MARINE SHUTTLE OPERATIONS INC, 424B4, 1998-12-22

MARINE SHUTTLE OPERATIONS INC
424B4, 1998-12-22
OIL & GAS FIELD SERVICES, NEC

Previous: VISTA ENERGY RESOURCES INC, 8-K, 1998-12-22

Next: RICHARDSON T O TRUST, N-1A/A, 1998-12-22

<PAGE>
THIS PROSPECTUS IS FILED
PURSUANT TO RULE 424(B)(4)
AND RELATES TO
REGISTRATION NUMBER 333-58465

PROSPECTUS

MARINE SHUTTLE OPERATIONS INC.

13,567,609 SHARES OF COMMON STOCK

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

This Prospectus relates to 13,567,609 shares (the "Selling Stockholder
Shares") of common stock, $0.001 par value per share (the "Common Stock"), of
Marine Shuttle Operations Inc., a Nevada corporation (the "Company"), which may
be offered and sold, from time to time, by the selling stockholders of the
Company named herein (the "Selling Stockholders"). The Company will not receive
any proceeds from the sale of the Selling Stockholder Shares by the Selling
Stockholders. The Common Stock currently is quoted on the OTC Bulletin Board
under the symbol "ZSUB", and is quoted under Securities No. 912836 on the
Bulletin Boards of the Berlin Stock Exchange, the Hamburg Stock Exchange, the
Dusseldorf Stock Exchange, and the Munich Stock Exchange. On December 21, 1998,
the last reported sale price of the Common Stock on the OTC Bulletin Board was
$5.50 per share.

THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" COMMENCING ON PAGE 6.

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

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

The Selling Stockholders, from time to time, depending on market conditions
and other factors, may offer and/or sell their Selling Stockholder Shares in the
over-the-counter market, or otherwise, at prices and terms then prevailing or at
prices related to the then-current market price, or in negotiated transactions.
The Selling Stockholder Shares may be sold by one or more methods including,
without limitation, (i) block trades in which a broker or dealer so engaged will
attempt to sell the Selling Stockholder Shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction; (ii)
purchases by a broker or dealer as principal and resale by such broker or dealer
for its account pursuant to this Prospectus; (iii) ordinary brokerage
transactions and transactions in which the broker solicits purchases; and (iv)
face to face transactions between sellers and purchasers without a broker or
dealer. In effecting sales, brokers or dealers engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. Such
brokers or dealers may receive commissions or discounts from the Selling
Stockholders in amounts to be negotiated. Such brokers, dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act, in connection with such sales.

The Company will bear all costs and expenses of the registration of the
Selling Stockholder Shares under the Securities Act and certain state securities
laws, other than fees of counsel for the Selling Stockholders and any discounts
or commissions payable with respect to sales of the Selling Stockholder Shares.

The date of this Prospectus is December 21, 1998
<PAGE>
[PHOTOGRAPHS]

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

The above pictures are computer-generated models of an Offshore Shuttle.
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS, INCLUDING NOTES THERETO, APPEARING
ELSEWHERE IN THIS PROSPECTUS. THIS PROSPECTUS CONTAINS FORWARD-LOOKING
STATEMENTS WHICH INVOLVE CERTAIN RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH UNDER RISK
FACTORS AND ELSEWHERE IN THIS PROSPECTUS. UNLESS THE CONTEXT OTHERWISE REQUIRES,
THE TERM "COMPANY" AS USED HEREIN INCLUDES MARINE SHUTTLE OPERATIONS INC. AND
ITS SUBSIDIARIES.

THE COMPANY
Marine Shuttle Operations Inc., through its wholly-owned Norwegian
subsidiary, Marine Shuttle Operations AS ("MSOAS"), is seeking to become a
leading player in the market for decommissioning, installing, and transporting
offshore oil and gas structures. The Company is in the development stage, has
not generated any revenues from operations, and does not expect to generate any
revenues from operations until the year 2001, at the earliest.

There are now more than 6,500 offshore oil and gas installations worldwide
located on the continental shelf of approximately 53 countries. Many different
types of installations exist, each one being uniquely designed based on the
water depth, seabed characteristics, and reservoir, wave, and current conditions
of the site of installation. Of the current installed base of structures, the
vast majority (more than 5,800) are fixed steel installations. Situated almost
exclusively in shallow (i.e., less than 75 meters) and intermediate (i.e., 75 to
200 meters) water depths, fixed steel installations are comprised of two
elements: the "topside" which contains the processing, drilling, and
accommodation facilities, and the substructure or "jacket" which consists of a
lattice-work of steel tubes and can weigh over 30,000 tons with a base dimension
of up to 120 meters. The balance of the installed base of structures includes
concrete gravity base structures (typically found in shallow and intermediate
water depths), various types of floating structures such as tension leg
platforms, floating production platforms, spars, and floating production,
storage and offloading vessels (typically situated in deep waters--i.e., more
than 200 meters), and subsea structures which include the equipment needed to
develop satellite fields and the seabed equipment associated with floating
installations. The Company believes that over the next 30 years, most of these
structures will have to be decommissioned at an estimated cost of $20 billion to
$40 billion.

The Company initially intends to concentrate its efforts on decommissioning
fixed steel structures, primarily the several hundred large steel installations
situated in intermediate water depths. Presently, the decommissioning of fixed
steel structures typically is accomplished by cutting the particular structure
into many pieces and utilizing crane ships and other support vessels to lift the
pieces onto barges or, in some instances, onto the deck of the crane ships
themselves. The cutting is necessitated by the limited lifting capabilities of
existing crane ships. Theoretically, the largest cranes are capable of lifting
objects up to 14,000 tons. Crane capacity, however, decreases as the required
outreach and/or upreach of the crane boom increases. Moreover, since the maximum
height to which a structure can be lifted is limited to the length of the crane
boom, taller structures must be cut into smaller pieces in order to clear the
barge deck. As a result, although the cutting and lifting procedure may be
adequate for small, shallow water installations, the extensive cutting and
lifting required with respect to the larger platforms in deeper waters makes
decommissioning such installations using such procedure difficult, dangerous,
expensive, and time-consuming.

Offshore Shuttle AS ("OSAS"), a majority-owned Norwegian subsidiary of the
Company, has designed a new generation of vessel (the "Offshore Shuttle") which
it believes will be capable of lifting most of the largest topsides in one piece
and also will be capable of diving partly below the water surface to remove a
complete jacket in one operation. MSOAS has entered into a license agreement
with OSAS which gives MSOAS the exclusive right to build and operate five
Offshore Shuttles, and an exclusive option

3
<PAGE>
to build and operate an additional two Offshore Shuttles thereafter. The Company
anticipates that the construction of the first Offshore Shuttle will be
completed by April, 2001, at the earliest.

The Company has formed strategic alliances to test, develop, manufacture,
and commercialize the Offshore Shuttle concept. In particular, the Company will
rely on OSAS with respect to the pre-engineering work necessary to construct the
Offshore Shuttles. In addition, MSOAS has entered into an agreement with Thyssen
Stahlunion GmbH ("TSU") with respect to the marketing of its proposed services.
TSU is a subsidiary of Thyssen AG ("Thyssen"), a conglomerate of more than 323
companies operating worldwide in numerous industries. In its fiscal year ended
September 30, 1998, Thyssen generated sales of approximately $25.5 billion with
a workforce of approximately 120,000 people. MSOAS also has entered into an
agreement with RC Consultants AS, a Norwegian engineering company with more than
330 skilled offshore engineers, with respect to its engineering and operational
activities, and has entered into an agreement with Schuller Industrieentsorgung
AG (formerly Schuller Industrieentsorgung GmbH), a German service company, with
respect to waste management, onshore dismantling, and oil pollution prevention
and cleanup. There can be no assurance that such arrangements will be
successful.

The Company was incorporated in Nevada in May 1997 under the name Geoteck
International, Inc. On May 29, 1998, it changed its name to Marine Shuttle
Operations Inc. In April, 1998, the Company acquired all of the issued and
outstanding stock of MSOAS in exchange for 7,600,000 shares of Common Stock (the
"MSOAS Exchange"). In May, 1998, the Company acquired 3,291,738 shares of OSAS
(approximately 68% of the outstanding OSAS capital stock) in exchange for
4,937,607 shares of Common Stock (the "OSAS Exchanges"). All of such shares are
being held in escrow subject to the registration statement of which this
Prospectus forms a part (the "Registration Statement") being declared effective.
On May 20, 1998, the Company entered into two agreements to acquire an
additional 686,668 shares of OSAS (approximately 14% of the outstanding OSAS
capital stock) in exchange for 1,030,002 shares of Common Stock (the "Additional
OSAS Exchanges"). Subject to the satisfaction of certain conditions precedent,
the Company anticipates that the Additional OSAS Exchanges will close soon after
the the effective date of the Registration Statement. The Company's principal
offices in the United States are located at 4410 Montrose Boulevard, Houston,
Texas 77006. Its telephone number is (713) 529-7498.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Selling 13,567,609 shares
Stockholders...............................
Common Stock Outstanding Prior to the 33,587,609 shares
Offering(1)................................
Common Stock Outstanding After the 33,587,609 shares
Offering(1)................................

NASDAQ Symbol................................ ZSUB
</TABLE>

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

(1) Assumes completion of the Additional OSAS Exchanges.

4
<PAGE>
RISK FACTORS

An investment in the Common Stock offered hereby involves a high degree of
risk and should be made only by investors who can afford the loss of their
entire investment. Prospective investors should carefully review and consider
the risks presented by the factors listed under "Risk Factors" as well as the
other information set forth in this Prospectus.

SUMMARY CONSOLIDATED FINANCIAL DATA

The following data presents for the periods indicated certain financial
information for the Company. Such data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and related notes thereto included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MAY 23, 1997
(INCEPTION)
THROUGH NINE MONTHS ENDED
DECEMBER 31, 1997 SEPTEMBER 30, 1998
------------------ ------------------
<S> <C> <C>
(UNAUDITED)
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Total costs and expenses.................................................. $ 164,931 $ 3,170,027
Net (loss)................................................................ $ (164,931) $ (3,129,338)
Net (loss) per share...................................................... $ (0.01) $ (0.13)
------------------ ------------------
------------------ ------------------
Weighted average number of common shares
outstanding............................................................. 18,931,982 24,724,762
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
(UNAUDITED)
CONSOLIDATED BALANCE SHEET DATA:
Working capital (deficiency)........................................................ $ (10,931) $ (2,401,629)
Total assets........................................................................ 9,015 22,210,921
Notes payable....................................................................... 0 2,349,510
Total liabilities................................................................... 19,946 2,567,111
Accumulated deficit................................................................. (164,931) (3,294,269)
Stockholders' equity (deficiency)................................................... (10,931) 19,643,810
</TABLE>

5
<PAGE>
RISK FACTORS

AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK AND SHOULD BE MADE ONLY BY INVESTORS WHO CAN AFFORD THE LOSS OF THEIR
ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD CAREFULLY REVIEW AND CONSIDER
THE FOLLOWING RISKS AS WELL AS THE OTHER INFORMATION SET FORTH IN THIS
PROSPECTUS.

RECENTLY ORGANIZED COMPANY; NO OPERATING HISTORY; ACCUMULATED AND WORKING
CAPITAL DEFICITS; QUALIFIED INDEPENDENT ACCOUNTANT'S REPORT; HOLDING COMPANY
STRUCTURE

The Company was incorporated in May, 1997 to serve as a holding company for
one or more unidentified operating subsidiaries. The Company has no operating
history on which an evaluation of its performance and prospects can be made, and
its proposed operations are subject to all of the risks inherent in the
establishment of a new business enterprise. To date, the Company has no
significant assets and it has not generated any revenues from operations. The
Company believes that it will not generate any revenues until 2001, at the
earliest. There can be no assurance, however, that significant revenues will
ever develop. The likelihood of the success of the Company must be considered in
light of the problems, expenses, difficulties, complications, and delays
frequently encountered in connection with a new business, particularly one that
is seeking to develop and commercialize a new product and operate in a
competitive environment.

The Company sustained a net loss of $164,931 for the period from May 23,
1997 (inception) through December 31, 1997, and $3,129,338 for the nine months
ended September 30, 1998. As of September 30, 1998, the Company had a working
capital deficit of $2,401,629 and an accumulated deficit of $3,294,269. The
Company expects to continue to incur losses through at least 2002, and there can
be no assurance that the Company will achieve profitable operations.
Accordingly, the independent accountant's report on the Company's financial
statements has an explanatory paragraph addressing the Company's ability to
continue as a going concern. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 1 of the Notes to the
Financial Statement for Marine Shuttle Operations Inc.

Marine Shuttle Operations Inc. owns all of the issued and outstanding
capital stock of MSOAS and, upon consummation of the Additional OSAS Exchanges,
will own approximately 82% of the outstanding capital stock of OSAS. Based on
this ownership structure, any dividends paid by MSOAS or OSAS to Marine Shuttle
Operations Inc. are subject to Norwegian withholding taxes and U.S. income taxes
(which can be offset to the extent of the Norwegian withholding taxes). Thus,
the amount of funds that may be distributed by such subsidiaries to Marine
Shuttle Operations Inc. for working capital, acquisitions, investments, or other
purposes will be reduced to the extent such taxes are payable.

INSUFFICIENT CAPITAL; NEED FOR FINANCING

The Company has insufficient capital to finance its proposed operating
activities or to repay the monies advanced under the Bridge Notes. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." . To address this concern, the Company intends to raise up to $15
million in a Regulation S private placement of Common Stock through Berliner
Effektenbank AG, a German investment bank. In addition, the Company has entered
into an engagement letter with MFC Merchant Bank S.A. ("MFC") pursuant to which
MFC shall act, on a best-efforts basis, as exclusive agent for the Company in
raising up to DM 215,000,000 (approximately $126,000,000) (the "MFC Financing").
As consideration for its services, MFC shall receive a fee equal to five percent
of the money raised plus DM 100,000 (approximately $60,000) per month until the
completion or termination of the MFC Financing. In addition, all of MFC's
out-of-pocket expenses shall be reimbursed, and if the Company raises the
necessary funds through another source, MFC shall receive a break-up fee equal
to the greater of $1,200,000 or 350,000 shares of Common Stock. Although the
structure of the MFC Financing has yet to be determined, the Company anticipates
that it will be principally through the issuance of government guaranteed debt.

6
<PAGE>
If funds are raised by issuing equity securities, it may result in
substantial dilution to existing stockholders. If capital is raised through a
debt financing with financial institutions, the Company would likely become
subject to restrictive covenants relating to its operations and finances. There
can be no assurance that the private placement or the MFC Financing will be
consummated on reasonable terms or at all. If either financing is not completed,
the Company may be required to significantly curtail or cease its proposed
activities.

Although the Company believes that the proceeds from the MFC Financing, if
completed, will enable it to construct the first Offshore Shuttle, no assurance
can be given in that regard. Moreover, even if the MFC Financing is consummated,
the Company's future capital requirements could vary significantly and will
depend on certain factors, many of which are not within the Company's control.
Such factors include, but are not limited to, the need for cash to fund the
construction of additional Offshore Shuttles, greater than anticipated expenses,
and longer engineering development, and construction times than now
contemplated. See "Business-Business Strategy." If the Company is successful in
completing the first Offshore Shuttle, it believes it will be able to fund the
construction of additional Offshore Shuttles from its future operating cash
flows and/or short or medium term debt financing. However, no assurance can be
given in that regard. See "Management's Discussion and Analysis of Financial
Condition and Results of Operation."

DEPENDENCE ON OSAS AND OFFSHORE SHUTTLE DESIGN

MSOAS, the Company's wholly-owned subsidiary, has entered into a license
agreement (the "License Agreement") with OSAS, the Company's majority-owned
subsidiary and the holder of all licensing and marketing rights to the Offshore
Shuttle design. Pursuant to the License Agreement, OSAS granted MSOAS the
exclusive right to build and operate five Offshore Shuttles, an exclusive option
to build and operate an additional two Offshore Shuttles thereafter, and a right
of first refusal with respect to any Offshore Shuttle licenses that OSAS may
seek to grant during a specified future period. In addition, based on functional
specifications for each Offshore Shuttle to be agreed upon by MSOAS and OSAS,
OSAS shall provide MSOAS with the pre-engineering work, including designs and
descriptions of operational procedures, necessary to construct the Offshore
Shuttles. In consideration for the licenses granted and services to be provided,
OSAS shall receive a construction fee equal to ten percent of the construction
price of each of the Offshore Shuttles, an operating fee equal to sixteen
percent of the gross profit for each contract concluded by MSOAS involving the
use of an Offshore Shuttle, and an exclusivity fee equal to one percent of the
aggregate construction price of Offshore Shuttles two through five. See
"Business-- Strategic Alliances--Offshore Shuttle AS."

The Company's operations are dependent on the rights granted to it pursuant
to the License Agreement and the work to be performed thereunder by OSAS. The
binding nature of the License Agreement is conditioned upon OSAS receiving
$2,000,000 towards the exclusivity fee by June 1, 1999 and MSOAS placing a firm
order for the first Offshore Shuttle with a construction yard by such date. The
License Agreement can be terminated by either party on written notice to the
other party in the event the other party (i) becomes insolvent or goes into
liquidation, bankruptcy, or receivership, or becomes a party to any procedure
for the settlement of its debts or any dissolution proceedings, or (ii) breaches
any term of the License Agreement and fails to remedy such default within 45
days after written notice thereof. OSAS has incurred substantial net losses from
operations since its inception, and as at September 30, 1998, had an accumulated
deficit of $2,993,692. If the conditions set forth in the License Agreement are
not satisfied, if the License Agreement is terminated, or if OSAS is unable to
perform its obligations under the License Agreement, it would have a material
adverse effect on the Company.

In addition, given OSAS's extensive knowledge of and familiarity with the
Offshore Shuttle design, the Company anticipates that it will rely on OSAS for
the provision of various other services including engineering verification,
technical support, and technical supervision of the construction and testing of
the Offshore Shuttle. If the Company is unable to negotiate acceptable
arrangements with OSAS with respect

7
<PAGE>
to such other services, or if any such arrangements are unsuccessful, the
Company could be materially adversely affected.

POTENTIAL GRANT OF OFFSHORE SHUTTLE LICENSE TO THIRD PARTY

Pursuant to the License Agreement, MSOAS has the right to build and operate
five Offshore Shuttles and an exclusive option to build and operate an
additional two Offshore Shuttles thereafter. MSOAS must place an order for the
first Offshore Shuttle by June 1, 1999. Subject, in each case, to an option to
extend the order date by twelve months upon payment of a $900,000 option
exercise fee, an order for the second Offshore Shuttle must be placed no later
than six months after successful testing of the first Offshore Shuttle, and
orders for each of the remaining three Offshore Shuttles must be placed by
December 31st of each year after the year in which the second Offshore Shuttle
is ordered. If an order is not placed on or before the required date, then for
the twelve-month period thereafter OSAS shall be entitled to grant a license to
build one Offshore Shuttle to a third party. No assurance can be given that each
Offshore Shuttle will be ordered on time or that the Company will have the
financial resources to extend a particular order date. If an Offshore Shuttle
license is granted to a third party, it could have a material adverse effect on
the Company. See "Business-- Strategic Alliances--Offshore Shuttle AS."

POTENTIAL LOSS OF RIGHTS TO OFFSHORE SHUTTLE CONCEPT

The intellectual property rights to the Offshore Shuttle concept (the
"Rights") were transferred to OSAS by Gunnar Foss and Per Bull Haugsen, the
developers of the Offshore Shuttle concept, pursuant to an Agreement Regarding
Intellectual Property dated March 31, 1998 (the "Intellectual Property
Agreement"). The Intellectual Property Agreement provides that if the License
Agreement is terminated and OSAS shall cease to actively engage in its
activities relating to the Offshore Shuttle concept, then, subject to a
six-month cure period, the Rights shall revert back to Messrs. Foss and Haugsen.
In such event, the Company would be unable to obtain any value from the future
sale or exploitation of the Rights.

SUBSTANTIAL TIME LAPSE UNTIL COMMERCIAL PRODUCT INTRODUCTION

Construction of the first Offshore Shuttle is intended to commence in April
1, 1999. The Company intends to solicit competitive bids from at least three
construction yards with the capacity and capability to build an Offshore
Shuttle. The Company anticipates that the construction of the first Offshore
Shuttle will be completed by April, 2001, at the earliest. Subject to the
receipt of financing, construction delays, market conditions, demand for the
Company's services, and other factors, construction of an additional Offshore
Shuttle is anticipated to commence in each of the four years after ordering the
first Offshore Shuttle, until a total five Offshore Shuttles are in operation.
There can be no assurance, however, as to the time required to complete such
construction efforts or that such efforts can be completed in a cost-effective
manner or at all.

Subject to market demand, performance results, and other factors, the
Company anticipates that each Offshore Shuttle will conduct one commercial
operation in its first year in service, and will perform up to three operations
in each year thereafter. In making the foregoing forecast, the Company has
assumed, among other things, that each commercial operation, including all
pre-engineering work, will take up to one year to complete, with the offshore
portion calculated to be four weeks on average. As a result, the Company does
not anticipate generating any revenues until the year 2001, at the earliest.
There can be no assurance, however, that the Company's assumptions regarding the
number of operations to be performed will prove to be accurate, or that the
Company will ever achieve commercially significant sales. To date, the Company
has not entered into any contracts for the use of its proposed services, and no
assurance can be given that any such contracts will materialize. See
"Business--Business Strategy."

8
<PAGE>
TECHNOLOGICAL RISKS

The Company believes that the technical risks associated with the Offshore
Shuttle concept have been reduced by extensive model testing and rigorous
calculations. Using a 1:50 scale model of an Offshore Shuttle, motions in
different ballast conditions were tested; ballasting/deballasting sequences were
tested without any marine object, with a 1:50 scale model of a 7,000 ton jacket,
and with a 1:50 scale model of an 8,000 ton topside; and hydrodynamics were
tested by examining the motions of the Offshore Shuttle (with and without a
marine object) in different positions and when subjected to wave forces, as well
as its towing resistance in calm water and storm. In addition, based on
engineering documentation, calculations, and model testing, Det Norske Veritas
AS, an internationally-recognized society responsible for classification and
technical inspections of merchant vessels, issued a Statement of Approval
verifying the technical feasibility of the Offshore Shuttle concept for the
transport and removal of certain offshore platform deck structures and jackets.

Despite the testing, documentation, and approval, there can be no assurance
that construction of the Offshore Shuttle will be successfully completed or
that, if constructed, the Offshore Shuttle will function properly, will be
operationally safe and environmentally friendly, or will enable the Company to
provide decommissioning, installation, and transportation services in an
effective manner or at all. In addition, it is anticipated that the Offshore
Shuttle will be equipped with an adjustable lifting frame, and specially-
prepared docking connections will be utilized during removal operations. To
date, neither the lifting frame nor the docking connections have been
engineered, and there can be no assurance such engineering will be successfully
completed. If the Company is unable to engineer the lifting frame and/or the
docking connections, it could have a material adverse effect on the Company. See
"Business--The Offshore Shuttle."

COMPETITION; TECHNOLOGICAL OBSOLESCENCE

The Company will face competition from companies which provide
decommissioning, installation, and/or transport services using cranes and
barges. In addition, several companies have offered and/or have proposed
solutions for lifting large platforms in one piece. These involve the use of
multiple barges, twin-hull tankers, split-hull tankers, and U-shaped
semi-submersibles. One such solution, known as Versatruss, is comprised of two
barges and an array of booms, rigging, and winches. The components are assembled
together to produce what is essentially a giant scissors jack. The barges are
symmetrically placed around the platform, and the booms from each barge are
placed in receptacles that have been welded to the platform deck. The barges are
pulled together sideways using winches. This causes the angle of inclination of
the booms to increase, forcing the deck upwards. The Company believes that the
utility of Versatruss and most of these other alternative solutions will be
limited to the lifting of topsides in calm waters. Although some of such lifting
systems may be capable of lifting jackets, the Company believes that the
vertical clearance limitations inherent in each of such systems will inhibit
their ability to lift the jackets onshore. Rather, the Company believes that
such systems only will be capable of towing jackets from one installation site
to another. There can be no assurance, however, that the Company's beliefs will
prove to be accurate.

Competition also may arise from vessels, processes, and/or technologies
currently in development, or developed in the future, by other companies. The
development by others of new or improved vessels, processes, or technologies may
make the services to be marketed by the Company less competitive or obsolete.

Many of the Company's current and potential competitors are likely to have
substantially greater financial, managerial, and technical resources than the
Company. There can be no assurance that the Company will be able to compete
successfully in the marketplace, if at all. See "Business--Competition."

9
<PAGE>
UNCERTAIN PROPRIETARY PROTECTION

OSAS has eight patent applications pending in Norway with respect to various
aspects of the Offshore Shuttle design and operation. Patent applications also
are pending in various other countries pursuant to the Patent Cooperation Treaty
and separately filed patent applications. There can be no assurance as to
whether patents will issue from any of OSAS's patent applications or, if issued,
as to the range or degree of protection such issued patents will afford. In
addition, no assurance can be given that others will not obtain patents claiming
aspects similar to those covered by such patent applications or patents, as the
case may be, or that such patents, if issued, will not be challenged by third
parties, invalidated, rendered unenforceable, or designed around.

Even if patents issue from such patent applications and a competitor were to
infringe thereon, the costs of enforcing such patent rights may be substantial
or even prohibitive. If OSAS chooses not to defend its patent rights, if any,
then the Company may be forced to expend substantial resources to do so. No
assurance can be given that the Company will be successful in any action for
infringement of the technology licensed to it. In addition, there can be no
assurance that the Offshore Shuttle will not infringe on the patent rights of
others, or that patents do not exist or will not be issued in the future that
would have an adverse effect on the Company's ability to manufacture or operate
the Offshore Shuttle. The Company is aware of the existence of a Norwegian
patent which claims the use of a U-shaped structure designed for removing and/or
installing topsides. Based on the opinion of Bryns Patentkontor A/S, patent
counsel to the Company, the Company believes that the Offshore Shuttle will not
infringe on this Norwegian patent because, unlike the structure covered by the
Norwegian patent, the Offshore Shuttle does not utilize movable transverse beams
mounted to its upper beams. There can be no assurance, however, that
infringement proceedings will not be brought against the Company.

The Company also may desire or be required to obtain licenses from others in
order to further develop, produce, and market the Offshore Shuttle effectively.
There can be no assurance that such licenses will be obtainable on commercially
reasonable terms, if at all, that the patents underlying such licenses will be
valid and enforceable, or that the proprietary nature of the unpatented
technology underlying such licenses will remain proprietary. In addition, the
Company relies on unpatented proprietary know-how and trade secrets, and employs
various methods including confidentiality agreements with employees, consultants
and marketing partners to protect its trade secrets and know-how. However, such
methods may not afford complete protection and there can be no assurance that
others will not independently develop such trade secrets and know-how or obtain
access thereto. See "Business-- Proprietary Protection."

DEPENDENCE ON STRATEGIC PARTNERS

The Company's strategy for testing, developing, manufacturing, and
commercializing the Offshore Shuttle concept is dependent upon forming strategic
alliances and relationships with joint venture partners, contract manufacturers,
or other third parties, and upon the subsequent success of these parties in
performing their responsibilities. In this regard, MSOAS has entered into
agreements with OSAS with respect to the rights to the Offshore Shuttle design
and the pre-engineering work necessary to construct the Offshore Shuttles,
Thyssen Stahlunion GmbH ("TSU") with respect to the marketing of its proposed
services, RC Consultants AS ("RC") with respect to its project management and
engineering and operational activities, and with Schuller Industrieentsorgung AG
(formerly Schuller Industrieentsorgung GmbH) with respect to waste management,
onshore dismantling, and oil pollution prevention and cleanup. There can be no
assurance that such arrangements will be successful. If any of these
arrangements are cancelled and/or are unsuccessful, and if the Company is unable
to secure new alliances in their place, there would be a material adverse effect
on the Company. See "Business--Strategic Alliances."

10
<PAGE>
and supply boats. The Company may seek to form strategic alliances and
relationships with third parties who provide these and other services. If the
Company is unable to negotiate acceptable arrangements, or if any of such
arrangements are unsuccessful, it could have a material adverse effect on the
Company.

NO MANUFACTURING FACILITIES OR PERSONNEL

Construction of the first Offshore Shuttle is intended to commence in April,
1999. The Company, however, does not have the ability to manufacture the
Offshore Shuttle. The Company will solicit competitive bids from at least three
construction contractors which it believes have the capacity and capability to
build an Offshore Shuttle. There can be no assurance that bids will be tendered
by capable construction contractors, or at all. In addition, if such bids are
tendered, no assurance can be given that the Company will be able to negotiate
acceptable joint venture or contract manufacturing arrangements, or that any
such arrangements will be successful.

If the Company is unable to have third parties manufacture the Offshore
Shuttle pursuant to joint venture or contract manufacturing agreements or
otherwise, or if the Company decides to manufacture the Offshore Shuttle itself,
the Company will be required to establish the necessary manufacturing facility
(which will require substantial financing) and employ and train qualified
manufacturing personnel, all of which may result in production delays. There can
be no assurance that the Company will be successful in attracting and retaining
experienced personnel or establishing the necessary manufacturing facilities or
arrangements that will enable the Company to manufacture the Offshore Shuttle in
a cost-effective manner, or at all. The failure to achieve these objectives
would have a material adverse affect on the Company. See "Business--Business
Strategy."

LIMITED MARKETING AND SALES CAPABILITIES

The Company has limited marketing and sales capabilities. If the marketing
agreement with TSU is cancelled or is unsuccessful, the Company will need to
develop a sales force and marketing group with technical expertise, or make
appropriate arrangements with other joint venture partners. There can be no
assurance that such efforts will be successful. In addition, there can be no
assurance that the Company will be able to effectively market or sell its
services through sales representatives, through arrangements with an outside
sales force, or through strategic partners. See "Business--Strategic
Alliances--Thyssen Stahlunion GmbH."

UNCERTAIN MARKET ACCEPTANCE

As with any new technology, there is the risk that the market may not
recognize the benefits or the potential applications of the Offshore Shuttle, or
any future products or technologies that may be developed by the Company. Market
acceptance of the Company's services will depend, in large part, upon the
ability of the Company to demonstrate to prospective customers the potential
advantages of the Offshore Shuttle over other types of vessels and/or
technologies performing similar functions. There can be no assurance that the
Company will be successful in marketing its services to the oil and gas industry
or other markets or that the use of the Offshore Shuttle will be embraced by the
oil and gas industry or other markets. See "Business--Strategic Alliances."

RISK OF INTERNATIONAL OPERATIONS

The Company intends to market its services in international markets.
International operations entail various risks, including economic instability
and recessions, exposure to currency fluctuations, difficulties of administering
foreign operations generally, and obligations to comply with a wide variety of
foreign laws and other regulatory requirements. A portion of the Company's
sales, if any, and expenditures may be collected or paid, as the case may be, in
currencies other than the U.S. dollar. Therefore, significant exchange rate
fluctuations could have an effect on the Company's results of operations. In
addition, the

11
<PAGE>
laws of certain foreign countries may not protect the Company's proprietary
rights to the same extent as the laws of the United States. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

DEPENDENCE ON KEY PERSONNEL

The Company's success depends to a significant extent upon the services of
Franz Eder, the President and Chairman of the Board of the Company. Mr. Eder has
entered into a two-year employment agreement with the Company which provides
that Mr. Eder shall devote only so much (but not less than 75%) of his
professional and business time, attention, and energies to his duties and
responsibilities as is reasonable to insure the Company's proper conduct. The
Company does not have, and has no current plans to obtain, key person life
insurance covering Mr. Eder or any of its other executive officers. The loss of
Mr. Eder's services could have a material adverse effect on the Company. See
"Business--Employees," and "Management."

Management believes that the future success of the Company also will depend
upon the Company's ability to attract and retain highly-skilled managerial and
technical personnel. Competition for such personnel is intense. The Company
competes for such personnel with other companies, academic institutions,
governmental entities and other organizations, some of which may have
substantially greater capital resources than the Company. There can be no
assurance that the Company will be successful in attracting and retaining such
personnel. See "Business--Employees."

SEASONALITY, WEATHER RISKS, AND OTHER FACTORS AFFECTING DEMAND

Offshore decommissioning and installation activity in the North Sea and the
North East Atlantic is highly seasonal, principally as a result of weather
conditions. Historically, the greatest demand for offshore decommissioning and
installation services in such regions has been during the period from May
through September. As a result, the Company anticipates that a disproportionate
amount of the Company's future revenues, if any, will be generated during the
second and third quarters of each year. In addition, full year results are not
likely to be a direct multiple of any particular quarter or combination of
quarters. The Company may seek to partially offset the anticipated seasonality
of its proposed operations by pursuing other potential opportunities such as
leasing the Offshore Shuttles to third parties for bridge building, drydocking
ships and floating platforms, and other uses. No assurances can be given that
such other opportunities, if successful, will result in the anticipated offset
of the seasonality of the Company's proposed operations.

Demand for the Company's proposed services also will be affected by the
level of spending by oil and gas companies for decommissioning, installation,
and other similar activities. The expenditures are influenced by the price of
oil and gas, the discovery rates of new oil and gas reserves in offshore areas,
local and international regulations and political and economic conditions, and
the oil and gas industry's access to capital.

RISK OF OPERATIONS; NO INSURANCE

The Company's proposed operations will be subject to all of the inherent
risks of offshore marine activity, including accidents, environmental mishaps,
mechanical failures, and vessels colliding, capsizing, grounding, or sinking.
These occurrences can result in significant personal injury or loss of life,
severe damage to or destruction of property and equipment, pollution or
environmental damage, and suspension of the Company's proposed operations.
Moreover, litigation arising from any such occurrence may result in the Company
being named as a defendant in lawsuits asserting large claims.

The Company intends to obtain insurance against some of these types of
risks. It also anticipates that it will be adequately protected by the insurance
policies of the companies that utilize the Company's services, and it intends to
further limit its risk by capping its liability exposure in its service
contracts with

12
<PAGE>
such companies. There can be no assurance, however, that the policies of such
companies will cover the Company or, if they do, that such insurance (or the
insurance obtained by the Company, if any) will be sufficient or effective under
all circumstances or against all hazards to which the Company may be subject. In
addition, there can be no assurance that any contractual limits on liability
will be enforceable or will adequately and effectively limit the Company's
liability exposure, or that the companies that utilize the Company's services
will nevertheless seek to be indemnified by the Company with respect to any and
all losses or damages they suffer or incur. See "Business--Insurance."

REGULATORY AND ENVIRONMENTAL MATTERS

The Company's operations may be subject to and affected by various types of
national and international regulations. Determining the applicable regulatory
framework will depend, in part, on how the Offshore Shuttles are classified
(e.g., as "ships," "vessels," "installations", etc.), whether (and if so, where)
the Offshore Shuttles are registered or documented, and where the Company's
intended operations are performed. The Company may be required to obtain certain
permits, licenses and certificates with respect to its proposed operations and
to comply with rigorous safety, workplace, and environmental standards.
Moreover, certain employees of the Company may be covered by laws that operate
to make liability limits, if any, established by state workers' compensation
laws inapplicable to these employees and permit the employees and their
representatives to pursue actions against the Company for job related injuries
with generally no limits on the Company's potential liability.

Violations of various statutes and regulations that may be applicable to the
Company's proposed operations can result in, among other things, civil
penalties, remediation expenses, monetary damages, injunctions, cease and desist
orders, and criminal penalties. Some environmental statutes impose strict
liability, rendering a person liable for environmental damage without regard to
negligence or fault on the part of such person. In addition, because such laws
and regulations are changed frequently, it is difficult for the Company to
accurately predict the cost or impact of such laws and regulations on its
planned operations. See "Business--Regulations."

CONTROL OF BOARD OF DIRECTORS

Franz Eder, the President and Chairman of the Board of the Company presently
owns 7,600,000 shares of Common Stock (approximately 22.6% of the Common Stock
currently outstanding). As such, Mr. Eder will have a significant voice in the
election of the Company's directors. See "Principal Stockholders."

SUBSTANTIAL NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE

The Company has reserved a total of 2,000,000 shares of Common Stock for
issuance upon the exercise of options that may be granted pursuant to the
Company's 1998 Stock Option Plan (the "Stock Option Plan"). See
"Management--Stock Option Plan." The issuance of options pursuant to the Stock
Option Plan may adversely affect the Company's ability to consummate future
equity financings. Further, the holders of such options may exercise them at a
time when the Company would otherwise be able to obtain additional equity
capital on terms more favorable to the Company. The exercise and sale of the
Common Stock underlying the options would have a dilutive effect on the
Company's stockholders, and may have a material adverse effect on the market
price of the Common Stock.

NO DIVIDENDS

The Company has never declared or paid dividends, and does not intend to pay
any dividends in the foreseeable future on shares of Common Stock. Earnings of
the Company, if any, are expected to be retained for use in expanding the
Company's business. The payment of dividends is within the discretion of the
Board of Directors of the Company and will depend upon the Company's earnings,
if any, capital

13
<PAGE>
requirements, financial condition, and such other factors as are considered to
be relevant by the Board of Directors from time to time. See "Dividend Policy."

LIMITED PUBLIC MARKET FOR THE COMMON STOCK

Prior to this offering there has been a limited public market for the Common
Stock, and there can be no assurance that a more active public market for the
Common Stock will develop or be sustained after this offering.

CONFLICTS OF INTEREST; TWO OUTSIDE DIRECTORS

The Board of Directors has the responsibility for fixing the compensation of
the employees of the Company, including the Company's officers. No independent
outside authority reviews or approves the decision of the Board of Directors
concerning compensation. Currently, two of the four directors of the Company are
also officers of the Company and, as a result, have a significant voice in
setting their own compensation.

CERTAIN ANTI-TAKEOVER PROVISIONS

The Company is subject to the provisions of Section 78.411 et seq. of the
Nevada General Corporation Law (the "Business Combination Act"). The Business
Combination Act provides, with certain exceptions, that a Nevada corporation may
not engage in any of a broad range of business combinations with a person, or an
affiliate or an associate of such person, who is an "interested stockholder" for
a period of three years from the date that such person became an interested
stockholder, unless the transaction resulting in a person becoming an interested
stockholder, or the business combination, is approved by the board of directors
of the corporation before the person becomes an interested stockholder. The
Business Combination Act further provides that a Nevada corporation may not
engage in such a business combination after the expiration of three years from
the date that such person became an interested stockholder, unless the business
combination is approved by the board of directors of the corporation before the
person became an interested stockholder or by the affirmative vote of a majority
of outstanding votes not beneficially owned by the interested stockholder at a
meeting called not earlier than three years after the interested stockholder's
date of acquiring shares. The Business Combination Act could have the effect of
delaying or preventing a change of control of the Company. See "Description of
Securities--Statutory Business Combination Provisions."

POSSIBLE VOLATILITY OF STOCK PRICE

From time to time, the stock market has experienced significant price and
volume fluctuations that may be unrelated to the operating performance of
particular companies. In addition, the market price of the Common Stock, like
the stock prices of many publicly-traded companies, may prove to be highly
volatile. Announcements of innovations or new commercial products by the Company
or its competitors, developments or disputes concerning proprietary rights, as
well as period-to-period fluctuations in financial results, among other factors,
may have a significant impact on the market price of the Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

There are 33,587,609 shares of Common Stock outstanding (assuming the
consummation of the Additional OSAS Exchanges), 20,020,000 of which are freely
tradeable (subject to certain contractual restrictions as described below), and
13,567,609 of which (the "Selling Stockholder Shares") are restricted securities
that may be offered by the Selling Stockholders pursuant to this Prospectus as
described below. Of the 20,020,000 freely tradeable shares, 4,750,000 shares are
being held by a pooling trustee and will not be released until August 3, 2001
(see "Principal Stockholders"), and 10,250,000 shares are being held by a pool
administrator and will not be released until three years after the effective
date of the Registration

14
<PAGE>
Statement (except that 2% of such shares will be released every 90 days
commencing 180 days after effective date of the Registration Statement and
additional shares may be released in exigent circumstances at the discretion of
the pool administrator).

Subject to the Registration Statement being declared and remaining
effective, all of the Selling Stockholder Shares (except for the 7,600,000
shares of Common Stock owned by Franz Eder, the President and Chairman of the
Board of the Company) that may be offered hereby will be immediately tradeable
without restriction or further registration under the Securities Act of 1933, as
amended (the "Securities Act"). Mr. Eder's shares are being held by a pooling
trustee pursuant to the terms of a pooling trust agreement. Although the
disposition of Mr. Eder's shares are covered by the Registration Statement,
pursuant to the pooling trust agreement Mr. Eder cannot dispose of such shares
until they are released to him by the trustee. Mr. Eder shall receive ten
percent of such shares on July 1, 1999, an additional thirty percent of such
shares on July 1, 2000, an additional thirty percent of such shares on July 1,
2001, and the balance of such shares on July 1, 2002. Subject to the continued
effectiveness of the Registration Statement, such shares shall be immediately
tradeable without restriction or further registration under the Act upon release
of such shares to Mr. Eder. See "Certain Transactions" and "Shares Eligible for
Future Sale."

If the Registration Statement is not in effect at the time such shares are
released to Mr. Eder, such shares may not be resold in a public distribution
except in compliance with the registration requirements of the Securities Act or
pursuant to a valid exemption from registration, including the safe harbor
provided by Rule 144. In general, under Rule 144 as currently in effect, a
person (or persons whose shares are aggregated) who has beneficially owned
restricted shares for at least one year (including the holding period of any
prior owner except an affiliate) would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of (i)
one percent of the number of shares of Common Stock then outstanding, or (ii)
the average weekly trading volume of the Common Stock during the four calendar
weeks preceding the filing of a Form 144 with respect to such sale. Sales under
Rule 144 are also subject to certain manner of sale provisions and notice
requirements and to the availability of current public information about the
Company. Under Rule 144(k), a person who is not deemed to have been an affiliate
of the Company at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years
(including the holding period of any prior owner except an affiliate), is
entitled to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.

No prediction can be made as to the effect, if any, that sales of shares of
Common Stock by Mr. Eder or the other Selling Stockholders, or even the
availability of such shares for sale will have on the market prices prevailing
from time to time. The possibility that substantial amounts of Common Stock may
be sold in the public market may adversely affect prevailing market prices for
the Common Stock and could impair the Company's ability to raise capital through
the sale of its equity securities. See "Shares Eligible for Future Sale."

AMORTIZATION OF GOODWILL

The Company's consolidated balance sheet immediately following the effective
date of the Registration Statement will include an amount designated as
"goodwill" that represents approximately 94% of assets and approximately 94% of
total capitalization. Goodwill arises when an acquiror pays more for a business
than the fair value of the tangible and separately measurable intangible net
assets. Generally Accepted Accounting Principles requires that this and all
other intangible assets be amortized over the period benefitted. Management has
determined the period benefitted to be 10 years.

If the benefit period of the all or a material portion of the goodwill is,
in fact, less than 10 years, then earnings reported in fiscal periods
immediately following the acquisitions would be overstated. In later years, the
Company would be burdened by a continuing charge against earnings without the
associated

15
<PAGE>
benefit anticipated by management in arriving at the consideration paid for the
acquired companies. Earnings in later years also could be significantly affected
if management determined then that the remaining balance of goodwill was
impaired and elected to write it off.

Management and its independent accountants have reviewed the factors which
it considered in arriving at the consideration paid for the acquired companies.
Management has concluded that the anticipated future cash flows associated with
intangible assets recognized in the acquisitions will continue for 10 years and
there is no persuasive evidence that any material portion will dissipate over a
period shorter than 10 years.

LIMITATION OF LIABILITY; INDEMNIFICATION

The Company's Articles of Incorporation: (i) eliminates the personal
liability of the directors of the Company to the fullest extent permitted by the
General Corporation Law of the State of Nevada (the "GCL") and (ii) provides
that the Company shall indemnify, to the fullest extent permitted by the GCL,
any and all persons whom it shall have the power to indemnify under the GCL from
all expenses, liabilities, or other matters referred to in or covered by the
GCL. The By-Laws of the Company provide that the Company shall have the power to
indemnify any person who was or is a party or is threatened to be made a party
to any proceeding (other than an action by or in the right of the Company to
procure a judgment in its favor) by reason of the fact that such person is or
was an agent of the Company, against expenses, judgments, fines, settlements,
and other amounts actually and reasonably incurred in connection with such
proceeding to the fullest extent permitted under the GCL. See
"Management--Limitations of Liability; Indemnification."

RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS INCLUDED IN THIS PROSPECTUS

This Prospectus contains certain forward-looking statements. These
forward-looking statements are based on current expectations that involve
numerous risks and uncertainties. Assumptions relating to the foregoing involve
judgments with respect to, among other things, future economic, competitive, and
market conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Company. Although the Company believes that its assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance that the results discussed
or implied in such forward-looking statements will prove to be accurate. In
light of the significant uncertainties inherent in such forward-looking
statements, the inclusion of such statements should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved. Words such as "believes," "anticipates,"
"expects," "intends," "may," and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying such
statements. The Company undertakes no obligation to revise any of these
forward-looking statements.

16
<PAGE>
DIVIDEND POLICY

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
September 30, 1998 (i) on an actual basis, and (ii) on a pro forma basis to give
effect to certain financial events occurring subsequent to September 30, 1998.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
-----------------------------
ACTUAL PRO FORMA(1)
------------- --------------
<S> <C> <C>
Notes payable..................................................................... $ 2,349,510 $ 2,349,510
Non-controlling interest.......................................................... -- 208,494
------------- --------------
Stockholder's equity:
Common stock, par value $.001 per
share; 75,000,000 shares authorized;
27,620,000 issued (actual), 33,587,609
(pro forma)..................................................................... 27,620(2) 33,587
Additional paid-in capital........................................................ 22,926,380 40,823,240
------------- --------------
Cumulative foreign exchange adjustment............................................ (15,921) (15,921)
Accumulated deficit............................................................... (3,294,269) (3,294,269)
------------- --------------
--------------
Total stockholders' equity........................................................ $ 19,643,810 37,546,637
------------- --------------
Total capitalization.............................................................. $ 21,993,320 40,104,641
------------- --------------
------------- --------------
</TABLE>

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

(1) Adjusted to give effect to the consummation of the OSAS Exchanges and the
Additional OSAS Exchanges.

(2) Includes the 4,937,607 shares of Common Stock issued in the OSAS Exchanges
that are being held in escrow subject to the Registration Statement being
declared effective.

17
<PAGE>
PRICE RANGE OF COMMON STOCK

The Common Stock commenced trading on the OTC Bulletin Board on December 22,
1997 and is traded under the symbol "ZSUB". The following table sets forth for
the periods indicated the high and low bid quotations for the Common Stock as
reported on the OTC Bulletin Board. These quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not necessarily
represent actual transactions.

<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
1997
Fourth Quarter (from December 22, 1997)........................................................ $ 4 $ 3
1998
First Quarter.................................................................................. $ 5.75 $ 3.50
Second Quarter................................................................................. $ 7.3125 $ 5
Third Quarter.................................................................................. $ 6.5625 $ 3.50
Fourth Quarter (through December 21, 1998)..................................................... $ 6.0625 $ 4
</TABLE>

On December 21, 1998, the last sale price of the Common Stock as reported on
the OTC Bulletin Board was $5.50 per share. As of December 14, 1998, there were
approximately 73 holders of record of the Common Stock.

SELECTED CONSOLIDATED FINANCIAL DATA

The following data presents for the periods indicated certain consolidated
financial information for the Company. Such data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and related notes thereto included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MAY 23, 1997
(INCEPTION)
THROUGH NINE MONTHS ENDED
DECEMBER 31, 1997 SEPTEMBER 30, 1998
------------------ -------------------
<S> <C> <C>
(UNAUDITED)
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Total costs and expenses................................................. 164,931 3,170,027
Net (loss)............................................................... $ (164,931) $ (3,129,338)
Net (loss) per share..................................................... $ (0.01) $ (0.13)
------------------ -------------------
------------------ -------------------
Weighted average number of common shares outstanding..................... 18,931,982 24,724,762
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
----------------- --------------
<S> <C> <C>
(UNAUDITED)
CONSOLIDATED BALANCE SHEET DATA:
Working capital (deficiency).................................................. $ (10,931) $ (2,401,629)
Total assets.................................................................. 9,015 22,210,921
Notes payable................................................................. 0 2,349,510
Total liabilities............................................................. 19,946 2,567,111
Accumulated deficit........................................................... (164,931) (3,294,269)
Stockholders' equity (deficiency)............................................. (10,931) 19,643,810
</TABLE>

18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
financial statements and notes thereto appearing elsewhere in this Prospectus.
The following information contains forward-looking statements which are subject
to risk and uncertainties. Should one or more of these risks and uncertainties
materialize, actual results may differ from those expressed or implied by the
forward looking statements.

GENERAL

Marine Shuttle Operations Inc., through its wholly-owned Norwegian
subsidiary, Marine Shuttle Operations AS ("MSOAS"), is seeking to become a
leading player in the market for decommissioning, installing, and transporting
offshore oil and gas structures.

There are now more than 6,500 offshore oil and gas installations worldwide
located on the continental shelf of approximately 53 countries. The Company
believes that over the next 30 years, most of these structures will have to be
decommissioned at an estimated cost of $20 billion to $40 billion. Offshore
Shuttle AS ("OSAS"), a majority-owned Norwegian subsidiary of the Company, has
designed a new generation of vessel (the "Offshore Shuttle") which it believes
will be capable of lifting and carrying most of the largest installations
without extensive cutting or dismantling. MSOAS has entered into a license
agreement with OSAS which gives MSOAS the exclusive right to build and operate
five Offshore Shuttles, and an exclusive option to build and operate an
additional two Offshore Shuttles thereafter.

RESULTS OF OPERATIONS

The Company is in the development stage and has not generated any revenues
to date. From May 23, 1997 (inception) through December 31, 1997, the Company
incurred net losses of $164,931, most of which were attributable to management
fees, consulting fees, and general and administrative expenses.

On December 31, 1997, the Company entered into a securities purchase
agreement with Kaizen Food Corporation ("Kaizen") pursuant to which Kaizen
issued 100 shares of its common stock (constituting a 50% interest in Kaizen) to
the Company for $100,000 (the "Kaizen Agreement"). Pursuant to the Kaizen
Agreement, Kaizen had the right to repurchase the shares for $50,000 if the
Company did not raise $500,000 for Kaizen on or before January 20, 1998. The
Company did not raise the additional capital and Kaizen repurchased the stock
for $10,000 in April, 1998 in full satisfaction of the repurchase price.

In April, 1998, the Company acquired all of the issued and outstanding stock
of MSOAS in exchange for 7,600,000 shares of Common Stock. In May, 1998, the
Company acquired 3,291,738 shares of OSAS (approximately 68% of the outstanding
OSAS capital stock) in exchange for 4,937,607 shares of Common Stock (the "OSAS
Share Exchanges"). All of such shares are being held in escrow subject to the
Registration Statement being declared effective. On May 20, 1998, the Company
entered into two

19
<PAGE>
agreements to acquire an additional 686,668 shares of OSAS (approximately 14% of
the outstanding OSAS capital stock) in exchange for 1,030,002 shares of Common
Stock (the "Additional OSAS Exchanges"). Subject to the satisfaction of certain
conditions precedent, the Company anticipates that the Additional OSAS Exchanges
will close soon after the effective date of the Registration Statement.

The Company incurred net losses of $3,129,338 for the nine-month period
ended September 30, 1998, of which $1,254,803 was attributable to the
amortization of goodwill arising from the acquisition of MSOAS as well as other
intangibles. Most of the balance of the net losses was attributable to
consulting fees ($177,758), promotion ($615,257), salaries ($112,255), share
issue costs ($348,039), and travel ($149,268).

Management anticipates that the Company will continue to incur losses at
least through the year 2001 and there can no assurance that the Company will not
continue to incur losses thereafter.

BUSINESS STRATEGY

Construction of the first Offshore Shuttle is intended to commence in April,
1999. The Company intends to solicit competitive bids from at least three
construction yards which it believes have the capacity and capability to build
an Offshore Shuttle. The Company anticipates that the construction of the first
Offshore Shuttle will be completed by April, 2001, at the earliest. Subject to
the receipt of additional financing, construction delays, market conditions,
demand for the Company's services, and other factors, construction of an
additional Offshore Shuttle is intended to commence in each of the four years
after ordering the first Offshore Shuttle, until a total five Offshore Shuttles
are in operation. MSOAS has an option to build an additional two Offshore
Shuttles thereafter.

The Company intends to focus its initial efforts on the decommissioning
market in the North Sea, the North East Atlantic, and other regions where it
anticipates the advantages of using the Offshore Shuttle to decommission large,
intermediate depth structures will be most prominent. The Company estimates that
300 to 400 of such structures currently exist for which use of the Offshore
Shuttle would be ideal. The Company ultimately intends to provide a full range
of services, including decommissioning, installing, transporting, and
recycling/disposing of various types of structures.

Offshore decommissioning and installation activity in the North Sea and the
North East Atlantic is highly seasonal, principally as a result of weather
conditions. Historically, the greatest demand for offshore decommissioning and
installation services in such regions has been during the period from May
through September. The Company may seek to partially offset the anticipated
seasonality of its proposed operations by pursuing other potential opportunities
such as leasing the Offshore Shuttle to third parties for bridge building,
drydocking ships and floating platforms, and other uses. No assurances can be
given that such other opportunities, if successful, will result in the
anticipated offset of the seasonality of the Company's proposed operations.

The principal currency used in the offshore decommissioning industry is the
U.S. dollar. Consequently, the Company anticipates that it will conduct most of
its business in U.S. dollars, except that the local expenses of its subsidiaries
(e.g., rent, telephone, payroll) are likely to be paid in Norwegian Kroner.
Although the Company may enter into interest rate and foreign currency
transactions on a non-speculative basis, it does not believe that its exposure
to interest rate and foreign currency fluctuations will be material.

20
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

On or about June 6, 1997, the Company's four founders contributed $10,000 to
the Company in exchange for an aggregate of 10,000,000 shares of Common Stock.
On June 15, 1997, the Company sold 10,000,000 shares of Common Stock to various
foreign investors for an aggregate purchase price of $100,000. On August 8,
1997, the Company sold an additional 20,000 shares of Common Stock to various
foreign investors for an aggregate purchase price of $60,000.

As of September 30, 1998, the Company had cash of approximately $165,482, an
accumulated deficit of $3,294,269, stockholders' equity of $19,643,810, and a
working capital deficit of $2,401,629.

The Company entered into a loan agreement (the "Loan Agreement") with
ValorInvest Ltd, an investment bank based in Geneva, Switzerland
("ValorInvest"), pursuant to which ValorInvest agreed to lend an aggregate of up
to $3,500,000 to the Company at such times as the Company shall request;
provided, however, advances shall be made in increments of $250,000 and shall
not exceed $500,000 in any single month. Pursuant to the Loan Agreement, the
Company issued three non-negotiable promissory notes to ValorInvest in the
aggregate principal amount $3,500,000 (the "Bridge Notes"). Any monies advanced
under the Bridge Notes shall bear interest at the rate of 7.5% per annum, and
shall be due and payable upon the earlier of December 31, 1998 or the completion
of a public offering for gross proceeds of at least $100,000,000. As of
September 30, 1998, an aggregate of $2,349,510 had been advanced to the Company
under the Bridge Notes.

The Company has insufficient capital to finance its proposed operating
activities or to repay the monies advanced under the Bridge Notes. To address
this concern, the Company intends to raise up to $15 million through a private
placement of Common Stock through Berliner Effektenbank AG, a German investment
bank. In addition, the Company has entered into an engagement letter with MFC
Merchant Bank S.A. ("MFC") pursuant to which MFC shall act, on a best-efforts
basis, as exclusive agent for the Company in raising up to DM 215,000,000
(approximately $126,000,000) (the "MFC Financing"). As consideration for its
services, MFC shall receive a fee equal to five percent of the money raised plus
DM 100,000 (approximately $60,000) per month until the completion or termination
of the MFC Financing. In addition, all of MFC's out-of-pocket expenses shall be
reimbursed, and if the Company raises the necessary funds through another
source, MFC shall receive a break-up fee equal to the greater of $1,200,000 or
350,000 shares of Common Stock. Although the structure of the MFC Financing has
yet to be determined, the Company anticipates that it will be principally
through the issuance of government guaranteed debt.

If funds are raised by issuing equity securities, it may result in
substantial dilution to existing stockholders. If capital is raised through a
debt financing with financial institutions, the Company would likely become
subject to restrictive covenants relating to its operations and finances. There
can be no assurance that the private placement or the MFC Financing will be
consummated on reasonable terms or at all. If either financing is not completed,
the Company may be required to significantly curtail or cease its proposed
activities.

Although the Company believes that the proceeds from the MFC Financing, if
completed, will enable it to construct the first Offshore Shuttle, no assurance
can be given in that regard. Moreover, even if the MFC Financing is consummated,
the Company's future capital requirements could vary significantly and will
depend on certain factors, many of which are not within the Company's control.
Such factors include, but are not limited to, the need for cash to fund the
construction of additional Offshore Shuttles, greater than anticipated expenses,
and longer engineering, development, and construction times than now
contemplated. See "Business--Business Strategy." If the Company is successful in
completing the first Offshore Shuttle, it believes it will be able to fund the
construction of additional Offshore Shuttles from its future operating cash
flows and/or short or medium term debt financing. However, no assurance can be
given in that regard. See "Risk Factors--Insufficient Capital; Need for
Financing."

21
<PAGE>
YEAR 2000 ISSUE

Many computer systems record years in a two-digit format. Such systems, if
not modified, will be unable to recognize and properly process information with
dates beyond the year 1999. The potential problems arising out of this inability
commonly are referred to as the "Year 2000 Issue."

The Company believes that the few computers and software programs currently
utilized by the Company and its subsidiaries are Year 2000 ready. Since the
Company currently does not have any material relationships with any suppliers or
clients, no assessment can be made at this time as to the effect third party
non-compliance will have on the Company's proposed operations. In the future,
the Company intends to verify that any suppliers or clients with whom it may
develop a material relationship are Year 2000 compliant.

22
<PAGE>
BUSINESS

GENERAL

The Company intends to focus its initial efforts on decommissioning -- i.e.,
the multi-stage process of removing an offshore oil or gas installation. Removal
typically is accomplished by cutting the particular installation into many
pieces and utilizing crane ships and other support vessels to lift the pieces
onto barges or, in some instances, onto the deck of the crane ships themselves.
Although this procedure may be adequate for the small, shallow water
installations that require relatively little cutting to be removed, the
extensive cutting and lifting required with respect to the larger platforms
situated in deeper waters makes decommissioning such installations using such
procedure difficult, dangerous, time-consuming, and expensive.

Offshore Shuttle AS ("OSAS"), a majority-owned Norwegian subsidiary of the
Company, has designed a new generation of vessel (the "Offshore Shuttle") which
the Company believes will be capable of lifting and carrying most of the largest
installations without extensive cutting or dismantling. MSOAS has entered into a
license agreement with OSAS which gives MSOAS the exclusive right to build and
operate five Offshore Shuttles, and an exclusive option to build and operate an
additional two Offshore Shuttles thereafter. See "Strategic Alliances--Offshore
Shuttle AS."

THE MARKET

There are now more than 6,500 offshore oil and gas installations worldwide
located on the continental shelf of approximately 53 countries. Of these, there
are approximately 4,000 structures in the Gulf of Mexico, 950 in Asia, 700 in
the Middle East, 400 in Europe, and the balance are scattered throughout the
rest of the world. Of the European total, more than 300 are in the North Sea and
the North East Atlantic.

Many different types of installations exist, each one being uniquely
designed based on the water depth, seabed characteristics, and reservoir, wave,
and current conditions of the site of installation. Of the current installed
base of structures, the vast majority (more than 5,800) are fixed steel
installations. Although most fixed steel installations are situated in shallow
waters (i.e., less than 75 meters), there are three hundred to four hundred
fixed steel installations situated in intermediate water depths (i.e., 75 to 200
meters). These deeper water structures tend to be much larger than their shallow
water counterparts.

Fixed steel installations are comprised of two elements: the topside and the
substructure or "jacket." The topside is the above-water portion of the
installation that contains the processing, drilling, and accommodation
facilities. Topsides vary enormously in size and function. Weights range from a
few hundred tons for small topsides in the Gulf of Mexico to over 50,000 tons
for large topsides in the North Sea. Topsides may be built as separate modules,
as an integrated unit, or as a combination of the two (i.e., an integrated deck
containing process facilities topped by individual modules). The choice of
system depends on the facilities required and the method by which the topside is
installed. Topsides typically are transported offshore either on barges or on
the deck of the crane ships.

A jacket is a lattice-work of steel tubes anchored to the seabed by piles
driven up to 100 meters into the soil. They can weigh over 30,000 tons, have a
wide base (up to 120 meters across), and taper towards

23
<PAGE>
the top. The vast majority of jackets are transported to their offshore site by
barge. Small jackets can be lifted off the barge and placed in the water
vertically. Large jackets, whether barge launched or crane lifted, enter the
water horizontally and are then ballasted by controlled flooding to the vertical
position before being lowered into place. Once the jacket is piled into the
seabed, the topside generally is installed by crane.

In addition to fixed steel structures, the installed base includes concrete
gravity base structures (typically found in shallow and intermediate water
depths), various types of floating structures such as tension leg platforms,
floating production platforms, spars, and floating production, storage and
offloading vessels (typically situated in deep waters --i.e., more than 200
meters), and subsea structures which include the equipment needed to develop
satellite fields and the seabed equipment associated with floating
installations.

The Company believes that over the next 30 years, most of the installed base
of structures will have to be decommissioned at an estimated cost of $20 billion
to $40 billion. It is anticipated that significant portion of this amount will
be spent on the three hundred to four hundred large, steel, intermediate water
depth installations that are substantially more difficult to remove using
existing technology than their shallow water counterparts. This is most evident
in the North Sea and the North East Atlantic where, due to the harsh environment
and the significant number of large, intermediate depth steel structures, the
anticipated decommissioning costs are considerably greater than in the rest of
the world. Indeed, it is estimated that approximately fifty to sixty percent of
worldwide decommissioning costs will be spent in the North Sea and the North
East Atlantic, even though such regions account for just five percent of the
total number of installations. The Company's initial decommissioning efforts
will focus on these large, intermediate depth steel structures.

DECOMMISSIONING

Decommissioning is the multi-stage process of removing an offshore oil or
gas installation. The process includes planning and engineering the removal of
the installation, obtaining necessary regulatory approvals, removing the
installation, sealing the wells, and transporting the installation for re-use,
recycling, or disposal. Removal costs can range from $2 million for smaller
platforms in shallow waters to more than $140 million for larger ones in deeper
waters.

A number of different methods may be utilized to remove an offshore
installation. Determining which method is most appropriate for a particular
installation is a function of numerous factors, including the installation's
size, weight, construction type, and distance from shore, the water depth,
seabed characteristics, reservoir, wave, and current conditions of the site of
installation, and safety considerations. The typical method of removal involves
cutting the particular structure into many pieces. Crane ships and other support
vessels are used to lift the pieces onto barges or, in some instances, onto the
deck of the crane ships themselves. The cutting is necessitated by the limited
lifting capabilities of existing crane ships. Complications often arise,
however, in determining the maximum lift capability during decommissioning
operations. The largest cranes theoretically are capable of lifting objects up
to 14,000 tons. During an actual lift, however, various factors including safety
and operational constraints (e.g., vertical and horizontal clearance, the
required outreach and/or upreach of the crane boom, anchoring requirements, and
proximity to other facilities, subsea wellheads, and pipelines), location
characteristics, and the size and structural integrity of the pieces to be
lifted all will significantly reduce the theoretical lift capability. This is
best illustrated by the recent removal of the Odin jacket in Norway. Two cranes,
with a combined maximum theoretical lift capacity of 14,000 tons, were engaged
to remove a jacket that weighed approximately 10,000 tons. Despite the
significant disparity between the cranes' maximum theoretical lift capacity and
the weight of the jacket, the jacket had to be cut into four sections, each of
which was lifted separately.

Several companies have offered and/or have proposed solutions for lifting
large platforms in one piece. These involve the use of multiple barges,
twin-hull tankers, split-hull tankers, and U-shaped semi-submersibles. One such
solution, known as Versatruss, is comprised of two barges and an array of booms,

24
<PAGE>
rigging, and winches. The components are assembled together to produce what is
essentially a giant scissors jack. The barges are symmetrically placed around
the platform, and the booms from each barge are placed in receptacles that have
been welded to the platform deck. The barges are pulled together sideways using
winches. This causes the angle of inclination of the booms to increase, forcing
the deck upwards. The Company believes that the utility of Versatruss and most
of these other alternative solutions will be limited to the lifting of topsides
in calm waters. Although some of such lifting systems may be capable of lifting
jackets, the Company believes that the vertical clearance limitations inherent
in each of such systems will inhibit their ability to lift the jackets onshore.
Rather, the Company believes that such systems only will be capable of towing
jackets from one installation site to another. There can be no assurance,
however, that the Company's beliefs will prove to be accurate. See "Risk
Factors--Competition; Technological Obsolescence," and "Competition."

Removal of a few of the larger, older jackets that are equipped with
flotation tanks may be attempted by re-floating them. During installation, the
flotation tanks were used to temporarily float the jackets. Foundation piles
were then added to fasten these structures to the seabed, the flotation tanks
were ballasted, and any temporary buoyancy aids were removed. If the flotation
tanks can be deballasted and the foundation piles can be removed or equipped
with temporary buoyancy aids, then it might be possible to refloat the
structure. Given the age of these structures, however, the condition of the
flotation tanks is questionable. Moreover, transporting the large floating
jacket would create a sizeable wake, thus limiting access to coastal locations.

Certain countries also permit the decommissioning of offshore oil and gas
structures by partially removing them or by toppling the structures and leaving
them on the seabed. Decommissioning guidelines issued by the International
Maritime Organization, a technical arm of the United Nations dealing with safety
of navigation, provide that certain platforms, depending on their size and water
depth, may be partially removed or toppled provided that the remains are covered
by an unobstructed water column at least 55 meters deep to allow for seagoing
traffic. Many countries, however, citing environmental and other concerns, do
not allow these forms of decommissioning in their territorial waters. In July,
1998, the contracting parties to the Convention for the Protection of the Marine
Environment of the North East Atlantic (also known as the "OSPAR Convention"),
which include the United Kingdom, Ireland, France, Spain, Portugal, Belgium,
Germany, Denmark, Norway, Sweden, Finland, Luxembourg, the Netherlands, Iceland,
the European Union, and Switzerland, agreed to restrictions more stringent than
those set forth in the IMO guidelines. Based on the premise that reuse,
recycling, or onshore disposal generally will be the preferred options for
decommissioning offshore platforms, the OSPAR Convention provides for a ban,
effective February, 1999, on the dumping and the leaving (wholly or partially)
in place of disused offshore installations located in the North Sea, the North
East Atlantic, and certain other regions. Permits may be issued for alternative
means of disposal if significant reasons can be shown as to why such alternative
means are preferable to reuse, recycling, or onshore disposal.

The Company believes that the Offshore Shuttle will represent a new,
cost-effective alternative for decommissioning offshore oil and gas platforms,
particularly large, intermediate depth structures.

THE OFFSHORE SHUTTLE

OPERATION. The Offshore Shuttle's design is based on the Archimedes
principle: putting water into a floating object will cause it to submerge, and
letting water out will cause it to rise. In essence, the Offshore Shuttle is
designed to be a large buoyancy tank that can be submerged for placement under
or adjacent to an offshore installation and then elevated to lift the
installation.

The Company envisions a typical platform removal operation commencing with
the preparation of the Offshore Shuttle at its home base and the preparation of
the platform for removal. Pre-removal preparations will include conducting a
detailed analysis and preparing a comprehensive method statement of all of the
tasks to be performed in the removal operation, adjusting the Offshore Shuttle's
lifting frame for the installation to be removed, and equipping the topside
support legs or the underside of the topside deck

25
<PAGE>
with specially-prepared docking connections. Upon completion of the pre-removal
preparations, the Offshore Shuttle will be towed (it is not a self-propelled
vessel) to the offshore site by several vessels, one of which will serve as the
control center for the removal operation.

The topside will be removed first. The Offshore Shuttle will be partially
submerged (i.e., ballasted) and guided into position under the topside by the
use of guidance tugs and/or mooring anchors. The tugs and/or the anchors will
keep the Offshore Shuttle in position while the topside is cut from the jacket
(alternatively, the Offshore Shuttle can be moved into position after cutting
the topside from the jacket). Once cut, the topside and the jacket will be
temporarily secured to each other by clamps that will be designed specifically
for the installation being removed. The Offshore Shuttle will be deballasted,
causing it to rise in the water until the lifting frame on the Offshore Shuttle
connects with the docking connections on the topside. The temporary clamps then
will be unfastened from the jacket. Once the topside is lifted, it can be
seafastened to the Offshore Shuttle for transport to another offshore site, or
to a land site for dismantling or refurbishment.

The Offshore Shuttle then will be tugged to the offshore location to perform
the jacket removal. At the site, the Offshore Shuttle will be ballasted at one
end so that it is sitting vertically in the water. It will be maneuvered by tugs
and/or mooring anchors into position and connected with the jacket. The tugs
and/or the anchors will keep the Offshore Shuttle in place while the connection
to the jacket is made. The top of the jacket will be connected by tension
mechanisms to the top of the Offshore Shuttle and the jacket legs will be cut at
the seabed (alternatively, the Offshore Shuttle can be moved into position after
cutting the jacket legs at the seabed). The Offshore Shuttle will "scoop up" the
jacket by deballasting into its original horizontal position. The jacket will be
seafastened to the Offshore Shuttle and transported to another offshore site, or
to a land site for dismantling or refurbishment.

The Company believes the Offshore Shuttle will be able to remove most of the
largest topsides in one piece and also will be capable of diving partly below
the water surface to remove a complete jacket in one operation. The maximum
weight of the structures which can be handled is a matter of design, but the
Company believes that a 17,000 ton Offshore Shuttle will be capable of lifting
most of the largest structures (i.e., topsides or platforms) (up to
approximately 25,000 tons) in one piece without the use of large crane barges.

Once a structure is removed, the Company believes that the Offshore Shuttle
will be able to be used as a barge for transport. It is anticipated that the
removed structure will lie in project-specific cradles on the Offshore Shuttle
to help prevent damage to the object during transportation. This is particularly
important where reuse of the marine structure is of interest. In addition, the
Company believes that it may be possible to design the Offshore Shuttle with a
cover at one end so that by ballasting it 180 degrees into a vertical position,
a very large working deck would be created 50 to 60 meters above water level. If
so, the working deck could be positioned above structures (e.g., ships) or
beneath structures (e.g., bridges) for use as a platform from which equipment
could be operated.

The cost of constructing an Offshore Shuttle is estimated to be around $80
million to $120 million, depending on size, compared to an estimated minimum
cost of $200 million to build a crane ship. Moreover, the Company anticipates
that approximately 20 people will be required for a typical Offshore Shuttle
decommissioning operation compared to the typical crane ship operation that
requires up to 200 people. Additional support vessels are needed for both crane
ship or Offshore Shuttle operations.

The Company believes that the Offshore Shuttle's principal advantage over
existing decommissioning methods will be its ability to remove and carry large
structures in one piece. By eliminating the need to cut installations into many
smaller units, offshore operation time, costs, and risks will be significantly
reduced and reuse of the installation will become a more viable alternative. The
Company believes the Offshore Shuttle's anticipated versatility will make it a
unique alternative for handling marine objects both inshore and offshore.

26
<PAGE>
DIMENSIONS. Based on current designs, each Offshore Shuttle will consist of
six longitudinal tubes, four transverse tubes, and twelve vertical tubes.
Although the dimensions of each Offshore Shuttle will vary based on the average
size installation a particular Offshore Shuttle is designed to handle, it is
anticipated that the Offshore Shuttles will be 130 to 200 meters long, 70 to 95
meters wide, and 60 meters high. The diameter of each tube will be approximately
10 meters. Each tube will be ring-stiffened in order to resist the hydrostatic
pressure associated with installation or retrieval of marine structures. The
longitudinal tubes may be ballasted by letting water in or deballasted by
pumping water out.

There may be a fixed, 4,000 ton ballast in one of the outer transverse tubes
to ensure sufficient stability. In addition, there will be separate ballasting
compartments at one end of the two outer lower longitudinal tubes. These
compartments will enable the Offshore Shuttle to maintain a horizontal position
when the center of gravity of the object being transported or unloaded is close
to the bottom of the Offshore Shuttle.

It is anticipated that the total weight of each Offshore Shuttle will range
from 8,000 tons to 17,000 tons, depending upon the task for which it is
designed. The main dimensions (as described above) may be subject to change
depending on the Company's determination of the number and types of marine
objects which are to be installed or removed in the foreseeable future. It is
the Company's intention to have each Offshore Shuttle built for a dedicated
region.

TESTING. The Company believes that the technical risks associated with the
Offshore Shuttle concept have been reduced by extensive model testing and
rigorous calculations. Using a 1:50 scale model of an Offshore Shuttle, motions
in different ballast conditions were tested; ballasting/deballasting sequences
were tested without any marine object, with a 1:50 scale model of 7,000 ton
jacket, and with a 1:50 scale model of an 8,000 ton topside; and hydrodynamics
were tested by examining the motions of the Offshore Shuttle (with and without a
marine object) in different positions and when subjected to wave forces, as well
as its towing resistance in calm water and storm. In addition, based on
engineering documentation, calculations, and model testing, Det Norske Veritas
AS, an internationally-recognized society responsible for classification and
technical inspections of merchant vessels, issued a Statement of Approval
verifying the technical feasibility of the Offshore Shuttle concept for the
transport and removal of certain offshore platform deck structures and jackets.

BUSINESS STRATEGY

27
<PAGE>
the time required to complete such construction efforts or that such efforts can
be successfully completed at all.

The Company intends to focus its initial efforts on the decommissioning
market in the North Sea, the North East Atlantic, and other regions where it
anticipates the advantages of using the Offshore Shuttle to decommission large,
intermediate depth structures will be most prominent. The Company estimates that
300 to 400 of such structures currently exist for which use of the Offshore
Shuttle would be ideal. In the North Sea alone, there are approximately 100
steel jackets in water depths greater than 75 meters. The Company ultimately
intends to provide a full range of services, including decommissioning,
installing, transporting, and recycling/disposing of various types of
structures.

Offshore decommissioning and installation activity in the North Sea and the
North East Atlantic is highly seasonal, principally as a result of weather
conditions. Historically, the greatest demand for offshore decommissioning and
installation services in such regions has been during the period from May
through September. The Company may seek to partially offset the anticipated
seasonality of its proposed operations by pursuing other potential opportunities
such as leasing the Offshore Shuttle to third parties for bridge building,
drydocking ships and floating platforms, and other uses. No assurances can be
given that such other opportunities, if successful, will result in the
anticipated offset of the seasonality of the Company's proposed operations.

STRATEGIC ALLIANCES

The Company's business strategy is dependent upon forming strategic
alliances and relationships with joint venture partners, contract manufacturers,
or other third parties, and upon the subsequent success of these parties in
performing their responsibilities. In this regard, MSOAS has entered into
agreements with OSAS with respect to the rights to the Offshore Shuttle design
and the pre-engineering work necessary to construct the Offshore Shuttles,
Thyssen Stahlunion GmbH ("TSU") with respect to the marketing of its proposed
services, RC Consultants AS ("RC") with respect to its engineering and
operational activities, and Schuller Industrieentsorgung AG (formerly Schuller
Industrieentsorgung GmbH, "Schuller") with respect to waste management, onshore
dismantling, and oil pollution prevention and cleanup.

OFFSHORE SHUTTLE AS. OSAS was established in November 1996 to develop and
sell specialized technology applicable to the field of marine transportation.
Operating from its premises in Oslo, Norway, OSAS now has four full-time
employees and eight independent consultants. In May, 1998, the Company acquired
3,291,738 shares of OSAS (approximately 68% of the outstanding OSAS capital
stock) in exchange for 4,937,607 shares of Common Stock (the "OSAS Exchanges").
All of such shares are being held in escrow subject to the Registration
Statement being declared effective. On May 20, 1998, the Company entered into
two agreements to acquire an additional 686,668 shares of OSAS (approximately
14% of the outstanding OSAS capital stock) in exchange for 1,030,002 shares of
Common Stock (the "Additional OSAS Exchanges"). Subject to the satisfaction of
certain conditions precedent, the Company anticipates that the Additional OSAS
Exchanges will close soon after the effective date of the Registration
Statement.

OSAS is the holder of all licensing and marketing rights to the Offshore
Shuttle. Pursuant to the License Agreement, MSOAS was granted the exclusive
right to build and operate five Offshore Shuttles, an exclusive option to build
and operate an additional two Offshore Shuttles thereafter, and a right of first
refusal with respect to any Offshore Shuttle licenses that OSAS may seek to
grant during a specified future period. MSOAS must place an order for the first
Offshore Shuttle by June 1, 1999. Subject, in each case, to an option to extend
the order dates by twelve months upon payment of a $900,000 option exercise fee,
an

28
<PAGE>
order for the second Offshore Shuttle must be placed no later than six months
after successful testing of the first Offshore Shuttle, and orders for each of
the remaining three Offshore Shuttles must be placed by December 31st of each
year after the year in which the second Offshore Shuttle is ordered. If an order
is not placed on or before the required date, then for the twelve-month period
thereafter OSAS shall be entitled to grant a license to build one Offshore
Shuttle to a third party. Based on functional specifications for each Offshore
Shuttle to be agreed upon by MSOAS and OSAS, OSAS shall provide MSOAS with the
pre-engineering work, including designs and descriptions of operational
procedures, necessary to construct the Offshore Shuttles. In consideration for
the licenses granted and services to be provided, OSAS shall receive a
construction fee equal to ten percent of the construction price of each of the
Offshore Shuttles, an operating fee equal to sixteen percent of the gross profit
for each contract concluded by MSOAS involving the use of an Offshore Shuttle,
and an exclusivity fee equal to one percent of the aggregate construction price
of Offshore Shuttles two through five ($2,000,000 of which must be remitted to
OSAS by June 1, 1999).

In addition to its obligations under the License Agreement, it is
anticipated that OSAS will provide the Company with various other services
including engineering verification, technical support, and technical supervision
of the construction and testing of the Offshore Shuttle.

THYSSEN STAHLUNION GMBH. TSU is a subsidiary of Thyssen AG ("Thyssen"), a
conglomerate of more than 323 companies operating worldwide in numerous
industries. In its fiscal year ended September 30, 1998, Thyssen generated sales
of approximately $25.5 billion with a workforce of approximately 120,000 people.

In addition to its activities in the steel industry, TSU offers offshore
technology and services to its clients including jacket concepts, platform
abandonment/removal, and waste management. Pursuant to the its agreement with
MSOAS, TSU will market the Offshore Shuttle on a worldwide basis to major oil
companies, offshore contractors, and others as part of its package of offshore
services. In addition, TSU shall act as a procurement service center for the
steel and equipment to be used in constructing the Offshore Shuttle, and shall
have a right of first refusal to lease the Offshore Shuttle if TSU is engaged in
any decommissioning, transportation, or installation project. TSU shall receive
a commission at a rate to be agreed upon for its marketing services, and shall
be precluded from promoting any products or services competitive with those of
the Company. Jurgen Ternieden, a director of the Company and Chairman of the
Board of OSAS, is an officer and the head of the Pipes, Offshore, Special
Products Department of TSU.

RC CONSULTANTS AS. RC is a Norwegian engineering company with more than 330
skilled offshore engineers. Pursuant to a personnel agreement with MSOAS, RC
will provide MSOAS with the engineers and technicians needed during the design,
engineering, fabrication, and operation of the Offshore Shuttle. In addition,
pursuant to an accounting services agreement, RC will provide MSOAS with
bookkeeping assistance. Sverre Hanssen, the Chairman of the Board of Directors
of RC, is Chairman of the Board of Directors of MSOAS.

SCHULLER INDUSTRIEENTSORGUNG AG. Schuller is a service company specializing
in waste management, onshore dismantling, and oil pollution prevention and
cleanup. MSOAS and Schuller have entered into a cooperation agreement pursuant
to which Schuller will provide such services to MSOAS, subject to the execution
of a written agreement on a project-specific basis. Franz Eder, the President
and Chairman of the Board of the Company, and Dr. Hubert Besner, a director of
the Company, are members of the Supervisory Board and shareholders of Schuller.

In addition, the Company's proposed offshore decommissioning activities may
require the use of large tug boats, unloading docks, subsea specialists, marine
operators, diving support vessels, and various safety and supply boats. The
Company may seek to form strategic alliances and relationships with third
parties who provide these and other services.

29
<PAGE>
The Company believes that the use of these outside parties will help
minimize the Company's fixed costs and increase its flexibility by gaining
access to qualified personnel when needed. There can be no assurance, however,
that such arrangements will be successful. If any of these arrangements are
cancelled and/or are unsuccessful, and if the Company is unable to secure new
alliances in their place, there would be a material adverse effect on the
Company.

PROPRIETARY PROTECTION

Even if patents issue from such patent applications and a competitor were to
infringe thereon, the costs of enforcing such patent rights may be substantial
or even prohibitive. If OSAS chooses not to defend its patent rights, if any,
then the Company may be forced to expend substantial resources to do so. No
assurance can be given that the Company will be successful in any action for
infringement of the technology licensed to it. In addition, there can be no
assurance that the Offshore Shuttle will not infringe on the patent rights of
others, or that patents do not exist or will not be issued in the future that
would have an adverse effect on the Company's ability to manufacture or operate
the Offshore Shuttle. The Company is aware of the existence of a Norwegian
patent which claims the use of a U-shaped structure designed for removing and/or
installing topsides. Based on the opinion of Bryns Patenkontor A/S, patent
counsel to the Company, the Company believes that the Offshore Shuttle will not
infringe on this Norwegian patent because, unlike the structure covered by the
Norwegian patent, the Offshore Shuttle does not utilize movable transverse beams
mounted to its upper beams. There can be no assurance, however, that
infringement proceedings will not be brought against the Company.

COMPETITION

30
<PAGE>
Although some of such lifting systems may be capable of lifting jackets, the
Company believes that the vertical clearance limitations inherent in each of
such systems will inhibit their ability to lift the jackets onshore. Rather, the
Company believes that such systems only will be capable of towing jackets from
one installation site to another. There can be no assurance, however, that the
Company's beliefs will prove to be accurate.

REGULATION

Decommissioning of facilities is governed by national legislation within the
framework of a rigorous international and regional regulatory regime. Although
details differ, most oil and gas producing countries have adopted a similar
approach to decommissioning. All feasible options for removal and disposal of
offshore installations are assessed on a case-by-case basis. The offshore
platform operator is required to prepare a decommissioning and abandonment plan
which identifies the decommissioning and abandonment options, evaluates the
technical feasibility of each option, assesses impacts on the environment and on
society, and minimizes risks to human health and safety. The offshore platform
operator then recommends to the responsible ministry the option which best
balances the factors involved.

In 1989, the International Maritime Organization, a technical arm of the
United Nations dealing with safety of navigation, issued guidelines (the "IMO
Guidelines") dealing with the removal of offshore platforms. Recognizing the
magnitude and complexity of removal operations, the IMO Guidelines took into
account not only the size of the platforms but also the capabilities of the
removal vessels. The IMO Guidelines provide that installations weighing less
than 4,000 tons that are in less than 75 meters of water must be completely
removed, while bigger and deeper structures need be only partially removed
provided the remains are covered by an unobstructed water column at least 55
meters deep. For structures emplaced on the seabed on or after January 1, 1998,
the water depth threshold increases from 75 meters to 100 meters. In addition,
all platforms installed on or after January 1, 1998 must be designed so that
removal is feasible.

In July, 1998, the contracting parties to the Convention for the Protection
of the Marine Environment of the North East Atlantic (also known as the "OSPAR
Convention"), which include the United Kingdom, Ireland, France, Spain,
Portugal, Belgium, Germany, Denmark, Norway, Sweden, Finland, Luxembourg, the
Netherlands, Iceland, the European Union, and Switzerland, agreed to
restrictions more stringent than those set forth in the IMO Guidelines. Based on
the premise that reuse, recycling, or onshore disposal generally will be the
preferred options for decommissioning offshore platforms, the OSPAR Convention
provides for a ban, effective February, 1999, on the dumping and the leaving
(wholly or partially) in place of disused offshore installations located in the
North Sea, the North East Atlantic, and certain other regions. Permits may be
issued for alternative means of disposal if significant reasons can be shown as
to why such alternative means are preferable to reuse, recycling, or onshore
disposal.

The Company's proposed operations may be subject to and affected by various
types of national and international regulations. Determining the applicable
regulatory framework will depend, in part, on how the Offshore Shuttles are
classified (e.g., as "ships," "vessels," "installations", etc.), whether (and if
so, where) the Offshore Shuttles are registered or documented, and where the
Company's intended operations are performed. The Company may be required to
obtain certain permits, licenses and certificates with

31
<PAGE>
respect to its proposed operations and to comply with rigorous safety and
workplace standards. Moreover, certain employees of the Company may be covered
by laws that operate to make liability limits, if any, established by state
workers' compensation laws inapplicable to these employees and permit the
employees and their representatives to pursue actions against the Company for
job related injuries with generally no limits on the Company's potential
liability.

The Company's proposed operations may be affected by numerous international
and national laws and regulations relating to protection of the environment. The
technical requirements of the various laws and regulations are complex and
stringent, and compliance is often difficult and expensive. Certain
environmental laws provide for strict liability for remediation of spills and
releases of hazardous substances and some provide liability for damages to
natural resources or threats to public health and safety. Sanctions for
noncompliance may include revocation of permits, corrective action orders,
administrative or civil penalties, and criminal prosecution.

INSURANCE

The Company's operations are subject to all of the inherent risks of
offshore marine activity, including accidents resulting in the loss of life or
property, environmental mishaps, mechanical failures, and collisions. The
Company intends to obtain insurance against some of these types of risks. It
also anticipates that it will be adequately protected by the insurance policies
of the companies that utilize the Company's services, and it intends to further
limit its risk by capping its liability exposure in its service contracts with
such companies. There can be no assurance, however, that the policies of such
companies will cover the Company or, if they do, that such insurance (or the
insurance obtained by the Company, if any) will be sufficient or effective under
all circumstances or against all hazards to which the Company may be subject. In
addition, there can be no assurance that any contractual limits on liability
will be enforceable or will adequately and effectively limit the Company's
liability exposure, or that the companies that utilize the Company's services
will nevertheless seek to be indemnified by the Company with respect to any and
all losses or damages they suffer or incur. See "Risk Factors--Risk of
Operations; No Insurance."

EMPLOYEES

Marine Shuttle Operations Inc. employs three people. These employees are not
unionized or employed pursuant to any collective bargaining agreement or any
similar agreement. The Company believes its relationship with its employees is
satisfactory.

The Company's success depends to a significant extent upon the services of
Franz Eder, the President and Chairman of the Board of the Company. Mr. Eder has
entered into a two-year employment agreement with the Company which provides
that Mr. Eder shall devote only so much (but not less than 75%) of his
professional and business time, attention, and energies to his duties and
responsibilities as is reasonable to insure the Company's proper conduct. The
loss of Mr. Eder's services could have a material adverse effect on the Company.
See "Management--Executive Compensation" and "Certain Transactions."

The Company also is a party to a two-year employment agreement with Iqbal
Akram. Pursuant to such agreement, Mr. Akram shall devote at least 50% of his
professional and business time to the Company as Vice President. See
"Management--Executive Compensation" and "Certain Transactions."

32
<PAGE>
FACILITIES

The Company's corporate headquarters in the United States are located in
approximately 500 square feet of office space in Houston, Texas. The Company
occupies these premises pursuant to a six-month lease that is automatically
renewed at the end of each lease period for an additional six months unless
either party gives thirty days prior written notice of cancellation.

LEGAL PROCEEDINGS

There are no pending legal or arbitration proceedings to which the Company
or its properties is subject.

33
<PAGE>
MANAGEMENT

The following table sets forth the names, ages and positions of the
executive officers and directors of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ---------------------------------------------------- --- ------------------------------------------------------
<S> <C> <C>
Franz Eder.......................................... 38 President and Chairman of the Board
Iqbal Akram......................................... 54 Vice President and a Director
George Wilfred Norman Wareham....................... 45 Treasurer, Chief Financial Officer, and Secretary
Jurgen Ternieden(1)................................. 56 Director
Hubert Besner(1).................................... 36 Director
</TABLE>

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

(1) Member of the Audit Committee

FRANZ EDER has been President and the Chairman of the Board of the Company
since April 14, 1998, and a director of MSOAS since December, 1997. He has been
Chairman of the Supervisory Board of Schuller Industrieentsorgung AG (formerly
Schuller Industrieentsorgung GmbH, "Schuller") since May, 1998, and served as
the general manager of Schuller from July, 1997 through May, 1998. From 1992 to
1997, Mr. Eder was General Manager at CETEM Industrieentsorgung und
Wiederverwertung GmbH, a German company engaged in waste management. From 1990
to 1991, he was a consultant to several companies, and from 1989 to 1990, he was
the head of the trade finance department at AMRO Handelsbank AG in Munich,
Germany. Mr. Eder received a Masters of Business degree from Business University
of Vienna in 1985.

IQBAL AKRAM has been a Director of the Company since April 14, 1998. He has
been a Vice President of the Company since February 19, 1998 and served as a
consultant to the Company for a period of approximately two weeks prior thereto.
Since 1992, he has been the managing director and a partner in Peregrine
Consultants, S.A., a Luxembourg management consulting firm. Since 1998, he has
been the sole principal of Peregrine Consultants, United Kingdom. In 1996 and
1997, he served as a group finance and corporate director of the House of Habib,
a Pakistani industrial, manufacturing, and financial services group. In 1995, he
served as group financial advisor to the Southern Electric Group in the
implementation of a power project in Pakistan. He currently is a fellow of the
Institute of Directors and the Institutes of Chartered Accountants in England,
Canada, and Pakistan. He received a Bachelor of Science degree from the London
School of Economics and Political Science in 1965.

GEORGE WILFRED NORMAN WAREHAM has been Treasurer, Chief Financial Officer,
and Secretary of the Company since January 1998, and was a director of the
Company from January 1998 through April 14, 1998. Since May, 1996, Mr. Wareham
has been an owner and operator of Wareham Management Ltd., a management
consulting and accounting services firm servicing a number of American and
Canadian public companies, including the Company. From April 1995 to April 1996,
he was employed on a contract basis as an accountant with Wanzel Sigmund &
Overes, a public practice accounting firm. From April 1993 to February 1995, he
was the President of Global Financial Corporation, an investment company located
in the British West Indies. Mr. Wareham is the Secretary, Treasurer, a director,
and a member of the audit committee of Intercap Resource Management Corp.; the
Secretary, a director, and a member of the audit and compensation committees of
ZMAX Corporation; the Secretary and a director of Solar Energy Limited; a
director and a member of the audit committee of Orko Gold Corporation; a
director and a member of the audit and strategic acquisition committees of
Bio-Preserve International Corporation; and a director of Cybernet Internet
Services International, Inc., Pyrocap International Corporation, AquaPlan Inc.,
and Novamed, Inc. Mr. Wareham graduated from Carson Graham High School in
Vancouver, Canada in 1971, and completed a certified general accountants course
in 1976.

JURGEN TERNIEDEN has been a director of the Company since April 14, 1998,
Chairman of the Board of OSAS since March 1998, and an officer and the head of
the Pipes, Offshore, Special Products Department

34
<PAGE>
of Thyssen Stahlunion GmbH ("TSU") since 1991. From 1981 to 1990, he was a
senior sales manager and head of the Pipes Department at TSU. Mr. Ternieden
received his intermediate high school certificate from Realschule Muelheim in
1959.

HUBERT BESNER has been a director of the Company since May 6, 1998. Since
1994, he has been a partner in the law firm of Besner Kreifels Weber, Munich,
Germany. From 1992 to 1994, he was the head of the legal department of Schneider
AG, a German real estate development company. He currently is a member of the
supervisory board of Cybernet Internet-Dienstleistungen AG, a director of
Cybernet Internet Services International, Inc., a director of AquaPlan Inc., a
member of the Supervisory Board of Schuller, and the head of the supervisory
board of PIPECAD Integrierte Softwaresysteme AG. Dr. Besner received his First
State Exam in Law from Ludwig-Maximilians-Universitat in 1986, and his doctorate
magna cum laude from Ludwig-Maximilians-Universitat in 1988.

No family relationship exists between any director or executive officer and
any other director or executive officer.

EXECUTIVE COMPENSATION

Since its inception through February 19, 1998, no executive officer or
director had received any compensation for services rendered as an executive
officer or director of the Company. Effective as of February 1, 1998, the
Company entered into a six-month consulting agreement with each of Iqbal Akram
and Wareham Management Ltd., a Canadian corporation which is owned and operated
by George Wilfred Norman Wareham. The respective agreements provided for Mr.
Akram to receive $5,000 per month and Wareham Management Ltd. to receive $2,500
per month. On February 19, 1998, Mr. Akram was appointed Vice President of the
Company and his consulting agreement was terminated. On April 14, 1998, the
Company entered into a two-year employment agreement with Mr. Akram (the "Akram
Agreement") pursuant to which Mr. Akram shall devote at least 50% of his
professional and business time to the Company as Vice President and shall
receive a salary of $60,000 per annum. On the same day, the consulting agreement
with Wareham Management Ltd. was terminated. In lieu thereof, the Company
entered into a two-year loan out agreement with Wareham Management Ltd. (the
"Wareham Agreement") for the services of Mr. Wareham. Pursuant to the Wareham
Agreement, Wareham Management Ltd. shall loan out the services of Mr. Wareham to
serve the Company as Chief Financial Officer, Treasurer, and Secretary. In
consideration thereof, Wareham Management Ltd. shall receive an annual fee of
$32,100. See "Certain Transactions."

On June 1, 1998, the Company entered into a two-year employment agreement
with Franz Eder, the President and Chairman of the Board of the Company.
Pursuant to such agreement, Mr. Eder shall devote at least 75% of his
professional and business time to the Company and shall receive a salary of
$100,000 per annum. See "Certain Transactions."

STOCK OPTION PLAN

The purpose of the Company's 1998 Stock Option Plan (the "Stock Option
Plan") is to further the growth and development of the Company by encouraging
and enabling employees, officers, and directors of, and consultants and advisors
to, the Company to obtain a proprietary interest in the Company through the
ownership of stock (thereby providing such persons with an added incentive to
continue in the employ or service of the Company and to stimulate their efforts
in promoting the growth, efficiency, and profitability of the Company), and
affording the Company a means of attracting to its service persons of
outstanding quality. Options granted under the Stock Option Plan may be either
incentive stock options, as defined in Section 422 of the Internal Revenue Code
of 1986, as amended, or non-qualified stock options. The Company has reserved
2,000,000 shares of Common Stock for issuance under the Stock Option Plan. As of
September 30, 1998, no options were outstanding under the Stock Option Plan.

35
<PAGE>
The Stock Option Plan may be administered by the Board of Directors or a
committee of the Board (the "Committee"). The Board of Directors or the
Committee, as the case may be, has the power to determine the terms of any
options granted thereunder, including the exercise price, the number of shares
subject to the option, and the exercisability thereof. Options granted under the
Stock Option Plan generally are not transferable, and each option is exercisable
during the lifetime of the optionee only by such optionee. The exercise price of
all incentive stock options granted under the Stock Option Plan must be at least
equal to 100% (110% in the case of optionees who own more than 10% of the total
combined voting power of all classes of stock of the Company) of the fair market
value of the shares of Common Stock on the date of grant. The term of any option
granted under the Stock Option Plan may not exceed ten years. The specific terms
of each option grant shall be approved by the Board of Directors or the
Committee, as the case may be, and shall be reflected in a written stock option
agreement.

The Plan was adopted by the Board of Directors on May 11, 1998, and was
approved and ratified by the stockholders of the Company as of July 31, 1998.
The Stock Option Plan shall expire at the end of the day on May 11, 2008 (except
as to options outstanding on that date).

LIMITATION OF LIABILITY; INDEMNIFICATION

36
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth, certain information as of December 14, 1998,
regarding beneficial ownership of the Common Stock by (i) each stockholder known
by the Company to be the beneficial owner of more than five percent (5%) of the
outstanding shares of Common Stock; (ii) each director of the Company; (iii)
each executive officer of the Company; and (iv) all of the Company's current
executive officers and directors as a group.

<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK PERCENTAGE OF CLASS
NAME OF BENEFICIAL HOLDER BENEFICIALLY OWNED BENEFICIALLY OWNED(2)
- ----------------------------------------------------------------------- ------------------- -----------------------
<S> <C> <C>
Franz Eder............................................................. 7,600,000(1) 22.6%
Iqbal Akram............................................................ 0 0%
George Wilfred Norman Wareham.......................................... 0 0%
Jurgen Ternieden....................................................... 332,499(3) *
Hubert Besner.......................................................... 0 0%
BEG Berliner Effektenbeteiligungsgesellschaft AG (4)................... 3,950,000(5)(6) 11.8%
Kurfurstendamm 119
10711 Berlin, Germany
All officers and directors as a group (5 persons)...................... 7,932,499 23.6%
</TABLE>

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

(1) Such shares are being held by a trustee pursuant to the terms of a pooling
trust agreement. Such shares may not be disposed of by Mr. Eder until they
are released to him by the trustee. Mr. Eder shall receive ten percent of
such shares on July 1, 1999, an additional thirty percent of such shares on
July 1, 2000, an additional thirty percent of such shares on July 1, 2001,
and the balance of such shares on July 1, 2002. The trustee shall seek
instructions from Mr. Eder before taking any action as a stockholder with
respect to any of the shares held in trust.

(2) Assumes completion of the Additional OSAS Exchanges.

(3) In connection with the OSAS Exchanges, such shares are being held in escrow
subject to the Registration Statement being declared effective.

(4) A 40%-owned subsidiary of Berliner Freiverkehr (Aktien) AG ("BFAG"). BFAG
also owns 40% of Berliner Effektenbank AG.

(5) Does not include 800,000 shares of Common Stock owned by BFAG.

(6) In 1997, BEG Berliner Effektenbeteiligungsgesellschaft AG ("BEG"), BFAG, an
officer/principal stockholder of BFAG, and various parties related to such
officer/principal stockholder acquired an aggregate of 4,750,000 shares of
Common Stock (800,000 of which were acquired by BEG) from a founder of the
Company for an aggregate purchase price of $104,500. At the time of such
acquisition, there was no public market for the Common Stock. The 3,150,000
shares of Common Stock held by such officer/principal stockholder and the
various parties related to such officer/principal stockholder subsequently
were sold to, and are now owned by, BEG. The 3,950,000 shares owned by BEG
as well as the 800,000 shares of Common Stock owned by BFAG, are being held
by a pooling trustee pursuant to the terms of a pooling trust agreement and
will not be released until August 3, 2001. During such time, the trustee
shall seek instructions from BEG and BFAG, respectively, before taking any
action as a stockholder with respect to any of such shares.

* Less than 1%

37
<PAGE>
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION

In April, 1998, the Company acquired all of the issued and outstanding stock
of MSOAS from Franz Eder, the President and Chairman of the Board of the
Company, in exchange for 7,600,000 shares of Common Stock (the "MSOAS
Exchange"). In May, 1998, the Company acquired 3,291,738 shares of OSAS
(approximately 68% of the outstanding OSAS capital stock) in exchange for
4,937,607 shares of Common Stock (the "OSAS Exchanges"). All of such shares are
being held in escrow subject to the Registration Statement being declared
effective. On May 20, 1998, the Company entered into two agreements to acquire
an additional 686,668 shares of OSAS (approximately 14% of the outstanding OSAS
capital stock) in exchange for 1,030,002 shares of Common Stock (the "Additional
OSAS Exchanges"). Subject to the satisfaction of certain conditions precedent,
the Company anticipates that the Additional OSAS Exchanges will close soon after
the effective date of the Registration Statement. The Company has agreed to
cover the disposition of the shares of Common Stock issued or to be issued
pursuant to the MSOAS Exchange, the OSAS Exchanges, and the Additional OSAS
Exchanges (collectively "the Selling Stockholder Shares") in the Registration
Statement.

The following table sets forth the names and addresses of each of the
Selling Stockholders and the number of shares of Common Stock that may be
offered by each of the Selling Stockholders pursuant to this Prospectus.

<TABLE>
<CAPTION>
NAME AND ADDRESS OF SELLING STOCKHOLDER SHARES(1)
- -------------------------------------------------------------------------- --------------
<S> <C>

Franz Eder(2)............................................................. 7,600,000(3)
Pariserstr. 61
10719 Berlin, Germany

SPAX Holding AS........................................................... 547,500
Stranden 3A
0250 Oslo, Norway

Aasens Trykkerier AS...................................................... 87,600
Hausmannsgt 6
0186 Oslo,Norway

Arne Martinsen............................................................ 223,500
Snnaveien 94
1476 Rasta, Norway

Birger Holten............................................................. 78,900
Rognerudveien 33B
0681 Oslo, Norway

Jochen Schene(4).......................................................... 332,499
Ohlauer Weg 12
40627 Dusseldorf, Germany

Frank Samuels............................................................. 324,999
Konradinstr 20
47058 Duisburg, Germany

Jurgen Ternieden(5)....................................................... 332,499
Saturnweg 26
45478 Mulheim, Germany

Thyssen Stahlunion GmbH(6)................................................ 333,000
Hans Gunter S. str 1
40235 Dusseldorf, Germany
</TABLE>

38
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SELLING STOCKHOLDER SHARES(1)
- -------------------------------------------------------------------------- --------------
<S> <C>
Thor Stang................................................................ 190,500
Ekebergveien 76
3080 Holmestrand, Norway

Norsk SMB Invest 1........................................................ 339,000
Stranden 3A
0250 Oslo, Norway

Norsk SMB Invest 2........................................................ 498,000
Stranden 3A
0250 Oslo, Norway

Norsk SMB Invest 3........................................................ 186,660
Stranden 3A
0250 Oslo, Norway

Norsk SMB Invest 4........................................................ 119,700
Stranden 3A
0250 Oslo, Norway

Nordas Invest AS.......................................................... 250,200
Midttunlia 73
5050 Nestun, Norway

Inger Egeberg Sogstad..................................................... 18,000
Fjordallen 14
0250 Oslo, Norway

Erik Staumo............................................................... 56,580
Fjordallen 14
0250 Oslo, Norway

Knut Rygh................................................................. 70,140
Nordhellinga 7
1313 Vyenenga, Norway

Georg Tidemann Andersen................................................... 10,140
Bjrnstjeme B 21
3000 Drammen, Norway

Arvid Kolle............................................................... 38,700
Tulipanveien 20
4300 Sandnes, Norway

AS Ineta.................................................................. 1,500
Postboks 2406 Solli
0201 Oslo, Norway

Concordia Capo AS......................................................... 4,500
Postboks 21
5501 Haugesund, Norway

Concordia Foss AS......................................................... 4,500
Postboks 21
5501 Haugesund, Norway

Concordia Star AS......................................................... 4,500
Postboks 21
5501 Haugesund, Norway
</TABLE>

39
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SELLING STOCKHOLDER SHARES(1)
- -------------------------------------------------------------------------- --------------
<S> <C>
Einar Myklebust........................................................... 65,100
Fyrgangen 17
1560 Larkollen, Norway

Erik Kristen-Johanssen.................................................... 14,700
Postboks 2406 Solli
0201 Oslo, Norway

Gunnar Greibokk........................................................... 34,500
4660 Evje, Norway

Gunnar Jrgensen........................................................... 22,500
Solveien 4
1177 Oslo,Norway

Hannestad Mek AS.......................................................... 6,000
Kanalveien 4
3110 Tnsberg, Norway

Jan Krohn-Hansen.......................................................... 53,310
Nordasneset 63
5046 Radal, Norway

Jens Holtung.............................................................. 90,000
Blakollveien 18
3175 Ramnes, Norway

Johnco AS................................................................. 30,000
Postboks 229
5501 Haugesund, Norway

Johs Owren................................................................ 40,140
Tllfsrud gard
2600 Lillehammer, Norway

Jon Fosse................................................................. 11,250
Smebyveien 2
2300 Hamar, Norway

Karlander Invest AS....................................................... 36,000
Postboks 1785 Vika
0122 Oslo, Norway

Maria Hareide............................................................. 26,700
Dicksvei 13
1324 Lysaker, Norway

Nistad Finans og Eiendom AS............................................... 207,150
Midttunlia 73
5051 Oslo, Norway

Ole-Johan Olsen........................................................... 42,300
Fynveien 24
3132 Husysund, Norway

Rolf Ness................................................................. 41,790
Milje
5593 Skanevik, Norway
</TABLE>

40
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SELLING STOCKHOLDER SHARES(1)
- -------------------------------------------------------------------------- --------------
<S> <C>
Sigfred Lyngy............................................................. 96,150
Stortingsgaten 28
0161 Oslo, Norway

Terje Rsj................................................................. 22,500
Van der Weld weg 5
5040 Paradis, Norway

Trade Invest AS........................................................... 30,000
Postboks 214
1415 Oppegard, Norway

Zaco AS................................................................... 14,400
Postboks 563
4801 Arendal, Norway

Per Bull Haugsen(7)....................................................... 332,499(8)
Gyldenlvesgt. 12
0260 Oslo, Norway

G. Foss Beheer b.v.(9).................................................... 697,503(8)
Mezenpelin 11
2566 ZS Den Haag
The Netherlands
</TABLE>

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

(1) The number of shares of Common Stock listed indicates both the number of
shares owned by the Selling Stockholder prior to this offering (assuming the
consummation of the Additional OSAS Exchanges) and the number of shares that
may be offered for the Selling Stockholder's account. Assuming all of the
Selling Stockholder Shares are sold, none of the Selling Stockholders will
own any shares of Common Stock after completion of this offering.

(2) Franz Eder is the President and Chairman of the Board of the Company and a
director of MSOAS.

(3) Such shares are being held by a trustee pursuant to the terms of a pooling
trust agreement. Such shares may not be disposed of by Mr. Eder until they
are released to him by the trustee. Mr. Eder shall receive ten percent of
such shares on July 1, 1999, an additional thirty percent of such shares on
July 1, 2000, an additional thirty percent of such shares on July 1, 2001,
and the balance of such shares on July 1, 2002. The trustee shall seek
instructions from Mr. Eder before taking any action as a stockholder with
respect to any of the shares held in trust.

(4) Jochen Schene is a member of the Board of Directors of OSAS and an officer
of Thyssen Stahlunion GmbH.

(5) Jurgen Ternieden is a director of the Company, Chairman of the Board of
OSAS, and an officer and the head of the Pipes, Offshore, Special Products
Department of Thyssen Stahlunion GmbH.

(6) MSOAS has formed a strategic alliance with Thyssen Stahlunion GmbH with
respect to the marketing of the Company's proposed services.

(7) Per Bull Haugsen is an officer of OSAS and one of the developers of the
Offshore Shuttle concept.

(8) Represents shares to be issued in the Additional OSAS Exchanges.

(9) G. Foss Beheer b.v. is a Dutch corporation that is owned and operated by
Gunnar Foss, a director of OSAS and one the developers of the Offshore
Shuttle concept.

The Selling Stockholders are entitled to receive all of the proceeds from
the future sale of their Selling Stockholder Shares.

41
<PAGE>
The Selling Stockholders, from time to time, depending on market conditions
and other factors, may offer and/or sell their Selling Stockholder Shares in the
over-the-counter market, or otherwise, at prices and terms then prevailing or at
prices related to the then-current market price, or in negotiated transactions.
The Selling Stockholder Shares may be sold by one or more methods including,
without limitation, (i) block trades in which a broker or dealer so engaged will
attempt to sell the Selling Stockholder Shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction; (ii)
purchases by a broker or dealer as principal and resale by such broker or dealer
for its account pursuant to this Prospectus; (iii) ordinary brokerage
transactions and transactions in which the broker solicits purchases; and (iv)
face to face transactions between sellers and purchasers without a broker or
dealer. In effecting sales, brokers or dealers engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. Such
brokers or dealers may receive commissions or discounts from the Selling
Stockholders in amounts to be negotiated. Such brokers, dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act, in connection with such sales.

Sales of the Selling Stockholder Shares by the Selling Stockholders may have
an adverse effect on the market price of the Common Stock. Moreover, the Selling
Stockholders are not restricted as to the number of Selling Stockholder Shares
that may be sold at any one time, and it is possible that a significant number
of Selling Stockholder Shares could be sold at the same time, which also may
have an adverse effect on the market price of the Common Stock.

42
<PAGE>
CERTAIN TRANSACTIONS

On April 14, 1998, the Company issued 7,600,000 shares of Common Stock to
Franz Eder, the President and the Chairman of the Board of the Company, in
exchange for the 999,000 shares of MSOAS capital stock (constituting all of
MSOAS's issued and outstanding capital stock) held by Mr. Eder. The stock
certificate evidencing the shares of Common Stock that were issued to Mr. Eder
is being held by a trustee pursuant to the terms of a pooling trust agreement.
Such shares may not be disposed of by Mr. Eder until they are released to him by
the trustee. Mr. Eder shall receive ten percent of such shares on July 1, 1999,
an additional thirty percent of such shares on July 1, 2000, an additional
thirty percent of such shares on July 1, 2001, and the balance of such shares on
July 1, 2002. The trustee shall seek instructions from Mr. Eder before taking
any action as a stockholder with respect any of the shares held in trust. The
disposition of Mr. Eder's shares is covered by the Registration Statement.

In May, 1998, the Company acquired 3,291,738 shares of OSAS (approximately
68% of the outstanding OSAS capital stock) in exchange for 4,937,607 shares of
Common Stock. All of such shares are being held in escrow subject to the
Registration Statement being declared effective. In connection therewith, the
221,666 OSAS shares held by Jurgen Ternieden, a director of the Company, were
exchanged for 332,499 shares of Common Stock. The disposition of Mr. Ternieden's
shares of Common Stock is covered by the Registration Statement.

The Company entered into a loan agreement (the "Loan Agreement"), dated as
of March 12, 1998, amended as of August 27, 1998 and as of September 24, 1998,
with ValorInvest Ltd., an investment bank based in Geneva, Switzerland
("ValorInvest"), pursuant to which ValorInvest agreed to lend an aggregate of up
to $3,500,000 to the Company at such times as the Company shall request;
provided, however, advances shall be made in increments of $250,000 and shall
not exceed $500,000 in any single month. Pursuant to the Loan Agreement, the
Company issued three non-negotiable promissory notes to ValorInvest in the
aggregate principal amount of $3,500,000 (the "Bridge Notes"). Any monies
advanced to the Company under the Bridge Notes shall bear interest at the rate
of 7.5% per annum, and shall be due and payable upon the earlier of December 31,
1998 or the completion of a public offering for gross proceeds of at least
$100,000,000. As of September 30, 1998, an aggregate of $2,349,510 had been
advanced to the Company under the Bridge Notes.

The Company currently leases its office space in the United States from
Intercap Resource Management U.S., Inc. ("Intercap U.S."), a wholly-owned
subsidiary of Intercap Resource Management Corp. ("Intercap"). Intercap is an
oil and gas exploration, development, and production company traded on the
Vancouver Stock Exchange. Jim Ford, the former President and a former director
of the Company, is the President and a director of Intercap and Intercap U.S.;
George Wilfred Norman Wareham, the Treasurer, Chief Financial Officer, and
Secretary of the Company, is the Secretary, Treasurer, and a director of
Intercap and the Treasurer, a Vice President, and a director of Intercap U.S.;
and Shafiq Nazerali, a former consultant to the Company, is a former director of
Intercap. The Company believes that the lease terms are at least as favorable to
the Company as would be obtained from an unaffiliated, independent third party.

Effective as of February 1, 1998, the Company entered into a six-month
consulting agreement with each of Iqbal Akram and Wareham Management Ltd., a
Canadian corporation which is owned and operated by George Wilfred Norman
Wareham. The respective agreements provided for Mr. Akram to receive $5,000 per
month and Wareham Management Ltd. to receive $2,500 per month. On February 19,
1998, Mr. Akram was appointed Vice President of the Company and his consulting
agreement was terminated. On April 14, 1998, the Company entered into a two-year
employment agreement with Mr. Akram (the "Akram Agreement") pursuant to which
Mr. Akram shall devote at least 50% of his professional and business time to the
Company as Vice President and shall receive a salary of $60,000 per annum. On
the same day, the consulting agreement with Wareham Management Ltd. was
terminated. In lieu thereof, the Company entered into a two-year loan out
agreement with Wareham Management Ltd.

43
<PAGE>
(the "Wareham Agreement") for the services of Mr. Wareham. Pursuant to the
Wareham Agreement, Wareham Management Ltd. shall loan out the services of Mr.
Wareham to serve the Company as Chief Financial Officer, Treasurer, and
Secretary. In consideration thereof, Wareham Management Ltd. shall receive an
annual fee of $32,100. See "Management."

As of September 30, 1998, the Company had paid approximately $60,319 to
Schuller for marketing research and other services rendered. The Company
believes that such services were rendered on terms at least as favorable to the
Company as would be obtained from an unaffiliated, independent third party. In
addition, MSOAS has entered into an agreement with Schuller with respect to
waste management, onshore dismantling, and oil pollution prevention and cleanup.
As of the date hereof, no monies have been paid to Schuller under such
agreement. Franz Eder and Dr. Hubert Besner are shareholders and members of the
Supervisory Board of Schuller.

MSOAS has entered into an agreement with TSU with respect to the marketing
of its proposed services. As of September 30, 1998, approximately $63,174 had
been paid to TSU under such agreement. Jurgen Ternieden, a director of the
Company, is an officer and the head of the Pipes, Offshore, Special Products
Department of TSU. The Company believes that such services were rendered on
terms at least as favorable to the Company as would be obtained from an
unaffiliated, independent third party.

As of September 30, 1998, approximately $87,000 had been paid to the law
firm of Besner Kreifels Weber for legal services rendered. Dr. Hubert Besner, a
director of the Company, is a member of Besner Kreifels Weber. The Company
believes that such services were rendered on terms at least as favorable to the
Company as would be obtained from an unaffiliated, independent third party.

MSOAS has entered into an agreement with RC with respect to its engineering
and operational activities. As of September 30, 1998, approximately $395,175 had
been paid to RC under such agreement. Sverre Hanssen, the Chief Executive
Officer of RC, is a Chairman of the Board of Directors of MSOAS. The Company
believes that such services were rendered on terms at least as favorable to the
Company as would be obtained from an unaffiliated, independent third party.

44
<PAGE>
DESCRIPTION OF SECURITIES

The authorized capital stock of the Company consists of 75,000,000 shares of
common stock, par value $0.001 per share (the "Common Stock").

COMMON STOCK

Each holder of Common Stock is entitled to one vote for each share held on
all matters properly submitted to the stockholders for their vote. Holders of
shares of outstanding Common Stock are entitled to those dividends declared by
the Board of Directors out of legally available funds. Holders of shares of
outstanding Common Stock have no preemptive, conversion, or redemption rights.
All of the issued and outstanding shares of Common Stock are duly authorized,
validly issued, fully paid and nonassessable.

STATUTORY BUSINESS COMBINATION PROVISIONS

The Company is subject to the provisions of Section 78.411 et seq. of the
Nevada General Corporation Law ("Business Combination Act"). The Business
Combination Act provides, with certain exceptions, that a Nevada corporation may
not engage in any of a broad range of business combinations with a person, or an
affiliate or an associate of such person, who is an "interested stockholder" for
a period of three years from the date that such person became an interested
stockholder, unless the transaction resulting in a person becoming an interested
stockholder, or the business combination, is approved by the board of directors
of the corporation before the person becomes an interested stockholder.

The Business Combination Act further provides that a Nevada corporation may
not engage in such a business combination after the expiration of three years
from the date that such person became an interested stockholder, unless the
business combination is approved by the board of directors of the corporation
before the person became an interested stockholder or by the affirmative vote of
a majority of outstanding votes not beneficially owned by the interested
stockholder at a meeting called not earlier than three years after the
interested stockholder's date of acquiring shares.

Under the Business Combination Act, an "interested stockholder" is defined
as any person that is (i) the owner of 10% or more of the outstanding voting
stock of the corporation or (ii) an affiliate or associate of the corporation
and was the owner of 10% or more of the outstanding voting stock of the
corporation at any time within the three year period immediately prior to the
date on which it is sought to be determined whether such person is an interested
stockholder.

At its option, a corporation may exclude itself from the coverage of the
Business Combination Act by amending its Articles of Incorporation by action of
its stockholders, other than interested stockholders and their affiliates and
associates, to exempt itself from coverage, provided that such charter amendment
may not become effective until 18 months after the date it is adopted and does
not apply to any combination of the corporation with an interested stockholder
whose date of acquiring shares is on or before the effective date of the
amendment. The Company has not adopted such an amendment to its Articles of
Incorporation.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Continental Stock
Transfer & Trust Company, 2 Broadway, 19th floor, New York, New York 10004

45
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Subject to the the Registration Statement being declared and remaining
effective, all of the Selling Stockholder Shares (except for the 7,600,000
shares of Common Stock owned by Franz Eder, the President and Chairman of the
Board of the Company) that may be offered hereby will be immediately tradeable
without restriction or further registration under the Securities Act. Mr. Eder's
shares are being held by a pooling trustee pursuant to the terms of a pooling
trust agreement. Although the disposition of Mr. Eder's shares are covered by
the Registration Statement, pursuant to the pooling trust agreement Mr. Eder
cannot dispose of such shares until they are released to him by the trustee. Mr.
Eder shall receive ten percent of such shares on July 1, 1999, an additional
thirty percent of such shares on July 1, 2000, an additional thirty percent of
such shares on July 1, 2001, and the balance of such shares on July 1, 2002.
Subject to the continued effectiveness of the Registration Statement, such
shares shall be immediately tradeable without restriction or further
registration under the Act upon release of such shares to Mr. Eder.

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for the
Company by Breslow & Walker, LLP, New York, New York.

46
<PAGE>
EXPERTS

The Company's financial statements as of December 31, 1997 and for the
period from May 23, 1997 (inception) through December 31, 1997 appearing in this
Prospectus have been audited by Deloitte & Touche, Vancouver, British Columbia,
Canada, independent auditors, as set forth in their report thereon appearing
elsewhere herein, and are included herein in reliance upon the authority of such
firm as experts in accounting and auditing.

The financial statements of MSOAS as of December 31, 1997 and for the period
from December 10, 1997 (inception) through December 31, 1997, and the financial
statements of OSAS as of December 31, 1996 and 1997 and for the period from
November 29, 1996 (inception) through December 31, 1996 and for the one-year
period ended December 31, 1997 appearing in this Prospectus have been audited by
Deloitte & Touche, Oslo, Norway, independent auditors, as set forth in their
reports thereon appearing elsewhere herein, and are included herein in reliance
upon the authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission, 450 Fifth Street, N.W.,
Washington, D.C., a Registration Statement on Form S-1 under the Securities Act
of 1933, as amended, for the registration of the Offering. This Prospectus,
which is part of the Registration Statement, does not contain all of the
information contained in the Registration Statement. For further information
with respect to the Company and the shares of Common Stock offered hereby,
reference is made to the Registration Statement, including the exhibits thereto,
which may be inspected, without charge, at the office of the Securities and
Exchange Commission, or copies of which may be obtained from the Commission in
Washington, D.C., upon payment of the requisite fees, or from the Commission's
Website at http://www.sec.gov. Statements contained in this Prospectus as to the
intent of any contract or other document referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.

47
<PAGE>
MARINE SHUTTLE OPERATIONS, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Consolidated Financial Statements of Marine Shuttle Operations Inc.
Independent Auditor's Report............................................................................. F-2
Consolidated Balance Sheets as of December 31, 1997 and September 30, 1998 (unaudited)................... F-3
Consolidated Statements of Loss for the period from May 23, 1997 (inception) through December 31, 1997
and for the nine-month period ended September 30, 1998 (unaudited)..................................... F-4
Consolidated Statements of Cash Flows for the period from May 23, 1997 (inception) through December 31,
1997 and for the nine-month period ended September 30, 1998 (unaudited)................................ F-5
Consolidated Statements of Shareholders' Equity (Deficit) for the period from May 23, 1997 (inception)
through December 31, 1997 and for the nine-month period ended September 30, 1998 (unaudited)........... F-6
Notes to Consolidated Financial Statements............................................................... F-7

Financial Statements of Marine Shuttle Operations AS
Independent Auditor's Report............................................................................. F-17
Balance Sheet as of December 31, 1997 and April 13, 1998 (unaudited)..................................... F-18
Statement of Loss for the period from December 10, 1997 (inception) through December 31, 1997 and for the
period from January 1, 1998 to April 13, 1998 (unaudited).............................................. F-19
Statement of Cash Flows for the period from December 10, 1997 (inception) through December 31, 1997 and
for the period from January 1, 1998 to April 13, 1998 (unaudited)...................................... F-20
Statement of Shareholders' Equity for the period from December 10, 1997 (inception) through December 31,
1997 and for the period from January 1, 1998 to April 13, 1998 (unaudited)............................. F-21
Notes to Financial Statements............................................................................ F-22

Financial Statements of Offshore Shuttle AS
Independent Auditor's Report............................................................................. F-26
Balance Sheet as of December 31, 1996 and 1997 and September 30, 1998 (unaudited)........................ F-27
Statement of Loss for the period from November 29, 1996 (inception) through December 31, 1996, the
one-year period ended December 31, 1997, and the nine-month period ended September 30, 1998
(unaudited)............................................................................................ F-28
Statement of Cash Flows for the period from November 29, 1996 (inception) through December 31, 1996, the
one-year period ended December 31, 1997 and the nine-month period ended September 30, 1998
(unaudited)............................................................................................ F-29
Statement of Shareholders' Equity for the period from November 29, 1996 (inception) through December 31,
1996, the one-year period ended December 31, 1997 and the nine-month period ended September 30, 1998
(unaudited)............................................................................................ F-30
Notes to Financial Statements............................................................................ F-31

Selected Unaudited Pro Forma Consolidated Financial Information
Explanatory Statement.................................................................................... F-39
Pro Forma Consolidated Balance Sheet..................................................................... F-40
Pro Forma Consolidated Statements of Loss
-Nine months ended September 30, 1998................................................................ F-41
-Period ended December 31, 1997...................................................................... F-42
Notes to the Unaudited Pro Forma Consolidated Financial Information...................................... F-43
</TABLE>

F-1
<PAGE>
AUDITORS' REPORT

To the Shareholders of
Marine Shuttle Operations Inc.
(formerly Geoteck International, Inc.)
(A development stage company)

We have audited the consolidated balance sheet of Marine Shuttle Operations
Inc. (a development stage company) as at December 31, 1997 and the consolidated
statements of loss, shareholders' equity (deficit) and cash flows for the period
from the date of incorporation, May 23, 1997, to December 31, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance 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.

In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at December 31,
1997 and the results of its operations and its cash flows for the period from
the date of incorporation, May 23, 1997, to December 31, 1997 in accordance with
accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's negative working capital and deficit raises
substantial doubt about its ability to continue as a going concern. Management's
plans concerning this matter are also described in Note 1. The financial
statements do not contain any adjustments that might result from the outcome of
this uncertainty.

/s/ Deloitte & Touche

Chartered Accountants
Vancouver, British Columbia
October 13, 1998

F-2
<PAGE>
MARINE SHUTTLE OPERATIONS INC.
(FORMERLY GEOTECK INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
(A NEVADA CORPORATION)

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 1998 AND DECEMBER 31, 1997

(U.S. DOLLARS)

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
-------------- ------------
<S> <C> <C>
(UNAUDITED)
ASSETS

CURRENT
Cash............................................................................. $ 165,482 $ 9,015
-------------- ------------
Total current assets............................................................. 165,482 9,015

CAPITAL ASSETS (Note 5)............................................................ 485,638 --

GOODWILL AND OTHER INTANGIBLES, net of amortization
(Note 6)......................................................................... 21,559,801 --
-------------- ------------
TOTAL ASSETS....................................................................... $ 22,210,921 $ 9,015
-------------- ------------
-------------- ------------
LIABILITIES

CURRENT
Accounts payable................................................................. $ 217,601 $ 16,092
Notes payable (Note 8)........................................................... 2,349,510 --
Due to a related company (Note 9)................................................ -- 3,854
-------------- ------------
Total current liabilities........................................................ 2,567,111 19,946
-------------- ------------
SHAREHOLDERS' EQUITY (DEFICIT)
Authorized
75,000,000 common shares with a par value of $0.001
Issued and outstanding
27,620,000 common shares with a par value of $0.001 at September 30, 1998 and
20,020,000 common shares at December 31, 1997................................ 27,620 20,020
Additional paid-in capital....................................................... 22,926,380 133,980
Cumulative foreign exchange adjustment........................................... (15,921) --
Accumulated deficit during the development stage................................. (3,294,269) (164,931)
-------------- ------------
Total shareholders' equity (deficit)............................................. 19,643,810 (10,931)
-------------- ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY (DEFICIT)................................................... $ 22,210,921 $ 9,015
-------------- ------------
-------------- ------------
</TABLE>

CONTINUING OPERATIONS (Note 1)

F-3
<PAGE>
MARINE SHUTTLE OPERATIONS INC.
(FORMERLY GEOTECK INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
(A NEVADA CORPORATION)

CONSOLIDATED STATEMENTS OF LOSS

(U.S. DOLLARS)

<TABLE>
<CAPTION>
CUMULATIVE
TO SEPTEMBER 30,
1998 FROM PERIOD FROM
DATE OF NINE MONTH MAY 23, 1997
INCEPTION, PERIOD ENDED TO
MAY 23, SEPTEMBER 30, DECEMBER 31,
1997 1998 1997
----------------- ------------- -------------
<S> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
EXPENSES
Accounting and audit............................................ $ 122,368 $ 106,857 $ 15,511
Bank charges.................................................... 1,746 1,446 300
Cost of Cancelled Financing Arrangement......................... 348,039 348,039 --
Consulting fees................................................. 207,758 177,758 30,000
Depreciation.................................................... 5,275 5,275 --
Interest........................................................ 85,196 85,196 --
Legal........................................................... 127,433 100,516 26,917
Listing and filing fees......................................... 31,000 -- 31,000
Goodwill amortization........................................... 1,254,803 1,254,803 --
Foreign exchange gain........................................... 1,174 1,174 --
Office and printing............................................. 115,289 106,615 8,674
Management fees................................................. 40,000 -- 40,000
Promotion....................................................... 615,257 615,257 --
Salaries........................................................ 112,255 112,255 --
Telephone....................................................... 6,593 4,246 2,347
Transfer agent fees............................................. 13,340 11,322 2,018
Travel.......................................................... 157,432 149,268 8,164
Write-down of investment (Note 3)............................... 90,000 90,000 --
----------------- ------------- -------------
3,334,958 3,170,027 164,931
Less: interest income........................................... 40,689 40,689 --
----------------- ------------- -------------
NET LOSS FOR THE PERIOD......................................... $ (3,294,269) $ (3,129,338) $ (164,931)
----------------- ------------- -------------
----------------- ------------- -------------
Basic and diluted loss per share................................ $ (0.13) $ (0.01)
------------- -------------
------------- -------------
Weighted average shares outstanding............................. 24,724,762 18,931,982
------------- -------------
------------- -------------
</TABLE>

F-4
<PAGE>
MARINE SHUTTLE OPERATIONS INC.
(FORMERLY GEOTECK INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
(A NEVADA CORPORATION)

CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. DOLLARS)

<TABLE>
<CAPTION>
CUMULATIVE
TO SEPTEMBER 30,
1998 FROM PERIOD FROM
DATE OF NINE MONTH MAY 23, 1997
INCEPTION, PERIOD ENDED TO
MAY 23, SEPTEMBER 30, DECEMBER 31,
1997 1998 1997
---------------- ------------- ------------
<S> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
OPERATING ACTIVITIES
Net loss for the period......................................... $ (3,294,269) $(3,129,338) $ (164,931)
Adjustments to reconcile net loss to net cash provided by
operating activities
Goodwill amortization......................................... 1,254,803 1,254,803 --
Write-down of investment...................................... 90,000 90,000 --
Interest expense.............................................. 49,510 49,510 --
Depriciation.................................................. 5,275 5,275 --
Changes in non-cash working capital
Accounts payable.............................................. 36,348 20,256 16,092
Due to related party.......................................... -- (3,854) 3,854
---------------- ------------- ------------
Net cash used in operating activities............................. (1,858,333) (1,713,348) (144,985)
---------------- ------------- ------------
FINANCING ACTIVITIES
Issuance of capital stock....................................... 170,000 -- 170,000
Share issue costs............................................... (16,000) -- (16,000)
--
Note payable.................................................... 2,300,000 2,300,000 --
---------------- ------------- ------------
Net cash generated by financing activities........................ 2,454,000 2,300,000 154,000
---------------- ------------- ------------
INVESTING ACTIVITIES
Investment...................................................... (100,000) (100,000) --
Capital asset purchases......................................... (490,913) (490,913) --
Cumulative foreign exchange adjustment.......................... (15,921) (15,921) --
Proceeds on sale of investment.................................. 10,000 10,000 --
Advance to Marine Shuttle Operations AS......................... (249,986) (249,986) --
Acquisition of Marine Shuttle Operations AS..................... 416,635 416,635 --
---------------- ------------- ------------
Net cash used in investing activities............................. (430,185) (430,185) --
---------------- ------------- ------------
CHANGE IN CASH DURING THE PERIOD.................................. 165,482 156,467 9,015
CASH, BEGINNING OF PERIOD......................................... -- 9,015 --
---------------- ------------- ------------
CASH, END OF PERIOD............................................... $ 165,482 $ 165,482 $ 9,015
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
Cash payment for interest....................................... $ -- $ -- $ --
---------------- ------------- ------------
Cash receipts for interest...................................... 40,689 40,689 --
---------------- ------------- ------------
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

During the nine month period ended September 30, 1998, the Company acquired
all of the issued and outstanding shares of Marine Shuttle Operations AS, ("MSO
AS") . Consideration consisted of 7,600,000 common shares of the Company (which
has been recorded at $22,800,000).

F-5
<PAGE>
MARINE SHUTTLE OPERATIONS INC.
(FORMERLY GEOTECK INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
(A NEVADA CORPORATION)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

NINE MONTHS ENDED SEPTEMBER 30, 1998 AND FROM THE DATE OF INCORPORATION,
MAY 23, 1997, TO DECEMBER 31, 1997

(U.S. DOLLARS)

<TABLE>
<CAPTION>
CUMULATIVE TOTAL
COMMON SHARES FOREIGN EXCHANGE SHAREHOLDERS'
---------------------- PAID-IN ADJUSTMENT DURING ACCUMULATED EQUITY
SHARES AMOUNT CAPITAL DEVELOPMENT STAGE DEFICIT (DEFICIT)
--------- ----------- ---------- ----------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>

Issued on incorporation................ 10,000,000 $ 10,000 $ -- $ -- $ -- $ 10,000

Private placement...................... 10,020,000 10,020 133,980 -- -- 144,000

Net loss............................... -- -- -- -- (164,931) (164,931)
--------- ----------- ---------- -------- ------------ --------------

Balance at December 31, 1997........... 20,020,000 20,020 133,980 -- (164,931) (10,931)

Issued on acquisition of MSO AS........ 7,600,000 7,600 22,792,400 -- -- 22,800,000

Net loss............................... -- -- -- (15,921) (3,129,338) (3,145,259)
--------- ----------- ---------- -------- ------------ --------------

Balance at September 30, 1998
(Unaudited).......................... 27,620,000 $ 27,620 $22,926,380 $ (15,921) $(3,294,269) $ 19,643,810
--------- ----------- ---------- -------- ------------ --------------
--------- ----------- ---------- -------- ------------ --------------
</TABLE>

F-6
<PAGE>
MARINE SHUTTLE OPERATIONS INC.
(FORMERLY GEOTECK INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
(A NEVADA CORPORATION)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 1998 AND DECEMBER 31, 1997

(INFORMATION AS AT SEPTEMBER 30, 1998
AND FOR THE NINE MONTH PERIOD THEN ENDED
IS UNAUDITED)
(U.S. DOLLARS)

1. CONTINUING OPERATIONS

Marine Shuttle Operations Inc. (the "Company") was incorporated under the
name Geoteck International, Inc. on May 23, 1997 in Nevada, U.S.A. The Company
changed its name to Marine Shuttle Operations Inc. on May 29, 1998.

The Company was organized with the intent to be a holding company which will
acquire and/or form joint ventures with corporate entities conducting various
types of businesses throughout the world.

The Company has negative working capital and a deficit. The ability of the
Company to continue as a going concern is dependent on the ability of the
Company to obtain financing. To address this concern, the Company intends to
raise up to $15 million through a private placement of Common Stock through
Berliner Effektenbank AG, a German investment bank. In addition, the Company has
entered into an engagement letter with MFC Merchant Bank S.A. ("MFC") pursuant
to which MFC shall act, on a best-efforts basis, as exclusive agent for the
Company in raising up to DM 215,000,000 (approximately $126,000,000) (the "MFC
Financing"). As consideration for its services, MFC shall receive a fee equal to
five percent of the money raised plus DM 100,000 (approximately $60,000) per
month until the completion or termination of the MFC Financing. In addition, all
of MFC's out-of-pocket expenses shall be reimbursed, and if the Company raises
the necessary funds through another source, MFC shall receive a break-up fee
equal to the greater of $1,200,000 or 350,000 shares of Common Stock. Although
the structure of the MFC Financing has yet to be determined, the Company
anticipates that it will be principally through the issuance of government
guaranteed debt.

2. SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared in accordance with generally
accepted accounting principles in the United States and reflect the following
significant accounting principles:

(A) PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, Marine Shuttle Operations AS (MSO AS).
Intercompany transactions and balances have been eliminated.

(B) ESTIMATES AND ASSUMPTIONS

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 amount of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.

F-7
<PAGE>
MARINE SHUTTLE OPERATIONS INC.
(FORMERLY GEOTECK INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
(A NEVADA CORPORATION)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 1998 AND DECEMBER 31, 1997

(INFORMATION AS AT SEPTEMBER 30, 1998
AND FOR THE NINE MONTH PERIOD THEN ENDED
IS UNAUDITED)
(U.S. DOLLARS)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(C) EARNINGS (LOSS) PER COMMON SHARE

In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings Per Share (SFAS 128), which established new
standards for computing and presenting earnings per share effective for
fiscal years ending after December 15, 1997. With SFAS 128, primary
earnings per share is replaced by basic earnings per share, which is
computed by dividing income available to common shareholders by the
weighted average number of shares outstanding for the period. In
addition, SFAS 128 requires the presentation of diluted earnings per
share, which includes the potential dilution that could occur if dilutive
securities were exercised or converted into common stock. The computation
of diluted EPS does not assume the conversion or exercise of securities
if their effect is anti-dilutive. Common equivalent shares consist of the
common shares issuable upon the conversion of the convertible loan notes
and special warrants (using the if-converted method) and incremental
shares issuable upon the exercise of stock options and share purchase
warrants (using the treasury stock method).

(D) CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on hand, deposits in banks and
highly liquid investments with an original maturity of three months or
less.

(E) INVESTMENTS

The Company carries its investments in private companies at the lower of
cost and net realizable value.

(F) CAPITAL ASSETS

Capital assets are recorded at cost. Depreciation is provided in the
fiscal quarter subsequent to acquisition. Depreciation is charged to
operations over the estimated useful lives of the assets as follows:

<TABLE>
<S> <C>
Computer equipment........................................... 35%
Office equipment............................................. 30%
</TABLE>

The carrying value of capital assets is reviewed on a regular basis for
any permanent impairment in value. To date, no such impairment has been
indicated.

The building period for each shuttle is estimated to be 24 months. All
direct costs including interest related to the construction of the
shuttle are capitalized as incurred with amortization commencing when the
shuttle is available for operation.

F-8
<PAGE>
MARINE SHUTTLE OPERATIONS INC.
(FORMERLY GEOTECK INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
(A NEVADA CORPORATION)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 1998 AND DECEMBER 31, 1997

(INFORMATION AS AT SEPTEMBER 30, 1998
AND FOR THE NINE MONTH PERIOD THEN ENDED
IS UNAUDITED)
(U.S. DOLLARS)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(G) GOODWILL AND OTHER INTANGIBLES

Goodwill arising on acquisition and other purchased intangibles are
amortized on a straight-line basis over periods ranging from 5 to 10
years. Management regularly reviews the carrying value of goodwill and
intangibles based upon future expected cash flows. To date, no impairment
has been indicated.

(H) FINANCIAL INSTRUMENTS

The Company estimates that the carrying values of its cash and cash
equivalents, accounts payable, due to related party and note payable
approximate fair value at September 30, 1998 and December 31, 1997 due to
the short-term to maturity and the arms-length nature of the
transactions.

(I) FOREIGN CURRENCY TRANSLATION

The Company's functional currency is the U.S. dollar since it is the
primary economic environment in which the Company operates. Subsequent to
the acquisition of MSO AS, management reviewed the operations of the
Company to determine whether the functional currency had changed. It was
determined that as all the Company's financing activities will be
denominated in U.S. dollars and that a significant amount of the costs
incurred in construction of shuttles will also be denominated in U.S.
dollars that a change had not occurred.

Transaction amounts denominated in foreign currencies are translated into
U.S. dollars at exchange rates prevailing at the transaction dates.
Carrying values of non-U.S. dollar assets and liabilities are adjusted at
each balance sheet date to reflect the exchange rate prevailing at that
date. Gains and losses arising from restatement of foreign currency
assets and liabilities are included in earnings. Assets and liabilities
of subsidiaries not reporting in U.S. dollars are translated into their
U.S. dollar equivalents at rates of exchange prevailing at each balance
sheet date. Revenues and expenses of such subsidiaries are translated at
exchange rates prevailing on the dates on which such items are recognized
in operations. Gains and losses arising from translation of financial
statements of subsidiaries not reporting in U.S. dollars are deferred and
disclosed as a separate component of shareholders' equity.

(J) RECENT PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued Statement
No. 130 (SFAS 130), Reporting Comprehensive Income, which is required to
be adopted for fiscal years beginning on or after December 15, 1997. SFAS
130 establishes standards for the reporting and display of

F-9
<PAGE>
MARINE SHUTTLE OPERATIONS INC.
(FORMERLY GEOTECK INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
(A NEVADA CORPORATION)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 1998 AND DECEMBER 31, 1997

(INFORMATION AS AT SEPTEMBER 30, 1998
AND FOR THE NINE MONTH PERIOD THEN ENDED
IS UNAUDITED)
(U.S. DOLLARS)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
comprehensive income and its components in a full set of general purpose
financial statements. Reclassification of financial statements for
earlier periods presented is required. SFAS 130 does not currently apply
to the Company as there are no items of comprehensive income in any
period presented.

In June 1997, the Financial Accounting Standards Board issued Statement
No. 131 (SFAS 131), Disclosures About Segments of an Enterprise and
Related Information, which is required to be adopted for fiscal years
beginning on or after December 15, 1997. SFAS 131 establishes new
standards for the reporting of segmented information in annual financial
statements and requires the reporting of certain selected segmented
information on interim reports to shareholders. The impact of SFAS 131 on
the Company's financial statements is not expected to be material.

In June 1998, the Financial Accounting Standards Board issued Statement
No. 133 (SFAS 133), ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES, which standardizes the accounting for derivative instruments.
SFAS 133 is effective for all fiscal quarters of all fiscal years
beginning after June 15, 1999. The impact on the Company's financial
statements is not expected to be material.

3. INVESTMENT

On December 31, 1997, the Company entered into a Securities Purchase
Agreement ("Agreement") to acquire 100 shares (constituting a 50% interest) of
Kaizen Food Corporation ("Kaizen"), a Canadian private company. The Company
purchased 100 shares of Kaizen at $100,000 according to the Agreement. In the
Agreement, the Company was required to raise $500,000 on or before January 20,
1998 to fund Kaizen's research and development activities. This requirement was
not met by the Company; therefore, Kaizen had the right to repurchase its stock
for $50,000 according to the Agreement. Kaizen repurchased the stock during the
six months ended June 30, 1998 for $10,000 in full payment of the repurchase
price.

4. ACQUISITION OF MARINE SHUTTLE OPERATIONS AS

On April 14, 1998, the Company acquired 100% of the issued and outstanding
stock of Marine Shuttle Operations AS, a Norwegian company ("MSO AS"), in
exchange for 7,600,000 common shares of the Company. The 7,600,000 shares are
held by a trustee pursuant to the terms of a pooling trust agreement. The shares
cannot be sold prior to the release from the trust. The shares are to be
released as to 10% on July 1, 1999, and an additional 30% on each of July 1,
2000, 2001, and 2002.

F-10
<PAGE>
MARINE SHUTTLE OPERATIONS INC.
(FORMERLY GEOTECK INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
(A NEVADA CORPORATION)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 1998 AND DECEMBER 31, 1997

(INFORMATION AS AT SEPTEMBER 30, 1998
AND FOR THE NINE MONTH PERIOD THEN ENDED
IS UNAUDITED)
(U.S. DOLLARS)

4. ACQUISITION OF MARINE SHUTTLE OPERATIONS AS (CONTINUED)
This transaction has been accounted for using the purchase method and the
purchase price has been allocated to the estimated fair value of net assets
acquired as follows:

<TABLE>
<S> <C>
Estimated fair value of net assets acquired:
Current assets--cash......................................... $ 416,635
----------
Current liabilities.......................................... 181,253
----------
235,382
----------
Intangibles represented by agreements in the area of marketing,
engineering and waste management............................. 2,281,460
----------
Goodwill....................................................... 20,533,144
----------
23,049,986
----------
Less: Advances to MSO AS at date of acquisition................ 249,986
----------
$22,800,000
----------
</TABLE>

The results of operations of MSO AS have been consolidated from April 14,
1998.

5. CAPITAL ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------------------------------- -------------
ACCUMULATED NET BOOK NET BOOK
COST AMORTIZATION VALUE VALUE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Computer and office equipment....................... $ 41,013 $ 5,275 $ 35,738 $ --
------------- ------------- ------------- -------------
Shuttle construction in progress.................... 449,900 -- 449,900 --
------------- ------------- ------------- -------------
$ 490,913 $ 5,275 $ 485,638 $ --
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>

F-11
<PAGE>
MARINE SHUTTLE OPERATIONS INC.
(FORMERLY GEOTECK INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
(A NEVADA CORPORATION)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 1998 AND DECEMBER 31, 1997

(INFORMATION AS AT SEPTEMBER 30, 1998
AND FOR THE NINE MONTH PERIOD THEN ENDED
IS UNAUDITED)
(U.S. DOLLARS)

6. GOODWILL AND OTHER INTANGIBLES

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, 1998 1997
------------------------------------------- -------------
ACCUMULATED NET BOOK NET BOOK
COST AMORTIZATION VALUE VALUE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Goodwill............................................ $ 20,533,144 $ 1,026,657 $ 19,506,487 $ --
------------- ------------- ------------- -------------
Marketing, engineering and waste management
agreements........................................ 2,281,460 228,146 2,053,314 --
------------- ------------- ------------- -------------
$ 22,814,604 $ 1,254,803 $ 21,559,801 $ --
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>

7. ACQUISITION OF OFFSHORE SHUTTLE AS

In May 1998, the Company acquired 3,291,738 shares of Offshore Shuttle AS, a
Norwegian limited company ("OSAS"), representing approximately 68% of the
outstanding OSAS capital stock, in exchange for 4,937,607 shares of the
Company's common stock. All of such shares are being held in escrow subject to
the registration statement covering the sale of the 4,937,607 shares of common
stock being declared effective. On May 20, 1998, the Company entered into two
agreements to acquire an additional 686,668 shares of OSAS (approximately 14% of
the outstanding OSAS capital stock) in exchange for 1,030,002 shares of Common
Stock (the "Additional OSAS Exchanges"). The consummation of the Additional OSAS
Exchanges is subject to certain conditions precedent. The acquisition will be
accounted for using the purchase method when all conditions of the acquisition
have been satisfied.

OSAS was established in November 1996, to develop and sell specialized
technology applicable to the field of marine transportation. Through an
agreement, OSAS has exclusive rights to use the technology related to the
shuttle concept. Patents related to the shuttle concept and its technology are
pending approval.

OSAS and MSO AS are parties to Head License Agreement dated as of March 31,
1998, as amended September 2, 1998 and as further amended November 20, 1998. The
Company acquired MSO AS in April 1998 (see Note 4). Pursuant to the agreement,
OSAS granted MSO AS the exclusive right to build and operate five offshore
shuttles, an exclusive option to build and operate two additional offshore
shuttles thereafter, and a right of first refusal with respect to any offshore
shuttle licenses that OSAS may seek to grant during a specified future period.
In addition, based on functional specifications for each offshore shuttle to be
agreed upon, OSAS shall provide MSO AS with the pre-engineering work, including
designs and descriptions of operational procedures, necessary to construct the
offshore shuttles.

In consideration for the licenses granted and pre-engineering services to be
provided, OSAS shall receive a construction fee equal to ten percent of the
construction price of each of the offshore shuttles, an

F-12
<PAGE>
MARINE SHUTTLE OPERATIONS INC.
(FORMERLY GEOTECK INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
(A NEVADA CORPORATION)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 1998 AND DECEMBER 31, 1997

(INFORMATION AS AT SEPTEMBER 30, 1998
AND FOR THE NINE MONTH PERIOD THEN ENDED
IS UNAUDITED)
(U.S. DOLLARS)

7. ACQUISITION OF OFFSHORE SHUTTLE AS (CONTINUED)
operating fee equal to sixteen percent of the gross profit for each contract
finalized by MSO AS involving the use of an offshore shuttle, and an exclusivity
fee equal to one percent of the aggregate construction price of offshore
shuttles two through five ($2,000,000 of which must be remitted to OSAS by June
1, 1999). Other services rendered by OSAS will be invoiced to MSO AS on fair
market terms.

The parties have agreed that orders for each of the first five offshore
shuttles shall be placed in specific years in the period between 1998 through
year 2003. The order for the first offshore shuttle is to be placed by June 1,
1999. Subject, in each case, to an option to extend the order dates by twelve
months upon payment of a $900,000 option exercise fee, an order for the second
offshore shuttle must be placed no later than six months after successful
testing of the first offshore shuttle, and the remaining three Offshore Shuttles
must be ordered by December 31st of each year thereafter. If an order is not
placed on or before the required date, then for the twelve-month period
thereafter OSAS shall be entitled to grant a license to build one offshore
shuttle to a third party.

8. NOTES PAYABLE

By a Loan Agreement dated March 12, 1998, as amended August 27, 1998 and
September 24, 1998, the Company arranged a loan facility with ValorInvest Ltd.
("ValorInvest") whereby ValorInvest would advance up to $3,500,000.

The loan facility is evidenced by three promissory notes. Interest accrues
from the date of each advance at 7.5% per annum. The entire balance of the notes
shall be due and payable upon the earlier of December 31, 1998 or the completion
of a public offering for gross proceeds of at least $100,000,000.

9. RELATED PARTY TRANSACTIONS

During the period ended December 31, 1997, the Company incurred $40,000 in
management fees to a company related by a common director. Effective February 1,
1998, the Company entered into a six month consulting agreement with an
officer/director of the Company for a monthly fee of $5,000 per month and
entered into a six month consulting agreement with a company controlled by an
officer/former director for a monthly charge of $2,500. These agreements were
terminated on February 19, 1998 and April 14, 1998, respectively. The Company
subsequently entered into a two year employment agreement with the officer/
director for $60,000 per annum and a two year personnel services agreement with
the company controlled by an officer/ former director for $32,100 per annum.

The Company currently leases office space at $750 per month from Intercap
Resource Management U.S., Inc., a wholly-owned subsidiary of Intercap Resource
Management Corp. ("Intercap"). Effective February 1, 1998, the Company entered
into a six month agreement with a former director of Intercap to

F-13
<PAGE>
MARINE SHUTTLE OPERATIONS INC.
(FORMERLY GEOTECK INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
(A NEVADA CORPORATION)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 1998 AND DECEMBER 31, 1997

(INFORMATION AS AT SEPTEMBER 30, 1998
AND FOR THE NINE MONTH PERIOD THEN ENDED
IS UNAUDITED)
(U.S. DOLLARS)

9. RELATED PARTY TRANSACTIONS (CONTINUED)
provide consulting services for $10,000 per month, ($60,000 was paid during the
nine month period ended September 30, 1998).

Effective June 1, 1998, the Company entered into a two-year employment
agreement with the President of the Company, whereby the President shall receive
remuneration of $100,000 per annum.

MSO AS is a party to a personnel services agreement and an accounting
services agreement with RC Consultants AS. The Chairman of RC Consultants AS is
also the Chairman of MSO AS.

MSO AS is a party to a cooperation agreement with Schuller
Industrieentsorgung AG ("Schuller") pursuant to which Schuller shall provide
waste management, onshore dismantling, and oil pollution prevention and cleanup
services. As of September 30, 1998, the Company paid approximately $60,319 to
Schuller for marketing research and other services rendered. The President and a
director of the Company are members of the supervisory board of Schuller.

MSO AS has entered into an agreement with Thyssen Stahlunion GmbH ("TSU")
with respect to the marketing of its proposed services. As of September 30,
1998, approximately $63,174 had been paid to TSU under such agreement. Jurgen
Ternieden, a director of the Company, is an officer and the head of the Pipes,
Offshore, Special Products Department of TSU.

During the period ended September 30, 1998, the Company paid approximately
$87,000 to a law firm, a member of which is a director of the Company.

10. STOCKHOLDERS' EQUITY

AUTHORIZED

The Company amended the Company's Articles of Incorporation on April 9, 1998
to increase the Company's authorized capital stock from 40,000,000 shares of
common stock to 75,000,000 shares of common stock and to change the name of
the Company to Marine Shuttle Operations Inc.

ISSUED

The Company has entered into the following transactions related to its
common shares:

i) On incorporation of the Company 10,000,000 common shares were issued at
$0.001 per share for proceeds of $10,000.

ii) On June 16, 1997, the Company issued 10,000,000 common shares at $0.01
per share for proceeds of $100,000.

F-14
<PAGE>
MARINE SHUTTLE OPERATIONS INC.
(FORMERLY GEOTECK INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
(A NEVADA CORPORATION)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 1998 AND DECEMBER 31, 1997

(INFORMATION AS AT SEPTEMBER 30, 1998
AND FOR THE NINE MONTH PERIOD THEN ENDED
IS UNAUDITED)
(U.S. DOLLARS)

10. STOCKHOLDERS' EQUITY (CONTINUED)
iii) On August 8, 1997, the Company issued 20,000 common shares at $3.00 per
share for proceeds of $60,000.

iv) On April 14, 1998, the Company issued 7,600,000 common shares in
exchange for all of the issued and outstanding shares of MSO AS (see Note
4).

v) In May 1998, the Company issued 4,937,607 shares of common stock in
exchange for 3,291,738 shares of OSAS.

vi) On May 20, 1998, the Company entered into agreements to issue 1,030,002
common shares pursuant to the acquisition of 686,668 shares of OSAS (see
Note 7).

The Company has established a Stock Option Plan for employees, officers,
directors, consultants, and advisors. Options granted under the Stock Option
Plan may be either incentive stock option or non-qualified stock options.
The Company has reserved 2,000,000 common shares for issuance under the
Stock Option Plan. Options granted for issuance under the Stock Option Plan
generally are not transferable, and the exercise price of incentive stock
options must be at least equal to 100% (110% in the case of optionees who
own more than 10% of the total combined voting power of all classes of stock
of the Company) of the fair market value of the common shares on the date of
grant. As of September 30, 1998, no options were outstanding under the Stock
Option Plan.

11. INCOME TAXES

The Company has not provided for an income tax liability due to the
availability of operating loss carry-forwards. The Company has net operating
losses which may give rise to future tax benefits of approximately $2,000,000
and $160,000 of September 30, 1998 and December 31, 1997, respectively. To the
extent not used, net operating loss carryforwards expire in varying amounts
beginning in the year 2012. Based on available evidence, including the Company's
history of operating losses, the uncertainty of future profitability and the
impact of tax laws which may limit the Company's ability to utilize such loss
carryforwards, management has recorded a valuation allowance against the
realization of the deferred tax assets.

12. SEGMENTED DISCLOSURES

(a) The Company is currently marketing and making preparations for the
construction of its first offshore shuttle for the removal of offshore
oil and gas structures. In accordance with SFAS No. 131 the Company
considers its business to consist of one reportable operating segment.

F-15
<PAGE>
MARINE SHUTTLE OPERATIONS INC.
(FORMERLY GEOTECK INTERNATIONAL, INC.)
(A DEVELOPMENT STAGE COMPANY)
(A NEVADA CORPORATION)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 1998 AND DECEMBER 31, 1997

(INFORMATION AS AT SEPTEMBER 30, 1998
AND FOR THE NINE MONTH PERIOD THEN ENDED
IS UNAUDITED)
(U.S. DOLLARS)

12. SEGMENTED DISCLOSURES (CONTINUED)
(b) The Company currently has long-lived assets, other then goodwill and
intangibles, comprising capital assets totalling $485,638 at September
30, 1998 all of which are located in Norway.

13. SUBSEQUENT EVENTS

The Company filed a registration statement on Form S-1 with the United
States Securities and Exchange Commission covering the sale of 13,567,609 shares
of common stock held by certain selling stockholders of the Company.

The Company intends to raise $15 million through a private placement of
Common Stock through Berliner Effektenbank AG, a German investment bank. In
addition, the Company has entered into an engagement letter with MFC Merchant
Bank S.A. ("MFC") pursuant to which MFC shall act, on a best-efforts basis, as
exclusive agent for the Company in raising up to DM 215,000,000 (approximately
$126,000,000) (the "MFC Financing"). As consideration for its services, MFC
shall receive a fee equal to five percent of the money raised plus DM 100,000
(approximately $60,000) per month until the completion or termination of the MFC
Financing. In addition, all of MFC's out-of-pocket expenses shall be reimbursed,
and if the Company raises the necessary funds through another source, MFC shall
receive a break-up fee equal to the greater of $1,200,000 or 350,000 shares of
Common Stock. Although the structure of the MFC Financing has yet to be
determined, the Company anticipates that it will be principally through the
issuance of government guaranteed debt.

F-16
<PAGE>
INDEPENDENT AUDITORS' REPORT

We have been engaged to complete an audit of the balance sheet of Marine Shuttle
Operations AS as of December 31, 1997 and the related statements of income,
shareholder's equity and of cash flows for the period from December 10, 1997
(inception) to December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. We are not the
elected, statutory auditors of the Company.

We conducted our audit in accordance with International Standards on Auditing
which do not differ materially from United States generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements present fairly, in all material
respects, the financial position of Marine Shuttle Operations AS as of December
31, 1997 and the result of its operations and its cash flows for the period from
December 10, 1997 (inception) to December 31, 1997, in conformity with
accounting principles generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE
25 June 1998
Oslo, Norway

F-17
<PAGE>
MARINE SHUTTLE OPERATIONS AS
(A DEVELOPMENT STAGE ENTERPRISE)

BALANCE SHEET AS OF APRIL 13, 1998 AND DECEMBER 31, 1997

<TABLE>
<CAPTION>
APRIL 13, 1998
(UNAUDITED) DECEMBER 31, 1997
----------------------- --------------------
<S> <C> <C> <C> <C>
NOK USD NOK USD
----------- ---------- --------- ---------
ASSETS

CURRENT ASSETS
Cash and cash equivalents......................................... 3,178,720 416,635 998,827 136,532
----------- ---------- --------- ---------
TOTAL CURRENT ASSETS.............................................. 3,178,720 416,635 998,827 136,532
----------- ---------- --------- ---------
TOTAL ASSETS...................................................... 3,178,720 416,635 998,827 136,532
----------- ---------- --------- ---------
----------- ---------- --------- ---------

LIABILITIES AND SHAREHOLDERS ' EQUITY

CURRENT LIABILITIES
Funding capital (Note 3).......................................... 1,907,268 249,986 0 0
Other current liabilities......................................... 1,382,871 181,253 0 0
----------- ---------- --------- ---------
TOTAL CURRENT LIABILITIES......................................... 3,290,139 431,239 0 0
----------- ---------- --------- ---------
TOTAL LIABILITIES................................................. 3,290,139 431,239 0 0
----------- ---------- --------- ---------
SHAREHOLDERS' EQUITY
Share capital..................................................... 999,000 130,939 999,000 136,556
Deficit accumulated during the development stage.................. (1,110,419) (145,543) (173) (24)
----------- ---------- --------- ---------
TOTAL SHAREHOLDERS' EQUITY........................................ (111,419) (14,604) 998,827 136,532
----------- ---------- --------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........................ 3,178,720 416,635 998,827 136,532
----------- ---------- --------- ---------
----------- ---------- --------- ---------
</TABLE>

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

Translation of amounts from Norwegian Kroner (NOK) into U.S. dollars (USD) for
the convenience of the reader has been made at the closing average rate by the
Norwegian Central Bank on April 13, 1998, and December 31, 1997 of
USD 1 = NOK 7.6295 and USD 1 = NOK 7.3157 respectively.

F-18
<PAGE>
MARINE SHUTTLE OPERATIONS AS
(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENT OF LOSS FOR THE PERIOD FROM
DECEMBER 10, 1997 (INCEPTION) TO DECEMBER 31, 1997
AND FOR THE PERIOD
FROM JANUARY 1, 1998 TO APRIL 13, 1998
<TABLE>
<CAPTION>
PERIOD FROM
DECEMBER 10, 1997 TO
CUMULATIVE FROM PERIOD ENDED
INCEPTION APRIL 13, 1998 DECEMBER 31, 1997
----------------------- ----------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
NOK USD NOK USD NOK USD
----------- ---------- ----------- ---------- --------- ---------

<CAPTION>
(UNAUDITED) (UNAUDITED)
----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Operating expenses............................... 1,109,873 145,978 1,109,873 145,978 0 0
----------- ---------- --------- ---------
Financial expenses............................... 546 73 373 49 173 24
----------- ---------- ----------- ---------- --------- ---------
Total operating expenses......................... 1,110,419 146,051 1,110,246 146,027 173 24
----------- ---------- ----------- ---------- --------- ---------
Net loss before income tax (Note 4).............. (1,110,419) (146,051) (1,110,246) (146,027) (173) (24)
----------- ---------- ----------- ---------- --------- ---------
Net loss......................................... (1,110,419) (146,051) (1,110,246) (146,027) (173) (24)
----------- ---------- ----------- ---------- --------- ---------
----------- ---------- ----------- ---------- --------- ---------
Basic and diluted loss per share................. (1.11) (0.15) 0 0
----------- ---------- --------- ---------
----------- ---------- --------- ---------
Weighted average number of shares outstanding.... 999,000 999,000 999,000 999,000
----------- ---------- --------- ---------
----------- ---------- --------- ---------
</TABLE>

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

Translation of amounts from Norwegian Kroner (NOK) into U.S. dollars (USD) for
the convenience of the reader has been made at the average rate for the period
from December 10, 1997 to December 31, 1997 by the Norwegian Central Bank, of
USD 1 = NOK 7.2920 and from January 1, 1998 to April 13, 1998 of
USD 1= NOK 7.6030.

F-19
<PAGE>
MARINE SHUTTLE OPERATIONS AS
(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENT OF CASH FLOWS FOR THE PERIOD FROM
DECEMBER 10, 1997 (INCEPTION) TO DECEMBER 31, 1997
AND FOR THE PERIOD
FROM JANUARY 1, 1998 TO APRIL 13, 1998

OPERATING ACTIVITIES
<TABLE>
<CAPTION>
PERIOD FROM
PERIOD FROM DECEMBER 10, 1997 TO
CUMULATIVE FROM JANUARY 1, 1998
INCEPTION TO APRIL 13, 1998 DECEMBER 31, 1997
----------------------- ----------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
NOK USD NOK USD NOK USD
----------- ---------- ----------- ---------- --------- ---------

<CAPTION>
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Operating activities:
Net loss......................................... (1,110,419) (145,544) (1,110,246) (145,520) (173) (24)
Working capital changes that provided (used)
cash:
Other current liabilities........................ 1,382,871 181,253 1,382,871 181,253 0 0
----------- ---------- ----------- ---------- --------- ---------
Net cash provided by operating activities........ 272,452 35,709 272,625 35,733 (173) (24)
----------- ---------- ----------- ---------- --------- ---------
Financing activities
Funding capital proceeds......................... 1,907,268 249,986 1,907,268 249,986 0 0
----------- ---------- ----------- ---------- --------- ---------
Proceeds from issuance of shares................. 999,000 130,939 0 0 999,000 136,556
----------- ---------- ----------- ---------- --------- ---------
----------- ---------- ----------- ---------- --------- ---------
Net cash provided by financing activities........ 2,906,268 380,926 1,907,268 249,986 999,000 136,556
----------- ---------- ----------- ---------- --------- ---------
----------- ---------- ----------- ---------- --------- ---------
Net increase in cash and cash equivalents........ 3,178,720 416,635 2,179,893 285,719 998,827 136,532
Cash and cash equivalents at beginning of
period......................................... 0 0 998,827 130,916 0 0
----------- ---------- ----------- ---------- --------- ---------
Cash and cash equivalents at end of period....... 3,178,720 416,635 3,178,720 416,635 998,827 136,532
----------- ---------- ----------- ---------- --------- ---------
----------- ---------- ----------- ---------- --------- ---------
</TABLE>

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

Translation of amounts from Norwegian Kroner (NOK) into U.S. dollars (USD) for
the convenience of the reader has been made at the average rate for the period
from November 26, 1996 to December 31, 1997, 1 USD = NOK 7.0250 (April 13, 1998:
1 USD = NOK 7.6030) for the Income Statement and at the closing average rate on
December 31, 1997, at USD 1 = NOK 7.3157 (April 13, 1998: 1 USD = NOK 7.6295)
for the Balance Sheet.

F-20
<PAGE>
MARINE SHUTTLE OPERATIONS AS
(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENT OF SHAREHOLDERS' EQUITY FROM JANUARY 1, 1998
TO APRIL 13, 1998 AND FOR THE PERIOD FROM DECEMBER 10, 1997 (INCEPTION)
TO DECEMBER 31, 1997

<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED TOTAL
DURING THE SHAREHOLDERS
NUMBER OF SHARE RESTRICTED DEVELOPMENT EQUITY
SHARES CAPITAL RESERVE STAGE NOK
----------- --------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Paid-in capital at inception on December 10,
1997............................................. 999,000 999,000 -- -- 999,000
Net loss 1997...................................... -- -- -- (173) (173)
----------- --------- --- ------------ ------------
BALANCE DECEMBER 31, 1997.......................... 999,000 999,000 -- (173) 998,827
NET LOSS JANUARY 1--APRIL 13, 1998................. -- -- -- (1,110,246) (1,110,246)
----------- --------- --- ------------ ------------
BALANCE APRIL 13, 1998 (UNAUDITED)................. 999,000 999,000 -- (1,110,419) (111,419)
----------- --------- --- ------------ ------------
</TABLE>

The Company was established on December 10, 1997. At such time, 999,000 shares
were issued for net proceeds of NOK 999,000 cash.

Marine Shuttle Operations AS had authorized, issued and outstanding ordinary
shares having a par value of NOK 1,- per share for the period ended April 13,
1998.

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

F-21
<PAGE>
MARINE SHUTTLE OPERATIONS AS
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM

DECEMBER 10, 1997 (INCEPTION) TO DECEMBER 31, 1997
AND FOR THE PERIOD FROM JANUARY 1, 1998 TO APRIL 13, 1998

(INFORMATION AS OF APRIL 13, 1998 AND FOR THE
PERIOD THEN ENDED IS UNAUDITED)

NOTE 1--NATURE OF BUSINESS

Marine Shuttle Operations AS (the Company) was established December 10,
1997. The Company is seeking to become a leading player in the market for
decommissioning, installing and transporting offshore oil and gas structures.
The Company initially intends to concentrate its efforts on decommissioning
fixed steel structures, primarily the several hundred large steel installations
situated in the intermediate water depths. The Company has formed strategic
alliances to test, develop, manufacture and commercialize the shuttle concept.

On April 14, 1998, Marine Shuttle Operations Inc. acquired all of the issued
and outstanding capital stock of the Company, consisting of 999,000 shares of
voting common stock, in exchange for 7,600,000 shares of common voting stock of
Marine Shuttle Operations Inc.

See Note 6--Subsequent events.

NOTE 2--ACCOUNTING PRINCIPLES

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on hand, deposits in banks and
highly liquid investments with an original maturity of three months or less.

INCOME TAXES

The Company accounts for income taxes using the asset and liability approach
that requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been recognized in the
financial statements or tax returns.

ESTIMATES AND ASSUMPTIONS

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 amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

NOTE 3--FUNDING CAPITAL

As of April 13, 1998, the Company had borrowed USD 249,986 (NOK 1,907,286)
from Marine Shuttle Operations Inc. Thereafter, the Company entered into a Loan
Agreement (the "Loan Agreement"), dated May 13, 1998, with Marine Shuttle
Operations Inc. The amounts previously borrowed by the Company from Marine
Shuttle Operations Inc. are subject to the terms of the Loan Agreement. Under
the terms of the Loan Agreement, Marine Shuttle Operations Inc. will provide the
Company a loan of up to USD 1,500,000. The loan bears an interest rate of 6% per
annum.

F-22
<PAGE>
MARINE SHUTTLE OPERATIONS AS
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM

DECEMBER 10, 1997 (INCEPTION) TO DECEMBER 31, 1997
AND FOR THE PERIOD FROM JANUARY 1, 1998 TO APRIL 13, 1998

(INFORMATION AS OF APRIL 13, 1998 AND FOR THE
PERIOD THEN ENDED IS UNAUDITED)

NOTE 4--INCOME TAX

INCOME TAX COMPUTATION

<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31, 1997
-------------------
<S> <C>
Net loss before tax............................................................................ (173)
Tax loss carry forward......................................................................... (173)
---
Current tax payable............................................................................ 0
---
---
</TABLE>

TEMPORARY DIFFERENCES AS OF DECEMBER 31, 1997

<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------
<S> <C>
Tax loss carry forward......................................................................... (173)
---
Net............................................................................................ (173)
---
28% deferred tax asset......................................................................... 48
Valuation allowance............................................................................ (48)
---
Deferred tax asset............................................................................. 0
---
---
</TABLE>

The Company's tax loss carry forward expires in 2007.

Based on available evidence, including the Company's history of operating
losses and the uncertainty of future profitability, management has recorded a
valuation allowance to reduce the deferred tax asset to zero.

NOTE 5--RELATED PARTIES TRANSACTIONS

ENGAGEMENT AGREEMENT, MANAGING DIRECTOR

Mr. Steve Adshead will act as the Managing Director for a limited period
until a permanent person has been hired for that position. For 1998 Mr. Steve
Adshead will be paid based on a daily rate of NOK 6,000, limited to NOK 80,000
per month. He will continue as an executive director after the expiration of
this agreement.

ENGAGEMENT AGREEMENT, WORKING CHAIRMAN OF THE BOARD

Mr. Sverre Hansen will act as Working Chairman of the Board of the Company
for a limited period until the General Assembly elects another person. For 1998
Mr. Sverre Hansen will be paid based on a daily rate of NOK 6,000, limited to
NOK 50,000 per month.

F-23
<PAGE>
MARINE SHUTTLE OPERATIONS AS
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM

DECEMBER 10, 1997 (INCEPTION) TO DECEMBER 31, 1997
AND FOR THE PERIOD FROM JANUARY 1, 1998 TO APRIL 13, 1998

(INFORMATION AS OF APRIL 13, 1998 AND FOR THE
PERIOD THEN ENDED IS UNAUDITED)

NOTE 5--RELATED PARTIES TRANSACTIONS (CONTINUED)
AGREEMENT WITH AN ENGINEERING COMPANY

Marine Shuttle Operations AS has entered into a personnel services agreement
and an accounting services agreement with RC Consultants AS. Mr. Sverre Hansen,
the Chairman of the Board of Directors of RC Consultants AS, is the Chairman of
the Board of Directors of Marine Shuttle Operations AS. Compensation for
services rendered under such agreements is to be based on normal trade terms.

AGREEMENT WITH A SERVICE COMPANY

Marine Shuttle Operations AS has entered into an agreement with Schuller
Industrietsordnung GmbH. Mr. Franz Eder, the President and Chairman of the Board
of Marine Shuttle Operations Inc., and Dr. Hubert Besner, a director of Marine
Shuttle Operations Inc., are members fo the Supervisory Board of Schuller
Industrietsordnung GmbH. Compensation for services rendered under such agreement
is to be based on normal trade terms.

NOTE 6--SUBSEQUENT EVENTS

ACQUISITION BY MARINE SHUTTLE OPERATIONS INC.

On April 14, 1998, Marine Shuttle Operations Inc. acquired all of the issued
and outstanding capital stock of the Company in exchange for 7,600,000 shares of
common stock of Marine Shuttle Operations Inc.

HEAD LICENSE AGREEMENT

The Company entered into a Head License Agreement with Offshore Shuttle AS
dated March 31, 1998, as amended. Pursuant to the Head License Agreement,
Offshore Shuttle AS granted Marine Shuttle Operations AS the exclusive right to
build and operate five offshore shuttles, an exclusive option to build and
operate two additional offshore shuttles thereafter, and a right of first
refusal with respect to any offshore shuttle licenses that Offshore Shuttle AS
may seek to grant during a specified future period.

In addition, based on functional specifications for each offshore shuttle to
be agreed upon, Offshore Shuttle AS shall provide Marine Shuttle Operations AS
with the pre-engineering work, including designs and descriptions of operational
procedures, necessary to construct the offshore shuttles.

In consideration for the licenses granted and pre-engineering services to be
provided, Offshore Shuttle AS shall receive a construction fee equal to ten
percent of the construction price of each of the offshore shuttles, an operating
fee equal to sixteen percent of the gross profit for each contract finalized by
Marine Shuttle Operations AS involving the use of an offshore shuttle, and an
exclusivity fee equal to one percent of the aggregate construction price of
offshore shuttles two through five. Other services rendered by Offshore Shuttle
AS will be invoiced to Marine Shuttle Operations AS on fair market terms.

The parties have agreed that yard orders for each of the first five offshore
shuttles shall be placed in specific years in the period between 1998 through
year 2003. The order for the first offshore shuttle is to be placed by June 1,
1999. Subject, in each case, to an option to extend the order dates by twelve
months upon

F-24
<PAGE>
MARINE SHUTTLE OPERATIONS AS
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM

DECEMBER 10, 1997 (INCEPTION) TO DECEMBER 31, 1997
AND FOR THE PERIOD FROM JANUARY 1, 1998 TO APRIL 13, 1998

(INFORMATION AS OF APRIL 13, 1998 AND FOR THE
PERIOD THEN ENDED IS UNAUDITED)

NOTE 6--SUBSEQUENT EVENTS (CONTINUED)
payment of a $900,000 option exercise fee, an order for the second offshore
shuttle must be placed no later than six months after successful testing of the
first offshore shuttle, and the remaining three offshore shuttles must be
ordered by December 31st of each year thereafter. If an order is not placed on
or before the required date, then for the twelve-month period thereafter
Offshore Shuttle AS shall be entitled to grant a license to build one offshore
shuttle to a third party.

The binding nature of the Head License Agreement is conditional upon
Offshore Shuttle AS having received payment from Marine Shuttle Operations AS of
the first installment of the exclusivity fee of USD 2,000,000 by June 1, 1999
and Marine Shuttle Operations AS having placed a firm order for offshore shuttle
number one with a construction yard by the same date.

LEASE AGREEMENTS

In April 1998, Marine Shuttle Operations AS entered into a lease for office
space. The agreement was for six months commencing April 15, 1998 with an option
to renew the agreement for one year at a time. The rent during such six month
period is NOK 84,000. Thereafter, the Company entered into a ten-year lease for
new office space commencing August 31, 1998. The annual lease is NOK 168,000,
subject to an adjustment based on the Consumer Price Index.

THYSSEN STAHLUNION GMBH--STRATEGIC ALLIANCE

Pursuant to a Marketing Aggreement dated April 14, 1998, Thyssen Stahlunion
GmbH will market the Offshore Shuttle on a worldwide basis to major oil
companies, offshore contractors, and others as part of its package of offshore
services. In addition, Thyssen Stahlunion GmbH shall act as a procurement
service center for the steel and equipment to be used in constructing the
Offshore Shuttle, and shall have a right of first refusal to lease the Offshore
Shuttle if Thyssen Stahlunion GmbH is engaged in any decommissioning,
transportation, or installation project. Thyssen Stahlunion GmbH shall receive a
commission at a rate to be agreed upon for its marketing services and shall be
precluded from promoting any products or services competitive with those of the
Company.

RC CONSULTANTS AS--STRATEGIC ALLIANCE

Pursuant to a personnel agreement with Marine Shuttle Operations AS, RC
Consultants AS will provide Marine Shuttle Operations AS with the engineers and
technicians needed during the design, engineering, fabrication, and operation of
the Offshore Shuttle. In addition, pursuant to an accounting services agreement,
RC Consultants AS will provide Marine Shuttle Operations AS with bookkeeping
assistance.

SCHULLER INDUSTRIEENTSORDNUNG GMBH--STRATEGIC ALLIANCE

Schuller Industrieentsordnung GmbH is a service company specializing in
waste management, onshore dismantling and oil pollution prevention and clean-up.
Marine Shuttle Operations AS and Schuller Industrieentsordnung GmbH have entered
into a cooperation agreement pursuant to which Schuller Industrieentsordnung
GmbH will provide such services to Marine Shuttle Operations AS, subject to the
execution of a written agreement on a project-specific basis. Compensation for
services rendered are based on normal business terms.

F-25
<PAGE>
INDEPENDENT AUDITORS' REPORT

We have been engaged to complete an audit of the balance sheet of Offshore
Shuttle AS as of December 31, 1997 and 1996 and the related statements of
income, shareholders' equity and of cash flows for the twelve month period ended
December 31, 1997 and the period from November 29, 1996 (date of inception) to
December 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 audit. We are not the elected, statutory
auditors of the Company.

In our opinion, the financial statements present fairly, in all material
respects, the financial position of Offshore Shuttle AS as of December 31, 1997
and 1996 and the result of its operations and its cash flows for the twelve
month period ended December 31, 1997 and the period from November 29, 1996 (date
of inception) to December 31, 1996, in conformity with accounting principles
generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE

25 June 1998
Oslo, Norway

F-26
<PAGE>
OFFSHORE SHUTTLE AS
(A DEVELOPMENT STAGE ENTERPRISE)

BALANCE SHEET AS OF DECEMBER 31, 1996 AND 1997 AND SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996
--------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
NOK USD NOK USD NOK USD
---------- --------- --------- --------- --------- ---------

<CAPTION>
(UNAUDITED)
---------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS

Current assets
Cash and cash equivalents.......................... 9,226,357 1,249,084 22,155,782 3,028,525 990,540 153,489
Restricted cash (Note 3)........................... 880,938 119,263 230,627 31,525
Accounts receivable (Note 4)....................... 100,000 13,538 100,000 13,669 0 0
Other current assets (Note 5)...................... 1,224,126 165,725 897,862 122,731 0 0
---------- --------- --------- --------- --------- ---------
Total current assets............................... 11,431,421 1,547,610 23,384,271 3,196,450 990,540 153,489
---------- --------- --------- --------- --------- ---------
Capital assets
Patents............................................ 401,104 54,302 -- -- -- --
Furniture, fixtures and equipment, net of
accumulated depreciation (Note 6)................ 843,745 114,228 398,700 54,499 0 0
---------- --------- --------- --------- --------- ---------
Total capital assets............................... 1,244,849 168,530 398,700 54,499 0 0
---------- --------- --------- --------- --------- ---------
Total assets....................................... 12,676,270 1,716,140 23,782,971 3,250,949 990,540 153,489
---------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- ---------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable................................... 3,033,318 410,657 2,193,599 299,848 0 0
Social security and employees taxes, accrued
salaries......................................... 1,065,943 144,310 377,095 51,546 0 0
Other current liabilities.......................... 21,220 2,873 21,220 2,901 890,540 137,993
---------- --------- --------- --------- --------- ---------
Total current liabilities.......................... 4,120,481 557,840 2,591,914 354,295 890,540 137,993
---------- --------- --------- --------- --------- ---------
Shareholders' equity
Share capital...................................... 241,600 32,708 241,100 32,957 100,000 15,495
Restricted reserve................................. 5,650,000 764,909 5,650,000 772,312 0 0
Other paid in capital.............................. 24,777,090 3,354,375 24,646,790 3,421,894 0 0
Deficit accumulated during the development stage... (22,112,901) (2,993,692) (9,346,833) (1,330,509)
---------- --------- --------- --------- --------- ---------
Total shareholders' equity......................... 8,555,789 1,158,300 21,191,057 2,896,654 100,000 15,495
---------- --------- --------- --------- --------- ---------
Total liabilities and shareholders' equity......... 12,676,270 1,716,140 23,782,971 3,250,949 990,540 153,489
---------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- ---------
</TABLE>

Translation of amounts from Norwegian kroner (NOK) into U.S. dollars (USD) for
the convenience of the reader has been made at the closing average rates by the
Norwegian Central Bank on September 30, 1998 and December 31, 1997 and December
31, 1996 of USD 1 = 7.3865 and USD 1 = 7.3157 and USD 1 = 6.4535 respectively.

F-27
<PAGE>
OFFSHORE SHUTTLE AS
(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENT OF LOSS FOR THE PERIOD FROM

NOVEMBER 29, 1996 (INCEPTION) TO DECEMBER 31, 1996,

THE TWELVE MONTHS ENDED DECEMBER 31, 1997, THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND CUMULATIVE FROM INCEPTION TO SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
CUMULATIVE FROM PERIOD FROM
INCEPTION TO NINE MONTHS ENDED YEAR ENDED NOVEMBER 29, 1996 TO
SEPTEMBER 30, 1998 SEPTEMBER 30, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------- ----------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NOK USD NOK USD NOK USD NOK USD
----------- ---------- ----------- ---------- ---------- ---------- ---------- ----------

<CAPTION>
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenue and
expenses
Fees................... 500,000 70,165 100,000 13,225 400,000 56,940 0 0
----------- ---------- ----------- ---------- ---------- ---------- ---------- ----------
Total operating
revenue.............. 500,000 70,165 100,000 13,225 400,000 56,940 0 0
----------- ---------- ----------- ---------- ---------- ---------- ---------- ----------
Salaries and other
personnel expenses... 3,440,525 470,634 1,893,846 250,466 1,546,679 220,168 0 0
Research and
development.......... 6,417,017 893,791 1,947,562 257,570 4,469,455 636,221 0 0
Pre-engineering
expenses............. 6,171,822 816,238 6,171,822 816,238 0 0 0 0
General and
administrative
expenses............. 7,060,622 973,713 3,105,793 410,748 3,954,829 562,965 0 0
Depreciation........... 240,969 32,760 152,669 20,191 88,300 12,569 0 0
Interest
income/expense,
net.................. (718,054) (98,119) (405,624) (53,645) (312,430) (44,474) 0 0
----------- ---------- ----------- ---------- ---------- ---------- ---------- ----------
Total operating
expenses............. 22,612,901 3,089,017 12,866,068 1,701,568 9,746,833 1,387,449 0 0
----------- ---------- ----------- ---------- ---------- ---------- ---------- ----------
Net loss before income
tax (Note 7)......... (22,112,901) (3,018,852) (12,766,068) (1,688,343) (9,346,833) (1,330,509) 0 0
----------- ---------- ----------- ---------- ---------- ---------- ---------- ----------
Net loss............... (22,112,901) (3,018,852) (12,766,068) (1,688,343) (9,346,833) (1,330,509) 0 0
----------- ---------- ----------- ---------- ---------- ---------- ---------- ----------
----------- ---------- ----------- ---------- ---------- ---------- ---------- ----------
Basic and diluted loss
per share............ (2.64) (0.35) (2.67) (0.38) 0 0
----------- ---------- ---------- ---------- ---------- ----------
----------- ---------- ---------- ---------- ---------- ----------
Weighted average number
of shares
outstanding.......... 4,827,000 4,827,000 3,505,000 3,505,000 2,000,000 2,000,000
</TABLE>

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

Translation of amounts from Norwegian kroner (NOK) into U.S. dollars (USD) for
the convenience of the reader has been made at the average rate by the Norwegian
Central Bank for the periods from January 1, 1998 to September 30, 1998 and from
November 29, 1996 to December 31, 1997of USD 1 = NOK 7.5613 and of USD 1 = NOK
7.0250 respectively.

F-28
<PAGE>
OFFSHORE SHUTTLE AS
(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENT OF CASH FLOWS FOR THE PERIOD FROM

NOVEMBER 29, 1996 (INCEPTION) TO DECEMBER 31, 1996,

THE TWELVE MONTHS ENDED DECEMBER 31, 1997, THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND CUMULATIVE FROM INCEPTION TO SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
CUMULATIVE FROM PERIOD FROM
INCEPTION TO NINE MONTHS ENDED YEAR ENDED NOVEMBER 29, 1996 TO
SEPTEMBER 30, 1998 SEPTEMBER 30, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------ ---------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NOK USD NOK USD NOK USD NOK USD
----------- ----------- ----------- ----------- ---------- ---------- ---------- ----------

<CAPTION>
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating activities:
Net loss............. (22,112,901) (2,993,691) (12,766,068) (1,728,297) (9,346,833) (1,330,510) 0 0
Adjustments to
reconcile net loss
to net cash used in
operating
activities:
Depreciation......... 240,969 32,623 152,669 20,669 88,300 12,569 0 0
Working capital
changes that
provided (used)
cash:
Accounts
receivable....... (100,000) (13,538) 0 0 (100,000) (13,669) 0 0
Other current
assets and
restricted
cash............. (2,105,064) (284,988) (976,575) (132,211) (1,128,489) (154,256) 0 0
Current
liabilities...... 4,120,481 557,839 1,528,567 206,941 1,701,374 232,565 890,540 137,993
----------- ----------- ----------- ----------- ---------- ---------- ---------- ----------
Net cash provided
(used) by operating
activities......... (19,956,515) (2,701,755) (12,061,407) (1,632,899) (8,785,648) (1,253,301) 890,540 137,993
----------- ----------- ----------- ----------- ---------- ---------- ---------- ----------
Investing activities:
Patents.............. (401,104) (54,302) (401,104) (54,302)
Purchases of
furniture, fixtures
and equipment...... (1,084,713) (146,851) (597,713) (80,920) (487,000) (67,069) 0 0
----------- ----------- ----------- ----------- ---------- ---------- ---------- ----------
Net cash used in
investing
activities......... (1,485,817) (201,153) (998,817) (135,222) (487,000) (67,069) 0 0
----------- ----------- ----------- ----------- ---------- ---------- ---------- ----------
Financing activities:
Proceeds from
issuance of shares,
net of offering
costs.............. 30,668,689 4,151,992 130,799 17,708 30,437,890 4,213,496 100,000 15,495
----------- ----------- ----------- ----------- ---------- ---------- ---------- ----------
Net cash provided by
financing
activities......... 30,668,689 4,151,992 130,799 17,708 30,437,890 4,213,496 100,000 15,495
----------- ----------- ----------- ----------- ---------- ---------- ---------- ----------
Net increase
(decrease) in cash
and cash
equivalents........ 9,226,357 1,249,084 (12,929,425) (1,750,413) 21,165,242 2,893,126 990,540 153,489
Cash and cash
equivalents at
beginning of
period............. 0 0 22,155,782 2,`999,497 990,540 135,399 0 0
----------- ----------- ----------- ----------- ---------- ---------- ---------- ----------
Cash and cash
equivalents at end
of period.......... 9,226,357 1,249,084 9,226,357 1,249,084 22,155,782 3,028,525 990,540 153,489
----------- ----------- ----------- ----------- ---------- ---------- ---------- ----------
----------- ----------- ----------- ----------- ---------- ---------- ---------- ----------
</TABLE>

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

Translation of amounts from Norwegian kroner (NOK) into U.S. Dollars (USD) for
the convenience of the reader has been made at the average rate from the period
from November 29, 1996 to December 31, 1997, 1 USD = NOK 7.0250 (September 30,
1998: 1 USD = NOK 7.5613) for the Income Statement and at the closing average
rate on December 31, 1996, at USD 1 = NOK 6.4535 (December 31, 1997: 1 USD = NOK
7.3157; September 30, 1998: 1 USD = NOK 7.3865) for the Balance Sheet.

F-29
<PAGE>
OFFSHORE SHUTTLE AS
(A DEVELOPMENT STAGE ENTERPRISE)

STATEMENT OF SHAREHOLDERS' EQUITY FOR THE PERIOD FROM

NOVEMBER 29, 1996 (INCEPTION) TO DECEMBER 31, 1996,

THE TWELVE MONTHS ENDED DECEMBER 31, 1997 AND
THE NINE MONTHS ENDED SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
DEFICIT
NUMBER OF ACCUMULATED TOTAL
SHARES SHARE RESTRICTED OTHER PAID DURING THE SHAREHOLDERS'
OUTSTANDING CAPITAL RESERVE IN CAPITAL DEVELOPMENT STAGE EQUITY
------------- ----------- ----------- ---------- ------------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Paid-in capital at inception on
November 29, 1996................. 2,000,000 100,000 100,000
BALANCE, DECEMBER 31, 1996.......... 2,000,000 100,000 100,000
Share issue, January 6, 1997........ 1,000,000 50,000 5,950,000 6,000,000
Offering costs...................... (300,000) (300,000)
Share issue, April 7, 1997.......... 222,000 11,100 1,986,900 1,998,000
Share issue, September 8, 1997...... 1,600,000 80,000 23,920,000 24,000,000
Offering costs...................... (1,260,110) (1,260,110)
Net loss 1997....................... (9,346,833) (9,346,833)
------------- ----------- ----------- ---------- ------------------ -------------
BALANCE, DECEMBER 31, 1997.......... 4,822,000 241,100 5,650,000 24,646,790 (9,346,833) 21,191,057
Option exercised April 3, 1998...... 10,000 500 130,299 130,799
NET LOSS JANUARY 1--SEPTEMBER 30,
1998.............................. (12,766,068) (12,766,068)
------------- ----------- ----------- ---------- ------------------ -------------
BALANCE, SEPTEMBER 30, 1998
(UNAUDITED)....................... 4,832,000 241,600 5,650,000 24,777,089 (22,112,901) 8,555,788
------------- ----------- ----------- ---------- ------------------ -------------
</TABLE>

Offshore Shuttle AS was established November 29, 1996 by means of the issuance
of 1,000,000 shares in exchange for cash of NOK 100,000. On September 9, 1997
the Company carried out a share split, reducing the par value from NOK 0.10 to
0.05 per share. After giving effect to the split the number of shares issued was
2,000,000.

On January 6, 1997, the Company issued 1,000,000 shares for cash of NOK
5,700,000, net of offering costs of NOK 300,000. On April 7, 1997, the Company
issued 222,000 shares for cash of NOK 1,998,000. On September 8, 1997, the
Company issued 1,600,000 shares for cash of NOK 22,739,890, net of offering
costs of NOK 1,260,110. On April 3, 1998, the Company issued 10,000 shares for
cash of NOK 130,799 pursuant to the exercise of stock options.

Offshore Shuttle AS had authorized, issued and outstanding 4,832,000 ordinary
shares having a par value of NOK 0.05 per share for the period ended September
30, 1998.

Share capital and Restricted Reserve of the Company constitute the
nondistributable portion of shareholders' equity and are not available for
dividend purposes.

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

F-30
<PAGE>
OFFSHORE SHUTTLE AS
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM

NOVEMBER 29, 1996 (INCEPTION) TO DECEMBER 31, 1996,
THE TWELVE MONTHS ENDED DECEMBER 31, 1997
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1998

(INFORMATION AS OF SEPTEMBER 30, 1998 AND FOR THE
NINE MONTHS THEN ENDED IS UNAUDITED)

NOTE 1--NATURE OF BUSINESS

Offshore Shuttle AS (the Company) was established November 29, 1996 in Oslo,
Norway. The purpose of the Company is to commercially exploit the potential of
the Shuttle concept.

Through an agreement with Mr. Gunnar Foss and Mr. Per Bull Haugso/en (see
Note 10), the Company has the exclusive rights to the use of the technology
related to the Shuttle concept. Patents related to the Shuttle concept and its
technology are pending approval.

In May 1988, Marine Shuttle Operations Inc. acquired 3,291,738 shares of the
Company (representing approximately 68% of the outstanding shares in the
Company) in exchange for 4,937,607 shares of Marine Shuttle Operations Inc. All
of such shares are being held in escrow subject to the registration statement
covering the sale of the 4,937,607 shares being declared effective. On May 20,
1998, Marine Shuttle Operations Inc. entered into two agreements to acquire an
additional 686,668 shares of the Company, approximately 14% of the outstanding
shares. The consummation of the acquisition of these additional shares is
subject to certain conditions precedent.

See Note 10, Subsequent Events, Head License Agreement.

NOTE 2--SIGNIFICANT ACCOUNTING PRINCIPLES

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on hand, deposits in banks and
highly liquid investments with an original maturity of three months or less.

RESEARCH AND DEVELOPMENT

Research and development costs are expensed when incurred.

INTANGIBLE ASSETS

Patents are recorded at cost less accumulated amortization, which is
calculated on a straight-line basis over the estimated useful life of the asset,
when the patent has a defined and measurable relationship to future revenues.
Accumulated amortization for all periods is NOK 0.

Offshore Shuttle AS has eight patent applications pending in Norway with
respect to various aspects of the Offshore Shuttle design and operation. The
patent applications are currently subject to examination by the Norwegian patent
authorities.

Four of the applications have been filed pursuant to the Patent Cooperation
Treaty. In addition, certain separate foreign patent applications have been
filed in countries that are not party to the Patent Cooperation Treaty. The
authorities in those countries are currently examining all foreign applications.

F-31
<PAGE>
OFFSHORE SHUTTLE AS
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM

NOVEMBER 29, 1996 (INCEPTION) TO DECEMBER 31, 1996,
THE TWELVE MONTHS ENDED DECEMBER 31, 1997
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1998

(INFORMATION AS OF SEPTEMBER 30, 1998 AND FOR THE
NINE MONTHS THEN ENDED IS UNAUDITED)

NOTE 2--SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
FURNITURE, FIXTURES AND EQUIPMENT

Furniture, fixtures and equipment are stated at cost. Depreciation is
provided by the straight line method over the estimated service lives of the
respective assets as follows:

<TABLE>
<S> <C>
Furniture.............................................................. 20%
Computer equipment..................................................... 35%
Office equipment....................................................... 30%
</TABLE>

Management periodically reviews the carrying value of furniture, fixtures
and equipment to ensure that any permanent impairment in value is recognized and
reflected in the results from operations.

STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation using the intrinsic value
based method in accordance with Accounting Principles Board (APB) Opinion No.
25, Accounting for Stock Issued to Employees.

FOREIGN CURRENCY TRANSACTIONS

Transactions denominated in foreign currency are translated to NOK at the
currency rate at the date of the transaction. Realized and unrealized gains or
losses on monetary assets or liabilities denominated in a foreign currency are
included in net income.

INCOME TAXES

PENSION

The Company has a defined benefit retirement plan which covers all
employees.

Plan benefits are based on years of service and final salary level. The plan
is administered by an insurance company.

Based on the short period of operations, no actuarial calculations of the
pension plan status have been performed. An actuarial calculation is expected to
be completed for the year ended December 31, 1998. The pension expense is not
expected to have a material impact on the Company's results of operations.

F-32
<PAGE>
OFFSHORE SHUTTLE AS
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM

NOVEMBER 29, 1996 (INCEPTION) TO DECEMBER 31, 1996,
THE TWELVE MONTHS ENDED DECEMBER 31, 1997
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1998

(INFORMATION AS OF SEPTEMBER 30, 1998 AND FOR THE
NINE MONTHS THEN ENDED IS UNAUDITED)

NOTE 2--SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
ESTIMATES AND ASSUMPTIONS

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 amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

RECENT PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued Statement No.
130 (SFAS 130), REPORTING COMPREHENSIVE INCOME, which is required to be adopted
for fiscal years beginning on or after December 15, 1997. SFAS 130 establishes
standards for the reporting and display of comprehensive income and its
components in a full set of general purpose financial statements. SFAS 130 does
not apply to the Company as there are no items of comprehensive income in any
period presented.

In June 1997, the Financial Accounting Standards Board issued Statement No.
131 (SFAS 131), DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION, which is required to be adopted for fiscal years beginning on or
after December 15, 1997. SFAS 131 establishes new standards for the reporting of
segment information in annual financial statements and requires the reporting of
certain selected segment information on interim reports to shareholders. The
impact of SFAS 131 on the Company's financial statements is not expected to be
material.

NOTE 3--RESTRICTED CASH

Cash and cash equivalents include taxes withheld from employees of NOK
111,019 (September 30, 1998: 414,231) and rental deposit of NOK 119,608
(September 30, 1998: 466,707) as of December 31, 1997.

NOTE 4--ACCOUNTS RECEIVABLE

Accounts receivable are recorded at net realizable value. No allowance for
doubtful account is deemed necessary.

NOTE 5--OTHER CURRENT ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------
<S> <C>
Prepaid expenses........................................................... 118,627
VAT receivable............................................................. 779,235
-------
897,862
-------
-------
</TABLE>

F-33
<PAGE>
OFFSHORE SHUTTLE AS
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM

NOVEMBER 29, 1996 (INCEPTION) TO DECEMBER 31, 1996,
THE TWELVE MONTHS ENDED DECEMBER 31, 1997
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1998

(INFORMATION AS OF SEPTEMBER 30, 1998 AND FOR THE
NINE MONTHS THEN ENDED IS UNAUDITED)

NOTE 6--FURNITURE, FIXTURES AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------------------------------------
<S> <C> <C> <C> <C>
OFFICE COMPUTER
EQUIPMENT EQUIPMENT FURNITURE TOTAL
----------- ----------- ----------- ----------
November 26, 1996................................................. 0
Additions during the period....................................... 60,617 285,839 140,544 487,000
Accumulated depreciation.......................................... (15,917) (49,839) (22,544) (88,300)
----------- ----------- ----------- ----------
Net book value, December 31, 1997................................. 44,700 236,000 118,000 398,700
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------

SEPTEMBER 30, 1998 (UNAUDITED)
-------------------------------------------------
<S> <C> <C> <C> <C>
Cost of March 31, 1997............................................ 60,617 285,839 140,544 487,000
Additions during the period....................................... 5,390 332,906 198,364 536,659
----------- ----------- ----------- ----------
Sold furniture during the period.................................. (10,000) (10,000)
Accumulated depreciation.......................................... (23,050) (107,858) (39,006) (169,914)
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
Net book value, September 30, 1998................................ 42,957 510,887 289,902 843,745
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
</TABLE>

NOTE 7--INCOME TAX

INCOME TAX COMPUTATION

<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31, 1997
-----------------
<S> <C>
Net loss before tax............................................................................ (9,346,833)
Offering cost, charged to equity............................................................... (1,560,110)
Other permanent differences.................................................................... 12,805
Change in temporary differences................................................................ (50,772)
-----------------
Tax loss carry forward......................................................................... (10,944,910)
-----------------
Current tax payable............................................................................ 0
-----------------
-----------------

TEMPORARY DIFFERENCES AS OF DECEMBER 31, 1997
Furniture, fixtures and equipment.............................................................. 50,772
Tax loss carry forward......................................................................... (10,944,910)
-----------------
Net............................................................................................ (10,894,138)
-----------------
28% deferred tax asset......................................................................... 3,050,359
Valuation allowance............................................................................ (3,050,359)
-----------------
Deferred tax asset............................................................................. 0
-----------------
-----------------
</TABLE>

F-34
<PAGE>
OFFSHORE SHUTTLE AS
(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM

NOVEMBER 29, 1996 (INCEPTION) TO DECEMBER 31, 1996,
THE TWELVE MONTHS ENDED DECEMBER 31, 1997
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1998

(INFORMATION AS OF SEPTEMBER 30, 1998 AND FOR THE
NINE MONTHS THEN ENDED IS UNAUDITED)

NOTE 7--INCOME TAX (CONTINUED)
The Company's tax loss carry forward expires in 2007.

NOTE 8--STOCK INCENTIVE PLAN

The Board is authorized to issue options to purchase 120,000 shares of stock
to employees and Board members and options to purchase 100,000 shares of stock
to cooperation partners. As of December 31, 1997, options to purchase 90,000
shares of stock have been issued to employees, Board members and cooperation
partners.

The exercise price for all options granted to date was equal to or in excess
of the fair market value of the Company's stock at the date of grant. The
exercise price for 80,000 and 10,000 options is NOK 12 and NOK 25, respectively.
Under the terms of the option agreements, the exercise price increases 1% per
month from the time of issuance until the date of exercise. The options may be
exercised during a three year period following the date of issuance.