VISITORS SERVICES INTERNATIONAL CORP, 10KSB40, 1997-01-14

VISITORS SERVICES INTERNATIONAL CORP
10KSB40, 1997-01-14
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

For the fiscal year ended September 30, 1996

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from:______________ to ______________

Commission file number: 33-11059-A

VISITORS SERVICES INTERNATIONAL CORP.
(Name of small business issuer as specified in its charter)

FLORIDA 59-2773602
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)

100 SECOND AVENUE SOUTH, SUITE 1000, ST. PETERSBURG, FLORIDA 33701
(Address of principal executive offices) (Zip Code)

Issuer's telephone number: (813) 895-4410

Securities registered under Section 12(b) of the Exchange Act: NONE

Securities registered under Section 12(g) of the Exchange Act: NONE

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

Check if there is no disclosure of delinquent files in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ X ]

State issuer's revenues for its most recent fiscal year. $791,949

As of December 31, 1996, the aggregate market value of the voting stock
held by non-affiliates, approximately 1,400,000 shares of Common Stock, $.0001
par value, was approximately $4,025,000 based on an approximate bid price
(2-7/8) for one share of Common Stock on such date.

The number of shares outstanding of the issuer's Common Stock, $.0001 par
value, as of December 31, 1996, was 17,750,387 shares.

DOCUMENTS INCORPORATED BY REFERENCE: None of the listed documents are
incorporated by reference.

Transitional Small Business Disclosure Format (check one):

Yes [ ]; No [ X ]
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PART I

Item 1. Description of Business.

History of the Company

Visitors Services International Corp., formerly Dynasty Capital
Corporation (the "Registrant", the "Company" or "VSIC") was a development stage
enterprise formed under the laws of the State of Florida to evaluate, structure
and complete a business combination in the form of a merger with, or acquisition
of, prospects consisting of private companies, partnerships or sole
proprietorships. The Registrant had no business operations and no intention of
engaging in an active business prior to a business combination with another
enterprise.

The Registrant's past activities were limited to organizational matters
and the Registrant entered into letters of intent with two private business
entities, neither of which resulted in the completion of a business combination.
The Registrant sold 2,500,000 units of $.0001 par value Common Stock ("Common
Stock") at $.02 per unit, for total proceeds of $50,000 in a public offering
which closed on June 8, 1987. The Company was formed for the purpose of seeking
potential business opportunities in the form of the acquisition of an existing
business that has profit potential.

Acquisition of Visitors Services, Inc.

On September 26, 1996, Registrant executed an Agreement and Plan of
Reorganization ("Agreement") with Visitors Services, Inc. ("VSI"), and certain
Stockholders of VSI, pursuant to which a minimum of 80% of the issued and
outstanding shares of VSI were to be exchanged on a one share for one share
basis for shares of restricted stock of the Registrant, after the Registrant
effect a 14.4 to 1 reverse stock split of the shares outstanding before the date
of the Agreement from 10,801,000 shares down to 750,093 shares (in lieu of any
fractional shares created as a result of the reverse stock split, each holder of
a fractional share was issued one additional whole share). The Closing Date of
the Agreement was September 27, 1996, when the Registrant's reverse stock split
was effected and certain Stockholders of VSI holding at least 80% of the
outstanding shares of VSI executed the Agreement. The "Exchange Offer" has been
extended to the remaining shareholders of VSI, who have, as extended, until
January 20, 1997, to accept the offer. The offering is being made in accordance
with Rule 506 of Regulation D of the Securities Act of 1933, as amended, or such
other appropriate and available exemption(s). By virtue of the reorganization,
VSI becomes a subsidiary of the Registrant. The transactions contemplated by the
Agreement are referred to as the "Reorganization."

Pursuant to the Agreement and Plan of Reorganization, on the Closing Date
the Registrant's Officers and Directors resigned and designees of VSI were
appointed to the vacated positions. Earnest Mathis resigned as President,
Treasurer and a Director; and Gary J. McAdam resigned as Vice President,
Secretary and a Director. Robert P. Gordon, Paul W. Henry and Steve McLean were
appointed Officers and Directors - See Item 9 below. Mr. Gordon, by virtue of
the transaction, became a controlling shareholder of the Registrant.

Overview - The Company

The Registrant will continue to operate through its newly acquired
subsidiary, Visitors Services, Inc. VSI was formed under the laws of the State
of Florida in November 1992 as a destination marketing company providing
automated reservations and information services specifically designed to support
the special needs of Convention and Visitors Bureaus ("CVB") and major
convention/event organizers. VSI's focus is to generate revenue for the client
destination's hotels, lodgings and attractions by converting information/visitor
guide calls into actual travel reservations. The traditional "passive" approach
to destination marketing involves placing advertising, taking calls for
information/vacation guides and hoping the traveling public will choose to
visit. VSI believes the only successful strategy in today's highly-competitive
tourism industry is to take a "proactive" marketing approach, whereby VSI's
destination counselors actively "sell" their destinations during each and every
call. VSI provides a "state-of-the-art" reservation system and
incentive-motivated, multi-lingual destination counselors who are accessible to
leisure travelers via destination specific toll-free telephone lines operating
24 hours a day, 365 days a year.

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For major conventions and events, VSI provides complete travel management
services for the Convention or Event organizers. Anyone wishing to attend a VSI
managed event can call a toll-free number and get registration, air, hotel and
car arrangements at any time of the day.

Since its formation in 1992, VSI has successfully attracted 15 CVB's and
35 major convention/event sponsors as clients, including: NIKE World Masters
Games; Sail America; and the CVB's for Arlington County, VA; Los Angeles, CA;
Houston, TX; Greater Milwaukee, WI; Greater Pittsburgh, PA; Cleveland, OH; Palm
Springs Desert Resorts, CA; St. Petersburg/Clearwater, FL; Kissimmee/St. Cloud,
FL (adjacent to booming Orlando); Bradenton, FL; Charlotte, NC; San Jose, CA;
Monterey County, CA; Denver, CO; and Valley Forge, PA.

Recent Developments

Acquisition of American International Travel Agency, Inc.

On December 6, 1996, VSI entered into a Stock Purchase Agreement (the
"SPA") with Phoenix Information Systems Corp. ("Phoenix") to acquire all the
capital stock of American International Travel Agency, Inc. ("American") from
Phoenix in exchange for 31,579 shares of Common Stock of Phoenix owned by VSI.
This transaction was closed on December 6, 1996, subject to certain rescission
rights described below. The consideration paid was based upon arms-length
negotiations between VSI and Phoenix and a fair market evaluation. Management
believes entering into this SPA will provide the following benefits to VSI: (i)
access to the major travel agency computerized reservation systems world-wide,
and (ii) the ability to issue airline tickets.

The assets of American both before and after the signed SPA will continue
to be used as a retail travel agency located in Clearwater, Florida.

American was incorporated in 1977 in the State of Florida to provide
retail leisure travel services. In 1980, 100% of the outstanding stock of
American was acquired by Owen and Frances Stewart. The Stewarts have operated
American since that time and have expanded the customer base to include
commercial travel services. American represents all airlines, tour operators and
cruise and rail lines on a commission basis.

During the three fiscal years ending June 30, 1994, March 31, 1995 and
March 31, 1996, American had total revenues of $314,573, $142,753 and $405,662,
respectively and net loss of $7,886 in 1994, net loss of $71,972 in 1995, and
net income of $31,076 in 1996.

The SPA states that the transaction is conditioned upon the subsequent
consent of the Airlines Reporting Corporation ("ARC"). VSI and Phoenix have
agreed that if the ARC does not consent to the change in ownership contemplated
in the SPA, the SPA will unwind and terminate as if the transaction was never
entered into by either party.

Under these circumstances, the management of the Company has determined,
for financial reporting purposes, the acquisition of American will not be deemed
to occur until such time as the ARC approves this transaction. Since the
acquisition of American has not been completed at the time of the filing of this
Form 10-KSB, no financial statements or pro forma financial information are
required to be filed in connection with this Form 10-KSB. If, upon completion
of an audit of American, the acquisition is deemed to involve a significant
amount of assets, the Registrant will file, on Form 8-K, financial statements
for American, pro forma financial information, and a copy of the Stock Purchase
Agreement.

Acquisition of Assets of Global Reservation Systems, Inc.

On December 23, 1996, VSI entered into an Asset Purchase Agreement (the
"APA") with Global Reservation Systems, Inc. ("GRS"), a Colorado corporation, to
acquire all of GRS's interests in, to and under any asset, used in connection
with GRS's business of answering toll-free telephone numbers advertised by
contracted marketing organizations, providing information to callers of such
toll-free telephone numbers, making reservations with lodging properties and
attractions and providing advertising effectiveness statistics to such
contracted marketing organizations of every kind, nature and description. As
partial consideration for the acquired assets, VSI will assume trade payables up
to a maximum amount equal to $200,000; liabilities associated with various Trade
License Agreements; rent payment obligations of $1,250 a month for twelve
months; and all obligations and liabilities arising out of events occurring on
or after December 23, 1996, related to VSI's ownership of the acquired assets or
its conduct of the GRS Operations. As additional consideration for the acquired
assets, VSI will cause its

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corporate parent, VSIC, to grant each year to GRS 45,000 shares of VSIC common
stock, par value $.0001 per share, for fiscal years 1997, 1998 and 1999, if and
only if, (i) the Net Operating Income attributable to the acquired assets for
fiscal years 1997, 1998 and 1999 equals or exceeds 60% of the projected Net
Operating Income for fiscal 1997, 1998 and 1999; and (ii) the Net Operating
Income is not less than 10% of the Total Adjusted Gross Revenue as projected for
fiscal years 1997, 1998 and 1999. Certain roll over provisions are in place if
the required Net Operating Income is not attained in the prior fiscal year. The
consideration paid was based upon arms-length negotiations between VSI and GRS
and a fair market evaluation.

GRS was incorporated in the State of Colorado to provide retail leisure
travel services. Included in the APA are all trade names, names under which GRS
operates, trademarks, service mark, patent or copyright and any application for
any of the foregoing used by GRS and which are material in the conduct of its
business, including: Global Reservation Systems, Inc., Colorado Reservation
Service, Illinois Reservation Service, Utah Reservation Service, Michigan
Reservation Service, Georgia Reservation Service and Chicago Plus Reservation.

If, upon completion of an audit of GRS, the acquisition is deemed to
involve a significant amount of assets, the Registrant will file, on Form 8-K,
financial statements for GRS, pro forma financial information, and a copy of the
Asset Purchase Agreement.

The Software License and Maintenance Agreement with an Affiliate

VSI's founders are affiliated with Phoenix Information Systems Corp.
("Phoenix"), a publicly held company based in St. Petersburg, Florida. Under
contract with Chinese airlines, hotels, and other travel providers (through a
joint venture partially owned by a subsidiary of Phoenix), Phoenix installed and
operates in China its proprietary airline and hotel reservations system, in
order to market and distribute world-wide the system's inventory of intra-China
airline seats, hotel rooms and tours.

Phoenix's hotel reservations system (known as "Phoenix-Hotel") forms the
basis for VSI's software. In July 1993 and later updated in January 1995, the
Company executed with Phoenix a Software License and Software Maintenance
Agreement (the "Software License Agreement"), whereby VSI would have the right
to license and use the Phoenix-Hotel software to support the booking and
information needs of one or more CVB's, similar tourist development
organizations and the constituents they serve. Under the terms of the Software
License Agreement, VSI pays Phoenix a monthly licensing fee equal to $2,000 and
50% of the software license fee will apply toward a fully paid license. At such
time that these credits equal $100,000, VSI will receive a fully paid and
non-assessable license to the software. VSI may, at any time, achieve fully paid
status by paying the difference between $100,000 and the credits accrued.
Further, Phoenix will maintain and may periodically upgrade the system. Phoenix
is required to make available one copy of any upgrades to VSI although Phoenix
is not required to develop or release upgrades or customize the upgrades to
satisfy VSI's particular requirements.

The Travel Market

The establishment of VSI as well as its philosophy was derived from the
recent developments in the travel industry. Over the past decade, the growth of
this industry has created an awareness of its economic significance to
destinations. Though many still consider tourism a pleasure activity, travel and
tourism as a composite industry is an annual multi-trillion dollar enterprise
that provides employment for millions; income to destinations, attractions, and
thousands of service companies; tax revenues to public bodies; and satisfaction
to millions of consumers.

The travel and tourism industry has a very complex structure, with 98% of
its organizations classified as small businesses. Significant among these many
organizations has been the specific growth of destination marketing
organizations whose primary responsibility is the marketing of their defined
geographic areas. Hundreds of Convention and Visitors Bureaus and State
Divisions of Tourism now compete worldwide for visitors, meetings, conventions
and group tours.

As a result of these trends, a need has developed for a better
understanding of the marketing role of destination marketing organizations.
People travel in relationship to a destination; destinations, therefore,
influence their direction of travel as well as their activities once they
arrive. Whether it is for leisure travel or for a major event, the destination
becomes a critical planning variable. Therefore, an understanding of the
important marketing role that Convention and Visitors Bureaus and State
Divisions of Tourism play in formulating images, preparing for events, and
influencing travelers and planners was fundamental to the creation of VSI.

A fundamental mission of Convention and Visitors Bureaus and State
Divisions of Tourism is to solicit and service conventions, events and other
related group businesses, as well as engage in visitor promotions, thereby

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generating overnight stays for a destination which enhances and develops the
economic fabric of the community in the process. VSI was created to assist these
vital organizations in marketing their cities more efficiently and effectively
by providing conventioneers and city visitors with an array of information,
transportation, accommodations, ticketing and other services.

The Opportunity for VSI

In the United States, there are estimated to be more than 900 CVB's whose
primary function is to promote local travel and tourism. Many of the larger
CVB's coordinate advertising campaigns and provide information to the public by
toll-free 800 telephone numbers. They collect names and addresses of interested
visitors, send brochures as requested about local attractions and
accommodations, and in some cases distribute names and addresses to local
merchants for direct mailing of sales brochures and other promotional
information.

Management believes that CVB's have not yet taken advantage of the
capability of modern automated reservations systems to reserve and confirm
accommodations. VSI's unique tele-response system has been designed to meet the
demanding destination marketing needs of the tourism and hospitality industries
by generating increased interest in a destination by the traveling public, thus
turning simple information calls into accommodation reservations. Unlike most
telemarketing call centers where the tourist segment is an added niche, VSI is
dedicated solely to destination marketing.

VSI provides services for the entire tourism community, presently
providing information services for any type of accommodation, including
campsites, trailer and RV parks, motels, hotels, inns, bed & breakfasts,
apartments, resorts and condominiums. VSI disseminates general information for
events, attractions, performing and visual arts, sporting organizations,
chambers of commerce, shops, restaurants, transportation systems and theme
parks.

Management believes that quality service and product familiarity are
highly beneficial to the successful marketing of each CVB's properties and
attractions and events. Thus, it is planned that each destination counselor will
receive ongoing training in the use of the system, in telephone sales techniques
and in subscriber products.

VSI's destination marketing service is intended to benefit (1) the CVB's
to whom VSI may provide a cost-effective information and reservations service;
(2) the hotels, resorts and facilities that subscribe to the service, which are
expected to be able to fill some of their excess capacity; (3) travel agencies
which are expected to have convenient access to information, a broader selection
of properties and a cost effective way to book their clients accommodation
needs; and (4) the traveling public, which is expected to have available a wide
selection of information about hotels and tourist attractions, as well as the
ability with a single phone call to seek information and to book and confirm a
hotel reservation as well as tickets to local events. Each participating
property, through an agreement with VSI, will indicate to VSI whether or not it
will pay normal travel agency commissions. Since travel agents are not likely to
recommend properties if no commissions are paid, most participating properties
have agreed or are expected to agree to pay travel agency commissions.

VSI's Telecommunication System

The VSI Destination Service Center at the Company's headquarters in St.
Petersburg, Florida began operations on July 1, 1993. VSI's Destination Service
Center is equipped with a sophisticated Siemens Rolm 9751 CBX Model 80 Automatic
Call Distribution (ACD) system, which provides call sequencing, distribution,
and statistical data appropriate to meet the needs of any VSI destination
marketing partner. Once a call enters the ACD system, it will be directed to an
available Destination Counselor. VSI's staffing is based on answering all calls
within 25 seconds hold-time prior to speaking with a "live" destination
counselor. Proper scheduling and accurate forecasting are practiced to ensure
this goal is met. The scheduling of staff is based upon receiving reliable
historical call volume data and accurate media schedules from VSI's destination
marketing partners.

AT&T serves as VSI's long distance carrier. Presently, calls are received
from the United States, Canada and 21 other countries. VSI clients have
toll-free phone access in eleven (11) European countries, and upon request, VSI
will obtain toll-free numbers from countries throughout the world. AT&T is the
premier global provider of information resources from the next generation
technologies of network computing, wireless communications, multimedia
messaging, visual communications, and voice and audio processing to the pure
research of Bell labs.

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Under this umbrella, the AT&T Worldwide Intelligent Network delivers the only
real-time information routing available in the world. Each of the more than 100
million calls per day is quality verified as it is completed via an incredible
140 separate routes available to every location. The AT&T Network further
incorporates that power into a comprehensive self-healing architecture that
couples the restoration technologies of FASTAR and RAPID with a ring optic
topology that is engineered with 100% protection overhead.

VSI is currently completing the integration of its sophisticated
Interactive Voice Response (IVR) system into the existing ACD data processing
environment. Through the IVR system, callers will be afforded their choice for
routine inquiries to be handled by the automated system, or by a "live"
Destination Counselor. In addition to handling overflow for the existing call
center operation, the IVR system will support automatic ACD "time-in queue"
announcements, fax confirmation/fax-on-demand and TDD prompts and messages. When
used in conjunction with Resume Routing, a system which allows the caller to
automatically advance to the most qualified destination counselor identified for
that particular caller, the IVR system provides unparalleled levels of customer
service. Most importantly, the IVR data will prove invaluable as call-flow
volumes increase, reporting requirements become more sophisticated, and the need
to automatically forecast call volume becomes critical in determining the
destination marketing strategies.

Management intends to link VSI's reservations system software to the
world-wide travel agency networks, known as CRS's (computerized reservations
systems) to generate additional revenue. Such a link would allow any travel
agent serviced by the CRS to seek information concerning CVB participating
properties and to book reservations for their clients at any participating CVB
property in the VSI system. Such bookings that would be booked as "tour
products" are typically booked through travel agency CRS's, except that the data
source is the VSI system. However, VSI does not have an agreement to link its
system with any of the travel agency CRS's, and VSI can give no assurances that
any such agreement could be negotiated on terms that would be satisfactory to
VSI, if at all.

Trademark

VSI applied for federal registration of the trademark "Visitors Services,
Inc. - VSI" which application was approved on February 27, 1996. No assurances
can be given that such trademark will enhance VSI's rights to use such trademark
and stop others from infringing upon such trademark.

Employees

As of the date hereof, the Registrant and its subsidiary, VSI, currently
employ 109 individuals, of which 98 are full time employees.

Competition

Companies with greater financial resources and experience could acquire or
develop the necessary reservations software and then obtain contracts with one
or more CVB's and enter into direct competition with the Company. Furthermore,
the Company faces competition from those that are now booking accommodations,
including, but not limited to: the hotels, inns, and condominium and apartment
owners themselves and their appointed sales agents; as well as travel agents and
tour operators who book accommodations directly and not through the CVB's 800
number. The Company's objective is not to book all (or even most of) the
available hotel or other rooms in the area served by the CVB, but rather to act
as a centralized reservations service for excess room inventory that might not
otherwise be booked. For the Company to succeed, it must book a sufficient
number of these rooms to cover its cost of operations. No assurances can be
given that the Company's operations will be profitable and that the Company will
be able to successfully compete in its operations.

Item 2. Description of Property.

Prior to July 1, 1993, VSI had nominal space requirements. From July 1,
1993 to December 31, 1993, VSI's operations was housed at a cost of $1,500 per
month in unoccupied space that VSI has been subleasing from Phoenix. Per a
Sublease Agreement made and entered into as of January 1, 1994 by and between
Phoenix and VSI, Phoenix subleased 3,300 square feet of its Premises to VSI from
January 1, 1994 through November 22, 1995 at a cost of $4,400 per month. On July
13, 1995, VSI entered into a Lease Agreement with City Center Associates, Ltd.

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(the "Landlord") to lease 16,552 square feet of commercial office space located
on the tenth floor of the City Center at an approximate monthly cost of $20,000.
VSI moved its reservation center into the new location on August 25, 1995 and
moved its administrative offices into the new location on November 22, 1995. VSI
shall be fully liable under all terms and conditions of the Lease. A Guaranty of
Lease was executed by Robert P. Gordon, Chairman, Director and a controlling
shareholder of the Registrant.

Item 3. Legal Proceedings.

There are no pending legal proceedings, and the Registrant is not aware of
any threatened legal proceedings to which the Registrant is a party.

Item 4. Submission of Matters to a Vote of Security Holders.

On October 2, 1996, the Registrant, formerly known as Dynasty Capital
Corporation, filed Articles of Amendment with the Secretary of State of Florida
to change its name to Visitors Services International Corp. The name change was
adopted on October 1, 1996, by resolution of the Board of Directors of the
Registrant and the written consent of the stockholders, in accordance with
Section 607.0704, Florida Statutes, representing a sufficient number of votes
necessary to approve the amendment to the Articles of Incorporation. Under
Florida law, stockholders representing a sufficient number of votes necessary to
approve any given matter requiring stockholder approval may act by written
consent without a meeting of stockholders and without requiring that the matter
be submitted to a vote of all security holders.

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PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

(a) Market Information. The Registrant completed a public offering of its
Common Stock on June 8, 1987. Since the Company's inception in 1987 through May
17, 1995, there had been no publicly traded market for the Company's Common
Stock in the Over-The-Counter market or otherwise. On May 18, 1995, the
Company's shares were listed on the OTC Electronic Bulletin Board System with no
reported quote. Since September 27, 1996, Management believes there has been
only limited trading in the Company's Common Stock. There is no assurance that
the Common Shares will continue to be listed or that any liquidity exists for
the Company's shareholders.

(b) Holders. As of December 31, 1996, the number of record holders of the
Registrant's Common Stock is 53. This does not reflect the 82 shareholders of
VSI who are in the process of accepting the Exchange Offer to convert their
shares of VSI into VSIC, nor does this number include shareholders who hold
their accounts at broker/dealers.

(c) Dividends. Holders of Common Stock are entitled to receive such
dividend as may be declared by the Registrant's Board of Directors. No dividends
have been paid with respect to the Registrant's Common Stock. The Company
presently intends to retain future earnings, if any, to finance the expansion of
its business and does not anticipate that any cash dividends will be paid in the
foreseeable future. Future dividend policy will depend on the Company's
earnings, capital requirements, financial conditions and other relevant factors.

(d) Recent Sales of Unregistered Securities.

On September 26, 1996, Registrant executed an Agreement and Plan of
Reorganization ("Agreement") with Visitors Services, Inc. ("VSI"), and certain
Stockholders of VSI, pursuant to which a minimum of 80% of the issued and
outstanding shares of VSI were to be exchanged on a one share for one share
basis for shares of restricted stock of the Registrant. Pursuant to the
Agreement, the Registrant issued a total 15,220,295 shares of common stock of
the Registrant to the following persons in exchange for their controlling
interest (over 80%) in VSI: Robert P. Gordon, 11,585,472 shares; Elizabeth
Gordon (wife of Robert P. Gordon), 1,409,857 shares; Mr. and Mrs. Gordon,
jointly, 48,750 shares; Harvest International of America, Inc. (a corporation
controlled by Robert P. Gordon), 362,010 shares; and James F. Gordon (brother of
Robert P. Gordon). The "Exchange Offer" has been extended to the remaining
shareholders of VSI, who have, as extended, until January 20, 1996, to accept
the offer. The Registrant expects that an additional 4,226,352 shares of
restricted common stock will be issued pursuant to the exchange offer, for a
total of 19,446,647 shares being issued pursuant to the transaction. No
underwriters were used and no commissions were paid. The Registrant believes
that this transaction is exempt from registration pursuant to Section 4(2)
and/or Rule 506 of Regulation D of the Securities Act of 1933 (the "Act"). The
transaction was reported on Form 8-K dated September 30, 1996.

In October of 1996, the Registrant raised $843,750.75 in cash through a
private placement of its common stock. The Registrant sold 1,124,999 shares of
common stock, par value $.0001 per share, at a cash purchase price of $0.75 per
share. Stephen G. McLean, an Officer of both the Registrant and VSI and a
Director of the Registrant, purchased 33,333 shares; Paul W. Henry, an Officer
and Director of the Registrant and a Director of VSI, purchased 50,000 shares,
which includes 15,000 shares in the name of his minor son; the R.P. Gordon
Children Family Trust, a trust benefiting the minor children of Robert P. Gordon
(Mr. Gordon has no control over and disclaims any interest in the trust,
beneficial of otherwise) purchased 333,333 shares; Robert J Conrads, a Director
of VSI, purchased 400,000 shares; Michael Gordon, brother of Robert P. Gordon,
purchased 33,333 shares; Samuel Jacobs, an Officer of VSI, purchased 33,333
shares; Russell R. Uhlmann, Jr., an Officer of VSI, purchased 33,333 shares.
1,814,206 shares; and the balance of 208,334 shares were purchased by four other
persons. No underwriters were used and no commissions were paid. All purchasers
are accredited investors, and the Registrant believes that this private
placement is exempt from registration pursuant to Sections 4(2) and/or 4(6) of
the Securities Act of 1933 (the "Act"). All shares are restricted securities
under the Act.

Prior to the Reorganization, the Registrant's subsidiary, VSI raised cash of
$1,050,000 through a private placement of 700,000 shares of VSI stock
(equivalent to $1.50 per share) between January 24, 1996 and July 15, 1996. VSI,
raised cash of $1,200,000 through a private placement of 1,200,000 shares of VSI
common stock (equivalent to $1.00 per share) between January 26, 1995 and June
26, 1995. Both private placements were made by VSI in

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reliance on Section 4(2) and/or Rule 506 of the Act. All shares of common stock
of VSI have been or are expected to be converted into shares of restricted
common stock of the Registrant pursuant to the Reorganization with the
Registrant and the terms of the Exchange Offer.

Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

Results of Operations

As of September 30, 1996, planned principal operations of the Company have
commenced, although VSI has received limited revenues. The financial statements
of the Company have been prepared on a consolidated basis to reflect the
acquisition of VSI.

Total revenues for the fiscal year ended September 30, 1996, were
$791,949, a 43% increase over revenues of $341,572 for fiscal 1995. However,
operating expenses for fiscal 1996 were $4,565,094, a 278% increase over
operating expenses of $1,642,865 for fiscal 1995. In fiscal 1996, there was an
increase in most expense categories, in particular salaries and payroll taxes,
contract services and telephone expenses, driven primarily by additional
personnel and associated overhead costs necessary to support the overall growth
of the Company's operations.

For fiscal 1996, the Company sustained a net loss of approximately
$3,859,117, compared to a net loss of $1,301,293 for fiscal 1995. The increase
in net loss is primarily attributable to the large increase in operating
expenses in fiscal 1996 as compared to fiscal 1995, although offset by the
increase in revenues in fiscal 1996 as compared to fiscal 1995. These losses
are expected to continue for a presently undetermined time.

Sales and Revenues

The Company's sales and revenues are derived from VSI. VSI has derived
revenues generally from (1) per call fee for visitor guide requests and
informational calls, (2) booking fees paid by the hotel or lodging properties
for each booked and used reservation provided by VSI, (3) transaction fees
between $1.00 to $2.50 per ticket sold for the Arts, Attractions, Events or
Sport Teams for which tickets are sold by VSI, (4) subscription fees charged to
the properties and for information services to attractions and events.

Limited Working Capital; Financial Instability

As of September 30, 1996, the Company had a negative stockholders' equity
of $184,079, an accumulated deficit of $5,861,742, and a working capital deficit
of $1,406,262.

Various factors affecting the Company's operations raise doubt as to the
Company's ability to continue as a going concern. There can be no assurance that
the Company will be able to continue as a going concern or achieve material
revenues or profitable operations. The Company is dependent upon sufficient cash
flow from operations to meet its short-term and long term liquidity needs. The
Company may require additional financing. In this event, no assurances can be
given that such financing will be available in the amount required or, if
available, that it can be on terms satisfactory to the Company.

Certain Financing Transactions

Prior to being acquired by the Registrant in September of 1996, VSI
engaged in a private placement of its common stock and raised $1,050,000 between
January 24, 1996 and July 15, 1996. A total of 700,000 shares of common stock of
VSI were issued as a result such offering. Such shares of common stock have been
or are expected to be converted into restricted shares of common stock of the
Registrant pursuant to the Reorganization with VSIC and the terms of the
Exchange Offer.

9
<PAGE> 10
Item 7. Financial Statements and Supplementary Data.

The information required by Item 7 and an index thereto commences on page
F-1, which pages follow this page.

Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

As a result of the transaction reported in the Registrant's Form 8-K dated
September 30, 1996, and the resulting change in control of the Registrant, the
Registrant's former principal independent accountant, Larry Legel, CPA, was
dismissed on October 17, 1996. The new principal independent accountant is
Schumacher & Associates, Inc.

The former accountant's report on the financial statements for either of
the past two fiscal years, contained a "going concern" qualification, but did
not contain an adverse opinion or disclaimer of opinion, and was not qualified
or modified as to uncertainty, audit scope or accounting principles.

The replacement of Larry Legel, CPA, was approved by the Board of
directors of the Registrant on October 17, 1996.

There were no disagreements with the former accountant on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure.

The firm of Schumacher & Associates, Inc., was engaged as the new
certifying accountants on October 17, 1996.

There were no consultations within the purview of Rule 304(a)(iv) of
Regulation S-B with the new accounting firm of Schumacher & Associates, Inc.

Letters addressed to the Securities and Exchange Commission from both the
former accountant and the new accountant stating their agreement with the
disclosures were included as exhibits on the Form 8-K dated October 17, 1996.

10
<PAGE> 11
VISITORS SERVICES INTERNATIONAL CORP.

CONSOLIDATED FINANCIAL STATEMENTS

September 30, 1996
September 30, 1995

F1
<PAGE> 12
Contents

<TABLE>
<CAPTION>
Pages
-----
<S> <C>
Reports of Independent Certified Public Accountants F3, F4

Consolidated Financial Statements:

Consolidated Balance Sheet F5

Consolidated Statements of Operations F6

Consolidated Statements of Cash Flows F7

Consolidated Statement of Changes in Stockholders' Equity (Deficit) F8

Notes to Consolidated Financial Statements F9
</TABLE>

F2
<PAGE> 13
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders of
Visitors Services International Corp.

We have audited the accompanying consolidated balance sheet of Visitors Services
International Corp. as of September 30, 1996, and the related statements of
operations, changes in stockholders' equity (deficit), and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Visitors Services
International Corp. as of September 30, 1996, and the results of its operations,
its changes in stockholders' equity (deficit) and its cash flows for the year
then ended in conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 3 to the
accompanying financial statements, the Company has suffered recurring losses
from operations. This condition raises substantial doubt about the ability of
the Company to continue as a going concern, however, as discussed in Note 7,
certain stockholders have continued to provide working capital for the Company.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

Schumacher & Associates, Inc.
Certified Public Accountants
12835 East Arapahoe Road, T-II, #110
Englewood, CO 80112

December 16, 1996

F3
<PAGE> 14
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders of
Visitors Services International Corp.

We have audited the accompanying statements of operations, changes in
stockholders' equity, and cash flows of Visitors Services International Corp.
for the year ended September 30, 1995. 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.

In our opinion, the financial statements referred to above present fairly, in
all material respects the results of operations, changes in stockholders' equity
and cash flows of Visitors Services International Corp. for the year ended
September 30, 1995 in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
accompanying financial statements, the Company has suffered recurring losses
from operations. This condition raises substantial doubt about the ability of
the Company to continue as a going concern, however, as discussed in Note 7,
certain stockholders have continued to provide working capital for the Company.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

Joseph F. Morgan
Certified Public Accountant
P.O. Box 489
400 North Main Street
Manahawkin, NJ 08050

January 24, 1996

F4
<PAGE> 15
Visitors Services International Corp.
Consolidated Balance Sheet
September 30, 1996

ASSETS

<TABLE>
<S> <C>
Current assets:
Cash $ 51,546
Cash, restricted (Note 2) 150,000
Accounts receivable, net of allowance for
doubtful accounts of $43,233 266,494
Other Current Assets 89,122
-----------
Total current assets 557,162

Investment in related party (Note 6) 357,052
Equipment, net of accumulated depreciation of
$303,067 (Note 5) 1,219,592
Other assets 27,155
-----------
Total assets $ 2,160,961
===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)

Current liabilities:
Accounts payable and accrued expenses (Note 10) $ 1,154,272
Loans payable, stockholders (Note 7) 412,659
Accrued interest payable, stockholders (Note 7) 69,639
Accrued payroll and taxes 123,718
Capital leases payable, current portion (Note 4) 55,934
Notes payable, current portion (Note 9) 147,202
-----------
Total current liabilities 1,963,424

Notes payable, net of current portion (Note 9) 324,730
Capital leases payable, net of current portion
(Note 4) 56,886
-----------
Total liabilities 2,345,040
-----------
Commitments and Contingencies (Notes 1,2,3,4,7,9,10,11 and 12) --

Stockholders' (deficit):
Preferred stock, $.001 par value
10,000,000 shares authorized
None issued and outstanding (Note 8) --
Common stock, $.0001 par value,
100,000,000 shares authorized,
15,970,388 shares issued and outstanding 1,597
Additional paid-in capital 5,676,066
Accumulated (deficit) (5,861,742)
-----------
Total stockholders' (deficit) (184,079)
-----------
Total liabilities and stockholders' (deficit) $ 2,160,961
===========
</TABLE>

The accompanying notes are an integral part of the Financial Statements.

F5
<PAGE> 16
Visitors Services International Corp.
Consolidated Statements of Operations

<TABLE>
Years ended September 30,
1996 1995
------------ ------------
<S> <C> <C>
Total Revenues $ 791,949 $ 341,572
------------ ------------
Operating Expenses:

Salaries 1,996,450 665,464
Payroll taxes 231,219 74,735
Insurance 115,016 61,340
Contract services 435,111 170,322
Rent 145,040 56,550
Utilities 7,536 12,346
Telephone 534,757 72,921
Repairs and maintenance 2,781 5,177
Office supplies and expense 42,062 35,943
Computer repairs and supplies 20,196 2,959
Postage and delivery 34,575 9,164
Equipment rental 11,253 6,689
Legal and accounting 140,872 104,527
Travel and entertainment 330,752 148,784
Licenses, fees and permits 30,828 25,189
Advertising and promotion 87,023 55,591
Depreciation 192,836 66,855
Other expenses 206,787 68,309
------------ ------------
Total operating expenses 4,565,094 1,642,865
------------ ------------
Net (loss) from operations (3,773,145) (1,301,293)

Other income (expenses):
Interest income 7,796 --
Interest (expense) (93,768) --
------------ ------------

Net (loss) $ (3,859,117) $ (1,301,293)
============ ============
Net (loss) per share $ (.22) $ (.09)
============ ============
Weighted Average Shares Outstanding 17,673,901 13,801,450
============ ============
</TABLE>

The accompanying notes are an integral part of the Financial Statements.

F6
<PAGE> 17
Visitors Services International Corp.

Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
Years ended September 30,
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:

Net (loss) $(3,859,117) $(1,301,293)
Adjustments to reconcile net (loss) to net cash (used in) operating
activities:
(Increase) in accounts receivable (179,392) (72,136)
Decrease in other receivables -- 431,762
Depreciation expense 192,836 66,885
Increase in accounts payable and accrued expenses 992,856 145,731
Increase (decrease) in accrued payroll
and taxes 93,685 (25,266)
Increase (decrease) in accrued interest to stockholder 69,639 (5,327)
Stock issued for services 78,000 --
Other (111,032) 6,405
----------- -----------
Net cash (used in)
operating activities (2,722,525) (753,239)
----------- -----------
Cash flows from investing activities:
(Acquisition) of equipment (885,619) (510,451)
(Investment in) related party -- (357,052)
----------- -----------
Net cash (used in)
investing activities (885,619) (867,503)
----------- -----------
Cash flows from financing activities:
Proceeds from (repayment of)
leases payable (46,624) 63,442
Cash proceeds from (repayment of) loans from stockholders (48,915) 461,576
Issuance of common stock 3,277,373 1,250,000
Proceeds from notes payable 485,196 --
Repayment of notes payable (13,264) --
----------- -----------
Net cash provided by
financing activities 3,653,766 1,775,018
----------- -----------
Increase in cash 45,622 154,276
Cash, beginning of period 155,744 1,468
----------- -----------
Cash, end of period $ 201,366 $ 155,744
=========== ===========
Interest paid $ 21,066 $ --
=========== ===========
Income taxes paid $ -- $ --
=========== ===========
</TABLE>

The accompanying notes are an integral part of the Financial Statements.

F7
<PAGE> 18
Visitors Services International Corp.
Consolidated Statement of Changes in Stockholders' Equity (Deficit)

From September 30, 1994 through September 30, 1996

<TABLE>
<CAPTION>
Common Stock Additional
Paid-in Accumulated
Shares Amount Capital Deficit Total
----------- ------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, September 30, 1994 14,176,694 $ 1,418 $ 1,070,872 $ (701,332) $ 370,958

Issuance of common stock 1,331,250 133 1,249,867 -- 1,250,000

Net (loss) -- -- -- (1,301,293) (1,301,293)
----------- ------- ----------- ----------- -----------
Balance, September 30, 1995 15,507,944 1,551 2,320,739 (2,002,625) 319,665

Shares earned by director, not 83,070 8 77,992 -- 78,000
issued as of September 30, 1996
(Note 7)

Issuance of common stock 3,498,750 350 3,277,023 -- 3,277,373
(Note 7)

Reorganization (Note 1) 750,093 75 (75) -- --

Minority interests shares not (3,869,469) (387) 387 -- --
exchanged as of September 30,
1996 (Note 1)

Net (loss) -- -- -- (3,859,117) (3,859,117)
----------- ------- ----------- ----------- -----------
Balance, September 30, 1996 15,970,388 $ 1,597 $ 5,676,066 $(5,861,742) $ (184,079)
=========== ======= =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of the Financial Statements.

F8
<PAGE> 19
VISITORS SERVICES INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996 and September 30, 1995

(1) Organization and Operations:

Visitors Services International Corp. (VSIC), formerly Dynasty Capital
Corporation (Dynasty), was formed under the laws of the State of Florida
on October 1, 1986. Effective September 30, 1996 VSIC issued 15,220,295
shares of its common stock for approximately 80% of the issued and
outstanding common stock of Visitors Services, Inc. (VSI). This
transaction was accounted for as a reverse acquisition since the former
controlling shareholders of VSI control VSIC after the business
combination. Prior to the transaction VSIC was an inactive public shell
corporation with no net assets. Dynasty had 750,093 shares of common stock
outstanding prior to the business combination. Since Dynasty had no net
monetary assets at the time of the business combination, par value of
these shares was transferred from additional paid-in capital to common
stock. Subsequent to September 30, 1996 approximately 72% of the 20%
minority shareholders of VSI have exchanged their shares of VSI for VSIC.
Management believes that all VSI shareholders will eventually exchange
their shares for VSIC.

VSI was formed under the laws of the State of Florida in November 1992 to
provide automated reservations and information services specifically
designed to support the special needs of convention and visitors bureaus
and other organizations.

(2) Summary of Significant Accounting Policies

(a) Concentration of Credit Risk

Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of temporary cash
investments and trade accounts receivable. The Company grants credit
to various business and entities, in the U.S.A. The Company does not
require collateral for its accounts receivable. The Company
maintains its cash balance in one financial institution located in
Florida. The balances are insured by the Federal Deposit Insurance
Corporation up to $100,000. At September 30, 1996, the Company's
uninsured cash balances total approximately $100,000.

F9
<PAGE> 20
VISITORS SERVICES INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996 and September 30, 1995

(2) Summary of Significant Accounting Policies, Continued

(b) Income Tax

The Company has net operating loss carryovers totaling approximately
$5,800,000 at September 30, 1996 which expire in various years
through 2011. The Company has deferred tax assets of approximately
$1,150,000 at September 30, 1996 related to loss carryovers but due
to the uncertainty of the Company's ability to utilize these
carryovers, a valuation allowance of the total $1,150,000 has been
provided. Therefore, as of September 30, 1996 the Company's
financial statements do not include any provision for deferred tax
assets. A change in ownership of more than 50% of the Company could
reduce or eliminate the Company's ability to utilize these loss
carryovers.

(c) Equipment - Equipment is carried at cost, net of accumulated
depreciation. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets ranging from 3
to 5 years.

(d) Per Share Information

The per share information is computed based upon the weighted
average shares outstanding. The weighted average shares for the year
ended September 30, 1996 includes the minority interest shares
expected to be exchanged for stock of the Company.

(e) Use of Estimates in the Preparation of Financial Statements

Preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenue and expenses during the reporting periods. Significant
assumptions in the accompanying financial statements relate to the
Company's ability to continue as a going concern as described in
note 3 and estimated useful lives of equipment as disclosed in note
2(c). The ultimate resolution of the reasonableness of the related
assumptions cannot presently be determined. Actual results could
differ from the Company's estimates.

F10
<PAGE> 21
VISITORS SERVICES INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996 and September 30, 1995

(2) Summary of Significant Accounting Policies, Continued

(f) Bad Debts

An allowance for uncollectible accounts has been provided based on
the Company's past collection history.

(g) Advertising and Promotion Costs

Advertising and promotion costs are expensed as incurred.

(h) Geographic Area of Operations

The Company provides services to customers in the U.S.A. The
potential for severe financial impact can result from negative
effects of economic conditions within the market or geographic area.
Since the Company's business is principally in one area and in one
industry, this concentration of operations results in an associated
risk and uncertainty.

(i) Stock Split

Effective January 16, 1996 the Company effected a 1.065 to 1 forward
stock split. All shares and per share amounts referred to have been
adjusted retroactively.

(j) Restricted Cash

Included in cash on September 30, 1996 is $150,000 being held in a
separate certificate of deposit as collateral for notes payable.

(3) Basis of Presentation - Going Concern

The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. However, the Company has
sustained recurring operating losses since its inception. Management is
attempting to raise additional capital and has, subsequent to September
30, 1996, issued 1,625,000 shares of restricted common stock with cash
proceeds to the company of $1,218,750.

F11
<PAGE> 22
VISITORS SERVICES INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996 and September 30, 1995

(3) Basis of Presentation - Going Concern, Continued

In view of these matters, realization of certain assets in the
accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its
financial requirements, raise additional capital, and the success of its
future operations. Management believes that its ability to raise
additional capital provides the opportunity for the Company to continue as
a going concern. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

(4) Lease Commitments

The Company entered into an operating lease agreement for its office
facilities beginning in September, 1995 for a term of seven years.

Minimum future rental payments under operating leases with terms greater
than one year are summarized as follows:

<TABLE>
<CAPTION>
Year ending September 30
<S> <C>
1997 $ 231,728
1998 $ 240,004
1999 $ 248,280
2000 $ 256,556
2001 $ 264,832
2002 $ 273,108
</TABLE>

The Company entered into a capital finance lease agreement covering its
telephone equipment. Under the terms of the agreement which commenced in
September, 1995 the Company is making aggregate lease payments over a
three year period of $185,196, which includes deferred interest of
approximately $27,000. The Company made a down payment of approximately
$82,000 at the beginning of the lease period. At the end of the lease
period, the equipment will be owned by the Company for a nominal charge of
$1.00. The Company has accounted for this transaction as a capital lease.
At September 30, 1996 the Company's financial statements included
equipment leased through capital leases in the amount of approximately
$240,000 with accumulated depreciation of approximately $98,800.

F12
<PAGE> 23
VISITORS SERVICES INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996 and September 30, 1995

(4) Lease Commitments, Continued

Total future minimum lease payments under this capital lease are
summarized as follows:

<TABLE>
<S> <C>
Years ending September 30,

1997 $ 64,903
1998 59,494
--------
Total 124,397

Amount representing interest 11,577
--------
Net after interest reduction 112,820

Current portion (55,934)
--------
Non current portion $ 56,886
========
</TABLE>

(5) Equipment

The Company's equipment as of September 30, 1996 is summarized as follows:

<TABLE>
<S> <C>
Furniture and fixtures $ 392,000
Telephone equipment 760,152
Computer equipment 362,229
Leasehold improvements 8,278
----------
1,522,659
Accumulated depreciation (303,067)
----------
$1,219,592
==========
</TABLE>

F13
<PAGE> 24
VISITORS SERVICES INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996 and September 30, 1995

(6) Investment in Related Party

The Company is the record owner of 714,104 restricted shares of Phoenix
Information Systems Corp. (Phoenix), a related party. These shares
represent less than 2% of the issued and outstanding common stock of
Phoenix. The Company's controlling stockholders are affiliated with
Phoenix, a publicly held company based in St. Petersburg, Florida. As
further discussed in Note 7, the Company received these shares in
conjunction with the settlement of obligations from the related entity.
The closing market price for free trading shares of Phoenix was $1,316,629
on September 30, 1996 with a volume of 62,500 shares traded on that day.
These shares were restricted under Rule 144 as of September 30, 1996 and
became saleable December 3, 1996. The sale of these shares is further
restricted due to the related party relationship. The shares are carried
at a cost of $357,952 rather than market due to these restrictions.

(7) Related Party Transactions

The Company subleased office space from Phoenix from July, 1993 through
November, 1995. The Company paid Phoenix $1,500 per month from July, 1993
through December, 1993 and paid Phoenix $4,400 per month from January,
1994 through November, 1995. The Company then entered into a lease for
office space effective in November, 1995 with an unrelated party as
described in note 4 above.

Phoenix has a hotel reservation system, known as Phoenix Hotel, which
forms the basis for the Company's software that it uses to serve its
customers. In July, 1993 and later updated in January, 1995, the Company
entered into a software license and maintenance agreement with Phoenix,
whereby the Company has the right to use the Phoenix Hotel software to
support the booking and information needs of its customers. Under the
terms of the agreement, the Company pays Phoenix a monthly licensing fee
of $2000 and 50% of this fee credits toward a fully paid license fee of
$100,000. After these credits total $100,000, the Company will receive a
fully paid and non-assessable license to the software. At any time, the
Company may achieve a fully paid status by paying the difference between
$100,000 and the credits applied. As of September 30, 1996 the difference
was approximately $73,000. Phoenix has agreed to maintain the system and
has agreed to make available a copy of any upgrade of the system to the
Company. All license fees paid by the Company to Phoenix have been
expensed in the accompanying financial statements.

F14
<PAGE> 25
VISITORS SERVICES INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996 and September 30, 1995

(7) Related Party Transactions, Continued

On July 14, 1993, two officers of the Company each purchased subscriptions
for 426,000 shares of common stock for $.0001 per share. The subscription
agreements state that the subscribed stock is to be earned evenly over a
36 month period and the officers rights to the shares would be forfeited
if the officers cease to provide services to the Company during that 36
month period. In addition, at the same time subscriptions to 117,150
shares of common stock were also issued to outside parties for $.0001 per
share. Since shares were issued to outside parties for the same price per
share, no compensation expense was recorded in this transaction

Various related parties have made loans to the Company which are repayable
to them on demand. These loans have been used to pay for general operating
expenses of the Company as well as loans to related parties as described
below.

In November 1994, Phoenix's Board of Directors approved converting certain
of Phoenix's existing debt owed to the Company into Phoenix common stock.
The Board of Directors authorized the conversion of $557,052 of principal
amount of non-interest bearing loans due the Company into 1,114,104 shares
of the common stock of Phoenix from the authorized but unissued stock of
Phoenix. Between December 15, 1994 and January 24, 1995, a Company
shareholder made loans to the Company of approximately $212,000 for
expansion and operating capital. On January 24, 1995, the Company's Board
approved the exchange of 400,000 shares of Phoenix stock owned by the
Company with the shareholder for forgiving $200,000 of the indebtedness.

Between January 26, 1995 and June 26, 1995, the Company raised $1,200,000
through a confidential private placement memorandum dated January 26,
1995. The Company successfully raised the maximum amount of $1,200,000 at
the price of $25,000 per Unit, each Unit consisting of 26,625 shares of
the Company at approximately $.94 per share. A total of 1,278,000 shares
were issued as a result of this offering.

F15
<PAGE> 26
VISITORS SERVICES INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996 and September 30, 1995

(7) Related Party Transactions, Continued

The stockholders of the Company have made various demand loans to the
Company for expansion and operating capital. During the year ended
September 30, 1996 the stockholders converted $2,250,000 into 2,798,750
shares of the common stock of the Company.

As of September 30, 1996 loans payable to stockholders totaled $412,659
plus accrued interest of $69,639. The loans from stockholders were
non-interest bearing through September 30, 1995 but accrued interest at
11% per annum effective October 1, 1995. The loans were payable on demand
and were uncollateralized. Subsequent to September 30, 1996 $329,965 of
the loans payable were forgiven in exchange for 439,953 shares of the
Company restricted common stock.

The Company has an aggregate of 2,983,428 options outstanding to various
employees, officers and related parties at purchase prices ranging from
$.94 to $1.50 per share. While some of these options are fully vested, the
majority of options vest over periods of up to three years. These options
expire at various dates through 2001. The Company also agreed to issue
230,040 shares of restricted common stock to a Board member. These shares
are for services being rendered as a Director to the Company and vest over
three years. As of September 30, 1996, 83,070 of these shares have been
earned and recorded as stock issued for services in the amount of $78,000.
The above referenced securities are restricted securities under the
Securities Act of 1933, as amended. The options outstanding relate to VSI
shares but the Company intends to convert them to VSIC shares.

(8) Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock,
having a par value of $.001 each. The preferred stock may be issued in a
series from time to time with such designation, rights, preferences and
limitations as the Board of Directors of the Company may determine by
resolution.

F16
<PAGE> 27
VISITORS SERVICES INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996 and September 30, 1995

(9) Notes Payable

Notes payable to a bank are summarized as follows:

<TABLE>
<S> <C>
Collateralized by a certificate of deposit
in the amount of $150,000, interest rate of
8.75% per annum, monthly payments of
$4,761, final payment due in August, 1999 $ 146,369

Collateralized by certain furniture and
equipment, interest rate of 9.75% per
annum, monthly payments of $10,777,
final payment due in August, 1999 325,563
----------
$ 471,932
==========
</TABLE>

The notes payable are personally guaranteed by a stockholder of the
Company.

Maturities of the notes payable are summarized as follows:

<TABLE>
<S> <C>
Years ending September 30:
1997 $147,202
1998 162,014
1999 162,716
--------
Total $471,932
========
</TABLE>

(10) Severence Pay Commitments

The Company has entered into various contracts for services, ranging in
terms from two to four years, as of September 30, 1996 which provide for
continued payment if the person is terminated prior to the end of the
contract period. Total commitments for severence on these contracts amount
to approximately $540,000. One of the individual's services have been
terminated resulting in a $5000 per month severence payment requirement
for a twelve month period. Accrued expenses as of September 30, 1996
include $60,000 related to this severence requirement. A contingent
liability exists with respect to severence pay requirements under the
terms of the agreements.

F17
<PAGE> 28
VISITORS SERVICES INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996 and September 30, 1995

(11) Travel Services Agreement

Effective August 8, 1996 the Company entered into an agreement whereby the
Company has been designated as the official travel partner of 1998 World
Masters Games (Games). The Company has agreed to pay $500,000 for this
designation as well as agreed to provide up to thirteen automobiles for
use at the Games. Fees and commissions earned by the Company up to
$500,000 shall belong totally to the Company with the excess over $500,000
subject to revenue sharing provisions with the other party to the
agreement.

(12) Subsequent Events

Subsequent to September 30, 1996 the Company has issued approximately
1,800,000 shares of its common stock to various parties for services
valued at $116,250 and cash of approximately $1,218,750. Accounts payable
and accrued expenses include a liability for legal fees of $93,750 which
were paid by issuance of 125,000 of the shares described above.

The Company has subsequent to September 30, 1996 signed various letters of
intent related to possible business acquisitions. These potential
acquisitions include various commitments by the Company but are subject to
various contingencies.

F18
<PAGE> 29
PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.

(a) Directors and Executive Officers of Registrant. The Registrant has a Board
of Directors (the "Board") which is comprised of three members. Each director
holds office until the next annual meeting of Shareholders or until a successor
is elected or appointed. The members of the Board and the executive officers of
the Registrant and their respective age and position are as follows:

<TABLE>
<CAPTION>
Director of
Name Age Position with Registrant Registrant Since
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Robert P. Gordon 46 Chairman, Chief Financial Officer, Director September 1996
Stephen G. McLean 43 Chief Executive Officer, Director September 1996
Paul W. Henry 49 Secretary, Treasurer, Director September 1996
</TABLE>

Directors and Executive Officers of VSI. The Registrant's subsidiary, VSI,
has a Board of Directors (the "Board") which is comprised of seven members. Each
director holds office until the next annual meeting of Shareholders or until a
successor is elected or appointed. The members of the Board and the executive
officers of VSI and their respective age and position are as follows:

<TABLE>
<CAPTION>
Director of
Name Age Position with VSI VSI Since
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Robert P. Gordon 46 Chairman, Director November 1992
Stephen G. McLean 43 Chief Executive Officer N/A
Paul W. Henry 49 Director March 1996
Joseph P. Avila 55 Secretary, Treasurer, Director November 1992
Leo O. Parisi 58 Vice President, Director November 1992
Robert Schaedel 51 Director November 1992
James F. Gordon 54 Director September 1994
Robert J. Conrads 50 Director March 1996
Samuel C. Jacobs 41 Vice President - Technology & Information N/A
Systems
Russell R. Uhlmann, Jr. 42 Vice President - Business Development N/A
</TABLE>

ROBERT P. GORDON, has served as the Chairman, Chief Executive Officer,
President and a Director of the Registrant since September 26, 1996. Mr. Gordon
founded Visitors Services, Inc. in 1992 to meet the demanding requirements of
the domestic tourism industry. As founder and chairman of Phoenix Information
Systems Corporation, a firm that invested ten years and several million dollars
to develop an airline and hotel reservation system for international markets,
Mr. Gordon recognized that Phoenix's sophisticated automated destination system
software could be programmed to exceed the specifications of any domestic or
international hospitality and tourism marketing program. Mr. Gordon's extensive
tourism background encompasses chairman and director positions within major
international corporations, including Harvest International of America, Inc., a
company engaged in global tourism and trade development in Southeast Asia. Mr.
Gordon has a BA in Philosophy and Biology from New York University, where he
also did his graduate studies.

STEPHEN G. MCLEAN, has served as Executive Vice President, Chief Operating
Officer and a Director of the Registrant since September 26, 1996. Mr. McLean
joined VSI in early 1996 as Chief Executive Officer. Previously, he was
Corporate Vice President - Worldwide Marketing for Indigo NV, an innovative,
high-technology printing and marketing communications company. At Indigo, Mr.
McLean was responsible for the domestic and foreign marketing strategy of one of
the fastest growing publicly traded companies in the United States. Mr. McLean
was also instrumental in formulating the successful launch strategy for the
E-Print 1000, the world's first digital offset printing press. Prior to joining
Indigo, Mr. McLean held various executive positions at Scitex America

11
<PAGE> 30
Corporation, including Vice President - Strategic Planning, Vice President -
Marketing and Vice President - National Division. Under Mr. McLean's direction,
Scitex's National Division grew from start-up to $80 million in revenues in two
years through developing previously unpenetrated markets in the printing and
publishing industry. Mr. McLean holds B.S. and J.D. degrees from Suffolk
University in Boston as well as an MBA from Northeastern University.

PAUL W. HENRY, has served as Secretary, Treasurer and a Director of the
Registrant since September 26, 1996. Mr. Henry joined VSI as a Director on March
1, 1996. Mr. Henry has been Secretary and a Director of Phoenix Information
Systems Corp and Phoenix Systems Group, Inc. since April 1992. During the past
ten years, Mr. Henry has been an independent financial consultant. From 1991 to
1992, he was retained by Essex Investment Management Company, an institutional
money management firm. From 1988 to 1991, Mr. Henry was retained by the
Caithness Corporation, a natural resources development company. From 1988 to
1989 he was an advisor to Veronex Resources, an international oil and gas
exploration company. From 1987 to 1989, Mr. Henry served as a consultant to
Harvest.

JOSEPH P. AVILA, has served as Vice President of Sales for Phoenix Systems
Group, Inc. since June 1992 and a Director and Secretary of VSI since November
1992. During 1990 to June 1, 1992, Mr. Avila was Director of Sales for World
Comnet, Inc. where he was responsible for establishing, training and managing a
national sales force of 15 regional sales managers. He developed a marketing
strategy for three travel industry data bases and conducted the negotiations
with major domestic and international airline computer systems. From 1986 to
1990, he served as an independent consultant to the travel industry. From 1982
to 1986, Mr. Avila was Vice President of FirstWorld Travel Corp. where he was
responsible for marketing, operations, and travel industry relations of
FirstWorld Travel Agencies in the United States. From 1976 to 1982, Mr. Avila
was owner of Del mar Tours, a wholesale/retail tour operator, specializing in
ski tours for the western United States.

LEO O. PARISI, has served as Vice President of Operations for Phoenix
Systems Group, Inc. since November 1991 and a Director and Vice President of VSI
since November 1992. During 1991, Mr. Parisi served as an independent consultant
to the travel industry. During 1990, Mr. Parisi has served as a Director of
Operations for World Comnet where he was responsible for network management,
software and system development, customer services and operations. From 1988 to
1990, he was Senior Director, Application Department, for System One where he
was responsible for all software development, project management and support of
airline reservations for 15 airlines, flight planning for 75 airlines and
critical operational systems for Continental Airlines. From 1969 to 1988, he was
Vice President, Application Department, of Trans World Airlines/Pars, where he
was responsible for all software development in support of travel agency
functionality, airline reservations and critical operational systems. His
responsibilities included emphasis on development of highly reliable
applications for a worldwide system utilizing a network with 47,000 on-line
terminals.

ROBERT SCHAEDEL, has served as a Director of VSI since November 1992 and
has served as a consultant to the hotel and travel industry. From August 1993 to
the present time, Mr. Schaedel has served as Vice President of Operations of
Sentry III, Ltd. As Vice President of Operations, Mr. Schaedel also serves as
Vice President and General Manager of Seasons Resort & Conference Center and is
responsible for the overall operation of this 600-room resort located in the New
Jersey countryside, 57 miles from New York City. From April 1991 until June,
1993, Mr. Schaedel served as Chief Executive Officer - Florida Region, Karena
Hotels, Inc., a subsidiary of Buckingham International PLC. Mr. Schaedel was
responsible for six hotels with 1,700 rooms and 550 personnel. During April 1990
to January 1991, he was a Director of Operations at the Berkeley Hotels. During
December 1988 to March 1990, and June 1985 to November 1988, he served as Vice
President of Operations at Hotel International Management, Inc. and Days Inn of
America, respectively.

JAMES F. GORDON, has served as a Director of VSI since September 1994 and
is currently a business consultant and private investor to the real estate
industry. Mr. Gordon is a Director of a wholly owned subsidiary of Phoenix
Information Systems Corp., which subsidiary acts as the joint venture partner
with China Hainan Airlines. Mr. Gordon has been in the real estate business for
30 years and has dealt with several CVB's in his development projects in real
estate.

ROBERT J. CONRADS, has served as a Director of VSI since March 1, 1996.
Mr. Conrads has been a Director of Phoenix Information Systems Corp. since March
1, 1995 and is currently President of Conrads, Inc., an investment and advisory
services firm. Mr. Conrads also serves as Executive Vice President, Chief
Financial

12
<PAGE> 31
Officer and member of the Supervisory Board of Indigo, N.V., and President of
Indigo America, Inc., developers of the Indigo E-Print 1000, the world's first
digital offset color press. From 1987 to 1993, Mr. Conrads was Managing Director
of The First Boston Corporation and headed that firm's Investment Banking
Technology Group based in New York. During his career in the investment banking
industry, Mr. Conrads was involved in the execution of several strategic
alliances, M&A and financing transactions with technology based companies in the
US and abroad. Prior to entering the investment banking industry, Mr. Conrads
was with McKinsey & Co. for twelve years where he was a Director and headed that
firm's Electronics Industry Practice. He has also conducted research in atomic
and molecular physics for the US Atomic Energy Commission and the National
Science Foundation.

SAMUEL C. JACOBS, Vice President - Technology and Information Systems,
joined VSI in August 1996 and has more than 18 years of experience in all facets
of automated information technology and delivery systems in PC based, mini- and
micro-computer environments. From 1978 to 1981, Mr. Jacobs was lead consultant
for Automated Concepts, Inc., a New York based information technology consulting
firm serving major clients, including CBS Records and Jordache Jeans. From 1981
to 1987, Mr. Jacobs served as Vice President of Hartwell Technologies, Inc.,
where he consulted on key financial information systems to Manufacturers Hanover
Trust, prior to co-founding Westbrook Technologies, Inc., a consulting firm
specializing in the financial information industry. In 1993, Mr. Jacobs joined
Chemical Bank as Vice President of Technical Development for the Industry
Specialist Group, where he managed the development of key credit analysis and
reporting functions for this major financial institution. Since joining VSI in
early 1996, Mr. Jacobs has focused on diversifying and expanding the
capabilities of the Company's proprietary automated destination system software.
Mr. Jacobs has a B.S. from Brooklyn College with a major in Computer Information
Service. His MBA in Computer & Information Systems is from the Stein School of
Business at New York University.

RUSSEL R. UHLMANN, JR., Vice President - Business Development, joined VSI
in 1996. He brings more than 18 years of successful experience in managing sales
and customer support organizations. Most recently, Mr. Uhlmann was the National
Account Manager for Gerber System Corporation, a $100 million NYSE company
providing technology solutions to the highly service-oriented graphic arts
market. In this role, Mr. Uhlmann assumed complete responsibility for the
customer satisfaction and business renewal of corporate accounts generating
millions of dollars in annual revenues. Mr. Uhlmann has also held the following
positions: Vice President Sales and Service, Worldwide Manager of Sales and
Distribution, and National Sales and Support Manager. In each of these
positions, Mr. Uhlmann had total responsibility for customer satisfaction
including pre- and post-sales support, customer training, and customer
evaluations. Mr. Uhlmann has been trained and certified in IS09001
business/customer satisfaction procedures. Mr. Uhlmann has a B.S. in Finance
from Auburn University and did graduate studies at Emory University.

b) Significant Employees

MARY GORDON, Director of Systems Development, joined VSI in 1996. Ms.
Gordon has direct management responsibility for new system developments through
their entire life cycle - from feasibility, functional definition and design,
through implementation and support. Ms. Gordon brings over 20 years of
experience in system design and analysis, customizing software for customers for
various applications, and designing enhancements to integrate business
requirements and design concepts. Ms. Gordon's technical background in hardware
and operating systems as well as her knowledge in software languages and
application development tools is extensive. Prior to VSI, Ms. Gordon spent eight
years with Avon as Application Manager for New Business Systems Development.
Using structured analysis and design techniques, she designed their Direct
Sales/Direct Marketing System and the Order Management System which replaced
their twenty year old system. From 1980 through 1988, Ms. Gordon worked for
Manufacturers Hanover Trust Company as Assistant Vice President where she
initiated and developed several major applications with generic application
development tools.

SIMON J. JASPERS, Director of Finance, joined VSI in 1996. A Certified
Public Accountant in the State of Florida, Mr. Jaspers has 24 years of
experience in the areas of banking, accounting and finance. His career began
with Deloitte, Touche CPAs in Charlotte, NC where he later joined First Union
Corporation of Charlotte as an accountant and was appointed an officer the
following year. Mr. Jaspers then joined Sun Bank of Florida as Regional
Controller and Accounting Officer and later became Vice President and Controller
of Sun Bank of Tampa Bay. He became Executive Vice President of the US Bank of
St. Petersburg and CFO of the bank's holding company. He also served as
secretary to both Boards of Directors. Following the bank's sale to new owners,
Mr. Jaspers joined the Resolution Trust Corporation as Department Head of Claims
and Settlement and later became

13
<PAGE> 32
Director of Accounting. Mr. Jaspers obtained a B.S. in Business Administration
from the University of Florida. He is also a graduate of the Bank Administration
Institute School of Banking at the University of Wisconsin.

ROBERT G. PAVIN, Director of Fulfillment Services, joined VSI in 1996. Mr.
Pavin has more than 30 years of telemarketing, printing, and fulfillment
experience. He has extensive experience in developing and managing full-service,
in-house graphic arts and media departments. In the early 1980s, Mr. Pavin was
responsible for integrating and supporting marketing and sales objectives with
promotional programs including advertising, collateral materials and lead
fulfillment at Agfa/Compugraphic. After owning and running his own
business-to-business telemarketing company, Mr. Pavin joined Scitex America in
1989 as Manager of Market Development where he developed telemarketing and other
successful sales and marketing programs. In 1994, Mr. Pavin joined Indigo,
America and became part of the group developing markets for digital printing,
including specific programs for Latin America and dealer support. At VSI, Mr.
Pavin has been instrumental in developing and implementing the customized
fulfillment program for the Company. Mr. Pavin attended Boston University where
he majored in Marketing and Management.

JULIE WOOD-DOWNEY, Director of Special Projects and Customer Support,
joined VSI in 1993. Ms. Wood-Downey was educated at Valparaiso University,
Valparaiso, Indiana, in marketing communications. She is a veteran of the
hospitality industry having spent 20 years working in the United States and
Canada with accommodations of all types and sizes from boutique to convention
hotels. During the course of her career, she has served as general manager,
director of sales and marketing, and reservation manager, as well as holding
corporate and regional management positions with various hotel management
companies. Her area of specialty was travel industry sales in domestic and
international markets. She was also Director of Promotions for the former Marco
Polo Park in Florida. Ms. Wood-Downey has been with VSI since service began in
1993, joining as Reservations Manager, in which position she was instrumental in
developing VSI's training program and departmental procedures. She has been an
active participant in industry trade shows and marketplaces, including POW WOW,
NTA, ABA, World Travel Mart, MPI and ASAE.

RICHARD OLSON, Director of Housing-NIKE World Masters Games Project,
joined VSI in July 1995 as Vice President-Sales. Prior to that, Mr. Olson was
Regional Vice President of International Hotel Academy, involved in the
development of sales operations, systems and contracts for the Grand Wailea
Resort, Hotel and Spa, Maui, Hawaii and the Los Angeles Biltmore. Mr. Olson's
diverse experience includes ten years of service in various capacities with
Hyatt Hotels Corp. Most recently he served as Director of National Accounts in
the Washington, D.C., Hyatt national sales office. In this capacity, his
responsibilities included Convention Sales for all 86 Hyatt properties. Mr.
Olson has a B.S. in Business Administration Marketing from Central Washington
University.

CATHERINE KRELL, Director of Marketing-NIKE World Masters Games Project,
joined VSI in 1996. Ms. Krell has extensive experience and a proven track record
marketing unique products on both a national and international level. Her
relevant successes over the last several years include destination marketing,
cultural tourism marketing and sponsorship sales. Ms. Krell's disciplined,
creative and bottom-line oriented approach to marketing has been developed over
her twenty years of experience with advertising agencies, in not-for-profit
organizations and in her own consulting business. Her background includes
consumer products and hotel/tourism marketing and advertising with some of the
world's leading advertising agencies, including J. Walter Thompson in New York
and Vancouver, British Columbia, Doyle Dane Bernback in New York and Los
Angeles, and McCann Erickson in Los Angeles. Ms. Krell's training and experience
have provided her with a solid foundation for marketing in today's rapidly
changing, highly competitive, and generally underfunded non-profit sector. Ms.
Krell holds a B.A. from Willamette University, Salem, Oregon, and a Masters of
International Management from the American Graduate School of International
Management (Thunderbird), Phoenix, AZ.

JAY T. DUSEK, Director of Telecommunications, joined VSI in early 1996.
Prior to that, Mr. Dusek was telecommunications manager for Smith Kline Beecham
Clinical Laboratories Florida operations, where he was responsible for a voice
network serving five major Florida locations including two call centers and 1500
individual users. He has worked with some of the most sophisticated
telecommunications equipment available today, including such voice and data
communications technologies as ISDN, computer/telephone integration, interactive
voice response (IVR) systems, voice messaging, automatic call distribution (ACD)
systems and call accounting systems. Mr. Dusek's specialty is the integration of
these types of systems into the call center environment to provide superior
mechanisms for placing, receiving, tracking and managing voice-based
communications. Mr. Dusek holds a B.A. degree in Business Administration from
the University of North Texas.

14
<PAGE> 33
SYLVIA PERKINS, Director of Destination Counselor Training, joined VSI in
1995. Ms. Perkins is responsible for the initial and ongoing training of VSI
travel and destination counselors. The areas of training focus on telephone
courtesy, customer service, sales skills and computer operation, along with
major emphasis on knowledge of the destination. Ms. Perkins brings to VSI more
than 15 years of varied and extensive experience in the travel industry. She
holds a degree in travel and tourism from St. Clair College in Ontario. She has
directed corporate travel, organized and managed the start-up of travel
agencies, served as chief instructor for a travel school and as director of
marketing for a travel consulting company.

c) Family Relationships.

Robert P. Gordon, the founder, Chairman and a Director of VSI, also
Chairman and a Director of the Registrant, is the brother of James F. Gordon, a
Director of VSI, and is also the brother of Mary Gordon, employed with VSI as
Director of Systems Development.

d) Involvement in Certain Legal Proceedings.

On September 30, 1994, the Securities and Exchange Commission issued an
Order Instituting Proceedings Pursuant to Section 8A of the Securities Act of
1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings and
Imposing a Cease and Desist Order against Harvest International of America, Inc.
and Robert P. Gordon. The findings and remedial sanctions imposed by the Order
were in accordance with Offers of Settlement dated July 24, 1994 submitted by
Harvest and Mr. Gordon, which the S.E.C. accepted. Without admitting or denying
liability, Harvest and Mr. Gordon consented to the cease and desist Order
alleging violations of Section 17(a) of the 1933 Act and Section 10(b) and Rule
10b-5 of the 1934 Act by reason of alleged misrepresentations in 1990 and 1991
in connection with the offer of sale of Harvest non-interest bearing promissory
notes convertible into common stock of the predecessors of Phoenix and one of
its subsidiaries and which common stock was to have been issued and registered
within 30 or 60 days from the dates of the various notes.

(e) Compliance With Section 16(a) of the Securities Exchange Act of 1934: Not
applicable.

15
<PAGE> 34
Item 10. Executive Compensation.

(a) General

The following information discloses all plan and non-plan compensation
awarded to, earned by, or paid to Robert P. Gordon, Chairman and Director and
Stephen G. McLean, CEO and Director of the Registrant, for all services rendered
in all capacities to the Registrant and its subsidiaries. No other executive
officer of the Registrant or its subsidiaries received a total annual salary and
bonus exceeding $100,000 for the fiscal year ended September 30, 1996, or
otherwise meets the reporting requirements of Item 402 of Regulation S-B.

(b) Summary Compensation Table

The following table sets forth all compensation, including bonuses, stock
option awards and other payments, paid or accrued by the Registrant and/or its
subsidiary, VSI, during each of the fiscal years ended September 30, 1996, 1995
and 1994, to or for the Registrant's Chairman, Chief Executive Officer and each
of the other executive officers of the Company if any, whose total annual salary
and bonus exceeded $100,000 for the fiscal year ended 1996.

<TABLE>
<CAPTION>
Annual Compensation
-------------------------------------

(a) (b) (c) (d) (e)
Name Year Other
and Ended Annual
Principal September Salary Bonus Compensation
Position 30 ($) ($) ($)
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert P. Gordon, 1996 30,500 -0- -0-
Chairman, Director 1995 -0- -0- -0-
1994 -0- -0- -0-

Stephen G. McLean, 1996 76,000 -0- -0-
CEO, Director 1995 -0- -0- -0-
1994 -0- -0- -0-
</TABLE>

<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------------
Awards Payouts
-------------------------------------
(a) (b) (f) (g) (h) (i)
Name Year Restricted
and Ended Stock Shares LTIP All Other
Principal September Award(s) Underlying Payouts Compensation
Position 30 ($) Options ($) ($)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert P. Gordon, 1996 -0- -0- -0- -0-
Chairman, Director 1995 -0- -0- -0- -0-
1994 -0- -0- -0- -0-

Stephen G. McLean, 1996 -0- 500,000 -0- -0-
CEO, Director 1995 -0- -0- -0- -0-
1994 -0- -0- -0- -0-
</TABLE>

16
<PAGE> 35
(c) Option/SAR Grants in Last Fiscal Year

The information provided in the table below provides information with
respect to individual grants of stock options during fiscal 1996 to each of the
executive officers named in the Summary Compensation Table above. The Registrant
did not grant any stock appreciation rights during 1996.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

Individual Grants

<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
% of Total
Number of Options/SARs
Securities Granted to
Underlying Employees Exercise or
Options/SARs in Fiscal Base Price Expiration
Name Granted (#) Year (1) ($/Sh) Date
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert P. Gordon -0- 0% N/A N/A

Stephen G. McLean 500,000 27.6% $1.50 01/31/00
</TABLE>

(1) The percentage of total options granted to employees in the fiscal
year is based upon all options granted to officers, directors,
employees, etc. in fiscal 1996.

In October 1996, subsequent to year-end, the Registrant granted options to
purchase shares of common stock at $.75 per share under the VSIC Plan and
registered on Form S-8 as follows: Robert P. Gordon, options to acquire
2,220,000 shares; Stephen G. McLean, options to acquire 225,000 shares. See Item
11 and Item 10(i) - Employee Benefit and Consulting Services Compensation Plan.

(d) Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values

The information provided in the table below provides information with
respect to each exercise of stock option during fiscal 1996 by the executive
officers named in the Summary Compensation Table and the fiscal year end value
of unexercised options.

<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)

Number of
Securities Value of
Underlying Unexercised
Shares Value Unexercised In-the-Money
Acquired on Realized Options/SARs at Options/SARs at
Name Exercise (#) ($)(1) FY-End (#) FY-End($)
-----------------------------------
Exercisable/ Exercisable/
Unexercisable Unexercisable(1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert P. Gordon -0- -0- -0- -0-

Stephen G. McLean -0- -0- -0- -0-
</TABLE>

(1) The aggregate dollar values in columns (c) and (e) are calculated by
determining the difference between the fair market value of the
Common Stock underlying the options and the exercise price of the
options at exercise or fiscal year end, respectively. In calculating
the dollar value realized upon exercise, the value of any payment of
the exercise price is not included.

17
<PAGE> 36
(e) Long-Term Incentive Plans ("LTIP") - Awards in Last Fiscal Year

This table has been omitted, as no executive officers named in the Summary
Compensation Table above received any awards pursuant to any LTIP during fiscal
1996.

(f) Compensation of Directors.

No compensation was paid by the Registrant to its Directors for any
service provided as a director during the fiscal year covered by this report.
None of the Registrant's Directors currently receive any salary from the
Registrant. There are no formal or informal understandings or arrangements
relating to compensation; however, Directors may be reimbursed for all
reasonable expenses incurred by them in conducting the Registrant's business.
These expenses would include out-of-pocket expenses for such items as travel,
telephone, postage, and federal express charges.

Options to acquire shares of common stock of VSIC were granted to certain
Directors of VSIC and VSI in October 1996, subsequent to year-end. See Item
10(i) - Employee Benefit and Consulting Services Compensation Plan.

The Registrant's subsidiary, VSI, has the following agreements in effect:

Pursuant to an Agreement to serve as a Director of VSI dated September 4,
1995, VSI granted to Mr. Paul W. Henry options to purchase 153,360 shares of
VSI's Common Stock at $.94 per share. The five year options shall expire on
February 28, 2001, and they shall vest for the benefit of Mr. Henry as follows:
options to acquire 4,260 shares shall vest on the first day of each month for 36
months, commencing on March 1, 1996.

Pursuant to a Consulting Agreement with VSI, dated September 4, 1995, the
VSI granted to Mr. Robert J. Conrads, a Director, 230,040 shares of VSI's Common
Stock. The shares shall vest for the benefit of Mr. Conrads as follows: 6,290
shares shall vest on the first day of each month for 36 months, commencing on
March 1, 1996.

No other compensation was paid by VSI to its Directors for any service
provided as a director during the fiscal year covered by this report.

(g) Employment Contracts and Termination of Employment and Change-in-Control
Arrangements.

As of the date of this report the Registrant has no employment contracts
or compensatory plan or arrangement in effect for any executive officer
identified in the Summary Compensation Table above. However, the Registrant
intends to enter into written employment contracts with certain of its executive
officers.

The Registrant's Board of Directors has complete discretion as to the
appropriateness of (a) key-man life insurance, (b) obtaining officer and
director liability insurance, (c) employment contracts with and compensation of
executive officers and directors, (d) indemnification contracts, and (e)
incentive plan to award executive officers and key employees.

The Registrant's subsidiary, VSI, has the following agreements in effect:

Pursuant to a Consulting Agreement dated December 3, 1995, the Company
engaged Robert P. Gordon, Chairman and a Director of VSI, as a Consultant to VSI
for a term of three years commencing January 1, 1996, and continuing until
December 31, 1998, unless otherwise terminated pursuant to the terms thereof.
Pursuant to the Consulting Agreement, Mr. Gordon will be paid a consultant fee
of $6,000 per month effective January 1, 1996. Mr. Gordon is also entitled to
the following: major medical health benefits equivalent to that provided to
other officers; indemnification from any claim or law suit which may be asserted
against him when acting as an officer for VSI provided that said indemnification
is not in violation of any federal or state law or rule or regulation of the
Securities and Exchange Commission. The Agreement also contains certain
provisions with respect to disability, termination, confidentiality and
non-competition. It is anticipated that the Consulting Agreement with VSI will
be replaced with an employment agreement between the Registrant and Robert P.
Gordon.

18
<PAGE> 37
Pursuant to an Employment Agreement dated January 24, 1996, VSI employed
Mr. Steve McLean as Chief Executive Officer of VSI for a term of three years
commencing on February 1, 1996 and continuing until January 31, 1999, unless
otherwise terminated pursuant to the terms thereof. Pursuant to the terms of the
Agreement, Mr. McLean will be paid a base salary at the rate of $10,000.00 per
month, for the first year, $12,083.00 per month, for the second year and
$14,583.00 per month, for the third year. In addition, Mr. McLean is entitled to
a 5% Net Profit Bonus each year based on VSI's fiscal year financial statements.
Mr. McLean is also entitled to the following: major medical health benefits
equivalent to that provided to other officers; indemnification from any claim or
law suit which may be asserted against him when acting as an officer for VSI
provided that said indemnification is not in violation of any federal or state
law or rule or regulation of the Securities and Exchange Commission; and options
to purchase 500,000 shares of VSI's Common Stock at $1.50 per share. The four
year options shall expire on January 31, 2000, and they shall vest for the
benefit of Mr. McLean as follows: options to acquire 80,000 shares vest on
February 1, 1996; and options to acquire 12,000 shares vest on the first day of
each month for the remaining 35 months. The Employment Agreement also contains
certain provisions with respect to disability, termination, confidentiality and
non-competition. It is anticipated that the Employment Agreement with VSI will
be replaced with an employment agreement between the Registrant and Stephen G.
McLean.

VSI's Board of Directors is responsible for reviewing and determining the
annual salary and other compensation of the executive officers and key employees
of VSI. The goals of VSI are to align compensation with business objectives and
performance and to enable VSI to attract, retain and reward executive officers
and other key employees who contribute to the long-term success of the company.
VSI provides base salaries to its executive officers and key employees
sufficient to provide motivation to achieve certain operating goals. Although
salaries are not specifically tied into performance, incentive bonuses are
available to certain executive officers and key employees. In the future,
executive compensation may include without limitation cash bonuses, stock option
grants and stock reward grants. In addition, the company may set up a pension
plan or similar retirement plans. It is anticipated that the Board of Directors
of the Registrant will assume responsibility for reviewing and determining the
annual salary and other compensation of the executive officers and key employees
of VSI, as well as any other subsidiaries of the Registrant or VSI.

(h) Report on Repricing of Options/SARs. - Not applicable.

(i) Employee Benefit and Consulting Services Compensation Plan.

On October 16, 1996, the Registrant filed a Registration Statement on Form
S-8 covering registration under the Securities Act of 1933, as amended, of
3,600,000 shares of the Company's common stock, $.0001 par value per share,
pursuant to the Registrant's Employee Benefit and Consulting Services
Compensation Plan dated October 3, 1996 (the "VSIC Plan"). Furthermore, on
November 18, 1996, the Registrant adopted and assumed VSI's 1995 Non-Qualified
Stock Option Plan ("VSI Plan"), whereby all options issued and issuable under
the VSI Plan will be convertible into shares of common stock of VSIC rather than
into shares of VSI common stock. The VSI Plan was amended to increase the number
of shares authorized to be issued under the VSI Plan from 3,250,000 shares to
5,000,000 shares; and to facilitate the Registrant's ability to adopt and assume
the VSI Plan, the VSI Plan was restated and retitled as "Visitors Services, Inc.
Employee Benefit and Consulting Services Compensation Plan," which is a
"mirror-image" of the plan that has been established by the Registrant. Under
both the VSIC Plan and the VSI Plan, the Registrant may issue Common Stock
and/or options to purchase Common Stock to certain consultants, service
providers, officers, directors and employees. The purpose of the VSIC Plan is to
promote the best interests of the Registrant and its stockholders by providing a
means of non-cash remuneration to eligible participants who contribute to
operating progress and earning power of the Registrant. Both the VSIC Plan and
the VSI Plan are administered by the Registrant's Board of Directors or a
committee thereof which has the discretion to determine from time to time the
eligible participants to receive an award; the number of shares of stock
issuable directly or to be granted pursuant to option; the price at which the
option may be exercised or the price per share in cash or cancellation of fees
or other payment which the Registrant or VSI is liable if a direct issue of
stock and all other terms on which each option shall be granted. In October
1996, options to acquire all shares covered by the VSIC Plan and the Form S-8
Registration Statement were granted, at an exercise price of $.75 per share,
including grants to the following Officers and Directors of VSIC and/or VSI to
acquire the number of shares indicated: Robert P. Gordon, 2,220,000 options;
Stephen G. McLean, 225,000 options; Paul W. Henry, 45,000 options; Robert J.
Conrads, 325,000 options; Samuel C. Jacobs, 25,000 options; and Russell R.
Uhlmann, Jr., 25,000 options. As of December 31, 1996, a total of 655,000 shares
of common stock of the Registrant were issued under the VSIC Plan, including
530,000 shares for consulting services and 125,000 shares for legal services.

19
<PAGE> 38
Item 11. Security Ownership of Certain Beneficial Owners and Management.

The following table sets forth, as of the date of this Report, the stock
ownership of each person known by the Registrant to be the beneficial owner of
five percent or more of the Registrant's Common Stock, each Officer and Director
individually and all Directors and Officers of the Registrant and/or VSI as a
group. No other class of voting securities is outstanding. Each person is
believed to have sole voting and investment power over the shares except as
noted.

<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owner (1) Beneficial Ownership(1)(2) Percent of Class (3)
<S> <C> <C>
Robert P. Gordon (4) 16,816,042 69.5

Stephen G. McLean (5) 758,333 3.4

Paul W. Henry (6) 198,360 *

Samuel C. Jacobs (7) 258,333 1.2

Russell R. Uhlmann, Jr. (8) 208,333 *

James F. Gordon 1,814,206 8.3

Robert Schaedel -- *

Robert J. Conrads (9) 955,040 4.3

Leo Parisi 426,000 1.9

Joseph Avila 426,000 1.9

Includes all officers and directors of the 21,860,647 88.0
Company as a group (ten persons)
</TABLE>

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

* Represents less than one percent.

(1) Unless otherwise indicated, all shares are directly beneficially owned and
investing power is held by the persons named. The address of each person
is 100 Second Avenue South, City Center, Suite 1000, St. Petersburg, FL
33701.

(2) Includes options beneficially owned but not yet exercised and outstanding,
and shares of common stock of VSI have been or are expected to be
converted into shares of restricted common stock of pursuant to the
Reorganization with VSIC and the terms of the Exchange Offer

(3) Based upon 21,976,739 shares issued and outstanding (which total includes
the additional 4,226,352 shares of common stock expected to be issued
pursuant to the Exchange Offer), plus the amount of shares each person or
group has the right to acquire within 60 days pursuant to options,
warrants, conversion privileges or other rights.

(4) Robert P. Gordon may be deemed to be a founder of the Company. Robert P.
Gordon individually owns 12,025,425 shares (includes 439,953 VSI shares
being converted into VSIC shares), Elizabeth K. Gordon, his wife,
individually owns 1,409,857, and they jointly own 698,750 shares (includes
650,000 shares of VSI being converted into VSIC shares). Also included are
362,010 shares owned by Harvest International of America, Inc., which is
controlled by Robert P. Gordon. Also included are options to purchase
2,220,000 shares at $.75 per share, granted under the VSIC Plan in October
1996.

(5) Includes options to purchase 500,000 shares at $1.50 per share, granted
under the VSI Plan prior to year-end; and options to purchase 225,000
shares at $.75 per share, granted under the VSIC Plan in October 1996.

20
<PAGE> 39
(6) Represents options to purchase 153,360 shares at $1.00 per share; granted
under the VSI Plan prior to year-end; and options to purchase 45,000
shares at $.75 per share, granted under the VSIC Plan in October 1996.

(7) Includes options to purchase 200,000 shares at $1.50 per share; granted
under the VSI Plan prior to year-end; and options to purchase 25,000
shares at $.75 per share, granted under the VSIC Plan in October 1996.

(8) Includes options to purchase 150,000 shares at $1.50 per share; granted
under the VSI Plan prior to year-end; and options to purchase 25,000
shares at $.75 per share, granted under the VSIC Plan in October 1996.

(9) Includes 230,040 shares that vest over three years. As of the date hereof,
63,900 shares have vested. Also includes options to purchase 325,000
shares at $.75 per share, granted under the VSIC Plan in October 1996.

Item 12. Certain Relationships and Related Transactions.

CERTAIN TRANSACTIONS

The Registrant acquired a controlling interest in VSI from certain
shareholders of VSI in September of 1996, and is in the process of completing an
Exchange Offer with the remaining shareholders of VSI. Pursuant to the
acquisition of VSI, the Registrant issued shares of common stock of the
Registrant to the following persons in exchange for their controlling interest
(over 80%) in VSI: Robert P. Gordon, 11,585,472 shares; Elizabeth Gordon (wife
of Robert P. Gordon), 1,409,857 shares; Mr. and Mrs. Gordon, jointly, 48,750
shares; Harvest International of America, Inc. (a corporation controlled by
Robert P. Gordon), 362,010 shares; and James F. Gordon (brother of Robert P.
Gordon), 1,814,206 shares. The reorganization was reported on Form 8-K dated
September 30, 1996. All shares are restricted securities under the Securities
Act of 1933, as amended.

In October of 1996, the Registrant raised $843,750.75 through a private
placement of its common stock. The Registrant sold 1,124,999 shares of common
stock, par value $.0001 per share, at a cash purchase price of $0.75 per share.
Stephen G. McLean, an Officer of both the Registrant and VSI and a Director of
the Registrant, purchased 33,333 shares; Paul W. Henry, an Officer and Director
of the Registrant and a Director of VSI, purchased 50,000 shares, which includes
15,000 shares in the name of his minor son; the R.P. Gordon Children Family
Trust, a trust benefiting the minor children of Robert P. Gordon (Mr. Gordon has
no control over and disclaims any interest in the trust, beneficial of
otherwise) purchased 333,333 shares; Robert J Conrads, a Director of VSI,
purchased 400,000 shares; Michael Gordon, brother of Robert P. Gordon, purchased
33,333 shares; Samuel Jacobs, an Officer of VSI, purchased 33,333 shares; and
Russell R. Uhlmann, Jr., an Officer of VSI, purchased 33,333 shares. All shares
are restricted securities under the Securities Act of 1933, as amended.

The following transactions all relate to the Registrant's subsidiary, VSI,
prior to the time that VSI was acquired by the Registrant, and all shares of
common stock of VSI described below have been or are expected to be converted
into restricted shares of common stock of the Registrant pursuant to the
Reorganization and the Exchange Offer:

In 1993, Robert P. Gordon, Leo Parisi, Joseph Avila and members of the
family of Lester Morse, counsel to VSI, as promoters of VSI, subscribed for
7,090,000 shares, 400,000 shares, 400,000 shares and 110,000 shares,
respectively, at a purchase price of $.0001 per share. On July 15, 1993, Robert
P. Gordon contributed to capital $9,200.

From time to time through September 30, 1994, Robert P. Gordon, Elizabeth
Gordon, James F. Gordon, Michael Gordon and Harvest International of America,
Inc. (a private corporation controlled by Robert P. Gordon) made loans (or
continue to make loans) to VSI which are repayable to them on demand. These
loans have been used to pay for general operating expenses of VSI as well as
loans to related parties as described below. Robert P. Gordon, Elizabeth Gordon,
James F. Gordon, Michael Gordon (brother of Robert P. Gordon) and Harvest had
made from inception to September 30, 1994 loans of $378,848, $264,763, $340,696,
$10,000 and $67,983, respectively,

21
<PAGE> 40
which loans were converted at the rate of $.20 per share into 1,894,240 shares,
1,323,815 shares, 1,703,480 shares, 50,000 shares and 339,915 shares of VSI,
respectively.

Between December 15, 1994 and January 24, 1995, Robert P. Gordon made
loans to VSI of approximately $212,000 for expansion and operating capital. On
January 24, 1995, VSI's Board approved the sale of 400,000 shares of common
stock of Phoenix Information Systems Corp. stock owned by VSI to Robert P.
Gordon in consideration of Robert P. Gordon forgiving $200,000 of that
indebtedness. VSI's founders are affiliated with Phoenix, a publicly held
company based in St. Petersburg, Florida. In November 1994, Phoenix's Board of
Directors approved converting certain of Phoenix's existing debt owed to VSI
into stock. The Board of Directors authorized the conversion of $557,052 of
principal amount non-interest bearing loans due VSI into 1,114,104 shares of the
Common Stock of the Phoenix from the authorized but unissued stock of the
Phoenix. As of the date hereof, VSI owns 714,104 restricted shares of Phoenix
which represents 1.5% of Phoenix's issued and outstanding shares.

VSI was indebted to Robert P. Gordon and Elizabeth K. Gordon, his wife, in
the amount of approximately $750,000 in principal for funds loaned to the
company, plus accrued interest. Robert and Elizabeth Gordon agreed to convert
their debt into shares of restricted common stock of VSI at the rate of $1.00
per share. On September 4, 1995, 750,000 shares of restricted stock were issued
to Robert and Elizabeth Gordon for their conversion of $750,000 in principal
owed to them by VSI.

VSI was indebted to Robert P. Gordon in the amount of approximately
$1,829,965 in principal for funds loaned to VSI, plus accrued interest. Robert
P. Gordon agreed to convert his debt into shares of restricted common stock of
VSI, in whole or in part, at the rate of $.75 per share. On September 26, 1996,
2,000,000 shares of restricted stock of VSI were issued to Robert P. Gordon for
his conversion of $1,500,000 in principal owed to him by VSI. On October 15,
1996, 439,953 shares of restricted stock of VSI were issued to Robert P. Gordon
for his conversion of the remaining principal balance of $329,965 owed to him by
VSI.

As noted above, all shares of common stock of VSI have been or are
expected to be converted into shares of restricted common stock of VSIC by all
persons noted above as well as all other shareholders of VSI, pursuant to the
Reorganization with VSIC and the terms of the Exchange Offer.

22
<PAGE> 41
Item 13. Exhibits and Reports on Form 8-K.

(a) List of Exhibits.

Exhibit Number Description

2.1 Agreement and Plan of Reorganization between Dynasty
Capital Corporation and Visitors Services, Inc., dated
September 26, 1996 (2)

3 Articles of Incorporation (3)

3.1 Amendment to Articles of Incorporation, filed November
12, 1986 (4)

3.2 Amendment to Articles of Incorporation, filed October 2,
1996 (5)

3.3 Bylaws as restated October 18, 1996 (6)

16.1 Letter on change in certifying accountant from Larry
Legel, CPA. (7)

16.2 Letter on change in certifying accountant from
Schumacher & Associates, Inc. (8)

21.1 List of Subsidiaries of the Registrant. (1)

27 Financial Data Schedule (1)

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

(1) Filed herewith.

(2) Incorporated by reference to Exhibit 2.1 to the Company's Form 8-K dated
and filed on September 30, 1996.

(3) Incorporated by reference to Exhibit 3 to the Company's Form 8-K dated and
filed on October 15, 1996.

(4) Incorporated by reference to Exhibit 3.1 to the Company's Form 8-K dated
and filed on October 15, 1996.

(5) Incorporated by reference to Exhibit 3.2 to the Company's Form 8-K dated
and filed on October 15, 1996.

(6) Incorporated by reference to Exhibit 3.3 to the Company's Form 8-K dated
October 17, 1996, and filed on October 23, 1996.

(7) Incorporated by reference to Exhibit 16.1 to the Company's Form 8-K dated
October 17, 1996, and filed on October 23, 1996.

(8) Incorporated by reference to Exhibit 16.2 to the Company's Form 8-K dated
October 17, 1996, and filed on October 23, 1996.

(b) Reports on Form 8-K.

The Registrant filed a Current Report on Form 8-K on September 30, 1996,
date of earliest event: September 26, 1996, reporting (i) a 14.4 to 1 reverse
split of the outstanding common stock of the Registrant; (ii) the Registrant's
acquisition of Visitors Services, Inc.; and (iii) changes in control of the
Registrant. Filed with the Report were financial statements of VSI and pro forma
financial information.

The Registrant filed a Current Report on Form 8-K on October 15, 1996,
reporting that the Registrant changed its name from Dynasty Capital Corporation
to Visitors Services International Corp.

The Registrant filed a Current Report on Form 8-K on October 22, 1996,
date of earliest event: October 17, 1996, reporting (i) changes in Registrant's
certifying accountant, (ii) the Registrant's restated Bylaws, (iii) a change in
management structure, and (iv) a change in the Registrant's annual accounting
period from one ending on June 30 to a fiscal year ending on September 30 of
each year.

23
<PAGE> 42
SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the Registrant caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.

VISITORS SERVICES INTERNATIONAL CORP.

Dated: January 10, 1997 /s/ Robert P. Gordon
-----------------------------------------------
Robert P. Gordon, Chairman, Chief Financial and
Accounting Officer, and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.

Name Title Date
---- ----- ----
/s/ Robert P. Gordon Chairman, Chief Financial and January 10, 1997
- -------------------- Accounting Officer, and Director
Robert P. Gordon

/s/ Stephen G. McLean Chief Executive Officer and January 10, 1997
- --------------------- Director
Stephen G. McLean

/s/ Paul W. Henry Secretary, Treasurer, and January 10, 1997
- ----------------- Director
Paul W. Henry

24
<PAGE> 43
EXHIBIT INDEX

Exhibit Number Description

2.1 Agreement and Plan of Reorganization between Dynasty
Capital Corporation and Visitors Services, Inc., dated
September 26, 1996 (2)

3 Articles of Incorporation (3)

3.1 Amendment to Articles of Incorporation, filed November
12, 1986 (4)

3.2 Amendment to Articles of Incorporation, filed October 2,
1996 (5)

3.3 Bylaws as restated October 18, 1996 (6)

16.1 Letter on change in certifying accountant from Larry
Legel, CPA. (7)

16.2 Letter on change in certifying accountant from
Schumacher & Associates, Inc. (8)

21.1 List of Subsidiaries of the Registrant. (1)

27 Financial Data Schedule (1)

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

(1) Filed herewith.

(2) Incorporated by reference to Exhibit 2.1 to the Company's Form 8-K dated
and filed on September 30, 1996.

(3) Incorporated by reference to Exhibit 3 to the Company's Form 8-K dated and
filed on October 15, 1996.

(4) Incorporated by reference to Exhibit 3.1 to the Company's Form 8-K dated
and filed on October 15, 1996.

(5) Incorporated by reference to Exhibit 3.2 to the Company's Form 8-K dated
and filed on October 15, 1996.

(6) Incorporated by reference to Exhibit 3.3 to the Company's Form 8-K dated
October 17, 1996, and filed on October 23, 1996.

(7) Incorporated by reference to Exhibit 16.1 to the Company's Form 8-K dated
October 17, 1996, and filed on October 23, 1996.

(8) Incorporated by reference to Exhibit 16.2 to the Company's Form 8-K dated
October 17, 1996, and filed on October 23, 1996.

<PAGE> 1
Exhibit 21.1

LIST OF SUBSIDIARIES OF THE REGISTRANT:

1. Visitors Services, Inc., incorporated under the laws of the State of Florida,
does business under the names of Visitors Services, Inc. and VSI.

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED SEPTEMBER 30, 1996 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-KSB.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<CASH> 51,546
<SECURITIES> 0
<RECEIVABLES> 309,727
<ALLOWANCES> 43,233
<INVENTORY> 0
<CURRENT-ASSETS> 557,162
<PP&E> 1,522,659
<DEPRECIATION> 303,067
<TOTAL-ASSETS> 2,160,961
<CURRENT-LIABILITIES> 1,963,424
<BONDS> 0
0
0
<COMMON> 1,597
<OTHER-SE> (185,676)
<TOTAL-LIABILITY-AND-EQUITY> 2,160,961
<SALES> 0
<TOTAL-REVENUES> 791,949
<CGS> 0
<TOTAL-COSTS> 4,565,094
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 93,768
<INCOME-PRETAX> (3,859,117)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,859,117)
<EPS-PRIMARY> (.22)
<EPS-DILUTED> (.22)

</TABLE>