreign Corporation of a Passive Foreign Investment Company.

The undersigned consents to the use of this opinion as an Exhibit to the
Registration Statement and to the reference to this firm in the Prospectus under
the headings "Certain Tax Considerations" and "Legal Matters".

Sincerely,

ERIC J. KAPLAN, P.A.

By: /s/ ERIC J. KAPLAN
-----------------------------------
Eric J. Kaplan, for the firm

EJK/mh

EXHIBIT 23

CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS

RTC Cruises, Ltd.
Miami, Florida

We hereby consent to the use in the Prospectus constituting a part of
this Registration Statement of our report dated August 26, 1996 (except for Note
5 which is as of October 10, 1996), relating to the financial statements of RTC
Cruises, Ltd., which is contained in that Prospectus. Our report contains an
explanatory paragraph indicating that there exists substantial doubt about the
Company's ability to continue as a going concern.

We also consent to the reference to us under the caption "Experts" in
the Prospectus.

BDO Seidman, LLP

Miami, Florida
November 27, 1996

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> AUG-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 650
<CURRENT-LIABILITIES> 27,569
<BONDS> 382,712
0
0
<COMMON> 100
<OTHER-SE> (409,721)
<TOTAL-LIABILITY-AND-EQUITY> 650
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 48,422
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (48,422)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (48,422)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> 0

</TABLE>