AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 1996
REGISTRATION STATEMENT NO. 333-
===============================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FIRST AMERICAN RAILWAYS, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

NEVADA 4011 87-0443800

(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)

ALLEN C. HARPER
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
FIRST AMERICAN RAILWAYS, INC.
FIRST AMERICAN RAILWAYS, INC. 1360 SOUTH DIXIE HIGHWAY
2445 HOLLYWOOD BLVD. CORAL GABLES, FLORIDA 33416
HOLLYWOOD, FLORIDA 33020 (305) 667-6781
(954) 920-0606 (NAME, ADDRESS AND TELEPHONE NUMBER
(ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
OF PRINCIPAL EXECUTIVE OFFICES
OR INTENDED PRINCIPAL PLACE OF BUSINESS)

COPIES TO:
DENNIS J. OLLE, ESQ. RUBI FINKELSTEIN, ESQ.
OLLE, MACAULAY & ZORRILLA, P.A. ORRICK, HERRINGTON & SUTCLIFFE
1402 MIAMI CENTER 666 FIFTH AVENUE
201 SOUTH BISCAYNE BOULEVARD NEW YORK, NEW YORK 10022
MIAMI, FLORIDA 33131 (212) 506-5000
(305) 358-9200 (212) 506-5151 (FAX)
(305) 358-9617 (FAX)

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.

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

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

Common Stock, $.001 par value....................... 4,425,275 $5.125 $22,679,534.38 $ 7,820.53
- -------------------------------------------------------------------------------------------------------------------
Series A Warrants................................... 3,962,773 -- -- --
- -------------------------------------------------------------------------------------------------------------------
Financial Advisory Warrants......................... 100,000 -- -- --
- -------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 Par Value, Underlying
Outstanding Series A Warrants(2).................. 3,962,773 $ 3.50 $13,869,705.50 $ 4,782.66
- -------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 Par Value, Underlying
Outstanding Financial Advisory Warrants........... 100,000 $ 2.50 $ 250,000 $ 86.21
- -------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value, Underlying
Outstanding Convertible Secured Notes ("Notes")... 3,300,273 $ 3.50 $11,550,455.50 $ 3,983.09
- -------------------------------------------------------------------------------------------------------------------
Series A Warrants to be Issued in Connection with
Prepayment of the Notes........................... 2,357,338 -- -- --
- -------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value, Underlying Series A
Warrants to be Issued in Connection with
Prepayment of the Notes(2)........................ 2,357,338 $ 3.50 $ 8,250,683 $ 2,845.06
- -------------------------------------------------------------------------------------------------------------------
Total Registration Fee(2)........................... $ 19,517.55
===================================================================================================================

(1) Estimated solely for purposes of determining the registration fee
pursuant to Rule 457(c) on the basis of $5.125 which was the average of
the high and low sale prices per share of the Company's Common Stock on
August 1, 1996, as reported by the OTC Bulletin Board. With respect to
the Warrants, the calculation of the registration fee has been based on
the exercise price thereof.

(2) Pursuant to Rule 416, this Registration Statement also covers such
indeterminate number of shares of Common Stock as may be issuable
pursuant to the anti-dilution provisions of the Warrants.
----------
THE COMPANY HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A)
OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
===============================================================================

(CROSS REFERENCE SHEET)
FORM SB-2

ITEM NUMBER AND CAPTION HEADING IN PROSPECTUS
- ----------------------------------------------------------------------------------------------------

1. Front of Registration Statement
Outside Front Cover of Prospectus ............... Cover Page

2. Inside Front Cover and Outside
Back Cover Pages of Prospectus .................. Inside Front and Outside Back;
Back Cover Pages

3. Summary Information and Risk Factors................ Prospectus Summary; Risk Factors

4. Use of Proceeds .................................... Use of Proceeds

5. Determination of Offering Price..................... Not Applicable

6. Dilution............................................ Not Applicable

7. Selling Security Holders............................ Principal and Selling Shareholders

8. Plan of Distribution................................ Plan of Distribution

9. Legal Proceedings .................................. Business--Legal Proceedings

10. Directors, Executive Officers,
Promoters and Control Persons .................... Management

11. Security Ownership of Certain
Beneficial Owners and Management ................. Principal and Selling Shareholders

12. Description of Securities .......................... Description of Capital Stock

13. Interest of Named Experts and Counsel............... Experts; Legal Matters

14. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities.... Not Applicable

15. Organization Within Last Five Years................. Not Applicable

16. Description of Business............................. Business

17. Management's Discussion and Analysis
or Plan of Operation ............................. Plan of Operation

18. Description of Property............................. Business

19. Certain Relationships and Related Transactions...... Certain Transactions

20. Market for Common Equity and
Related Stockholder Matters........................ Risk Factors; Price Range of Common
Stock; Principal and Selling
Shareholders

21. Executive Compensation............................... Management

22. Financial Statements................................. Financial Statements

23. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure ............................... Experts

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.

SUBJECT TO COMPLETION, DATED AUGUST 6, 1996
11,788,321 SHARES OF COMMON STOCK
6,320,111 SERIES A REDEEMABLE WARRANTS
100,000 FINANCIAL ADVISORY WARRANTS

FIRST AMERICAN
RAILWAYS, INC. [LOGO]

----------

This Prospectus relates to the offering of 11,788,321 shares of Common
Stock, $.001 par value (the "Shares"), along with 6,320,111 Series A
Redeemable Warrants ("Series A Warrants") and 100,000 financial advisory
warrants ("Advisory Warrants"), (collectively the "Warrants") of First
American Railways, Inc. (the "Company"), by certain securityholders of the
Company (collectively, the "Selling Shareholders"). A total of 4,425,275
Shares offered hereby are owned of record by the Selling Shareholders, and
7,263,046 shares offered hereby represent Common Stock underlying outstanding
Series A Warrants and Common Stock underlying outstanding convertible secured
notes (the "Notes"), which securities were issued in connection with two
recent private placements by the Company (collectively, the "Private
Placements"). Also included in the Common Stock offered hereby are 2,357,338
Shares underlying certain additional Series A Warrants which may be issued in
the future, as described below, and 100,000 Shares underlying the Financial
Advisory Warrants, described below. The outstanding Series A Warrants are
held as follows: (i) warrants to purchase an aggregate of 650,000 Shares that
expire in April 1998 and have an exercise price of $3.50 per share are held
by Capital Growth International, LLC, the Company's placement agent in the
Private Placements and its designees ("Capital Growth"); and (ii) warrants to
purchase 3,312,773 Shares which are exercisable until April or May 1998 at an
exercise price of $3.50 per share are held by the Selling Shareholders who
participated in the Private Placements; and (iii) 2,357,338 warrants that
would expire in April and May 1998 and have an exercise price of $3.50 per
share which may be issued to the holders of the Notes in certain
circumstances in connection with the prepayment of the Notes. The Series A
Warrants may be redeemed under certain circumstances. The remaining warrants
offered hereby consist of 100,000 Advisory Warrants that expire in February
2001, which are not redeemable and are exercisable at $2.50 per share. See
"Description of Securities."

The Company will not receive any proceeds from this offering; however, the
maximum gross proceeds payable to the Company from the exercise of all of the
outstanding Warrants would be $14,119,705, and an additional $8,250,683 would
be payable to the Company if the Warrants that may be issued in certain
circumstances in repayment of the Notes are exercised in full.

The Company has applied for the listing of its Common Stock on the Nasdaq
SmallCap Market ("Nasdaq"). The Company's Common Stock is currently quoted on
the OTC Bulletin Board under the symbol FTRN. On August 1, 1996, the last
reported sales price of the Common Stock was $5.75 per share. See "Price
Range of Common Stock." Currently there is no public market for the Warrants,
nor is one expected to develop.

The Company is unaware of any specific plan of distribution of the Selling
Shareholders with respect to the Shares or the Warrants; however, it believes
that the Shares will be sold from time to time by such Selling Shareholders
or by their pledgees, donees, transferees or other successors in interest, to
or through underwriters or directly to other purchasers or through brokers or
agents in one or more transactions at varying prices determined at the time
of sale or at a fixed or negotiated price. See "Plan of Distribution." The
aggregate net proceeds to the Selling Shareholders from the sale of the
Shares or Warrants pursuant to this Prospectus will be the sale price of such
Shares or Warrants less any commissions. The Company is paying all of the
expenses in connection with the preparation of this Prospectus and the
related registration statement and the qualification of the shares under
applicable state securities laws.

This offering is being made without using the services of an underwriter.
The Selling Shareholders and any broker-dealers, agents or underwriters that
participate with the Selling Shareholders in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act
of 1933, as amended (the "Securities Act"), in which event any commission
received by such broker-dealers, agents or underwriters and any profit on the
resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
----------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------
THE DATE OF THIS PROSPECTUS IS , 1996.

PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
DETAILED INFORMATION AND FINANCIAL STATEMENTS AND RELATED NOTES APPEARING
ELSEWHERE IN THIS PROSPECTUS.

INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION SET FORTH UNDER THE
HEADING "RISK FACTORS."

THE COMPANY

The Company was organized in the State of Nevada in 1987 and completed a
public offering of its securities in May 1987. Prior to the Merger (described
below) the Company's business purpose was to seek to acquire suitable
property, assets or businesses by means of completing a merger with or the
acquisition of a privately-held business enterprise seeking to obtain the
perceived advantages of being a public company. The Company's predecessor by
merger, First American Railways, Inc., a Florida corporation ("First
American-Florida"), was formed in February 1994 with management who has
experience in the passenger rail and tourism industries. The Company plans to
offer a series of entertainment-based trains, and initially the Company
intends to capitalize upon Florida's growing tourist base of over 41 million
tourists per year by providing a unique entertainment-based passenger rail
service, the "Florida Fun-Train," between South and Central Florida.

Florida attracts tourists from across the world and was the top tourist
destination in the United States in 1995. South Florida not only contains a
number of well-known tourist destinations, but is also a key entry point into
the state for cruise ships entering and leaving the Port of Miami and Port
Everglades (Fort Lauderdale), as well as tourists utilizing Miami
International and Hollywood-Fort Lauderdale Airports. Central Florida
(Greater Orlando) plays host to world renowned tourist destinations such as
Universal Studios Florida, Walt Disney World, Sea World, Kennedy Space Center
and Port Canaveral. In 1993, approximately 11.1 million people traveled
between South and Central Florida.

The Florida Fun-Train is being designed to provide passengers with an
exciting and fun-filled overland leisure excursion. The Company expects that
this will be accomplished through the use of a variety of entertainment
features, including "virtual reality" and "high-tech" games, as well as
dining, dancing and lounge cars offering a variety of live entertainment. It
is anticipated that the exterior of the Florida Fun-Train will be designed to
have the appearance of an ultra-modern, colorful, sleek, high-speed train.
The colors will be vibrant unlike the typical passenger train in the United
States. The Company expects that most of its passengers will be tourists, and
that the Company's service will be offered as an "extension" of the
passenger's vacation. The Company intends to provide a high level of service
in order to accommodate its passengers.

The Fun-Train concept is to provide an enjoyable, high-quality
entertainment alternative to other means of transportation between South and
Central Florida. The Company's goal is to maximize the entertainment value of
the travel time while providing an efficient, safe and reliable form of
transportation at a reasonable price. As such, management of the Company
believes that the Florida Fun-Train will be able to capture both a portion of
the tourist market intent on travelling between South and Central Florida
while also encouraging travel by tourists and residents who would not
otherwise make the trip. Currently, travel (without an entertainment focus)
is made between South and Central Florida primarily by automobile, bus or
airplane. The Company believes the entertainment aspects of the Florida
Fun-Train will provide its passengers with a reasonably-priced, enjoyable
alternative for travel in this corridor.

The Company is in its developmental stage, and it has had no operations;
however, the Company has taken significant steps to commence operations of
the Florida Fun-Train including constructing its

first passenger car, entering into a track rights agreement with FEC,
entering into a memorandum of understanding with CSXT for track use (which
the Company is currently negotiating a binding contract in this regard),
negotiating a letter of intent with the Greater Orlando Aviation Authority to
locate a terminal at the Orlando International Airport, negotiating with the
proposed manufacturer of the railcars for the Florida Fun-Train, entering the
final design phase of two station terminals, contracting with an outside
consultant for the preparation of a definite marketing study, and conducting
discussions with major wholesale travel, tour companies, tourist attractions
and hotels for the marketing of the Company's services.

The Company's ability to meet its planned commencement date (Fall 1997)
depends on, among other things, successful and prompt completion of the
Company's pre-opening development activities. Presently, the Company believes
it has sufficient funds to commence operations of the Florida Fun-Train. See
"Plan of Operation."

In the future the Company contemplates offering another
entertainment-based passenger train in Florida to be known as the "Space
Coast Fun-Train" which is to provide passenger service between South Florida
and the Florida Space Coast (near the Kennedy Space Center). Additional
funding will be required for this or any other future rail operations; there
can be no assurance, however, that the Company will be in a position to
launch the Space Coast Fun-Train or any other rail operations at any time.

The Company maintains offices at 2445 Hollywood Boulevard, Hollywood, FL
33020. Its telephone number is (954) 920-0606.

THE MERGER

On April 26, 1996, the Company merged with First American-Florida (the
"Merger") and the Company was the surviving entity. As a result of the Merger
the Company assumed all of the contractual rights, privileges and duties of
First American-Florida. In connection with the Merger the Company amended its
Articles of Incorporation to, among other things, change its name and create
a series of "blank check" preferred stock. See "The Merger."

THE OFFERING

THE OFFERING:

Maximum Common Stock Offered by the Selling
Shareholders Assuming Exercise of Warrants and
Conversion of Notes(1) ............................ 11,788,321 Shares

Maximum Common Stock Outstanding after the
Offering Assuming Exercise of All Warrants and
Conversion of Notes(1) ............................ 16,413,324 Shares

Nasdaq Small Cap Symbol for Common Stock ............ FTRN
Series A Warrants Offered
by Selling Shareholders(2) ........................ 6,320,111 Warrants

Advisory Warrants Offered by Selling Shareholders .. 100,000 Warrants

Use of Proceeds ..................................... The Company will not receive any proceeds from the
sale of the Shares or Warrants by the Selling
Shareholders. Any proceeds received by the Company,
from time to time, upon exercise of the Warrants
will be used for working capital and general corporate
purposes. See "Use of Proceeds."

Risk Factors ........................................ The securities offered hereby involve a substantial
degree of risk and should not be purchased by anyone
who cannot afford the loss of their entire investment.
See "Risk Factors."

- ----------
(1) Includes Shares to be issued upon the exercise of the Warrants, and
conversion of the Notes (or alternatively, the exercise of Series A
Warrants issued in connection with prepayment of Notes); as a result an
additional maximum 7,363,046 shares will be outstanding.

(2) No public market exists for the Warrants. Includes 2,357,338 Series A
Warrants that may be issued, in certain circumstances, in connection with
the prepayment of the Notes.

PLAN OF DISTRIBUTION:

The Company is unaware of any specific plan of distribution of the Selling
Shareholders with respect to the Shares or the Warrants, but believes that
the Shares will be sold at prevailing market prices on Nasdaq, without
payment of any underwriting commissions or discounts other than ordinary
brokerage transaction fees. See "Plan of Distribution." The aggregate net
proceeds to the Selling Shareholders from the sale of the Shares or Warrants
pursuant to this Prospectus will be the sale price of such Shares or Warrants
less any commissions. The Company is paying all of the expenses in connection
with the preparation of this Prospectus and the related registration
statement.

RISK FACTORS

THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK. ONLY THOSE PERSONS ABLE TO LOSE THEIR ENTIRE INVESTMENT SHOULD PURCHASE
THESE SECURITIES. PROSPECTIVE INVESTORS, PRIOR TO MAKING AN INVESTMENT
DECISION, SHOULD CAREFULLY READ THIS OFFERING DOCUMENT AND CONSIDER, ALONG
WITH OTHER MATTERS REFERRED TO HEREIN, THE FOLLOWING RISK FACTORS:

NO REVENUE; SUBSTANTIAL LOSSES. Neither the Company nor its predecessor by
merger, First American-Florida, have had any revenue from operations, and
they have an accumulated deficit during the development stage of $2,098,616
(unaudited) for the period from February 14, 1994 (incorporation) through
June 30, 1996. The Company expects such losses to continue at least through
commencement of its rail operations in the Fall of 1997, and perhaps
thereafter. See "Plan of Operation."

NEW BUSINESS; SIGNIFICANT CAPITAL REQUIREMENTS; UNCERTAINTY OF MARKET. The
Company is a development stage enterprise. The Company has not begun actual
passenger rail operations, has had no revenues to date and will not have any
revenues until such time, if any, as the Florida Fun-Train is placed into
service. The Company has incurred and will continue to incur substantial
expenses prior to the commencement of passenger rail operations, which is
scheduled to begin in the Fall of 1997. The Company is also subject to all of
the risks inherent in the creation of a new business. The Company's ability
to deliver its new service with good quality at a reasonable price cannot be
assured; and as a result, there can be no assurance that the Company's
efforts will result in a commercially viable business or that the Company
will ever operate at a profit. The level of acceptance of the Company's
services by consumers and the travel/tourism industry cannot be predicted. As
a result of its small size and capitalization and lack of operating history,
the Company is particularly susceptible to adverse effects of changing
economic conditions and consumer tastes, competition, technological
developments, and other contingencies beyond the control of the Company. Due
to changing circumstances, the Company may be forced to change dramatically,
or even terminate, its planned operations.

CERTAIN ASSUMPTIONS WITH RESPECT TO THE COMPANY'S PROPOSED OPERATIONS. The
Company's proposed rail operations are based on assumptions that are
inherently subject to significant economic and competitive uncertainties, all
of which are difficult to predict and many of which are beyond the control of
the Company. These assumptions are also based on information about
circumstances and conditions existing at the time the prospective information
was prepared. There can be no assurance that any of the prospective
information can be realized or that the actual results will not be materially
higher or lower than assumed herein.

REQUIREMENTS FOR ADDITIONAL FINANCING. The Company believes that its
current funds, along with the interest earned thereon, will be sufficient to
allow the Company to commence full revenue service of the Florida Fun-Train
in the Fall of 1997. Additional financing(s) will be required to fund
operations if the Company's operations do not generate sufficient revenues to
cover operating expenses and assuming no exercise of any of the Warrants.
Moreover, expansion of passenger rail operations will require substantial
additional financing after such time period. The Company has made no
arrangements to obtain future additional financing, and there can be no
assurance that such financings will be available, or that financing will be
available on acceptable terms.

TRACK RIGHTS. The Company entered into an agreement with the Florida East
Coast Railroad Company ("FEC") for the use of certain track rights in the
Fort Lauderdale-West Palm Beach-Titusville corridor. Among other things, this
ten-year agreement calls for significant payments to FEC, and it requires the
Company to maintain a significant amount of comprehensive general liability
insurance once the Florida Fun-Train is operational. See "Business--Florida
Fun-Train." Failure to comply with these and other obligations set forth in
the agreement with FEC could result in the loss of such track rights without
which the Company could not operate. See "Business--Florida Fun-Train."

The Company has also negotiated a Memorandum of Understanding (the "CSXT
Memorandum") with CSXT Transportation, Inc. ("CSXT") for the use of the track
between West Palm Beach and

Orlando. Among other things, this memorandum provides for a five-year
agreement and calls for significant payments to CSXT. See "Business." Like
the FEC agreement, the CSXT Memorandum contemplates requirements of
comprehensive general liability insurance. If for any reason the Company is
not successful in finalizing a formal agreement with CSXT, the Company would
have to seek alternative track rights in this corridor, and failure to do so
would have a material adverse effect on the prospects of the Company. Failure
to comply with these and other obligations under the agreement with CSXT
could result in loss of such track rights without which the Company could not
operate the Florida Fun-Train. See "Plan of Operation."

The contractual payments by the Company to the track owners as
contemplated by the above-described agreements and understandings are
significant and such payments are based on the use of track, and not on the
Company's profitability. Further, there can be no assurance that either
contractual arrangement will be renewed after the expiration of the
applicable terms and the failure to renew either could materially adversely
affect the financial prospects of the Company.

CONSTRUCTION AND INDUSTRY RISKS ASSOCIATED WITH THE FUN-TRAIN. The
railcars for the Florida Fun-Train (and the remodeling of the locomotives)
must be constructed. The Company expects that the construction and remodeling
will be done in Denver, Colorado, by Rader Railcar, Inc. ("RRI"), which is
owned by Thomas G. Rader, a director and the largest shareholder of the
Company. While there is no binding construction agreement in place, RRI has
provided a draft construction contract to the Company which is currently
being negotiated. This proposal forms the basis of the projected cost of the
Florida Fun-Train set forth elsewhere herein. Assuming an agreement can be
negotiated between the parties on terms acceptable to the Company, the
Company expects the railcars and locomotives (collectively, "railcars") to be
ready for delivery to the Company beginning in approximately June, 1997.
There can be no assurance, however, that construction and remodeling of the
railcars will be completed on a timely basis. Delays may be caused by
technical difficulties, strikes, insufficient financing, and many other
factors beyond the Company's control. In the event of such delays, the
Company's operations could be delayed and any such delay could have a
material adverse effect on the Company's financial condition. See "Certain
Transactions," and "Business--Florida Fun-Train."

Further, the Company has not finalized plans for the construction of the
terminals for the Florida Fun-Train and additional governmental approvals
will be required. See "Business--Governmental Regulation." There can be no
assurance that the terminals will be timely constructed.

The Company's operations may be adversely affected by general economic
conditions and by numerous other factors, some of which are common to all
businesses and some of which are unique to the passenger rail industry. Such
factors include, among others: labor disturbances or strikes, either by on
board employees or land-based personnel, which could delay trains or force
their cancellation; government regulatory orders or rules which could
adversely affect the Company's operations; accidents causing damage to or
resulting in the impounding of the Company's railcars, which could result
from a variety of natural or man-made causes and could temporarily or
permanently prevent the Company's train(s) from operating; and insurance,
which may be insufficient to cover losses from the cessation of operations or
the replacement or repair of lost or damaged property.

NO AGREEMENT WITH ENTERTAINMENT PROVIDERS. The success of the Company's
Fun-Train concept will depend in part on the provision of entertainment,
including video presentations and computer games as well as live
entertainment to its railway passengers. To date, the Company has not entered
into any agreement with any entity to provide entertainment on the
Fun-Trains. The failure to enter into such agreements on terms acceptable to
the Company would adversely affect the Company's operations.

RELIANCE ON FLORIDA TOURISM MARKET. The Company's initial services, the
Florida Fun-Train and the Space Coast Fun-Train, will target tourists
visiting Florida. These planned operations may be materially adversely
affected by declining growth or absolute declines in the number of tourists
visiting Florida. From time to time the Florida tourism market has
experienced slowdowns (declines in growth

or absolute declines). The most recent decline was the result of
highly-publicized criminal attacks on tourists, as well as increasing
competition from other tourist destinations in the U.S. and the Caribbean
region, and economic problems in some of Florida's overseas tourism markets.
There can be no assurance that any such declines in Florida tourism will not
occur in the future, or that such declines would have a direct and adverse
impact on the Company's business. See "Business--Markets."

The Company's business may also be subject to certain seasonal
fluctuations, depending on the tourist seasons in Florida, particularly in
South Florida (Miami/Ft. Lauderdale) and the Orlando area.

MARKETING/DEPENDENCE ON WHOLESALE TOUR OPERATORS. The introduction of the
Company's passenger railroad service will depend on the Company's ability to
successfully implement a marketing program. Initially, the Company expects to
rely on wholesale tour operators and travel agents to sell tickets for its
passenger train service as part of a travel package. Thus far, the Company
has not entered into any agreement with any wholesale tour operator, or other
third party distributor. There can be no assurance that the Company will
establish satisfactory arrangements with such third party distributors or
that sales of tickets for the Company's new railway service will be at prices
or in quantities that will be profitable. The Company's present internal
marketing and sales capabilities are limited, and the Company will be
dependent upon independent representatives for the marketing of its new
service. Such persons also market competing tourist services and
entertainment attractions. Failure of the Company to establish the necessary
marketing and distribution network or to generate profitable sales of tickets
for the Company's new railway service will have a material adverse effect on
the Company's financial condition and results of operations.

HIGH OPERATING COSTS; RISKS ASSOCIATED WITH FUEL PRICES AND MAINTENANCE OF
RAILROAD EQUIPMENT. The passenger rail industry is characterized by a high
degree of operating leverage. Specifically, fixed costs represent the major
portion of a railroad's operating expenses and cannot be significantly
reduced when competition or any of various other factors causes a reduction
in load factors (passenger occupancy as a percentage of capacity) or
passenger fares or en route revenues. Since railcar purchase or lease
installment payments, train operating expenses (including fuel, insurance,
track usage charges and wages) and corporate overhead will represent the vast
majority of the Company's expenses, the Company may not be able to reduce or
decrease these costs on a timely basis in the event that passenger levels
drop or fares or en route prices must be lowered because of competitive
pressures. Accordingly, there is no assurance that the Company will be able
to operate profitably. Future increases in the cost of diesel fuel, a major
anticipated expense of train operations, are difficult to predict given the
continued economic and political uncertainties in certain areas of the world.
Despite the fact that the Company intends to purchase new railcars and
related rail equipment, there can be no assurance that a significant amount
of maintenance will not be required. See "Business--Competition."

RISK OF OPERATING A RAILWAY SERVICE; POTENTIAL FOR LIABILITY CLAIMS. The
Company faces an inherent risk of exposure to liability claims in the event
that the operation of its trains results in accidents or other adverse
effects. Further, the Company's track usage agreements with the track owners
require (or are expected to require) that the Company maintain certain levels
of liability insurance protecting the track owners. See "Business." There can
be no assurance that the Company will not be faced with exposure to material
liability claims. The track rights agreements require (or will likely
require) substantial general comprehensive liability insurance (up to
$300,000,000 in coverage), and the premiums for such insurance will be
significant. While the Company has obtained commitments for liability
insurance for the operation of the Florida Fun-Train, there can be no
assurance that this insurance will be available or that it will be adequate,
or that the Company will be able to maintain such insurance at reasonable
rates. Failure to maintain adequate insurance could place the Company at
great financial risk in the event of accidents and adversely affect the
Company's ability to do business. Further, even if the Company were to
maintain adequate insurance, adverse publicity from accidents could have a
material adverse effect on the Company's business.

COMPETITION. Numerous companies, most of which are substantially larger
than the Company and have much greater financial and other resources, offer
alternative modes of transportation over the

routes where the Company intends to operate. These alternative modes of
transportation, principally private motor vehicles, bus service and passenger
air service, offer transportation that is less expensive and/or faster than
the Company's proposed rail service. Most of these competitors already enjoy
an established presence in the Florida and United States transportation and
tourism markets. The Company expects to compete on the basis of what it
believes to be its unique combination package of transportation and
entertainment.

The Company also has a rail service competitor in the South/Central
Florida corridor; the Company competes with the National Passenger Rail
System ("Amtrak"). AmTrak currently operates a passenger train service
between Miami/Fort Lauderdale and Orlando, Florida with numerous stops. While
the present AmTrak service does not include the "entertainment-type" service
which the Company proposes to provide on the Florida Fun-Train, there can be
no assurance that AmTrak will not improve its service and offer amenities
similar to those proposed to be offered by the Company.

Generally, the Company faces extensive competition for the spending of
leisure time and dollars from numerous attractions in the tourist
entertainment sector. The Company's success will depend primarily on its
ability to quickly develop an entertaining, high-quality, efficient, safe and
reliable service, as well as its ability to market the service and secure
consumer acceptance. It is highly uncertain whether the Company will be
successful in these efforts.

GOVERNMENTAL REGULATION. The Company's contemplated railroad operations
are strictly intrastate and therefore not regulated by the federal government
except for various safety regulations promulgated by the Federal Railroad
Administration, as well as the Florida Department of Transportation's
application of federal safety rules. The Company's trains will be required to
have a safety inspection by the U.S. Department of Transportation, Federal
Railroad Administration and the Florida Department of Transportation before
rail operations commence (and periodically thereafter). The failure to "pass"
safety inspections both before operations commence and periodically
thereafter would result in the railroad operations ceasing until such time as
the reason(s) for failure are remedied. And such delay or cessation of
operations would materially, adversely affect the Company and its financial
performance. See "Business--Governmental Regulation."

In addition, the Company's operations will also be subject to
environmental regulation by federal and state agencies, as well as liquor
license and other regulations promulgated by state and local authorities.
There can be no assurance that future regulatory compliance will not
materially adversely affect the Company's operations and profitability.

CONTROL OF THE COMPANY. The executive officers and directors of the
Company (six persons) jointly own an aggregate of 42.34% of the issued and
outstanding Common Stock of the Company (excluding Shares to be issued upon
exercise of the Warrants or conversion of the Notes), which is the only
outstanding capital stock of the Company and which has one vote per share.
Thomas Rader, a director of the Company, is the single largest shareholder of
the Company with 17.84% of the Common Stock. Therefore, management of the
Company should be able to control virtually all matters requiring approval of
the shareholders of the Company, including the election of all of the
directors. See "Principal and Selling Shareholders."

POTENTIAL CONFLICTS OF INTEREST. A significant portion of the Company's
available cash (approximately $9.2 million) is expected to be used to
purchase the railcars for the Florida Fun-Train from RRI, a company which is
controlled by one of the Company's Directors, Thomas G. Rader. Mr. Rader is
currently the Company's largest single shareholder. The Company also expects
to satisfy its future needs for railcars through agreements with RRI. There
can be no assurance that the Company will enter any future agreements with
RRI, or if so, that there will not be material adverse consequences to the
Company from the inherent conflict of interest and lack of arm's-length
negotiations with RRI. Further, in the event that disputes arise between Mr.
Rader or RRI and the Company, resolution of such disputes, whether through
legal action or otherwise, could be severely complicated by Mr. Rader's
status as a director and a principal shareholder. See "Business--Florida
Fun-Train" and "Certain Transactions."

NO PAYMENT OF CASH DIVIDENDS. The Company has not paid any cash dividends
to holders of its Common Stock nor does it intend to declare any cash
dividends with respect thereto in the near future. Instead, the Company
intends to retain future earnings, if any, for use in its business
operations. Further, the security instrument securing the Notes prohibit the
payment of any dividends on the Common Stock. See "Dividend Policy."

ADVERSE EFFECT OF POSSIBLE REDEMPTION OF SERIES A WARRANTS. Upon
redemption of the Series A Warrants, the holders thereof would be required to
(i) exercise such warrants and pay the exercise price at a time when it may
be disadvantageous for them to do so, or (ii) accept the redemption price
which is likely to be substantially less than the market value of such
warrants at the time of redemption. See "Description of Securities."

EXERCISE OF THE WARRANTS AND/OR THE CONVERSION OF THE NOTES INTO COMMON
STOCK WILL HAVE DILUTIVE EFFECT. The Warrants will provide an opportunity for
the holders thereof to profit from a rise in the market price of the Common
Stock, of which there is no assurance, with resulting dilution in the
ownership interest in the Company held by the then present shareholders.
Holders of the Warrants or the Notes most likely would exercise such Warrants
or convert the Notes and purchase the Common Stock underlying such securities
at a time when the Company may be able to obtain capital by a new offering of
securities on terms more favorable than those provided by such Warrants or
Notes, in which event the terms on which the Company may be able to obtain
additional capital would be affected adversely.

SHARES ELIGIBLE FOR FUTURE SALE. All but 350,000 of the Company's current
outstanding shares of Common Stock (9,050,278 Shares) are "restricted
securities"; however, pursuant to this offering a significant number of such
currently outstanding shares (4,425,275 shares) are being offered hereby for
sale. In addition, in the future, these "restricted securities" along with
the balance of the Common Stock outstanding may be sold upon compliance with
Rule 144, adopted under the Act. Rule 144 provides, in essence, that a person
holding "restricted securities" for a period of two years may sell only an
amount every three months equal to the greater of (a) one percent of the
Company's issued and outstanding Common Stock, or (b) the average weekly
volume of sales during the four calendar weeks preceding the sale. The amount
of "restricted securities" which a person who is not an affiliate of the
Company may sell is not so limited, since non-affiliates may sell without
volume limitation their Shares held for three years if there is adequate
current public information available concerning the Company. During each
three-month period, beginning in April 1998, a holder of restricted
securities who has held them for at least the two-year period may sell under
Rule 144 a number of Shares up to approximately 90,500 Shares (assuming no
exercise of Warrants or conversion of Notes). Non-affiliated persons who hold
for the three-year period described above may sell unlimited Shares once
their holding period is met.

DILUTION; FUTURE SALES OF STOCK BY THE COMPANY. After reserving a total of
7,363,046 Shares of Common Stock for issuance upon the exercise of the
outstanding Warrants and conversion of the Notes, the Company will have in
excess of 83,000,000 Shares of authorized but unissued Common Stock available
for issuance without further shareholder approval. As a result, any issuance
of additional Shares of Common Stock may cause current shareholders of the
Company to suffer significant dilution which may adversely affect the market
for the securities of the Company. See "Description of Securities."

Prospective investors should be aware that the possibility of sales may,
in the future, depress the price of the Common Stock in any market which may
develop and, therefore, the ability of any investor to market Shares may be
dependent directly upon the number of Shares that are offered and sold.
Affiliates of the Company may sell their Shares during a favorable movement
in the market price of the Common Stock which may have a negative effect on
its price per share. See "Description of Securities."

POSSIBLE ADVERSE EFFECT OF ISSUANCE OF PREFERRED STOCK ON MARKET PRICE AND
RIGHTS OF COMMON STOCK. The Company's Articles of Incorporation authorize the
issuance of 500,000 shares of "blank

check" preferred stock ("Preferred Stock") with such designations, rights and
preferences as may be determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without shareholder
approval, to issue Preferred Stock with dividend, liquidation, conversion,
voting or other rights that could adversely affect the voting power or other
rights of the holders of the Common Stock. The issuance of any series of
Preferred Stock having rights superior to those of the Common Stock may
result in a decrease in the value or market price of the Common Stock.
Holders of Preferred Stock to be issued in the future may have the right to
receive dividends and certain preferences in liquidation and conversion
rights. The issuance of such Preferred Stock could make the possible takeover
of the Company or the removal of management of the Company more difficult,
discourage hostile bids for control of the Company in which shareholders may
receive premiums for their Common Stock and adversely affect the voting and
other rights of the holders of the Common Stock. The Company may in the
future issue additional shares of its Preferred Stock. See "Description of
Securities--Preferred Stock."

REQUIREMENTS OF CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION IN
CONNECTION WITH THE EXERCISE OF THE WARRANTS. The Company will be able to
issue the Shares issuable upon the exercise of the Warrants only if (i) there
is a current Prospectus relating to the securities offered under an effective
Registration Statement filed with the Commission, and (ii) such Common Stock
is then qualified for sale or exempt therefrom under applicable state
securities laws of the jurisdictions in which the various holders of such
Warrants reside. While this Prospectus relates to a current, effective
registration statement, there can be no assurance, that the Company will be
successful in maintaining a current Registration Statement. After a
Registration Statement becomes effective, it may require updating by the
filing of post-effective amendments.

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK. This Prospectus contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including statements regarding, among other items (i) the Company's
growth strategies, (ii) the impact of the Company's products and anticipated
trends in the Company's business, and (iii) the Company's ability to enter
into contracts with certain suppliers and strategic partners. These
forward-looking statements are based largely on the Company's expectations
and are subject to a number of risks and uncertainties, certain of which are
beyond the Company's control. Actual results could differ materially from
these forward-looking statements as a result of the factors described herein,
including, among others, regulatory or economic influences. In light of these
risks and uncertainties, there can be no assurance that the forward-looking
information contained in this Prospectus will in fact transpire or prove to
be accurate.

THE MERGER

GENERAL. In conjunction with the Private Placements on April 26, 1996,
(see "Plan of Operation"), the Company merged with First American-Florida, a
Florida corporation (the "Merger"). The Company was the surviving entity in
the Merger, and as part of the Merger the Company issued one share of Common
Stock for each share of common stock of First American-Florida then
outstanding, and changed its name to "First American Railways, Inc." By
virtue of the Merger, the Company has succeeded to all of the contractual
rights, duties and obligations of First American-Florida, including, but not
limited to, those arising under the Warrants and other obligations incurred
executed in connection with the Private Placement. See "Certain
Transactions."

The Company (formerly known as "Asia-America Corporation" and prior to
that "Barona Enterprises, Inc.") was formed in March 1987 for the purpose of
acquiring one or more potential business ventures within the United States,
without restriction as to any particular type of business or industry. In
March 1988, the Company completed a public offering of its securities.

REVERSE STOCK SPLIT. Prior to completion of the Merger, the Company
effectuated a reverse stock split on a 1-for-108 basis which reduced its
issued and outstanding shares of common stock to 350,000 shares. All
fractional shares were rounded up to the nearest whole share. A pre-Merger
shareholder of the Company contributed sufficient shares to the Company for
cancellation to offset whole shares issued in lieu of fractional shares and
to round off the exact number of issued and outstanding shares to 350,000.

AMENDMENT TO THE ARTICLES OF INCORPORATION. At the time of the Merger, the
Company amended its Articles of Incorporation to (i) change its corporate
name, (ii) authorize 500,000 shares of preferred stock, $.001 par value, to
be issued in such series and with such rights, preferences and designations
as determined by the Company's Board of Directors, and (iii) to provide that
officers and directors of the Company shall have no liability for breach of
fiduciary duty except as provided under Nevada law.

The State of Nevada has amended its corporation law subsequent to the
incorporation of the Company in 1987 to provide that directors and officers
of a Nevada corporation, if so stated in the Articles of Incorporation, shall
not be personally liable to the corporation or its stockholders for a breach
of fiduciary duty except in the instance of intentional misconduct, fraud,
knowing violation of law, or the improper payment of dividends. By amending
its Articles of Incorporation, the Company intended to include a provision in
its Articles of Incorporation to take advantage of this provision in the law
so as to be able to retain the best qualified officers and directors free
from claims under spurious and frivolous shareholders' suits.

The Company has no present intention to issue any of its preferred stock,
but proposed new management desires to have such shares available should the
need arise to issue such shares for financing or other corporate purposes in
the future. All terms, conditions, rights and preferences of such shares,
including any separate series thereof shall be determined at the sole
discretion of the Company's Board of Directors. See "Description of
Securities--Preferred Stock."

The preferred stock may be issued in series from time to time with such
designation, rights, preferences and limitations as the Board of Directors of
the Company may determine by resolution. The rights, preferences and
limitations of separate series of preferred stock may differ with respect to
such matters as may be determined by the Board of Directors, including,
without limitation, the rate of dividends, method and nature of payment of
dividends, terms of redemption, amounts payable on liquidation, sinking fund
provisions (if any), conversion rights (if any) and voting rights. The
potential exists that the preferred stock could be issued which would grant
dividend preferences and liquidation preferences to preferred shareholders.
See "Description of Securities--Preferred Stock."

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of the Shares
offered by the Selling Shareholders. Management estimates that the aggregate
expense of this offering will be approximately $116,800, all of which will
be borne by the Company.

The gross proceeds from the exercise of all of the outstanding Warrants
would be $14,119,705. The Company intends to use the proceeds from the
exercise of the Warrants, if any, for working capital and general corporate
purposes. Proceeds not immediately required for such purposes will be
invested principally in United States government securities, short-term
certificates of deposit, money market funds or other short-term
interest-bearing investments.

PRICE RANGE OF COMMON STOCK

The Company has applied for the listing of its Common Stock on the Nasdaq
SmallCap Market ("Nasdaq"). The Company's Common Stock is currently quoted on
the OTC Bulletin Board under the symbol FTRN. The following table sets forth
the high and low sales prices of the Common Stock for the period indicated in
1996.

1996: HIGH LOW
- ----- ------ -----
Second Quarter (April 26 through June 30)*.. $6.375 $3.00
Third Quarter (through July 30) .......... $5.375 $4.75

On August 1, 1996, the last reported sales price of the Common Stock was
$5.75 per share. As of that date, there were 381 holders of record of the
Common Stock.

- ----------
* Market prices have been disclosed for the post-Merger period; prior thereto
there had been no active trading market for the stock during the last three
years.

DIVIDEND POLICY

Holders of the Company's Common Stock are entitled to dividends when, as
and if declared by the Board of Directors out of funds legally available
therefor. The Company does not anticipate the payment of any dividends in the
foreseeable future. The Company intends to retain future earnings, if any, to
finance the development and expansion of its business. Future dividend policy
will be subject to the discretion of the Board of Directors and will be
contingent upon future earnings, if any, the Company's financial condition,
capital requirements, general business conditions and other factors.
Therefore, there can be no assurance that any dividends of any kind will ever
be paid. Further, the Notes provide that the Company will not (i) declare or
pay any dividend or make any other distribution of the Company, except
dividends or distributions payable in equity securities of the Company, or
(ii) purchase, redeem or otherwise acquire or retire for value any equity
securities of the Company, except (a) an equity security acquired upon
conversion thereof into other equity securities of the Company and (b) any
equity security issued to employees, directors or others performing services
in accordance with agreements providing for such repurchase at original cost
upon termination of employment, membership on the Board of Directors or other
affiliation with the Company.

SELECTED FINANCIAL DATA

The following selected financial data as of December 31, 1995, and for the
eight months then ended and the year ended April 30, 1995, is derived from
the Company's audited financial statements included elsewhere herein. The
financial data as at June 30, 1996 and 1995 and for six months ended June 30,
1996 and 1995 and for the cumulative period for February 14, 1994
(incorporation) through June 30, 1996, has not been audited by independent
auditors; however, in the opinion of management such financial data includes
all adjustments (consisting of normal recurring adjustments) necessary to
present fairly the information set forth therein. Interim results are not
necessarily indicative of results for the entire year. The following data
should be read in conjunction with the financial statements of the Company,
including notes thereto, and other financial information included elsewhere
herein.

STATEMENT OF OPERATIONS DATA

CUMULATIVE FROM
THE PERIOD
FEBRUARY 14, 1994 FOR THE SIX MONTHS FOR THE EIGHT FOR THE YEAR
(INCORPORATION) ENDED JUNE 30, MONTHS ENDED ENDED
THROUGH -------------- DECEMBER 31, APRIL 30,
JUNE 30, 1996 1995 1995 1996 1995
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------------- ----------- ----------- ------------- ------------

Net Loss .......... $(2,098,616) $(759,207) $(442,316) $(720,413) $(618,996)
Net Loss Per Share -- $ (.12) $ (.10) $ (.17) $ (.14)

BALANCE SHEET DATA
JUNE 30, 1996 DECEMBER 31, 1995
(UNAUDITED)
------------- -----------------

Working Capital .................... $12,748,710 $(580,366)
Total Assets ....................... 14,724,221 357,672
Total Liabilities .................. 8,407,041 582,046
Total Stockholders' Equity
(Deficit) ........................ 6,317,180 (224,374)

PLAN OF OPERATION

The Company is in its developmental stage, and it has had no rail
operations; however, the Company has taken significant steps to commence
operations of the Florida Fun-Train including purchasing its first passenger
car (for $850,000 from RRI), entering into a track rights agreement with FEC,
entering into a memorandum of understanding with CSXT for track use (which
the Company is currently negotiating to reduce to a final contract),
negotiating a letter of intent with the Greater Orlando Aviation Authority to
locate a terminal at the Orlando International Airport, negotiating with RRI,
(which is owned by a director of the Company) for the construction of the
railcars for the Florida Fun-Train, entering the final design phase of two
station terminals, contracting with an outside consultant for the preparation
of a definite marketing strategy and conducting discussions with major
wholesale travel, tour companies, tourist attractions and hotels for the
marketing of the Company's services. The Company anticipates commencing
promotional rail service for the Florida Fun-Train in the Summer 1997 and
full rail service in the Fall 1997. Until full service is commenced, the
Company does not expect to generate any material revenues; nevertheless,
during the next twelve months the Company expects to have significant capital
expenditures for railcar construction, terminal construction, and track and
leasehold improvements, and significant operating expenses for salaries,
marketing and track use (when rail service commences).

The Company plans to use its current available funds (i) to pay the
expenses in connection with the commencement of the operation of the Florida
Fun-Train and (ii) provide working capital to support the Florida Fun-Train's
initial operations to the extent that cash flow from such operation is
insufficient. See "Business."

The Company intends to commence operations of the Florida Fun-Train in the
Fall 1997. The track rights for the use of the subject route for the Florida
Fun-Train are held by the FEC (between Ft. Lauderdale and West Palm Beach and
the CSXT (between West Palm Beach and Orlando). The Company has entered into
a ten year agreement with FEC for these rights. This agreement provides that
the Company will pay FEC $18 per train-mile (with a stipulated train size of
15 cars) once the Fun-Train commences operation, with a minimum payment of
$500,000 per year per train. The Company has also entered into a Memorandum
of Understanding with CSXT for use of its portion of the subject route. This
latter understanding is expected to be reduced to a more formal agreement
which is expected to require the Company to pay the greater of (i) $20 per
train-mile, or (ii) 16% of the passenger revenues of the Florida Fun-Train.
The Company expects to begin passenger railroad operations using the Florida
Fun-Train; however, if for any reason that operation cannot commence as
planned then the Company will commence its operations using the Space Coast
Fun-Train, the track rights for which have been obtained (FEC track use
only). The FEC track rights agreement is applicable to the commencement of
either Fun-Train.

During this development stage, the Company intends to purchase additional
Fun-Train railcars pursuant to a construction agreement expected to be
negotiated with RRI. The Company expects to spend a maximum of approximately
$9.2 million to purchase up to 12 railcars and make exterior modifications to
three diesel locomotives. The Company expects to lease the three diesel
locomotives prior to commencing operations, and it believes that diesel
locomotives are generally available for lease for approximately
$10,000/month/locomotive.

The anticipated construction agreement is expected to require an advance
payment of a portion of the contract price upon execution with the balance of
the contract price to be paid thereafter in 11 equal monthly installments.
The Company expects the railcars to be completed and delivery to begin in the
Summer 1997. The Company expects staggered delivery of the railcars from RRI
during the Summer 1997 and it expects to begin offering promotional rail
service of the Florida Fun-Train at that time. See "Risk
Factors--Construction and Industry Risks Associated with the Fun-Train."

Before the Florida Fun-Train rail operations can commence, the Company
must construct or otherwise obtain the use of terminals at each end of the
proposed route. The Company is currently in

negotiations in this regard, and in this connection the Company is in the
process of finalizing its cost estimates and determining the extent of
governmental support for these activities, if any. Also, during the next 12
months the Company expects to increase its work force from the six persons
currently employed by the Company (four of whom are management). The Company
will be required to hire approximately 25 additional employees; however, the
exact number of employees is dependent on the Company's decision with respect
to "outsourcing", its marketing and rail operations functions, etc.

There can be no assurance that all of the foregoing arrangements or
agreements, which are still to be negotiated, will be made in a timely
fashion. See "Risk Factors" and "Business." In addition, the Company will be
required to obtain certain levels of insurance, hire qualified employees and
it may be required to develop its own maintenance services and its own
reservation system.

Upon launching the Florida Fun-Train, revenues will be generated from both
passenger ticket sales and on-board passenger revenues. The Company
estimates, although there can be no assurance, that such prices will be
realized, that the initial one-way ticket price for the Florida Fun-Train
will be approximately $55 and that average per passenger en route revenue
(for food, beverages, entertainment and souvenirs) will be approximately $14.
A significant portion of the tickets sold for the Florida Fun-Train are
anticipated to be sold through travel wholesalers and travel agents. Travel
wholesalers and travel agents typically earn commissions of approximately 20%
and 10%, respectively. The Florida Fun-Train is anticipated to consist of up
to eight passenger cars which would accommodate up to 640 passengers
(approximately 80 passengers per car).

Presently, the Company contemplates offering in the future another
entertainment train to be known as the Space Coast Fun-Train which is to
provide passenger service between South Florida and the Florida Space Coast
(near the Kennedy Space Center).

DEVELOPMENT STAGE ACTIVITIES AND LIQUIDITY

GENERAL:

Neither the Company nor its predecessor by merger, First American-Florida,
have had any revenue from operations, and the Company has had accumulated
losses of $2,098,616 (unaudited) for the period from February 14, 1994
(incorporation) through June 30, 1996. The Company expects such losses to
continue at least through commencement of its full rail operations in the
Fall 1997, and perhaps thereafter. Since inception the Company's (and its
predecessor's) activities have been funded by the private placement of its
securities and by borrowings, the net cash proceeds from which have totaled
$15,417,649.

YEAR ENDED APRIL 30, 1995:

The Company was initially capitalized with $18,000. Thereafter, in October
1994, the Company completed a private placement of securities in which it
sold an aggregate of 420,570 shares of common stock to 24 investors for a
total of approximately $961,000 in net proceeds. There was no placement agent
retained in connection with this private placement. These aggregate funds
were used to pay a deposit of $350,000 on the first railcar for the Florida
Fun-Train, and the balance was used to pay costs associated with further
capital raising, and general and administrative expenses (which were related
to the pre-commencement activities for the Florida Fun-Train and capital
raising activities).

EIGHT MONTHS ENDED DECEMBER 31, 1995:

The Company explored various financing alternatives; however, no
additional capital was raised during this period. The Company borrowed an
additional $270,000 in order to support its operations. During this period,
the Company had a net loss of $720,413, of which approximately $282,000 were
expenses of offerings not completed. In addition, a significant amount of
other expenses, principally the salaries of officers and employees, were
expended in connection with capital raising activities.

SIX MONTHS ENDED JUNE 30, 1996:

In March 1996, the Company completed a private placement of securities in
which it sold an aggregate 375,004 shares of common stock and issued $500,000
in convertible notes, bearing interest at 10% per annum, for aggregate net
proceeds of $393,709. In April-May 1996, the Company completed a private
placement of securities, in which it sold 3,950,271 Series A Warrants,
exercisable at $3.50 per share, and 4,050,271 shares of Common Stock valued
at $8,250,683 and issued $8,250,682 (principal amount) in Notes, bearing
interest at 10% per annum, for aggregate net proceeds of $14,514,905 (of
which $416,300 was not cash consideration, but represented the conversion of
the principal and accrued interest on certain secured notes issued in the
March 1996 private placement into securities sold in the April-May 1996
private placement).

The Company used $783,388 of the proceeds to repay $333,388 in notes
payable to related parties and others, and $445,000 to repay notes payable
from the financing completed in March 1996. In addition, in June 1996, the
Company made a payment of $536,000 to RRI representing the final payment
(plus interest) due on the first railcar purchased. In addition, a
significant portion of the proceeds of the May 1996 private placement
(approximately $830,000) were escrowed to pay the first year's interest on
the Notes sold in that private placement.

To date the Company has not generated any revenue and as of June 30, 1996
it had accumulated losses of $2,098,616 (unaudited). At June 30, 1996, the
Company had working capital of $12,748,710 and stockholders' equity of
$6,317,180 (unaudited).

LIQUIDITY:

The Company's future cash requirements will be significant. The Company
expects that the proceeds from the Private Placements, in conjunction with
other leasing and financing opportunities, to be sufficient to enable the
Company to commence operations of the Florida Fun-Train in the Fall 1997.
There can be no assurance, however, that operations will in fact commence as
scheduled, nor that unanticipated problems may arise which may necessitate
the need for additional financing until the Company can generate revenues
sufficient to meet operating expenses. Further, there can be no assurance
that the Company will not experience adverse changes in its business
prospects, its proposed operations, or in the transportation or tourism
industries, or the U.S. economy, generally. See "Business."

FUTURE ACCOUNTING PRONOUNCEMENTS

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 121 "Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
("SFAS No. 121"). SFAS No. 121 requires, among other things, impairment loss
of assets to be held and gains or losses from assets that are expected to be
disposed of be included as a component of income from continuing operations
before taxes on income. The Company has adopted SFAS No. 121 as of January 1,
1996 and its implementation did not have a material effect on the financial
statements.

In October 1995, FASB issued SFAS No. 123, "Accounting for Stock Based
Compensation." SFAS No. 123 requires that a fair value method for accounting
for stock-based compensation plans be calculated and either recognized in the
financial statements or disclosed in the notes to the financial statements.
The Company does not presently intend to adopt the fair value based method
and as such, earnings will not be impacted by these options. However, it will
disclose in the footnotes the effects of the calculation required by the
statement.

BUSINESS

The Company was organized in the State of Nevada in 1987 and completed a
public offering of its securities in May 1987. Prior to the merger described
below, the Company's business purpose was to seek to acquire suitable
property, assets or businesses by means of completing a merger with or the
acquisition of a privately-held business enterprise seeking to obtain the
perceived advantages of being a public company.

First American-Florida was organized in February 1994 with management who
has experience in the passenger rail and tourism industries. The Company
plans to offer a series of entertainment-based trains, and initially the
Company intends to capitalize upon Florida's growing tourist base of over 41
million tourists per year by developing and operating unique
entertainment-based passenger rail service, the "Florida Fun-Train", between
South and Central Florida. First American-Florida merged into the Company in
April 1996.

Florida attracts tourists from across the world and was the top tourist
destination in the United States in 1995. South Florida not only contains a
number of well-known tourist destinations, but is also a key entry point into
the state for cruise ships entering and leaving the Port of Miami and Port
Everglades (Fort Lauderdale), as well as tourists utilizing Miami
International and Hollywood-Fort Lauderdale Airports. Central Florida
(Greater Orlando) plays host to world renowned tourist destinations such as
Universal Studios Florida, Walt Disney World, Sea World, Kennedy Space Center
and Port Canaveral. In 1994, approximately 14 million people traveled between
South and Central Florida.

The Florida Fun-Train is being designed to provide passengers with an
exciting, unique, fun-filled overland leisure excursion. The Company expects
that this will be accomplished through the use of a variety of entertainment
features, including "virtual reality" and "high-tech" games, as well as
dining, dancing and lounge cars offering a variety of live entertainment. It
is anticipated that the exterior of the Florida Fun-Train will be designed to
have the appearance of an ultra-modern, colorful, sleek, high-speed train.
The train's colors will be vibrant unlike the typical passenger train in the
United States. The Company expects that most of its passengers will be
tourists, and that the Company's service will be offered as an "extension" of
the passenger's vacation. The Company intends to provide a high level of
service in order to accommodate its passengers.

In the future the Company contemplates offering another
entertainment-based passenger train in Florida to be known as the "Space
Coast Fun-Train" which is to provide passenger service between South Florida
and the Florida Space Coast near the Kennedy Space Center. The Company will
be required to seek additional financing for the Space Coast Fun-Train; there
can be no assurance that such financing will be available on terms acceptable
to the Company or that the Company will be in a position to launch the Space
Coast Fun-Train or any other rail operations at any time.

Management of the Company has extensive experience in the passenger rail
and tourism markets. The Company's Chairman of the Board is the Chairman of
the Tri-County Rail Authority (from October 1992 to October 1993). The
Authority operates a 67-mile mass transit railroad service known as
"Tri-Rail" between the metropolitan areas of Miami, Fort Lauderdale and West
Palm Beach, Florida, and carries approximately 10,000 passengers daily. The
Company's Vice Chairman was the founder and is the former Chairman of the
Board of Directors of the Auto-Train Corporation (which carries passengers
and their automobiles on the same train, between the Washington, D.C. area
and the Orlando, Florida area).

while also encouraging travel on the Florida Fun-Train by tourists and
residents who would not otherwise make the trip. Currently, travel is made
between South and Central Florida primarily by either automobile or airplane.
The Company believes the Florida Fun-Train will offer significant price
advantages to travelling by airplane while travelling by automobile does not
offer the entertainment value provided on the Florida Fun-Train.

COMPETITION

Numerous companies, most of which are substantially larger than the
Company and have much greater financial and other resources, offer
alternative modes of transportation over the routes where the Company intends
to operate. In addition to the extensive competition in the transportation
sector, the Company faces extensive competition for the spending of leisure
time and dollars from numerous attractions in the tourist entertainment
sector. These alternative modes of transportation, offer transportation that
is less expensive and/or faster than the Company's proposed rail service.
Most of these competitors already enjoy an established presence in the
Florida and United States transportation and tourism markets. The Company
expects to compete on the basis of what it believes to be its unique product,
which will provide a combined package of transportation and entertainment.

The Company believes its principal competition in the transportation
sector occurs from airlines,, automobiles and inter-city buses. While air
travel is a faster means of transportation, it is more expensive than the
Company's proposed fares, nor does this mode of travel provide greater
convenience within the scope of the Florida Fun-Train's projected routes.
Automobile travel is, on the other hand, less expensive, but lacks the
convenience and ease of transport expected to be provided by the Florida
Fun-Train.

In addition, the Company also has a rail service competitor in the
South/Central Florida corridor) the National Passenger Rail System
("Amtrak"). Amtrak currently operates passenger train service between
Miami/Fort Lauderdale and Orlando, Florida with numerous stops in between.
The cost of a round-trip ticket between Miami/Fort Lauderdale and Orlando is
currently $284 (first class service) and $55 (coach service.) While the
present Amtrak service does not include the "entertainment-type" service
which the Company proposes to provide on the Florida Fun-Train, there can be
no assurance that Amtrak will not improve its service and offer amenities
similar to those proposed to be offered by the Company. The Company believes
that its principal competition stems from air, automobile and other railway
companies. The Company is not aware of any other person or entity currently
planning to provide a service directly competitive with the Florida
Fun-Train, the Space Coast Fun-Train or any of the other trains contemplated
by the Company; however, the Company is generally aware of the fact that Walt
Disney Company has indicated from time to time its interest in establishing a
rail link between its operations in greater Orlando and one or more cruise
ports in Florida. There can be no assurance that such a competitor will not
appear before or after the Company commences operations.

FLORIDA FUN-TRAIN

The Company plans to commence operations of the Florida Fun-Train during
the Fall 1997.

The Florida Fun-Train is anticipated to consist of:

8 Full Dome Passenger Cars Each car will provide comfortable, spacious seating and meal service for up to 80 passengers.

2 Lounge Cars The adult lounge and entertainment car will serve cocktails and hors d'oeuvres and provide music
and live entertainment, including musicians and disc jockeys for listening and/or dancing.

The youth lounge will provide young passengers with food and soft drinks, as well as music and live
entertainment will be provided by musicians, disc jockeys, magicians, comedians and clowns, etc.

1 Space Station Arcade Car This car will allow travelers of all ages to experience the latest high-tech video and virtual
reality games.

1 "Interactive" Car/Gift Shop Educationally oriented computer and video games will fill one side of the car. On the other side, a
gift shop will offer interesting train gifts and souvenirs.

1 Power and Luggage Car This car will provide the electricity needed for operation of the train's facilities, as well as
additional storage space for the passengers' luggage.

The Company intends to have all of these railcars constructed by Rader
Railcar, Inc. See "Certain Transactions."

In addition, each Fun-Train will utilize two leased diesel locomotives,
which will be remodelled to give the appearance of a sleek, high-speed
locomotive. It is currently contemplated that one locomotive will be
positioned on each end of the train, allowing the train to be operated in
either direction without the need to turn the train around.

The Company plans to initially operate the Florida Fun-Train between Fort
Lauderdale and Orlando over existing tracks. The Company may, in the future,
conduct certain operations from Miami; however, to date no arrangements have
been made for locating a terminal in Miami. Until such time, passengers will
be brought by either ferry or bus from Miami to Fort Lauderdale. The Company
intends to operate the Florida Fun-Train on currently existing FEC and CSXT
tracks.

On February 28, 1995, the Company entered into an agreement with FEC for
the use of certain track rights in the Miami-Fort Lauderdale-West Palm
Beach-Titusville corridor. The ten-year term of the FEC agreement starts when
either the Florida Fun-Train or the Space Coast Fun-Train is operational and
the agreement provides for a standard, per-car mileage charge of $1.20 per
car-mile (which is equivalent to $18 per train-mile based on the minimum FEC
15-car train requirement), payable monthly, with a minimum guaranteed annual
amount of $500,000 per route to be paid by the Company to FEC. When and if
both Fun-Trains are operable, the minimum payment will be $1 million per
annum. The Company will operate the Florida Fun-Train and/or Space Coast
Fun-Train with locomotives it provides subject to dispatching (and related
controls) by FEC. The agreement provides for limited exclusivity to the
Company to operate "Fun-Train" type train services and/or services to cruise
lines over the prescribed routes, with certain exceptions. Further, the
Company is obliged to indemnify FEC for claims under actions arising from the
operation of the Florida Fun-Train and the Space Coast Fun-Train, and the
Company is obliged to obtain a minimum of $200 million in comprehensive
general liability insurance coverage in favor of FEC, with a minimum
deductible.

The CSXT Memorandum dated August 24, 1995, provides for the use of CSXT's
tracks between West Palm Beach and the Orlando International Airport
Tradeport site to be used for the operation of the Florida Fun-Train. The
CSXT Memorandum which contains the essential terms of the agreement between
the Company and CSXT, provides, in part, that the Company will pay CSXT the
greater of $20 per train mile, or 16% of the Company's revenue from the
Florida Fun-Train operations. In addition,

the Company is required to maintain at least $300 million in comprehensive
general liability insurance with a minimal deductible (or self-assured).
Pursuant to the CSXT Memorandum, CSXT has agreed not to grant similar access
rights to the subject rail corridor (between West Palm Beach and Orlando) to
any other private rail passenger operator or contractor which would provide
comparable conventional rail passenger service (primarily servicing the
cruise ship market). The exclusivity provision specifically excepts the
provision of access to the subject CSXT route by Amtrak and the Tri-County
Commuter Rail Authority, as well as other publicly-funded authorities with
statutory and/or contractual rights with respect thereto. The exclusivity
also does not apply to high-speed rail activities. In addition, the
exclusivity clause will be voidable at CSXT's option if (i) after the first
year of operation, the Company does not operate at least 16 Florida
Fun-Trains a week, or (ii) management of the Company changes significantly.
The term of the agreement will be five years. In addition to the foregoing,
the Company has tentatively agreed to sell up to 400,000 warrants to CSXT,
the terms of which are to be negotiated; no provision has been made herein
for the effect of the issuance or exercise of these warrants when and if
issued. Also, the Company has tentatively agreed to appoint a CSXT
representative, selected by the Company, to its Board of Directors.

The initial terminal locations are planned to be in Fort Lauderdale (which
is located in the center of the metropolitan area comprising Dade, Broward
and Palm Beach Counties) and in Greater Orlando, the home of Walt Disney
World, Universal Studios Florida, Sea World and numerous other attractions.
The Company has commenced preliminary discussions with representatives of the
Port of Miami to construct a second terminal to serve Port of Miami cruise
passengers. Until the Miami terminal is in operation, of which there can be
no assurance, the Company expects to transport its passengers from the Port
of Miami to its planned Fort Lauderdale terminal by bus, ferry or other means
of transportation.

The Company has entered into discussions with representatives of Port
Everglades which is under the authority of the Broward County commission for
a Fort Lauderdale terminal. A proposed site has been selected adjacent to the
Broward County Convention Center, which is adjacent to the piers for cruise
ships and within two miles of the Fort Lauderdale International Airport.
Representatives of Port Everglades have been supportive of the Company's
plans, and the Company's architects and engineers intent to proceed with the
design plans for the Port Everglades Terminal. Further, the Company has
entered into a Letter of Intent with the Greater Orlando Aviation Authority
to locate a terminal at the Orlando International Airport. Although the
Company expects to obtain funding for some or all of these facilities from
State and/or local governments, final terms regarding the construction of
these facilities have not been negotiated. There can be no assurance that any
such negotiations will be successful.

The estimated travel time for the Florida Fun-Train between Central
Florida and South Florida is approximately four hours. To serve the general
domestic and international tourist market, the Company plans to offer daily
weekday service origination in South Florida in the morning and in Central
Florida in the afternoon. To serve the South Florida weekend cruise market
(Port Everglades and Port of Miami) the Company plans to offer special
inbound and outbound service for cruise passengers.

FUTURE FUN-TRAINS

After the introduction of the Florida Fun-Train, and assuming the Company
has sufficient capital available, it expects to provide "Fun-Train" passenger
service between South Florida and the Florida Space Coast (near the Kennedy
Space Center). The Space Coast Fun-Train is expected to provide daily
round-trip service at a fixed price which will include a full tour of the
Kennedy Space Center. The Kennedy Space Center is one of Florida's most
popular tourist attractions, receiving over 2.1 million visitors in 1994 and
is especially popular with international tourists. The Company expects to
market the Space Coast Fun-Train as a convenient and entertaining travel
opportunity to see the Kennedy Space Center. The Space Coast Fun-Train will
operate over existing tracks owned and operated by FEC.

MARKETING

The Company estimates that the initial one-way ticket price for the
Florida Fun-Train will be approximately $55 and the per-passenger en route
revenue (for food, beverages, entertainment and souvenirs) will be
approximately $14. On the Space Coast Fun-Train, the Company estimates an
initial round-trip ticket price of approximately $140, which will include
transportation and the cost of admission to the Kennedy Space Center as well
as en route revenue of approximately $20.

On July 23, 1996, the Company engaged Management Resource Group, Inc.
("MRG") to conduct a market study for the Company for the purpose of
providing recommendations with respect to targeting market segments most
likely to use the Florida Fun-Train, traffic volume (including seasonal
fluctuations), schedules that would generate the highest volume of ridership,
fare structure, types of entertainment, and key product attributes such as
classes of service, language or other special requirements. The total cost of
this market study (including reimbursement for professional fees and
out-of-pocket expenses) will be approximately $172,000.

Over the next 12 months the Company plans to develop and implement its
sales and marketing efforts. The Company plans to hire approximately five
employees who will begin marketing the Company to the travel and tour
industries. Among other things these employees will market and sell tickets
(passenger seats) through wholesale tour operators and retail travel agents.
Wholesale tour operators have historically represented a material source of
business for the travel industry in South and Central Florida, particularly
in the cruise and lodging businesses. While the Company cannot anticipate
what percentage of its future business will be with wholesale tour operators
it is expected that wholesalers will represent approximately one-half of its
business.

In addition, marketing efforts which feature the Company's services are
presently planned through various channels such as trade shows and
conferences, as well as advertising in various tour industry publications as
well as to the general public. During this stage, the Company plans to sell
Fun-Train tickets through an internal reservation system which must be
developed. The Company also may negotiate computer time-sharing or other
arrangements with third parties which operate systems for or similar to those
used by the travel and tour industries. In addition, the Company intends to
attempt to market its services and sell tickets by means of joint
arrangements with cruise lines, airlines and hotels. General advertising on
radio and television and in periodicals, newspapers and other media, is also
planned as an important component of the Company's marketing program.

The Company has also entered into discussions with Universal Studios
Florida regarding joint marketing efforts in connection with the Florida
Fun-Train. Further, it is anticipated that Universal may advertise on the
train and install rides and exhibits which promote the Florida Fun-Train.

MARKET

The Company's principal market is approximately 41 million persons who
visit Florida each year. The Company also intends to rely for passengers on
the more than 1.4 million residents of the Central Florida (principally the
Greater Orlando metropolitan area) and the more than 3.5 million residents of
the South Florida (Miami/Ft. Lauderdale) metropolitan area, as well as on the
rest of the more than 13.4 million residents of Florida. SOURCE: "1994
Florida Visitor Study," Florida Department of Commerce, Bureau of Economic
Analysis, Tallahassee, FL (1995).

From 1980 to 1995 the number of annual visitors to Florida increased by
105%, from 20 million to 41.3 million. According to the Florida Department of
Transportation, approximately half of these visitors arrived without an
automobile. From 1980 to 1995, the resident population of Florida increased
from 9.7 million to 14.4 million, a 49% increase. During that period, the
population of Central Florida increased by 75%, from 800,000 to 1.4 million,
and the South Florida population grew from 2.6 million to 3.5 million, a 35%
increase. SOURCE: Florida Department of Commerce, Division of Economic
Development, Bureau of Economic Analysis. According to the 1994 Florida
Visitor Study, Florida's

population and tourist base are expected to continue to grow significantly
during the next decade; however, the rates of growth are expected to slow
somewhat.

During the 1990's, the growth in portions of Florida's tourism industry
slowed, with some areas and attractions experiencing declines. The recent
slowdown has been attributed, in part, to highly-publicized criminal attacks
on tourists, and increasing competition from other tourist destinations in
the U.S. and the Caribbean region as well as economic problems in some of
Florida's overseas tourism markets.

VISITORS BY SOUTHEAST AND CENTRAL FLORIDA REGIONS (1989-94)(1)(4)

1989 1990 1991 1992 1993 1994
---------- ---------- ---------- ---------- ---------- ----------

Southeast(2) ..... 11,788,156 12,839,327 13,386,130 13,560,302 13,419,865 13,321,071
Central(2) ....... 11,614,149 11,504,725 10,554,752 10,965,330 10,713,397 9,891,095
State Estimate(3) 38,712,303 40,970,233 39,560,874 40,536,194 41,032,560 39,883,447

- ----------
(1) Southeast region includes: Dade (including Miami), Broward (including Ft.
Lauderdale), Palm Beach, Monroe and three less populated counties.
Central region includes: Orange (including Orlando) and eight less
populated counties.

(2) These figures count survey respondents who visited both regions, in which
case they were included in both figures for the applicable year.

(3) The State estimate is not based on total of regional numbers for reasons
set forth in Note 2, above.

(4) Source: 1994 Florida Visitor Study.

The Company's planned operations may be materially adversely affected by
declining growth or an absolute decline in the number of tourists visiting
Florida; however, the Company believes that, by offering a unique and safe
tourist attraction and service, it can attract the passenger base needed for
profitability, notwithstanding possible adverse trends in the growth of the
Florida tourist market as a whole.

According to the Florida Department of Transportation, in 1994
approximately 14 million persons traveled between Central and South Florida.
Of these trips, 55% were for tourism/recreation, 24% were for family/personal
reasons, and 21% were for business.

Given the status of both Central Florida and South Florida as major
tourist destinations, as well as the size of the underlying metropolitan
areas, the Company sees great potential in the market for transportation
between the two areas. The Company plans to target the tourists and residents
already traveling between the two destinations, but it also plans to
stimulate, through a marketing effort, travel between the areas on the
Florida Fun-Train and Space Coast Fun-Train by persons who otherwise would
not have made the trip. By providing a convenient, entertaining and
reasonably priced service between South Florida and Central Florida, the
Company's Fun-Train will be marketed as an inducement to South Florida
visitors and residents to travel to Central Florida, and vice versa. Given
the huge size of the potential market, the Company believes that it needs to
capture only a small portion in order to be successful.

CENTRAL FLORIDA

According to the 1995 Department of Commerce Study, the greater Orlando
area was the fastest growing metropolitan statistical area in Florida in the
early 1990's. The greater Orlando area added nearly 172,000 residents between
1990 and 1995 for an estimated population of 1.4 million. The Orlando area's
rate of growth during this period was 2.5 times the United States average.

Approximately 22.4 million passengers enplaned and deplaned at the Orlando
International Airport in 1994, up from approximately 21.5 million in 1993 and
21.1 million in 1992. These increases compare favorably to nationwide
increases in the magnitude of 2.5% (for 1992). Of these passengers, a
significant portion (approximately 24%) were international visitors,
primarily from Europe, Canada and, to a lesser extent, Latin America.

Central Florida is filled with a plethora of attractions including Walt
Disney World's Magic Kingdom, Epcot Center, Disney-MGM Studios, Universal
Studios (Florida), Sea World of Florida, as well as Church Street Station,
Seminole Greyhound Park (Turf Club) and Splendid China.

Walt Disney World (and its related attractions) is a dominant component of
the Central Florida economy and has been historically (since 1971) the single
most important generator of airline traffic at the Orlando International
Airport. The international character of Disney's EPCOT Center has had a
particularly important influence on the number of international visitors
using that airport. In recent years, the relative influence of the Disney
attractions has lessened with the significant development of other major
tourist attractions and convention facilities; however, the magnitude of
Disney's importance to Florida tourism is demonstrated by the fact that Walt
Disney World's 1995 attendance total of approximately 35.3 million was over
four times the total at Central Florida's next most popular attraction
(Universal Studios).

One of the fastest growing components of the Central Florida economy is
the convention industry. Orlando is one of the largest convention markets (in
terms of number of delegates) in the United States. Reasons cited for the
increasing popularity of Orlando as a location for conventions and
conferences include the continuing development of area attractions, the
addition of hotel rooms, and the increased availability of transportation.

SOUTH FLORIDA

The Miami/Fort Lauderdale metropolitan area contains approximately 3.3
million residents and is also a major tourist destination, with numerous
attractions, two major cruise ports, four major-league professional sports
teams and miles of beaches. The area attracts millions of domestic and
international visitors each year, who come for tourism, shopping, business
and family visits. Miami is the financial and trade capital of Latin America,
and Miami Beach, famous for its night life, is internationally known as a
center for the fashion, music and movie industries. Fort Lauderdale, Miami
and Miami Beach are also major convention destinations. Miami International
Airport is the primary travel connection linking the Americas, the Caribbean,
Europe and Africa. Served by over 100 scheduled airlines, more than any other
airport in the world, Miami International Airport logs approximately 1,400
daily departures and arrivals. In 1994, over 13 million international
passengers flew to or from Miami.

South Florida has expanded from its traditional role as a wintertime
destination for North Americans to become a year-round destination for
domestic and international visitors. South Americans now comprise 35% of
annual international visitors, European visitors make up 27% of the annual
total, visitors from Central America and the Caribbean account for 23%, and
North Americans account for 15%.

The Port of Miami is the home port to a world-leading fleet of 16 luxury
cruise ships, including five of the world's largest passenger ships, which
are expressly outfitted for pleasure cruise vacations. The Port of Miami
handles approximately 3 million passengers per year from its 12 passenger
terminals--more than any other cruise port.

Port Everglades, located approximately 30 miles north of Miami in Fort
Lauderdale, received a total of 2,379,520 cruise passengers during 1993.
There are 25 cruise ships based at Port Everglades, with four cruise
terminals just a short walk from the Broward County Convention Center.

The Fort Lauderdale/Hollywood International Airport is another major
transportation destination for tourists going to South Florida. In 1993, the
airport handled approximately 9.2 million domestic passengers and 1.2 million
international passengers. There are 19 major airlines serving the Fort
Lauderdale/Hollywood International Airport with 362 daily arrivals and
departures. The airport is located just one and one-half miles from Port
Everglades and the Broward County Convention Center.

EMPLOYEES

The Company currently employs six persons, four of whom are management and
two of whom are staff members. Over the next 12 months, the Company expects
to hire approximately 25 persons. See

"Plan of Operation.'' The Company also intends to rely extensively on
independent contractors and the out-sourcing of certain functions, e.g.
marketing and rail operations.

Traditionally, railroad operating crews have been unionized, and the
Company may have no alternative but to use a unionized crew. Further, while
unionization among railroad passenger service workers is less prevalent then
among crew members, there can be no assurance that the Company will not have
to use unionized personnel in passenger service positions as well. While the
Company does not anticipate material labor relations problems and believes
that it can reach mutually beneficial collective bargaining agreements with
any unionized employees, there can be no assurance that these problems will
be avoided. The Company is considering "outsourcing" its rail operations.

GOVERNMENTAL REGULATION

The Company's operations will be subject to safety regulation by the
Federal Railroad Administration and the Florida Department of Transportation
applying federal safety standards, as well as environmental regulation by
federal and state agencies. The primary responsibility for safety at
crossings will lie with the track owners, i.e., most likely CSXT in the case
of the Florida Fun-Train and FEC in the case of the Space Coast Fun-Train.
The Company also will be subject to liquor license and other regulations
promulgated by state and local authorities. Any interstate operations by the
Company would subject it to regulation by the federal Interstate Commerce
Commission. The Company does not anticipate any material regulatory problems;
however, there can be no assurance that they will not develop.

The Company's proposed intrastate railroad operations will be subject to
various federal and state environmental laws and regulations. The Company
believes that its proposed operations will be in material compliance with all
such laws and regulations, and the Company estimates that such compliance
will not have any material effect on the its profitability or capital
expenditures. Nevertheless, there can be no assurance that current
environmental regulatory requirements will not change and that any such
change may have a material effect on the Company's operations.

LEGAL PROCEEDINGS

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

MANAGEMENT

The directors of the Company are as follows:

NAME AGE POSITION(S)
- ---- --- -----------

Allen C. Harper(1)...... 51 Chairman of the Board of Directors

Eugene K. Garfield...... 60 Vice Chairman of the Board of Directors

Raymond Monteleone...... 48 Director

Thomas G. Rader(2)...... 50 Director

David H. Rush(1)(2)..... 75 Director

Luigi Salvaneschi(1).... 65 Director

- ----------
(1) Member of the Compensation Committee, the Chairman of which is Mr. Rush

(2) Member of the Audit Committee, the Chairman of which is Mr. Rader.

The executive officers of the Company are as follows:

NAME AGE POSITION(S)
- ---- --- -----------

Allen C. Harper...... 51 Chief Executive Officer

Raymond Monteleone .. 48 President, Chief Operating Officer

MR. HARPER, has been the Chairman of the Board of Directors and Chief
Executive Officer of the Company since the Merger (April 1996), and prior to
that he served in similar capacities with First American-Florida since its
incorporation (February 1994). He has over 30 years of business experience,
principally in the areas of real estate management and development and rail
transportation. Since 1984, he has been principally employed as the Chairman,
President and principal shareholder of First Reserve, Inc., the holding
company for Esslinger-Wooten-Maxwell, Inc., a residential and commercial real
estate brokerage and management firm based in Coral Gables, FL. Since
September 1989, Mr. Harper has been a director, and from October 1992 to
October 1993, and beginning in September 1995 to date, he has served as
Chairman of the Board of the Tri-County Rail Authority. Since May 1994, he
has served as a Director of Florida East Coast Railway Co. (a railroad
company based in St. Augustine, FL) and Vacation Break U.S.A., Inc. (a travel
and time-share corporation based in Fort Lauderdale, FL).

MR. GARFIELD, has been the Vice Chairman of the Board since June 1996.
From the Merger (April 1996) to June 1996 he served as the President of the
Company, and prior to that he served in a similar capacity with First
American-Florida since its incorporation. Mr. Garfield has served as a
director of the Company since the Merger and prior to that was a director of
First American-Florida since its incorporation. During the last five years,
he has held several positions, including: professor of Business Law at
Miami-Dade Community College (Miami, FL -1990-1992), during which period he
also served as a director of the Entrepreneur-in-Residence-Program for the
School of Business and Entrepreneurship of Nova University (Fort Lauderdale,
FL). Thereafter, Mr. Garfield served as an advisor to the Florida Department
of Transportation (Office of the Governor) on the development of a high-speed
rail system for the State of Florida from January 1992 to April 1994. Since
April 1993, he has been Chairman of the Institute for Transportation Research
and Education at Barry University's Andreas School of Business (Miami Shores,
FL), and since October 1993, he has been a member of the Dade County Select
Committee. Mr. Garfield was appointed by former President Gerald R. Ford to
serve on the National Highway Safety Commission from 1977 to 1981. In 1969,
he was the founder and Chairman of the Board of Directors of the Auto-Train
Corporation, which operates the only passenger railroad of its kind in the
United States, carrying passengers and their automobiles on the same train.
Mr. Garfield was Assistant to the U.S. Secretary of Transportation from 1967
to 1968, and liaison assistant to President Lyndon B. Johnson from 1968 to
1969. In December 1995, Mr. Garfield was

appointed to the Metropolitan Orlando International Affairs Commission
(MOIAC) by the Mayor of Orlando. Mr. Garfield serves on the International
Transportation Committee of the MOIAC.

MR. MONTELEONE, became President, Chief Operating Officer, and a Director
of the Company in July 1996. Most recently (1988-1996) Mr. Monteleone served
as the Vice President of Corporate Development, Planning, Administration, and
Acting Chief Financial Officer of Sensormatic Electronics Corporation. In
addition, from May 1988 until January 1995 he served as a consultant to and
Board member of various businesses . From 1973 until May 1988, he was a staff
accountant and later a partner, and then the Director of Taxes (three South
Florida offices) of Arthur Young & Company, an international accounting firm.
Mr. Monteleone is a Certified Public Accountant licensed in Florida, as well
as other states. He graduated cum laude from the New York Institute of
Technology in 1969, and received his Masters in Business Administration from
Florida Atlantic University (Boca Raton, FL) in 1992. He serves on the Boards
of Directors of Loren Industries, Inc. (a jewelry casting company), Pointe
Financial Corporation (a federal savings and commercial bank holding company)
and Rexall Sundown, Inc. (a pharmaceutical company). Mr. Monteleone has also
served on the Boards of Directors of numerous civic, industrial, and
professional associations, and he has received numerous governmental
appointments.

MR. RADER, has been a Director of the Company since the Merger, and prior
to that he served in a similar capacity with First American-Florida since its
incorporation. Since 1982, Mr. Rader has been the President and sole
shareholder of Rader Railcar, Inc., Denver, CO, which designs, builds and
operates unique rail cars. He has more than 20 years' experience in both the
tourism and railroad industries. From 1970 to 1975, he served as Vice
President and director with Sheraton Hawaii (a subsidiary of ITT-Sheraton
Corporation) and from 1978 to 1982, he served as Vice President and General
Manager of Holland America (a division of Holland America Line, Inc.). In
1982, he founded Tour Alaska, a privately-held Alaskan tour company which
offered the first private railcar tour through Alaska.

MR. RUSH has been a Director of the Company since the Merger, and prior to
that he served in a similar capacity with First American-Florida since June
1994. He has extensive experience in the private and public sectors,
principally in the areas of high tech industry, economic development and rail
transportation. Mr. Rush has served as a member and chairman of the Florida
High Speed Rail Commission, and he is also currently the Chairman of the
Tri-County Commuter Rail Authority. Mr. Rush was former chairman of the
National High Tech Council and is a current member of the Defense Conversion
and Transition Commission in 1993. Mr. Rush was the President and Chief
Executive Officer of Aptek Technologies, Inc., Deerfield Beach, FL, from 1982
to April 1995, and has been President of Rush Holdings, Inc., in Deerfield
Beach since 1958. He is also President of RTX Telecom and Electro Data Corp.
since 1982.

MR. SALVANESCHI has been a Director of the Company since the Merger, and
prior to that he served in a similar capacity with First American-Florida
since June 1994. His career has been in "mass-marketing service" businesses
which are oriented toward consumers' discretionary dollars. In 1969, he
became Vice President/Real Estate Administration, and in that position, he
was instrumental in setting national standards and policies for market
development and store locations. In 1971, he was made an advisory member of
McDonald's Board of Directors. From 1983 to 1987, Mr. Salvaneschi was
employed by Kentucky Fried Chicken as senior Vice President. In January 1988,
he joined Blockbuster Entertainment Corporation as Executive Vice President
of Development, and in June 1988 he became President, Chief Operating Officer
and a Director of Blockbuster. He retired from Blockbuster in February 1991.

* * * *

Directors are elected at the Company's annual meeting of shareholders and
serve for one year or until their successors are elected and qualified.
Officers are elected by the Board of Directors and their terms of office are
at the discretion of the Board, subject to the Company's obligation to pay
any compensation required under applicable employment agreements. All of the
Company's executive

officers except Mr. Harper are full-time employees of the Company. There are
no family relationships among any of the officers or directors of the
Company.

The Company has agreed to use its best efforts to cause the designee of
Capital Growth (the Company's financial advisor) to be elected to the
Company's Board of Directors, for the three-year period commencing on April
26, 1996. In the event that the Capital Growth's designee shall not be
elected, or is unavailable to serve if elected, an individual selected by
Capital Growth shall be permitted to attend all meetings of the Board of
Directors. To date no designee has been named by Capital Growth to serve on
the Company's Board of Directors.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

Pursuant to the Company's Bylaws, the Company is obligated to indemnify
each of its officers and directors to the fullest extent permitted by law
with respect to all liability and loss suffered, and reasonable expense
incurred, by such person in any action, suit or proceeding in which such
person was or is made or threatened to be made a party or is otherwise
involved by reason of the fact that such person is or was a director or
officer of the Company. The Company is also obligated to pay the reasonable
expenses of indemnified directors or officers in defending such proceedings
if the indemnified party agrees to repay all amounts advanced should it be
ultimately determined that such person is not entitled to indemnification.

The Company has procured and maintains a policy of insurance under which
the directors and officers of the Company are insured, subject to the limits
of the policy, against certain losses arising from claims made against such
directors and officers, including liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable.

EMPLOYMENT AGREEMENTS

The Company and Messrs. Harper and Garfield have entered into employment
agreements. These agreements are for a three-year term (expiring February
1997) and provide for the base salaries of $75,000 and $125,000,
respectively, (along with cost-of-living adjustments based on the appropriate
consumer price index). In addition, the agreements provide for health care
insurance and other standard employment benefits. These agreements also
contain customary non-competition provisions prohibiting competition with the
Company during the term of employment and for two years thereafter. The
agreement with Mr. Garfield requires his full-time efforts on behalf of the
Company; however, the agreement with Mr. Harper requires that he devote at
least 30 hours per week to Company business. While the Company believes that
the extent of Mr. Harper's efforts will be sufficient, there is no assurance
that an additional time commitment will not prove necessary or that
additional management personnel will not be needed as a result of Mr.
Harper's limited availability.

In addition, the Company has entered into an employment agreement with Mr.
Monteleone. Mr. Monteleone was employed by the Company to be its President
and Chief Operating Officer, pursuant to an employment agreement dated July
1, 1996, the initial term of which is three years with automatic one-year
renewals (cancelable by either party) thereafter. The agreement provides for
an initial base salary of $150,000 per annum and a minimum bonus of $12,500
on January 1, 1997. There will be a minimum increase in his base salary to
$175,000 on January 1, 1997, $189,000 on January 1, 1998, and $204,120 on
January 1, 1999. In addition, he will receive an annual bonus of at least
$25,000 on January 1, 1998, January 1, 1999 and June 1, 1999. The agreement
also provides for standard life and health care insurance benefits, which
begin in January 1997, along with other standard employment benefits.
Pursuant to the agreement, Mr. Monteleone received a stock grant of 7,500
shares, effective July 1, 1996, and he will be granted a minimum of 30,000
non-qualified stock options annually during

the three-year employment term and any subsequent renewal term; the first of
these 30,000-share options was granted on July 1, 1996. Mr. Monteleone will
receive a $500 per month car allowance, plus an automobile mileage
reimbursement for business travel of $.20 per mile. During the initial
three-year term the Company has agreed to fund an individual retirement plan
on behalf of Mr. Monteleone in the aggregate of $35,000.

The agreement with Mr. Monteleone provides that he may receive, in certain
circumstances, a severance package consisting of twice his current base
salary and all of the stock options which were to be granted to him during
the remaining term of his employment will become fully granted and vested.
This severance package shall be payable upon the termination of the agreement
and the occurrence of any of the following events, (i) "change in control" of
the Company (where more than 50% of the Company's stock is sold to a third
party), (ii) should someone other than Mr. Monteleone or Mr. Harper (the
current Chief Executive Officer) be the Company's Chief Executive Officer, or
(iii) should there be a substantial reduction in Mr. Monteleone's duties
under the agreement. The agreement also contains a non-competition provision
which prohibits Mr. Monteleone from competing with the Company for two years
following the termination of the agreement.

BOARD COMPENSATION

Employee directors of the Company are not compensated for their services
as directors. In June 1996, the Company instituted a policy whereby each
"non-management" director would receive a $5,000 annual retainer along with a
per meeting stipend ($500 for "in person" and $300 for "telephonic"
attendance). In addition, the Company has to award each "non-employee"
director with a one-time grant of stock options covering 15,000 shares (at
the then current market price) and thereafter each such non-employee director
will receive an annual stock option grant covering 3,000 shares, all of which
options are to be awarded under a stock option plan to be developed by the
Company. To date, this stock option plan has not been prepared and,
therefore, no such options have been granted.

EXECUTIVE COMPENSATION

The following table provides information with respect to the compensation
paid by First American-Florida, the Company's predecessor by merger, to Allen
C. Harper, the Chairman of the Board and Chief Executive Officer. There was
no executive officer whose salary exceeded $100,000 for any applicable
period. During the subject periods, First American-Florida paid no long-term
compensation to any person. The Company did not pay any form of compensation
to any officer or director during its last three full fiscal years.

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION
----------------------------------------------------------
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)
- --------------------------- ------------------------------------ --------- --------

Allen C. Harper Eight months ended December 31, 1995 38,461 --
Chairman and Chief Twelve months ended April 30, 1995 79,775 --
Executive Officer

PRINCIPAL AND SELLING SHAREHOLDERS

COMMON STOCK:

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of August 1, 1996, and
as adjusted to reflect the sale of Shares offered by the Selling Shareholders
with respect to (i) each of the Company's executive officers and directors,
(ii) all officers and directors as a group, (iii) each person known to the
Company to be the beneficial owner of more than 5% of the Common Stock, eight
of whom are Selling Shareholders, and (iv) each of the Selling Shareholders.
Unless otherwise indicated, all shares of Common Stock are owned directly and
of record and the persons so indicated have voting and investment power with
respect thereto. With respect to the Selling Shareholders, it has been
assumed that all their shares so offered will be sold.

SHARES
BENEFICIALLY OWNED
BEFORE AND AFTER OFFERING(1)
----------------------------- SHARES
NAME POSITION WITH COMPANY SHARES PERCENT(2) OFFERED
- ---- --------------------- ------ ---------- -------

EXECUTIVE OFFICERS AND
DIRECTORS:(3)

Thomas G. Rader Director 1,614,581 17.84 0

Allen C. Harper Chairman of the 1,379,032(4) 15.24 0
Board of Directors
and Chief Executive Officer

Eugene K. Garfield Vice Chairman 718,343 7.94 0
of the Board of Directors

Ray Monteleone President, Chief 17,500(5) * 0
Operating Officer
and Director

Luigi Salvaneschi Director 85,654 * 0

David H. Rush Director 21,414 * 0

All Officers and Directors 3,836,524(3) 42.34 0
as a Group (6 persons)

SHARES
BENEFICIALLY OWNED
BEFORE OFFERING(1)
-----------------------
SHARES
NAME SHARES(6) PERCENT(2) OFFERED(7)
- ---- --------- ---------- ----------

SELLING SHAREHOLDERS:
Capital Growth International, LLC(8)
666 Steamboat Road
Greenwich, CT 06830 823,274 8.84 823,274
Lancer Partners L.P.
237 Park Ave., 8th Fl.
New York, NY 10017 814,286 8.51 900,000
Egger & Co.
c/o The Chase Manhattan Bank N.A.
P.O. Box 1508 Church Street Station
New York, NY 10008 797,928 8.36 880,934
EFO Fund, Ltd.
1111 W. Mockingbird Lane, #1400
Dallas, TX 75247 732,857 7.70 810,000
Rush & Co.
c/o Swiss American Securities, Inc.
100 Wall Street, 4th Fl.
New York, NY 10005 572,177 6.09 628,834
Fairnoon Management Ltd.
11 Queenstreet Mayfair
London W1X 7PD, England 570,000 6.06 630,000
Emanon Partners, L.P.
237 Park Avenue
Suite 901
New York, NY 10017 515,714 5.50 570,000
Rosebud Capital Growth Fund Ltd.
c/o Euro-Dutch Trust Co. (Bahamas)
Charlotte House, Charlotte St.
Nassau, Bahamas 512,747 5.48 563,267
Edgeport Nominees, Ltd. 401,888 4.32 439,625
Demachy Worms & Co. International, Ltd. 325,714 3.52 360,000
Alan L. Jacobs 318,176 3.47 318,176
Corner Bank, Ltd. 195,429 2.13 216,000
BFI Banque De Financement & D'Investissement, Geneve 162,857 1.78 180,000
Republic National Bank of New York (Suisse) SA 162,785 1.78 178,933
Faisal Finance (Switzerland) SA 155,286 1.70 169,000
Republic National Bank of New York (Luxemburg) SA 146,571 1.60 162,000
James F. Ellis Trust DTD 4/11/89 97,281 1.07 101,600
Stanley Hollander IRA Cowen & Co. Custion 58-03120 89,495 * 96,942
Cameo Trust Corporation Limited 81,429 * 90,000
The Gifford Fund Ltd. 81,429 * 90,000
Charles L. and Donna Greenberg, JTWROS 81,429 * 90,000
Napier Brown Holdings Ltd. 81,429 * 90,000
Veritas Films SA 81,429 * 90,000
Heptagon Investments Ltd. 81,356 * 88,933
Stolzoff Family Trust of 2/05/95, Martin S. Stolzoff
and Barbara R. Stolzoff, Trustees 68,123 * 74,468
Ronald Koenig 67,406 * 73,422
Phillip Bibicoff 65,143 * 72,000
Bostar A.S. 65,143 * 72,000
C.M. Investment Nominees Limited 65,143 * 72,000
David A. Rees 65,143 * 72,000
P.G. Ridgwell 65,071 * 70,933
Banque Privee Edmond De Rothschild S.A. 56,964 * 62,467
Vital Miljo AS 56,017 * 59,308
Bauer Family Limited Partnership 48,857 * 54,000
Falcon Management Ltd. 48,857 * 54,000
Fixtar Holdings, Inc. 48,857 * 54,000
Richard B. Liroff 48,857 * 54,000
Saracen International 48,857 * 54,000
Tradeco Limited 48,857 * 54,000
UOB Luxembourg S.A. 48,857 * 54,000

SHARES
BENEFICIALLY OWNED
BEFORE OFFERING(1)
-----------------------
SHARES
NAME SHARES(6) PERCENT(2) OFFERED(7)
- ---- --------- ---------- ----------
Gibesgelt 46,250 * 46,250
Euro Capital 45,000 * 45,000
Lawrence Burstein 40,695 * 44,485
Michael Schaenen 35,625 * 35,625
Christopher Fox 35,625 * 35,625
Brookbank Holdings, Ltd. 33,300 * 33,300
Gary Barnett, IRA Standard/Rollover 32,571 * 36,000
Harvey R. Brice BSSC Master Defined Contribution M/P Pension
Plan 32,571 * 36,000
Compass Investment Management Limited 32,571 * 36,000
Coutts & Co. S.A. 32,571 * 36,000
Barrie M. Damson 32,571 * 36,000
Ernest Dorner GST Non-Exempt Trust A U/T/A 5/26/94 32,571 * 36,000
Elmtree Corporation 32,571 * 36,000
Milton and Irene Geller 1985 Trust 32,571 * 36,000
Susan Greenberg 32,571 * 36,000
Alan D. Jacobson, IRA 32,571 * 36,000
Robert Katz 32,571 * 36,000
Peter Barrington Kirk 32,571 * 36,000
Lago Wernstedt 32,571 * 36,000
Morgan Steel Limited 32,571 * 36,000
John D. Murphy 32,571 * 36,000
Nicator S.A., Zurich 32,571 * 36,000
Pictet & Cie 32,571 * 36,000
Robinson Gear (Nominees) Limited A/CJ-10 32,571 * 36,000
Stoneman Investor Partnership 32,571 * 36,000
Terrier Finance, Inc. 32,571 * 36,000
Ghazi Allawi 32,499 * 34,933
Helix Investments, Ltd. 31,497 * 32,220
Dan Purjes 30,010 * 30,010
Kimberly A. Goguen 25,000 * 25,000
Christopher D. Jennings 24,409 * 26,485
Gary H. Stolzoff 22,768 * 25,003
Pyramid Partners, LP 21,714 * 24,000
Prime, Grieb & Co. Limited 19,286 * 21,000
Gerald Rosen 19,000 * 21,000
Michael S. Jacobs 18,750 * 18,750
Sachem Corporate Finance Ltd. 16,875 * 16,875
Philip Altheim 16,286 * 18,000
Gary Barnett 16,286 * 18,000
Denis Baylin 16,286 * 18,000
I. Bibicoff, Inc., Pension Trust Fund 16,286 * 18,000
Boel AS 16,286 * 18,000
Credit Lyonnais (Suisse) SA Geneva 16,286 * 18,000
Credit Suisse Zurich 16,286 * 18,000
Owen H. Gassaway 16,286 * 18,000
David Greenberg, IRA 16,286 * 18,000
David Greenberg and Susan Greenberg,
Trustees FBO Greenberg and Panish,
a Prof. Corp. Def. Bene. Pension Plan 2/01/88 16,286 * 18,000
Haaco AS 16,286 * 18,000
David M. Hallman, Sr. 16,286 * 18,000
Hapoalim Mayo Casa Bancaria 16,286 * 18,000
Allan B. Hechtman, Inc., Pension Plan & Trust 16,286 * 18,000
Allan B. and Linda S. Hechtman, JTWROS 16,286 * 18,000
Trustees of the Hill Oldridge Ltd. Pension Fund 16,286 * 18,000
Nils Otto Holmen 16,286 * 18,000
P.B. Hubbard/J.D. Boden as Trustees of the Vector Trust 16,286 * 18,000
Svein Huse 16,286 * 18,000

SHARES
BENEFICIALLY OWNED
BEFORE OFFERING(1)
-----------------------
SHARES
NAME SHARES(6) PERCENT(2) OFFERED(7)
- ---- --------- ---------- ----------
Intergalactic Growth Fund, Inc. 16,286 * 18,000
Lenard E. Jacobson, MD, PC Profit Sharing Trust 16,286 * 18,000
Robert Jones 16,286 * 18,000
Mazin Kamouna 16,286 * 18,000
William A. Kamke and Dorothy S. Kamke, JTWROS 16,286 * 18,000
A/S Kapitalutvikling 16,286 * 18,000
Ronald Korn, IRA 16,286 * 18,000
Pierre and Francoise Lambert 16,286 * 18,000
Metropolitan Finance Limited 16,286 * 18,000
John Bell Moran, Jr. 16,286 * 18,000
Anne P. Newman and Harry Newman, Jr. JTWROS 16,286 * 18,000
Scott Notowitz 16,286 * 18,000
Oistein Nyberg 16,286 * 18,000
RNB (France) Monaco 16,286 * 18,000
Rigel AS 16,286 * 18,000
Allan Rudnick, IRA 16,286 * 18,000
J.R.L. Smith 16,286 * 18,000
K.E. Smith 16,286 * 18,000
Ivor Spiro 16,286 * 18,000
Craig Taines 16,286 * 18,000
Taines Family Limited Partnership 16,286 * 18,000
Abraxas Partners, Ltd. 16,286 * 18,000
Michael Morris 16,247 * 16,971
Walter Prime 16,247 * 16,971
Peter R. McMullin 16,213 * 16,933
Rudnick Living Trust DTD 7/22/91 16,213 * 16,933
John VanOrdstrand 12,500 * 12,500
Joseph and Lillian Matulich JTWROS 9,375 * 9,375
Trafina Privatebank AG 9,375 * 9,375
Magne F. Aaby 8,143 * 9,000
Birger Dalen 8,143 * 9,000
John Heckler 8,143 * 9,000
Norman Leben 8,143 * 9,000
Svein A. Loken 8,143 * 9,000
Steven Millner 8,143 * 9,000
Asher Plaut and Evelyn Plaut, JTWROS 8,143 * 9,000
Svein-Erik Stiansen 8,143 * 9,000
Bank Julius Baer & Co. 8,107 * 8,467
Craig A. Blumberg 5,429 * 6,000
Steven H. Marvin 5,429 * 6,000
Daniel J. Marx 5,428 * 6,000
Peter Sheib 5,010 * 5,010
Lori Shepps 5,000 * 5,000
Lawrence Rice 4,990 * 4,990
Southeast Research Partners 4,500 * 4,500
Matthew Balk 3,880 * 3,880
John T. Clarke 3,750 * 3,750
Charles Roden 3,530 * 3,530
Nancy Tarlow Barrett 3,500 * 3,500
First National Fund 2,250 * 2,250
Giant Trading Company 1,500 * 1,500
Michael Loew 1,325 * 1,325
Cheviot Capital 750 * 750
Value Investing Partners 750 * 750
Joelle Jacobs 750 * 750
Scott A. Weisman 445 * 445
Brill Securities 375 * 375

SHARES
BENEFICIALLY OWNED
BEFORE OFFERING(1)
-----------------------
SHARES
NAME SHARES(6) PERCENT(2) OFFERED(7)
- ----------------------------------------------------------------- ---------- ----------- ---------------
Paul Fitzgerald 365 * 365
Sherwood P. Larkin 290 * 290
Richard Sichenzio 155 * 155

- ----------
* Less than 1%

(1) Unless otherwise indicated, each shareholder has sole voting and
investment power with respect to the Common Stock indicated as
beneficially owned thereby.

(2) In accordance with Rule 13d-2 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), shares that are not outstanding, but that
are issuable pursuant to (i) the exercise of outstanding Warrants and
(ii) the conversion of the Notes, all of which are exercisable or
convertible within 60 days of the date of this Prospectus, have been
deemed to be outstanding for the purpose of computing the percentage of
outstanding shares owned by the individual having such right, but have
not been deemed outstanding for the purpose of computing the percentage
for any other person. These amounts do not include the exercise of
certain warrants to purchase an aggregate of 400,00 shares of Common
Stock. See "Description of Securities."

(3) Unless otherwise indicated, the address for each director is c/o First
American Railways, Inc., 2445 Hollywood Boulevard, Hollywood, Florida
33020.

(4) Includes 1,379,032 shares which are jointly-owned with his wife, and
1,285 shares which are owned of record by Harper Partners of Miami, Ltd.,
a Florida limited partnership, for which his wife, Carol E. Harper,
serves as trustee.

(5) Includes 7,500 shares owned of record, and 10,000 shares issuable upon
the exercise of currently exercisable stock options.

(6) These share amounts include up to an aggregate of 3,300,273 shares which
may be issued either upon the conversion of the Notes or upon the
exercise of the Series A Warrants which may be issued, in certain
circumstances, upon the prepayment of the Notes.

(7) With respect to the Selling Shareholders, it has been assumed that all
their Shares so offered will be sold. Further, these amounts include
shares which may be issued to certain Selling Shareholders upon
conversion of accrued interest payable upon their Notes.

(8) Does not include the shares owned of record by various officers and/or
employees of Capital Growth International, LLC, including Messrs. S.
Hollander, R. Koenig, A. Jacobs and M. Jacobs, whose share totals are
included elsewhere in this table.

SERIES A WARRANTS:

The following table sets forth certain information with respect to the
beneficial ownership of the Company's outstanding Series A Warrants as of
August 1, 1996, and as adjusted to reflect the sale of such Warrants offered
by the holders thereof, none of whom hold any position with the Company and
six of whom own more than 5% thereof.

BEFORE OFFERING
---------------- WARRANTS
NAME WARRANTS PERCENT OFFERED
- ---- -------- ------- --------

Lancer Partner L.P.
237 Park Ave., 8th Fl.
New York, NY 10017 300,000 7.57 300,000

Egger & Co.
c/o The Chase Manhattan Bank N.A.
P.O. Box 1508 Church Street Station
New York, NY 10008 290,519 7.33 290,519

EFO Fund, Ltd.
1111 W. Mockingbird Lane, #1400
Dallas, TX 75247 270,000 6.81 270,000

BEFORE OFFERING
---------------- WARRANTS
NAME WARRANTS PERCENT OFFERED
- ---- -------- ------- --------
Capital Growth International, LLC**
666 Steamboat Road
Greenwich, CT 06830 260,774 6.58 260,774

Fairnoon Management Ltd.
11 Queenstreet Mayfair
London W1X 7PD, England 210,000 5.30 210,000

Rush & Co.
c/o Swiss American Securities, Inc.
100 Wall Street, 4th Fl.
New York, NY 10005 208,799 5.27 208,799

Emanon Partners, L.P. 190,000 4.79 190,000

Rosebud Capital Growth Fund Ltd. 176,818 4.46 176,818

Edgeport Nominees, Ltd. 147,333 3.72 147,333

Demachy Worms & Co. International, Ltd. 120,000 3.03 120,000

Alan L. Jacobs 86,926 2.19 86,926

Faisal Finance (Switzerland) SA 73,000 1.84 73,000

Corner Bank, Ltd. 72,000 1.82 72,000

BFI Banque De Financement & D'Investissement, Geneve 60,000 1.51 60,000

Republic National Bank of New York (Suisse) SA 56,519 1.43 56,519

Republic National Bank of New York (Luxemburg) SA 54,000 1.36 54,000

Gibesgelt 46,250 1.17 46,250

Eurocapital 45,000 1.14 45,000

Michael Schaenen 35,625 * 35,625

Christopher Fox 35,625 * 35,625

Bookbank Holdings, Ltd. 33,300 * 33,300

Cameo Trust Corporation Limited 30,000 * 30,000

The Gifford Fund Ltd. 30,000 * 30,000

Charles L. and Donna Greenberg, JTWROS 30,000 * 30,000

Napier Brown Holdings Ltd. 30,000 * 30,000

Veritas Films SA 30,000 * 30,000

Vital Miljo AS 26,894 * 26,894

Heptagon Investments Ltd. 26,519 * 26,519

Stanley Hollander IRA Cowen & Co. Custion 58-03120 26,064 * 26,064

Phillip Bibicoff 24,000 * 24,000

Bostar A.S. 24,000 * 24,000

C.M. Investment Nominees Limited 24,000 * 24,000

David A. Rees 24,000 * 24,000

Stolzoff Family Trust of 2/05/95, Martin S. Stolzoff and Barbara R.
Stolzoff, Trustees 23,023 * 23,023

Ronald Koenig 21,058 * 21,058

P.G. Ridgwell 20,519 * 20,519

Banque Privee Edmond De Rothschild S.A. 19,260 * 19,260

Bauer Family Limited Partnership 18,000 * 18,000

Falcon Management Ltd. 18,000 * 18,000

Fixtar Holdings, Inc. 18,000 * 18,000

Richard B. Liroff 18,000 * 18,000
35

BEFORE OFFERING
---------------- WARRANTS
NAME WARRANTS PERCENT OFFERED
- ---- -------- ------- --------
Saracen International 18,000 * 18,000

Tradeco Limited 18,000 * 18,000

UOB Luxembourg S.A. 18,000 * 18,000

Helix Investments, Ltd. 17,782 * 17,782

James F. Ellis Trust DTD 4/11/89 15,117 * 15,117

Lawrence Burstein 13,266 * 13,266

John VanOrdstrand 12,500 * 12,500

Dean Witter Reynolds Custodian for Gary Barnett, IRA Standard/Rollover 12,000 * 12,000

Harvey R. Brice BSSC Master Defined Contribution M/P Pension Plan 12,000 * 12,000

Compass Investment Management Limited 12,000 * 12,000

Coutts & Co. S.A. 12,000 * 12,000

Barrie M. Damson 12,000 * 12,000

Ernest Dorner GST Non-Exempt Trust A U/T/A 5/26/94 12,000 * 12,000

Elmtree Corporation 12,000 * 12,000

Milton and Irene Geller 1985 Trust 12,000 * 12,000

Susan Greenberg 12,000 * 12,000

Jacobson, Alan D., IRA 12,000 * 12,000

Robert Katz 12,000 * 12,000

Peter Barrington Kirk 12,000 * 12,000

Lago Wernstedt 12,000 * 12,000

Morgan Steel Limited 12,000 * 12,000

John D. Murphy 12,000 * 12,000

Nicator S.A., Zurich 12,000 * 12,000

Pictet & Cie 12,000 * 12,000

Robinson Gear (Nominees) Limited A/CJ-10 12,000 * 12,000

Stoneman Investor Partnership 12,000 * 12,000

Terrier Finance, Inc. 12,000 * 12,000

Prime Grieb 9,000 * 9,000

Ghazi Allawi 8,519 * 8,519

Pyramid Partners, LP 8,000 * 8,000

Sachem Corporate Finance, Ltd. 7,500 * 7,500

Christopher D. Jennings 7,266 * 7,266

Gary H. Stolzoff 7,009 * 7,009

Gerald Rosen 7,000 * 7,000

Abraxas Partners, Ltd. 6,000 * 6,000

Philip Altheim 6,000 * 6,000

Gary Barnett 6,000 * 6,000

Denis Baylin 6,000 * 6,000

I. Bibicoff, Inc., Pension Trust Fund 6,000 * 6,000

Boel AS 6,000 * 6,000

Credit Lyonnais (Suisse) SA Geneva 6,000 * 6,000

Credit Suisse Zurich 6,000 * 6,000

Owen H. Gassaway Trustee, FBO Owen H. Gassaway Trust 6,000 * 6,000
36

BEFORE OFFERING
---------------- WARRANTS
NAME WARRANTS PERCENT OFFERED
- ---- -------- ------- --------
David Greenberg, IRA 6,000 * 6,000

David Greenberg and Susan Greenberg, Trustees FBO Greenberg and Panish,
a Prof. Corp. Def. Bene. Pension Plan 2/01/88 6,000 * 6,000

Haaco AS 6,000 * 6,000

David M. Hallman, Sr. 6,000 * 6,000

Hapoalim Mayo Casa Bancaria 6,000 * 6,000

Allan B. Hechtman, Inc., Pension Plan & Trust 6,000 * 6,000

Allan B. and Linda S. Hechtman, JTWROS 6,000 * 6,000

Trustees of the Hill Oldridge Ltd. Pension Fund 6,000 * 6,000

Nils Otto Holmen 6,000 * 6,000

P.B. Hubbard/J.D. Boden as Trustees of the Vector Trust 6,000 * 6,000

Svein Huse 6,000 * 6,000

Intergalactic Growth Fund, Inc. 6,000 * 6,000

Lenard E. Jacobson, MD, PC Profit Sharing Trust 6,000 * 6,000

Robert Jones 6,000 * 6,000

Mazin Kamouna 6,000 * 6,000

William A. Kamke and Dorothy S. Kamke, JTWROS 6,000 * 6,000

A/S Kapitalutvikling 6,000 * 6,000

Ronald Korn, IRA 6,000 * 6,000

Pierre and Francoise Lambert 6,000 * 6,000

Metropolitan Finance Limited 6,000 * 6,000

John Bell Moran, Jr. 6,000 * 6,000

Anne P. Newman and Harry Newman, Jr. JTWROS 6,000 * 6,000

Scott Notowitz 6,000 * 6,000

Oistein Nyberg 6,000 * 6,000

Prime, Grieb & Co. Limited 6,000 * 6,000

RNB (France) Monaco 6,000 * 6,000

Rigel AS 6,000 * 6,000

Allan Rudnick, IRA 6,000 * 6,000

J.R.L. Smith 6,000 * 6,000

K.E. Smith 6,000 * 6,000

Ivor Spiro 6,000 * 6,000

Craig Taines 6,000 * 6,000

Taines Family Limited Partnership 6,000 * 6,000

Southeast Research Partners 4,500 * 4,500

John T. Clarke 3,750 * 3,750

Magne F. Aaby 3,000 * 3,000

Birger Dalen 3,000 * 3,000

John Heckler 3,000 * 3,000

Norman Leben 3,000 * 3,000

Svein A. Loken 3,000 * 3,000

Steven Millner 3,000 * 3,000

Asher Plaut and Evelyn Plaut, JTWROS 3,000 * 3,000
37

BEFORE OFFERING
---------------- WARRANTS
NAME WARRANTS PERCENT OFFERED
- ---- -------- ------- --------
Svein-Erik Stiansen 3,000 * 3,000

First National Fund 2,250 * 2,250

Michael Morris 2,532 * 2,532

Walter Prime 2,532 * 2,532

Peter R. McMullin 2,519 * 2,519

Rudnick Living Trust DTD 7/22/91 2,519 * 2,519

Craig A. Blumberg 2,000 * 2,000

Steven H. Marvin 2,000 * 2,000

Daniel J. Marx 2,000 * 2,000

Giant Trading Company 1,500 * 1,500

Bank Julius Baer & Co. 1,260 * 1,260

Cheviot Capital 750 * 750

Value Investing Partners 750 * 750

Joelle Jacobs 750 * 750

Brill Securities 375 * 375

- ----------
* Less than 1%

** Does not include the Series A Warrants owned of record by various officers
and/or employees of Capital Growth International, LLC, including Messrs.
S. Hollander, R. Koenig, A. Jacobs and M. Jacobs, whose warrant totals are
included elsewhere in this table.

FINANCIAL ADVISORY WARRANTS:

The following table sets forth certain information with respect to the
beneficial ownership of the Advisory Warrants as of August 1, 1996, and as
adjusted to reflect the sale of such Warrants offered by the holders thereof,
none of whom hold any position with the Company nor own more than 5% of such
warrants.

BEFORE OFFERING
--------------- WARRANTS
NAME WARRANTS PERCENT OFFERED
- ---- -------- ------- --------

Dan Purjes 30,010 * 30,010

Alan Jacobs 25,000 * 25,000

Kimberly A. Goguen 25,000 * 25,000

Peter Sheib 5,010 * 5,010

Lawrence Rice 4,990 * 4,990

Mathew Balk 3,880 * 3,880

Charles Roden 3,530 * 3,530

Michael Loew 1,325 * 1,325

Scott A. Weisman 445 * 445

Paul Fitzgerald 365 * 365

Sherwood P. Larkin 290 * 290

Richard Sichenzio 155 * 155

- ----------
* Less than 1%

* * * *

RELATIONSHIP BETWEEN THE COMPANY AND CERTAIN SELLING SHAREHOLDERS:

Capital Growth International, LLC acted as the placement agent in
connection with the Company's Private Placements and received compensation
therefor in the form of cash and securities. See "Certain Transactions." The
following Selling Shareholders may be deemed affiliates of Capital Growth:
Ronald Koenig, Alan L. Jacobs, Stanley Hollander IRA, Sachem Corporate
Finance, Ltd.

CERTAIN TRANSACTIONS

1994 PRIVATE OFFERING

In October 1994, the Company closed a private offering of 420,570 shares
of its Common Stock for gross proceeds of $982,000. A total of 26 investors
purchased Common Stock in that private offering which began in July 1994, and
the two largest investors therein were Company Directors Thomas Rader
(256,774 shares; $350,000) and Luigi Salvaneschi (146,728 shares; $200,000).
David Rush, one of the Company's directors, also invested in that private
offering (36,683 shares; $50,000).

ACQUISITION OF RAILCARS

The Company expects that RRI will be its primary source of railcars for
the Florida Fun-Train and its other planned trains. RRI is owned by Thomas G.
Rader, a Director and currently the largest shareholder of the Company. The
Company entered into an agreement with RRI as of June 28, 1994, whereby RRI
produced the initial railcar for the Company. The total purchase price was
$850,000. Title to the railcar was transferred to the Company on July 2,
1996. The Company believes the transaction for the purchase of the railcar
was no less favorable to the Company than a similar transaction conducted
with an unaffiliated third party.

The Company anticipates entering into another agreement with RRI for the
design and production of the 12 additional railroad cars and the exterior
modification of the three leased locomotives all of which will be used for
the Florida Fun-Train (or alternatively the Space Coast Fun-Train). The
railcars required for the Florida Fun-Train are not currently being built and
would only be built if the Offering is successful. The proposed total cost of
this equipment is expected to be approximately $9.3 million.

The terms of the transactions between the Company and RRI have been and
are expected to be determined by negotiations between RRI and the Company's
disinterested directors. Competitive bidding has not been used nor is it
expected to be used for any of these railcar purchase agreements. The
Company's Board of Directors believes that the design and acquisition of the
railcars through RRI is and will be on commercially reasonable terms;
however, there can be no assurance that the Company will be able to negotiate
a favorable contract with RRI for the purchase of the additional railcars, as
described above. Further, the Company believes there are several other
sources for the manufacture or remodeling of railcars which would be suitable
for the Company's intended use with the Fun-Trains.

The purchase price, along with the other terms of this agreement, will be
determined by negotiations between representatives of the Company and Mr.
Rader on behalf of RRI. There is an inherent conflict of interest in this
process and no competitive bids were sought in this regard.

Should the Company contract with RRI to purchase the 12 railcars
(described above), Mr. Rader and RRI have agreed that for a five-year period
they will not, directly or indirectly, engage in the design, marketing sale
or lease of passenger railcars for the purpose of operating passenger
entertainment, tourism or excursion trains in Florida.

RUSH LOAN

In June and July 1995, David Rush, a director and shareholder of the
Company, loaned an aggregate of $125,000 to the Company. The promissory note
associated with this loan provided for simple interest at 18% and the
obligation was personally guaranteed as to collection by Allen C. Harper, the
Company's Chairman of the Board of Directors. At the time of the transaction,
the Board of Directors (with Mr. Rush abstaining) concluded that the interest
rate paid on this loan was reasonable and customary, given the financial
condition of the Company and the current business environment, and that the
terms of such loan were no less favorable than those for a similar
transaction with a third party. The loan was repaid with a portion of the
proceeds from the Private Placements.

COMPENSATION TO PLACEMENT AGENT

In connection with the Private Placements, the Company paid Capital Growth
(as the placement agent for such Private Placements) an aggregate cash
commission of $1,320,109.17 and paid Capital Growth a nonaccountable expense
allowance of $330,027.29.

In connection with the April 1996 closing of the Private Placements, the
Company issued to Capital Growth and its designee Alan Jacobs an aggregate of
750,000 shares of the Company's Common Stock; in addition, the Company issued
an aggregate of 650,000 Series A Warrants, 260,774 warrants directly to
Capital Growth and the balance (389,226 warrants) to 22 designees. These
Shares and Series A Warrants are included in this Offering.

The Company agreed to indemnify Capital Growth against certain liabilities
in connection with the Private Placements, including liabilities under the
Securities Act.

The Company has retained Capital Growth for a period of twenty-four months
(the "Advisory Period") at a fee of $5,000 per month, to render various
financial advisory services thereto, and specified fees for additional
financings and other transactions. Further, Capital Growth will be paid a
warrant advisory fee equal to five (5%) percent of the exercise price of the
warrants if it solicits the exercise of such warrants. The Company has agreed
not to solicit the exercise of the warrants other than through Capital
Growth.

DESCRIPTION OF SECURITIES

COMMON STOCK

The authorized common stock of the Company consists of 100,000,000 shares
of Common Stock, $.001 par value. Each holder of Common Stock is entitled to
one vote per share on all matters on which shareholders are entitled to vote,
and the holders of the Common Stock do not have preemptive rights to purchase
additional shares of Common Stock or other subscription rights. The Common
Stock carries no conversion rights and is not subject to redemption or to any
sinking fund provisions. All shares of Common Stock are entitled to share
equally in dividends from sources legally available therefor when, as and if
declared by the Board of Directors and, upon liquidation or dissolution of
the Company, whether voluntary or involuntary, to share equally in the assets
of the Company available for distribution to shareholders. All outstanding
shares of Common Stock are validly authorized and issued, fully paid and
nonassessable, and all shares to be sold and issued as contemplated hereby
will be validly authorized and issued, fully paid and nonassessable.

SERIES A REDEEMABLE WARRANTS

The following is a brief summary of certain provisions of the Series A
Redeemable Warrants ("Series A Warrants"), but such summary does not purport
to be complete and is qualified in all respects by reference to the actual
text of the subject warrant certificates.

Each Series A Warrant entitles the registered holder to purchase one share
of Common Stock at an initial exercise price of $3.50 per share (subject to
adjustment for stock splits, combinations and reclassifications) at any time
prior to redemption from the date of issuance (April 26 or May 9, 1996) until
two years thereafter. The exercise price of each Series A Warrant bears no
relationship to any objective criteria of value and should in no event be
regarded as an indication of any future market price of the securities
offered hereby. Provided that the applicable Circumstances exist (described
below), all, but not less than all, of the Series A Warrants may be redeemed
by the Company at $.10 per share on thirty days' notice at any time, but only
after six months from the consummation of the Merger (October 26, 1996) and
only if the market price (as described below) for the Common Stock exceeds
$5.00 per share. The "Circumstances" shall exist if (i) the subject
securities are registered under the Securities Act and applicable state "blue
sky" laws, (ii) a current Prospectus is then available for the sale of the
securities, and (iii) the closing bid price of the Common Stock as reported
by Nasdaq, the OTC Bulletin Board, or such other market on which the Common
Stock is then traded, exceeds $5.00 per share for the twenty consecutive
trading days ending on the fifth trading day prior to the date of the notice
of redemption or prepayment, as the case may be.

Each Series A Warrant may be exercised by surrendering the warrant
certificate, with the subscription form attached to the warrant certificate
properly completed and executed, together with payment of the exercise price.
The Series A Warrants may be exercised in whole or from time to time in part.
If less than all of the Warrants evidenced by a warrant certificate are
exercised, a new warrant certificate will be issued for the remaining number
of Series A Warrants.

The Series A Warrants do not confer upon the holders thereof any voting,
dividend or other rights as shareholders of the Company.

The Series A Warrants are not exercisable unless, at the time of the
exercise, the Company has a current Prospectus covering the shares of Common
Stock issuable upon the exercise of such warrants, and such shares have been
registered, or qualified under the securities laws of the state of residence
of the exercising holder of such warrants, unless such exercise is deemed to
be exempt under federal and applicable state securities laws. Although the
Company will use its best efforts to have all of the shares of Common Stock
issuable upon the exercise of the Series A Warrants registered or qualified
on or before the exercise date and to maintain a current Prospectus relating
thereto until the expiration of such warrants, there can be no assurance that
it will be able to do so.

FINANCIAL ADVISORY WARRANTS

The following is a brief summary of certain provisions of the Financial
Advisory Warrants ("Advisory Warrants"), but such summary does not purport to
be complete and is qualified in all respects by reference to the actual text
of the warrant certificates.

Each Advisory Warrant entitles the registered holder to purchase one share
of Common Stock at an initial exercise price of $2.50 per share (subject to
adjustment for stock splits, combinations and reclassifications) at any time
for a period of five years from the date of issuance (February 1996). The
exercise price of each Advisory Warrant bears no relationship to any
objective criteria of value and should in no event be regarded as an
indication of any future market price of the securities offered hereby.

Each Advisory Warrant may be exercised by surrendering the warrant
certificate, with the subscription form attached to the warrant certificate
properly completed and executed, together with payment of the exercise price.
The Advisory Warrants may be exercised in whole or from time to time in part.
If less than all of the Warrants evidenced by a warrant certificate are
exercised, a new warrant certificate will be issued for the remaining number
of Advisory Warrants.

The Advisory Warrants do not confer upon the holders thereof any voting,
dividend or other rights as shareholders of the Company.

The Advisory Warrants are not exercisable unless, at the time of the
exercise, the Company has a current Prospectus covering the shares of Common
Stock issuable upon the exercise of such warrants, and such shares have been
registered, or qualified under the securities laws of the state of residence
of the exercising holder of such warrants, unless such exercise is deemed to
be exempt under federal and applicable state securities laws. Although the
Company will use its best efforts to have all of the shares of Common Stock
issuable upon the exercise of the Advisory Warrants registered or qualified
on or before the exercise date and to maintain a current Prospectus relating
thereto until the expiration of such warrants, there can be no assurance that
it will be able to do so.

PREFERRED STOCK

In connection with the Merger, the Company amended its Articles of
Incorporation to authorize, among other things, the issuance of 500,000
shares of Preferred Stock, $.001 par value. See "The Merger." The Preferred
Stock may be issued in series from time to time with such designation,
rights, preferences and limitations as the Board of Directors may determine
by resolution. The rights, preferences and limitations of separate series of
Preferred Stock may differ with respect to such matters as may be determined
by the Board of Directors, including, without limitation, the rate of
dividends, method and nature of payment of dividends, terms of redemption,
amounts payable on liquidation, sinking fund provisions (if any), conversion
rights (if any) and voting rights. The potential exists, therefore, that
preferred stock might be issued which would grant dividend preferences and
liquidation preferences to preferred shareholders over common shareholders.
Unless the nature of a particular transaction and applicable statute require
such approval, the Board of Directors has the authority to issue these shares
without shareholder approval. The issuance of Preferred Stock may have the
effect of delaying or preventing a change in control of the Company without
any further action by shareholders.

PLAN OF DISTRIBUTION

This Prospectus covers the sale of Shares and Warrants by the Selling
Shareholders. See "Principal and Selling Shareholders." Any distribution of
the Shares by the Selling Shareholders, or by their pledgees, donees,
transferees or other successors in interest, may be effected from time to
time in one or more of the following transactions: (a) to underwriters who
will acquire securities for their own account and resell them in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale (any public
offering price and any discount or concessions allowed or reallowed or paid
to dealers may change from time to time); (b) through brokers, acting as
principal or agent, in transactions (which may involve block transactions) on
the Nasdaq SmallCap Market or on one or more exchanges on which the
securities are then listed, in special offerings, exchange distributions
pursuant to the rules of the applicable exchanges or in the over-the-counter
market, or otherwise, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at negotiated prices or at
fixed prices; (c) directly or through brokers or agents in private sales at
negotiated prices; or (d) by any other legally available means.

The Company will not receive any proceeds from the sale of the Shares and
Warrants offered hereby. The aggregate proceeds to the Selling Shareholders
from the securities offered hereby will be the offering price less applicable
commissions or discounts, if any. There is no assurance that the Selling
Shareholders will sell any of the securities offered hereby.

The Selling Shareholders and such underwriters, brokers, dealers or
agents, upon effecting a sale of securities, may be considered "underwriters"
as that term is defined in the Securities Act. Sales effected through agents,
brokers or dealers will ordinarily involve payment of customary brokerage
commissions although some brokers or dealers may purchase such shares as
agents for others or as principals for their own account. The Selling
Shareholders will pay any sales commissions or other sellers' compensation
applicable to such transactions. A portion of any proceeds of sales and
discounts, commissions or other sellers' compensation may be deemed to be
underwriting compensation for purposes of the Securities Act.

Pursuant to applicable rules and regulations under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), any person engaged in the
distribution of the securities offered hereby may not simultaneously engage
in market making activities for the Common Stock for a period of two business
days prior to the commencement of such distribution. In addition, each
Selling Shareholder and any other person who participates in a distribution
of the securities will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including Rules 10b-2, 10b-6
and 10b-7, which provisions may limit the timing of purchases and may affect
the marketability of the securities and the ability of any person to engage
in market making activities for the Common Stock.

At the time a particular offering of securities is made, to the extent
required, a Prospectus supplement will be distributed which will set forth
the number of securities being offered and the terms of the offering,
including the purchase price or the public offering price, the name or names
of any underwriters, dealers or agents, the purchase price paid by any
underwriters for securities purchased from the Selling Shareholders, any
discounts, commissions and other items constituting compensation from the
Selling Shareholders and any discounts, commissions or concessions allowed or
reallowed or paid to dealers.

In order to comply with the securities laws of certain states, if
applicable, the securities will be sold in such jurisdictions, if required,
only through registered or licensed brokers or dealers. In addition, in
certain states the securities may not be sold unless the securities have ben
registered or qualified for sale in such state or an exemption from
registration or qualification is available and the conditions of such
exemption have been satisfied.

The Company has agreed that it will bear all costs, expenses and fees in
connection with the registration or qualification of the securities under
federal and state securities laws. The Company and each Selling Shareholder
have agreed to indemnify each other and certain other persons against certain
liabilities in connection with the offering of the securities, including
liabilities arising under the Securities Act.

LEGAL MATTERS

The validity of the securities being offered hereby will be passed upon
for the Company by Olle, Macaulay & Zorrilla, P.A., Miami, Florida. Dennis J.
Olle, a shareholder of that firm, is the beneficial owner of 1,714 shares of
the Common Stock of the Company.

EXPERTS

The financial statements of the Company included in this Prospectus for
the eight months ended December 31, 1995, and the year ended April 30, 1995,
have been audited by BDO Seidman LLP, independent certified public
accountants, to the extent and for the periods set forth in their report
appearing elsewhere herein and is included in reliance upon such report given
upon the authority of said firm as experts in accounting and auditing.

On May 6, 1996, the Company's Board of Directors voted to engage BDO
Seidman, LLP to act as the Company's independent certified public
accountants, thereby discharging Hansen, Barnett & Maxwell, P.C. (Salt Lake
City, UT). The former accountants' reports for the Company's last two fiscal
years did not contain any adverse opinion, or disclaimer of opinion, nor were
any such reports modified as to uncertainty, audit scope or accounting
principles. There have been no disagreements between the Company and the
former accountants with regard to any matters which would have caused such
accountants to make reference to the subject matter thereof with their
report.

ADDITIONAL INFORMATION

The Company is subject to the information requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected at the public reference facilities maintained by
the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549, and at the Commission's Regional Offices at Suite
1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661; and
13th Floor, Seven World Trade Center, New York, New York 10048. Copies of
such material can be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549.

The Company has filed with the Commission a registration statement (the
"Registration Statement") under the Securities Act with respect to the
securities offered by this Prospectus. This Prospectus does not contain all
the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and this
offering, reference is made to the Registration Statement, including the
exhibits filed therewith, which may be inspected without charge at the
Commission's public reference facility at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549, and upon request at its above-described
Regional Offices. Copies of the Registration Statement may be obtained from
the Commission at its public reference facility upon payment of prescribed
fees. Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete and, where the
contract or other document has been filed as an exhibit to the Registration
Statement, each such statement is qualified in all respects by reference to
the applicable documents filed with the Commission.

In addition, reports and other information concerning the Company may be
inspected at the offices of the Nasdaq Stock Market, Inc., 1735 K Street,
N.W., Washington, D.C. 20006.

FIRST AMERICAN RAILWAYS, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS

PAGE
----

Report of Independent Certified Public Accountants .. F-2

Balance Sheets ....................................... F-3

Statements of Operations ............................. F-4

Statements of Stockholders' Equity (Deficit) ........ F-5

Statements of Cash Flows ............................. F-6

Notes to Financial Statements ........................ F-7

F-1

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
First American Railways, Inc.
(A Development Stage Company)

We have audited the accompanying balance sheet of First American Railways,
Inc. (a development stage company) as of December 31, 1995 and the related
statements of operations, stockholders' equity (deficit) and cash flows for
the eight months then ended, and for the year ended April 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 audits.

We conducted our audits 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 audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of First American Railways,
Inc., (a development stage company) as of December 31, 1995 and the results
of its operations and its cash flows for the eight months then ended, and for
the year ended April 30, 1995 are in conformity with generally accepted
accounting principles.

BDO Seidman, LLP

Miami, Florida
July 3, 1996

F-2

FIRST AMERICAN RAILWAYS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS

JUNE 30, DECEMBER 31,
1996 1995
(UNAUDITED)
----------- ------------

ASSETS
CURRENT
Cash ....................................................... $11,930,645 $ --
Restricted cash (Note 8) ................................... 829,924 --
----------- -----------
Cash and cash items ........................................ 12,760,569 --
Prepaids and other ......................................... 144,500 1,680
----------- -----------
Total current assets ........................................ 12,905,069 1,680
EQUIPMENT (NOTE 2) .......................................... 12,722 5,992
ASSET HELD FOR FUTURE USE ................................... 840,000 --
DEPOSIT TO RELATED PARTY (NOTE 5) ........................... -- 350,000
DEFERRED LOAN COSTS (NOTE 8) ................................ 966,430 --
----------- -----------
$14,724,221 $ 357,672
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT
Accounts payable ........................................... $ 13,683 $ 196,076
Accrued liabilities ........................................ 142,676 120,970
Notes payable to related parties and others (Note 7) ...... -- 265,000
----------- -----------
Total current liabilities ................................... 156,359 582,046
CONVERTIBLE NOTES PAYABLE, NET (NOTE 8) ..................... 8,250,682 --
----------- -----------
8,407,041 582,046
----------- -----------
COMMITMENTS AND CONTINGENCIES (NOTE 5)
STOCKHOLDERS' EQUITY (DEFICIT) (NOTE 4)
Preferred stock, $.001 par value, 500,000 shares authorized -- --
Common stock, $.001 par value, 100,000,000 shares
authorized,
9,050,275 and 4,275,000 shares issued and outstanding .... 9,050 4,275
Additional paid-in capital ................................. 8,406,746 1,110,760
Deficit accumulated during the development stage .......... (2,098,616) (1,339,409)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) ........................ 6,317,180 (224,374)
----------- -----------
$14,724,221 $ 357,672
=========== ===========

See accompanying notes to financial statements.

F-3

FIRST AMERICAN RAILWAYS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS

CUMULATIVE FROM
FEBRUARY 14, 1994
(INCORPORATION) FOR THE FOR THE FOR THE
THROUGH SIX MONTHS ENDED EIGHT MONTHS ENDED YEAR ENDED
JUNE 30, JUNE 30, DECEMBER 31, APRIL 30,
1996 1996 1995 1995 1995
(UNAUDITED) (UNAUDITED)
----------------- ------------------- ------------------ ----------

EXPENSES:
Salaries and payroll taxes .. $ 762,434 $ 157,635 $ 164,251 $ 242,007 $ 362,792
Professional fees ............ 30,790 26,875 63,416 3,464 451
General and administrative .. 380,394 179,064 69,747 125,723 75,607
Interest, net ................ 207,164 188,085 517 19,079 --
Consulting fees (Note 5) .... 86,637 27,265 32,013 46,802 12,570
Amortization of deferred loan
costs (Note 8) ............. 121,399 121,399 -- -- --
Depreciation ................. 3,235 1,055 780 1,088 1,092
Expenses from offerings
not completed .............. 506,563 57,829 111,592 282,250 166,484
----------- ---------- ---------- ---------- ----------
Total expenses ................ 2,098,616 759,207 442,316 720,413 618,996
----------- ---------- ---------- ---------- ----------
Net loss, representing deficit
accumulated during the
development stage ........... $(2,098,616) $ (759,207) $ (442,316) $ (720,413) $ (618,996)
=========== ========== ========== ========== ==========
Weighted average number of
common shares outstanding
(Note 1) .................... -- 6,193,452 4,275,000 4,275,000 4,275,000
=========== ========== ========== ========== ==========
Net loss per common share .... -- $ (.12) $ (.10) $ (.17) $ (.14)
=========== ========== ========== ========== ==========

The Company had no operating activities from February 14, 1994
(incorporation) through April 30, 1994.

See accompanying notes to financial statements.

F-4

FIRST AMERICAN RAILWAYS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE
------------------- PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE
------ ------ ---------- -----------

Balance at February 14, 1994 and April 30, 1994 ...... -- $ -- $ -- $ --
Initial capitalization for cash at $0.0046 per share
(Note 4(b)) ......................................... 3,854,430 3,854 14,146 --
Issuance of common stock for cash at $2.29 per share,
net offering costs of $20,965 (Note 4(c)) ........... 420,570 421 960,614 --
Capital cotnribution--forgiven salaries (Note 5) ..... -- -- 136,000 --
Net loss .............................................. -- -- -- (618,996)
--------- ------ ---------- -----------
Balance at April 30, 1995 ............................. 4,275,000 $4,275 $1,110,760 (618,996)
Net loss .............................................. -- -- -- (720,413)
--------- ------ ---------- -----------
Balance at December 31, 1995 .......................... 4,275,000 $4,275 $1,110,760 $(1,339,409)
Issuance of common stock in connection with Stage 1
offering, net of offering costs of $11,692 (unaudited)
(Note 8(a)) ......................................... 375,004 375 42,933 --
Issuance of common stock in connection with Stage II
offering, net of offering costs of $993,230
(unaudited) (Note 8(a)) ............................. 4,050,271 4,050 7,253,403 --
Merger with Asia-America Corporation (unaudited) (Note
8(c)) ............................................... 350,000 350 (350) --
Net loss (unaudited) .................................. -- -- -- (759,207)
--------- ------ ---------- -----------
Balance at June 30, 1996 (unaudited) .................. 9,050,275 $9,050 $8,406,746 $(2,098,616)
========= ====== ========== ===========

See accompanying notes to financial statements.

F-5

FIRST AMERICAN RAILWAYS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS

OPERATING ACTIVITIES:
Net loss ............................. $(2,098,616) $ (759,207) $(442,316) $(720,413) $(618,996)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Salaries forgiven .................. 136,000 -- -- -- 136,000
Depreciation ....................... 3,235 1,055 780 1,088 1,092
Amortization of deferred loan costs 121,399 121,399 -- -- --
Write-off of deferred offering costs 25,000 -- -- 25,000 --
Increase in restricted cash ........ (829,924) (829,924) -- -- --
Increase in prepaids and other...... (144,500) (142,820) (1,000) -- (1,680)
Increase (decrease) in accounts
payable .......................... 13,683 (182,393) 24,924 173,954 22,122
Increase in accrued liabilities ... 142,676 21,706 518 120,970 --
----------- ----------- --------- --------- ---------
Total adjustments ..................... (532,431) (1,010,977) 25,222 321,012 157,534
----------- ----------- --------- --------- ---------
Net cash used by operating activities (2,631,047) (1,770,184) (417,094) (399,401) (461,462)
----------- ----------- --------- --------- ---------
INVESTING ACTIVITIES:
Deposit for purchase of railcar from
related party ...................... (350,000) -- -- -- (350,000)
Capital expenditures ................. (505,957) (497,785) (1,137) -- (8,172)
----------- ----------- --------- --------- ---------
Net cash used in investing activities (855,957) (497,785) (1,137) -- (358,172)
----------- ----------- --------- --------- ---------
FINANCING ACTIVITIES:
Borrowings from related parties ..... 338,388 68,388 50,000 270,000 --
Repayments of notes payable to
related parties and others ......... (338,388) (333,388) -- (5,000) --
Net proceeds from issuance of notes
payable ............................ 8,695,682 8,695,682 -- -- --
Repayment of notes payable ........... (445,000) (445,000) -- -- --
Payment of loan costs ................ (1,087,829) (1,087,829) -- -- --
Net proceeds from issuance of common
stock .............................. 8,279,796 7,300,761 -- -- 979,035
Payment of offering costs ............ (25,000) -- -- -- (25,000)
----------- ----------- --------- --------- ---------
Net cash provided by
financing activities ............... 15,417,649 14,198,614 50,000 265,000 954,035
----------- ----------- --------- --------- ---------
Net increase in cash .................. 11,930,645 11,930,645 (368,231) (134,401) 134,401
Cash at beginning of period ........... -- -- 368,231 134,401 --
----------- ----------- --------- --------- ---------
Cash at end of period ................. $11,930,645 $11,930,645 $ -- $ -- $ 134,401
=========== =========== ========= ========= =========
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest ............... $ 125,341 $ 125,341 $ -- $ -- $ --
Application of deposit to related
party for purchase of asset held for
future use ......................... $ 350,000 $ 350,000 $ -- $ -- $ --
=========== =========== ========= ========= =========

See accompanying notes to financial statements.

F-6

FIRST AMERICAN RAILWAYS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BUSINESS

First American Railways, Inc. ("the Company") was incorporated on February
14, 1994, in the state of Florida. The Company is a development stage entity,
organized for the purpose of constructing, acquiring and marketing
entertainment based passenger trains. Initially the Company intends to
initiate service between Ft. Lauderdale and Orlando and subsequently to other
parts of the United States and internationally.

PREPARATION OF FINANCIAL STATEMENTS

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

EQUIPMENT AND DEPRECIATION

Equipment is stated at cost less accumulated depreciation. Equipment is
depreciated on the straight line basis over 5 years.

ASSET HELD FOR FUTURE USE

Asset held for future use will be depreciated beginning at the time it is
placed into service.

OFFERING COSTS

Costs incurred in connection with the Company's efforts to obtain
additional financing through a public offering or private placement of
securities are deferred and offset against the proceeds in stockholders'
equity (deficit) or charged to operations if an offering or placement is
unsuccessful.

FINANCIAL INSTRUMENTS

The carrying amounts of financial instruments including accounts and notes
payable approximated fair value due to the relatively short maturity.

INCOME TAXES

The Company has no income since inception and accordingly has not provided
for income taxes.

NET LOSS PER COMMON SHARE

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

FUTURE ACCOUNTING PRONOUNCEMENTS

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 121 "Accounting for
Impairment of Long-Lived Assets and for Long-Lived

F-7

FIRST AMERICAN RAILWAYS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

Assets to be Disposed of" ("SFAS No. 121"). SFAS No. 121 requires, among
other things, impairment loss of assets to be held and gains or losses from
assets that are expected to be disposed of be included as a component of
income from continuing operations before taxes on income. The Company has
adopted SFAS No. 121 as of January 1, 1996 and its implementation did not
have a material effect on the financial statements.

In October 1995, FASB issued SFAS No. 123, "Accounting for Stock Based
Compensation." SFAS No. 123 requires that a fair value method for accounting
for stock-based compensation plans be calculated and either recognized in the
financial statements or disclosed in the notes to the financial statements.
The Company does not presently intend to adopt the fair value based method
and as such, earnings will not be impacted by these options. However,
appropriate disclosures will be made in the notes to the financial statements
of the effects of the calculation required by the statement.

UNAUDITED FINANCIAL STATEMENTS

The interim financial statements as of June 30, 1996 and for the six
months ended June 30, 1996 and 1995 and for the cumulative period from
February 14, 1994 through June 30, 1996 are unaudited. In the opinion of
management, such statements reflect all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the
financial position, results of operations and changes in cash flows. The
results of operations for the six months ended June 30, 1996 are not
necessarily indicative of the results for the entire year.

2. EQUIPMENT

The Company's equipment is summarized as follows:

DECEMBER 31,
1995
------------

Office and computer equipment $ 8,172
Less accumulated depreciation (2,180)
-------
$ 5,992
=======

Also see Note 5 for assets held for future use.

3. INCOME TAXES

At December 31, 1995, the Company had an accumulated net loss of
approximately $1,340,000 for financial reporting purposes. In general,
expenses incurred during the development stage are capitalized for tax
purposes as pre-operating expenses and may be amortizable over a 60 month
period commencing with the month in which active business begins.

Realization of any portion of the approximate $500,000 deferred tax asset
at December 31, 1995, resulting from the future amortization of capitalized
pre-operating expenses, is not considered more likely than not and,
accordingly, a valuation allowance has been established for the full amount
of such asset.

4. STOCKHOLDERS' EQUITY (DEFICIT)

a) In May 1995, the Company executed a stock split and exchanged the
1,996,400 then outstanding shares of its common stock for 2,495,500 shares of
common stock and changed the par value of its

F-8

FIRST AMERICAN RAILWAYS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995

4. STOCKHOLDERS' EQUITY (DEFICIT)--(CONTINUED)

common stock from $.01 to no par. In February 1996, the Company executed a
second stock split and exchanged the 2,495,500 shares of its common stock for
4,275,000 shares of common stock with no par value, 10,000,000 shares
authorized to be issued. In connection with the merger with Asia-America, the
common stock was recapitalized at $.001 par value (Note 8(c)). The components
of stockholders' equity and all per share amounts in the accompanying
financial statements have been adjusted retroactively to reflect the stock
splits and changes in par value.

b) In 1994, the Company issued 3,854,430 shares of common stock to its
initial shareholders for cash of $18,000.

c) In connection with a private placement, the Company issued 420,570
shares of common stock for cash of $961,035 net of offering costs of $20,965.

5. COMMITMENTS AND CONTINGENCIES

a) The Company entered into employment agreements, which expire by 1997,
with three of its officers providing for aggregate annual salaries of
approximately $250,000 and for certain payments in the event of termination.
During the period from February 14, 1994 (incorporation) to April 30, 1995,
such officers waived approximately $136,000 of salaries due them under the
terms of their respective employment agreements. The amounts waived were
recorded as salary expense and a capital contribution. The officers do not
plan to waive future salaries due them under the agreements. The Company has
modified certain employment agreements and entered into others (Note 8(g)).

b) The Company pursuant to an agreement with Rader Railcar, Inc. ("Rader")
a company owned by a director and shareholder, had a railcar constructed to
be acquired by the Company at a total cost of $850,000. During the year ended
April 30, 1995, the Company advanced $350,000 to Rader which is included in
deposit in the accompanying balance sheet at December 31, 1995. The Company
took delivery of the railcar on April 28, 1995, and at that time assumed the
full risk of loss of such car. The balance was paid in June 1996 at which
time title passed to the Company. In April 1996, Rader had entered into a
lease agreement with Great Canadian Railtour Co., to lease the railcar for a
period of seven months for $10,000 per month. In June 1996, this lease was
assigned to the Company and therefore the Company will receive monthly lease
payments of $10,000 through September 1, 1996. Since this leasing activity is
not the intended use of the railcar, the June 1996 payment was recorded as a
reduction in the cost of the railcar.

c) In February 1995, the Company entered into an agreement with the
Florida East Coast Railway Company ("FEC") for the use of FEC track in
connection with the Company's proposed rail operations. Under the agreement,
the Company will pay a fee to the FEC upon commencement of operations of no
less than either $500,000 per train, per year, or $18 per train-mile (with a
stipulated train size of 15 cars). Effective January 1 of the year in which
the third anniversary of the commencement service occurs, and January 1 in
every third year thereafter, the car mile rate and the minimum amount payable
shall, upon the request of either party, be adjusted based on the "Consumer
Price Index For Urban Wage Earners and Clerical Workers" unadjusted, as
published by the Bureau of Labor Statistics, U.S. Department of Labor. The
agreement will expire ten years from the date of commencement of service. At
the conclusion of the initial ten year term, the company will have the right
to extend the agreement for an additional ten year period upon twelve months
advance notice to the FEC.

F-9

FIRST AMERICAN RAILWAYS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995

6. OTHER EVENTS

On August 24, 1995 the Company entered into a memorandum of understanding
with CSX Transportation, Inc. ("CSXT") for the use of its tracks between West
Palm Beach and the Orlando International Airport tradeport site in connection
with the operation of the Florida Fun-Train. The Memorandum which contains
the essential terms of the agreement between the Company and CSXT, provides,
in part, that the Company will pay CSXT the greater of $20 per train mile, or
16% of the Company's ticket revenue from the Florida Fun-Train operations. In
addition, the Company is required to maintain at least $300 million in
comprehensive general liability insurance with a minimal deductible (or self
insured). The Memorandum also provides for a certain degree of exclusivity
for the Company's proposed rail operations. Specifically CSXT has agreed not
to grant similar access rights to the subject rail corridor (between West
Palm Beach and Orlando) to any other private rail passenger operator or
contractor which would provide comparable conventional rail passenger service
(primarily servicing the cruise ship market). This exclusivity clause is
voidable by CSXT upon the occurrence of certain conditions. The term of the
agreement is five years. In addition to the foregoing, the Company has agreed
to sell up to 400,000 warrants to CSXT the terms of such warrants are to be
negotiated. Also, the Company has agreed to appoint a CSXT representative,
selected by the Company, to its Board of Directors. CSXT has not yet
nominated their representative to the Board.

7. NOTES PAYABLE TO RELATED PARTIES AND OTHERS

On June 9, 1995 the Company entered into a loan agreement with a
shareholder and director for up to $125,000, with simple interest of 18%. As
of December 31, 1995, the Company had borrowed $125,000. In addition, the
Company entered into loan agreements with two other shareholders for a total
of $140,000 with simple interest of 18%. Subsequent to December 31, 1995, an
additional $68,388 was borrowed from related parties bearing interest of 18%
per annum. All loans were repaid with the proceeds of the private offering
that closed in May 1996.

8. SUBSEQUENT EVENTS

a) In March 1996, the Company completed its Stage I financing. The Company
received gross proceeds of $500,000 in exchange for $500,000 in notes payable
bearing interest at 10% per annum, with a $55,000 original issue discount,
and 375,004 shares of common stock valued at $55,000. Costs associated with
the offering were $106,291.

In May 1996, the Company completed its Stage II financing. Total
consideration of $16,501,365 was received consisting of $16,085,000 in cash
and the conversion of $412,500 in notes payable and $3,865 in accrued
interest from Stage I financing. In connection with this transaction
$8,250,682 in five-year convertible notes bearing interest at 10% per annum
were issued. Interest is payable semi-annually in April and October and the
notes are convertible at $3.50 per share. In addition, 3,950,271 redeemable
common stock purchase warrants and 4,050,271 shares of common stock valued at
$8,250,683 were issued. Costs associated with the offering were $1,986,460.
The Company used $783,388 of the net proceeds to paydown $333,388 in notes
payable to related parties and others and $445,000 in notes payable from the
Stage I financing. In connection with the retirement of the Stage I debt,
$94,599 of deferred loan costs was charged to operations as amortization of
deferred loan costs. In addition, $55,000 of original issue discount was
charged to operations as interest expense.

Prepaid interest of $829,924 representing the first year's interest on the
Stage II debt was placed in escrow.

F-10

FIRST AMERICAN RAILWAYS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
UNAUDITED WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995

8. SUBSEQUENT EVENTS--(CONTINUED)

b) In 1996, the Company granted two-year warrants to purchase 12,500
shares of common stock at $3.50 per share to a shareholder, in consideration
for extending the repayment terms of a loan made to the Company.

c) On April 26, 1996, the Company merged into Asia-America Corporation
(Asia) a public company and accounted for the transaction as a reverse
acquisition for financial statement purposes, and was recapitalized with
9,050,271 shares of $.001 par value stock, 100,000,000 shares authorized to
be issued. In connection with this transaction, there was no impact on the
operating results of the Company and it resulted only in an adjustment to
stockholders equity.

d) During 1996, the Company granted three year warrants to purchase
100,000 shares of common stock at $2.50 per share (the market value at the
date of grant) pursuant to a consulting agreement.

e) In May 1996, the Company entered into a two year agreement with an
underwriter to provide financial advisory and consulting services. The
agreement provides for annual fees of $60,000. It also provides for
additional fees comprising of 3% to 5% of consideration paid for acquisitions
or mergers with other companies, joint ventures, license and royalty
agreements, etc., that the consultant arranges and 1.5% to 8% of the gross
proceeds resulting from the sale of any securities issued by the Company.

f) In July 1996, the Company entered into a three year employment
agreement with its new President and Chief Operating Officer. The agreement
provides for an initial annual base salary of $150,000 and a minimum annual
bonus of $25,000 with minimum increases in the base salary to $175,000 on
January 1, 1997, $189,000 on January 1, 1998, and $204,120 on January 1, 1999.
In addition, nonqualified stock options will be granted annually to purchase a
minimum of 30,000 shares of common stock. In connection with this agreement, in
July 1996, the Company issued 7,500 shares of common stock and granted options
to purchase 30,000 shares at $3.50 per share (the market value at the date of
grant).

g) In June 1996, the employment agreements previously entered into with
the officers of the Company were modified to provide for aggregate annual
base salaries of approximately $300,000. (Note 5(a))

h) In July 1996, the Company entered into a consulting agreement to
undertake a market study designed to evaluate target market segments most
likely to use the Company's trains. The cost of the study will be
approximately $172,000.

F-11

===============================================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
IN CONNECTION WITH THE OFFER MADE HEREBY. IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER
THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH AN OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
FACTS HEREIN SET FORTH SINCE THE DATE HEREOF.

----------
TABLE OF CONTENTS

PAGE
----

Prospectus Summary ........................ 2
The Merger ................................ 3
Risk Factors .............................. 5
Use of Proceeds ........................... 12
Price Range of Common Stock ............... 12
Dividend Policy ........................... 13
Selected Financial Data ................... 14
Plan of Operation.......................... 15
Business .................................. 18
Management ................................ 26
Executive Compensation .................... 29
Principal and Selling Shareholders ....... 30
Certain Transactions ...................... 40
Description of Securities ................. 42
Plan of Distribution ...................... 44
Legal Matters ............................. 45
Experts ................................... 45
Additional Information .................... 45
Index to Financial Statements ............. F-1
Report of Independent Certified Public
Accountants ............................... F-2

===============================================================================

11,788,321 SHARES OF COMMON STOCK
6,320,111 SERIES A REDEEMABLE WARRANTS
100,000 FINANCIAL ADVISORY WARRANTS

FIRST AMERICAN RAILWAYS, INC. [LOGO]

FIRST AMERICAN RAILWAYS, INC.

COMMON STOCK
AND
WARRANTS

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

, 1996

===============================================================================

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 78.751 of the Nevada General Corporation Law empowers a Nevada
corporation to indemnify any person who was or is, or is threatened to be
made, a party to any threatened, pending or contemplated action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of such corporation) by reason of the fact
that such person is or was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise. The indemnity may include expenses
including attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding, provided that such person acted in good faith and
in a manner such person reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action
or proceeding such person had no reasonable cause to believe his conduct was
unlawful. A Nevada corporation may indemnify such person against expenses
including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by such person in connection with actions brought by or
in the right of the corporation to procure a judgment in its favor under the
same conditions, except that no indemnification is permitted in respect of
any claim, issue or matter as to which such person shall have been adjudged
to be liable to the corporation unless and to the extent the court in which
such action or suit was brought or other court of competent jurisdiction,
shall determine upon application that, in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses as the court shall deem proper. To the extent such person has been
successful on the merits or otherwise in defense of any action referred to
above, or in defense of any claim, issue or matter therein, the corporation
must indemnify such person against expenses, including attorneys' fees,
actually and reasonably incurred by such person in connection therewith. The
indemnification and advancement of expenses provided for in, or granted
pursuant to, Section 78.751 is not exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled
under the articles of incorporation of the Registrant or any by-law,
agreement, vote of shareholders or disinterested directors or otherwise.
Section 78.751 also provides that a corporation may maintain insurance
against liabilities for which indemnification is not expressly provided by
the statute.

Article VII of the Registrant's Restated Bylaws provides for
indemnification of the directors, officers, employees and agents of the
Company (including the advancement of expenses) to the extent permitted by
Nevada law. In addition, the Company has contractually agreed to indemnify
its directors and officers to the fullest extent permitted by law.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth various expenses to be incurred by the
Company in connection with the sale of the securities offered hereby, other
than underwriting discounts and commissions. Except for the Securities and
Exchange Commission registration fee, all of the amounts set forth in the
table are estimates.

Securities and Exchange Commission registration fee $ 19,517.55
Legal fees and expenses ........................... 35,000.00
Blue Sky fees and expenses ........................ 10,000.00
Accounting fees and expenses ...................... 40,000.00
Printing and engraving ............................ 10,000.00
Miscellaneous ..................................... 2,282.45
-----------
Total ............................................. $116,800.00
===========

II-1

ITEM 26. RECENT SALE OF UNREGISTERED SECURITIES.

The following is information regarding the Company's sales of unregistered
securities for the last three years. All shares were issued without
registration in reliance upon Section 3(b) or 4(2) of the Act, or Regulation
D thereunder, except as noted below.

AMOUNT AND TYPES CASH
OF SECURITIES DATE OF SALE PURCHASER(S) CONSIDERATION
---------------- ------------ ------------ -------------

9,991,216 shares of
Common Stock(1) 2/15/96 Lynn Dixon $9,991

20 Units(2) 2/27/96 Various private 500,000
(375,000 shares of common stock, and placement "accredited"
$500,000 (principal amount) convertible investors and foreign
secured notes) investors

550 Units(3) 4/26/96 & 5/9/96 Various private 16,500,000
(4,050,271 shares of common stock, placement "accredited"
4,050,271 Series A Redeemable Warrants, and investors and foreign
$7.5 million (principal amount) convertible investors
secured notes).

750,000 shares of Common Stock and 650,000 April 26, 1996 Capital Growth --(4)
Series A Redeemable Warrants International, LLC

100,000 warrants to purchase 100,000 shares June 12, 1996 Josephthal Lyon & --(5)
of Common Stock Ross Incorporated
(and its designees)

- ----------
(1) Before a 1-for-108 reverse stock split effective April 23, 1996.

(2) Each unit consisted of (a) 18,750 shares of the Company's common stock,
no par value, and (b) a convertible secured note in the principal amount
of $25,000, bearing interest at the rate of 10% per annum. A total of
8.25 units sold in the private placement were sold without registration
in reliance upon Regulation S under the Securities Act. Capital Growth
International, LLC, acted as placement agent for the private placement
for which it was paid a non-accountable expense allowance of $10,000 and
sales commissions of $40,000.

(3) Each unit consisted of (a) a convertible secured note in the principal
amount of $15,000, which bears interest at the rate of 10% per annum, (b)
6,000 shares of the Company's Common Stock, $.001 par value, and (c)
6,000 redeemable Common Stock Purchase Warrants, each Warrant entitling
the holder thereof to purchase one share of Common Stock at an exercise
price of $3.50 per share (subject to adjustment under certain
circumstances) at any time prior to redemption from the date of issuance
until two years thereafter. A total of 299.28 units sold in the private
placement were sold without registration in reliance upon Regulation S
under the Securities Act. Capital Growth International, LLC, acted as
placement agent for the 1996 private placement for which it was paid a
non-accountable expense allowance of $330,027.29 and sales commissions of
$1,320,109.17.

(4) Issued as consideration pursuant to a Placement Agent Agreement dated
April 26, 1996, between First American Railways, Inc., a Florida
corporation ("First American-Florida") and Capital Growth International,
LLC.

(5) Issued as consideration pursuant to a Financial Advisory Agreement dated
February 24, 1994, between First American-Florida and Josephthal Lyon &
Ross Incorporated.

II-2

ITEM 27. EXHIBITS.

EXHIBIT NO. DESCRIPTION
- ----------- -----------

3.1 Articles of Incorporation, as amended, is hereby incorporated by reference to Exhibit 3.1 of the
Company's Registration Statement on Form 8-A, filed May 30, 1996.
3.2 Plan and Articles of Merger, is hereby incorporated by reference to Exhibit 3.2 of the Company's
Registration Statement on Form 8-A, filed May 30, 1996.
3.3 Bylaws, is hereby incorporated by reference to Exhibit 3.3 of the Company's Registration Statement
on Form 8-A, filed May 30, 1996.
4.1 Form of Common Stock Certificate, is hereby incorporated by reference to Exhibit 4.1 of the Company's
Registration Statement on Form 8-A, filed May 30, 1996.
4.2 Form of Series A Redeemable Warrant Certificate.
4.3 Series A Redeemable Warrant Agreement.
4.4 Form of Financial Advisory Warrant Certificate.
4.5 Financial Advisory Warrant Agreement.
5 Opinion of Olle, Macaulay & Zorrilla, P.A.*
10.1 Agreement effective as of June 28, 1994, between First American-Florida and Rader Railcar, Inc.,
as amended.
10.2 Employment Agreement dated February 16, 1994, between the Registrant and Allen C. Harper.
10.3 Employment Agreement dated February 16, 1994, between the Registrant and Eugene K. Garfield, as
amended.
10.4 Employment Agreement dated February 16, 1996, between First American-Florida and Michael J. Acierno,
as amended.
10.5 Employment Agreement dated July 1, 1996, between the Company and Ray Monteleone.
10.6 Agreement dated February 28, 1995, between First American-Florida and Florida East Coast Railway
Company.
10.7 Form of Non-Competition Agreement between Thomas G. Rader and First American-Florida.
10.8 Form of Railcar Construction Agreement between the Registrant and Rader Railcar, Inc.
10.9 Financial Advisory and Consulting Agreement between the Registrant and Capital Growth International,
LLC, dated April 26, 1996.
10.10 Note Escrow Agreement between the Registrant, Capital Growth International, LLC and Sterling National
Bank and Trust Company of New York dated April 26, 1996.
10.11 Form of Convertible Secured Note.
23.1 Consent of Olle, Macaulay & Zorrilla, P.A., included as part of Exhibit 5.
23.2 Consent of BDO Seidman, LLP.
24 Power of Attorney (included on page II-5 hereof).

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* To be filed by Amendment

II-3

ITEM 28. UNDERTAKINGS.

(a) The registrant hereby undertakes:

(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement:

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

(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information set forth in the registration statement; and

(iii) To include any additional or changed material information on the
plan of distribution.

(2) That it will, for determining any liability under the Securities Act,
treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of such securities at that time to be
the initial bona fide offering.

(3) To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the termination of the offering.

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

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

(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.

II-4

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all requirements for filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of Coral
Gables, State of Florida, on August 5, 1996.

FIRST AMERICAN RAILWAYS, INC.

By: /s/ ALLEN C. HARPER
---------------------------------
Allen C. Harper, Chairman of
the Board and
Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that First American Railways, Inc., and
each person whose signature appears below, constitutes and appoints Allen C.
Harper and Raymond L. Monteleone and each of them, his true and lawful
attorney-in-fact and agent, with full power of substitution and
re-substitution for him and in his name or in the name of the Company and in
any and all capacities, to sign any and all amendments to the Form SB-2
Registration Statement under the Securities Act of 1933, as amended, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises as full to all items and purposes as they might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent or his substitute or substitutes may lawfully do or cause to be done by
virtue thereof.

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

SIGNATURES TITLE DATE
---------- ----- ----

/s/ ALLEN C. HARPER Chairman of the Board August 5, 1996
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Allen C. Harper (principal executive,
financial and principal
accounting officer)

/s/ EUGENE K. GARFIELD Vice Chairman of the Board August 5, 1996
- ---------------------------
Eugene K. Garfield

/s/ RAYMOND L. MONTELEONE President, Chief August 5, 1996
- ---------------------------
Raymond L. Monteleone Operating Officer
and Director

/s/ THOMAS G. RADER Director August 5, 1996
- ---------------------------
Thomas G. Rader

/s/ DAVID H. RUSH Director August 5, 1996
- ---------------------------
David H. Rush

/s/ LUIGI SALVANESCHI Director August 5, 1996
- ---------------------------
Luigi Salvaneschi