SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-KSB

| | [X] | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 (FEE
                    REQUIRED)
| | --- | --------------------------------------------------------------------------------------------------------

| |  | For the
fiscal year ended December 31, 1998
| |  | -------------------------------------------

| | [   ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) THE SECURITIES EXCHANGE ACT OF
1934 (NO FEE REQUIRED)
| | ----- | -------------------------------------------------------------------------------------------------

| |  | For the
transition period from  _____________to _____________
| |  | -------------------------------------------------------------

Commission
file number 33-4844-D

AMERICANA GOLD & DIAMOND HOLDINGS, INC. (Name of small business issuer in its charter)

|Delaware                                                       | 84-1023321                           
|-------------------------------------------------------------- | -------------------------------------
|(State or other jurisdiction of
incorporation or organization) | (I.R.S. employer identification Nss.)

Av. Francisco de
Miranda con Av. DiegoCisneros Centro Empresarial MirandaMezz, Ofic. 5 Caracas,
Venezuela 1071(Address of principal executive offices)

(Telephone): (582)
235-21-88 (Fax) 235-21-88

Securities registered under Section
12(b) of the Exchange Act:

None

Securities registered pursuant to
Section 12(g) of the Exchange Act:

Common Stock, $.001 par
value

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

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

State
issuers revenues for its most recent year. $-0-

State the
aggregate market value of the voting stock held by non-affiliates computed by reference to
the price at which the voting stock as sold, or the average bid and asked prices of such
stock, as of (See definition of affiliate in Rule 12b-2 of the Exchange Act). $ 5,800,781

Note: If determining whether a person
is an affiliate will involve an unreasonable effort and expense, the issuer may calculate
the aggregate market value of the common equity held by non-affiliates on the basis of
reasonable assumption, if the assumptions are stated.

Indicate
the number of shares outstanding of the Issuers Common Stock, as of the latest
practicable date. At March 1, 1997 there was outstanding 12,692,683 shares of the
Issuers Common Stock, $.001 par value.

DOCUMENTS INCORPORATED BY REFERENCE

Portions
of the Companys Proxy Statement (pursuant to Regulation 14A) concerning the Annual
Meeting of Shareholders is incorporated by reference to Part III of this Form 10-KSB.

1

TABLE OF CONTENTS

|                                                                        | Page
|----------------------------------------------------------------------- | ----
|PART I                                                                  | 3   
|ITEM 1. BUSINESS                                                        | 3   
|ITEM 2. DESCRIPTION OF PROPERTY                                         | 7   
|ITEM 3. LEGAL PROCEEDINGS                                               | 7   
|ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS             | 7   
|PART II                                                                 | 8   
|ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS        | 8   
|ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION       | 9   
|ITEM 7. FINANCIAL STATEMENTS                                            | 11  
|ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING    
|AND FINANCIAL DISCLOSURE                                                | 11  
|PART III                                                                | 12  
|ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:  
|COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT                       | 12  
|ITEM 10. EXECUTIVE COMPENSATION                                         | 12  
|ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 12  
|ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                 | 12  
|ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K                               | 12  

2

PART I Item 1.  Business

(a) Business Development

Americana Gold & Diamond
Holdings, Inc. (the Company or AGD) in its current form resulted from
the merger (the Merger) in February 1993 of Americana Gold & Diamond
Mining, Inc., a corporation incorporated in Tortola, British Virgin Islands in April 1990
(Americana Gold) with and into Blue Willow Holdings, Inc., a Colorado
corporation incorporated in March 1986 (Blue Willows). In connection with the
Merger, Blue Willows changed its name to Americana Gold & Diamond Holdings, Inc. and
issued 2,823, 180 shares of common stock, $.001 par value (the Common Stock)
to the shareholders of Americana Gold. Prior to the Merger, Blue Willows was a publicly
held shell corporation and Americana Gold held several mining concessions, which generated
limited revenue. Subsequent to the Merger, the Company purchased additional mining
concessions.

The Company has five wholly-owned
Venezuelan subsidiaries, Latinvan Metal Trading L.T.D., C.A., which holds the titles to
the Companys Bochinchito mining concession, Consorcio Minero Miamo, C.A., which is
the original owner of the Fortuna I concession, Minera Rio Carichapo C.A., which holds the
contractual rights for the El Foco project, Minera Rios del Oriente, which holds some of
the capitalized shares of Minera Rio Carichapo C.A., and AGD Holdings Inc. de Venezuela,
C.A., which holds all of the Companys exploitation and exploration equipment. Unless
the context requires otherwise, references to the Company and AGD in this Form 10-KSB
shall mean Americana Gold & Diamond Holdings, Inc. and its subsidiaries.

Pursuant to an agreement completed
September 15, 1998 between AGD and the Homestake Mining Company of California
(Homestake), in consideration of a 3% net smelter royalty on production in
excess of the drill indicated resources defined by Homestake, 100% of the shares of Minera
Rio Carichapo S.A. and Minera Rios del Oriente S.A., the beneficial owners of an option to
earn a 90% vested interest in the El Foco and Chicanan  Chicanan Contract Areas.
This transaction was a significant development for AGD, adding significant fixed assets,
mineral resources and potential. The property has a drill indicated resource of 300,000
ounces of gold with potential for additional discoveries, a fully functional operations
base with offices and housing, and a core management facility.

AGD acquired this project to optimise
the value of its adjoining Fortuna Property and with the intention of selling the
consolidated project to Zaruma Mining Corporation ASA (Zaruma) for a total consideration
of $4 million payable as $200,000 in cash and the balance in shares, plus production
royalties. This transaction was contemplated in a letter agreement dated September 17,
1998 but completed during 1999.

The Company has five wholly owned  Venezuelan  subsidiaries,  Latinvan Metal Trading L.T.D.,  C.A., which holds the
titles to the Companys Bochinchito mining concession, Consorcio Minero
Miamo, C.A., which is the original owner of the Fortuna I concession, Minera Rio Carichapo
C.A., which holds the contractual rights for the El Foco project, Minera Rios del Oriente,
which holds some of the capitalized shares of Minera Rio Carichapo C.A., and AGD Holdings
Inc. de Venezuela, C.A., which holds all of the Companys exploitation and
exploration equipment. Unless the context requires otherwise, references to the Company
and AGD in this Form 1O-KSB shall mean Americana Gold & Diamond Holdings, Inc. and its
subsidiaries.

3

The Company has limited capital
resources and is actively seeking other sources of capital in order to meet its working
capital needs. The independent auditors report for the fiscal year ended December
31 1998 has been prepared assuming that the Company will continue as a going
concern. There can be no assurance that any additional financing will be available to the
Company on acceptable terms, or at all. See Managements Discussions and
Analysis or Plan of Operation.

(b)    
          Business of Issue:

(1)    
          Principal products or services and their markets.

The Company is engaged in the
exploitation, exploration and development of gold mining concessions in Venezuelas
Guayana Shield. The Company currently has the rights to two concessions (El Bochinchito
and Fortuna I) and controls on a temporary basis an additional ten concessions
(Collectively referred to as the El Foco Project), which it believes may lead to gold
production. However, there can be no assurance that there will be any gold production from
these concessions. The location and chief characteristics for each of these properties are
discussed below.

El Bochinchito

Lying across a vast area near the
border with Guyana, the Bochinche zone of the Pastora province is believed to have an
immense gold potential. The Bochinche area has had a history of gold production dating
back more than a century. It is one of the four principal gold-bearing zones in Bolivar
State. Over the past two years, Monarch Resources of Canada and others have introduced
modern mining equipment and methods into the Bochinche area, and are now producing gold
from several deposits in the district.

The Companys El Bochinchito
prospect, a 250-acre parcel is a concession contract with the Venezuelan Ministry of Mines
and was acquired by the Company in 1993 from an unaffiliated third party who had
controlled the concession since 1988. During 1994, the company solicited from the
Corporacion Venezuelana de Guyana (CVG) an additional exploration contract
area of 5,000 hectares. CVG has confirmed that AGD has a documented priority for this
additional land subject to resolution of environmental regulations related to the
Bochinche area.

Exploration activity within the
Bochinche area was very limited prior to the commencement of the AGD work, but the
Bochinchito area was subject to a small alluvial gold mining project which confirmed the
presence of rich alluvials in a basin contained within the concession. El Bochinchito is
located east of Tumeremo village, in a region that has been surveyed and explored by the
Venezuelan Corporation of Guyana (C.V.G.), the state-owned mining company. It lies north
of Kilometer 88, and east of the El Callao Mining District. The El Callao District was
Venezuelas major nineteenth century discovery, yielding in excess of seven million
ounces of gold between 1871and the present time. Mining continues at the El Callao and
Tomi Mines today. Access to the Bochinchito property is by an all weather gravel road 72
kilometers from Tumeremo to the village of Bochinche, thence by a very rough 4 by 4 bush
track, 15 kilometers to the concession.

4

AGD has completed sampling and
geochemical work on El Bochinchitos alluvial deposits. The alluvial gold plant was
installed and fine-tuned at Bochinchito Concession during the First Quarter 1996.
Production at El Bochinchito has been delayed as the Company concentrates on what appears
to be a major discovery in altered gabbro at La Fortuna I. Trial runs with the plant have
indicated some problems with clay balls and the water supply which will require some minor
modifications to the plant. Exploration and development activity was suspended during
1998. Mining activity in this region is restricted by uncertainties in the application of
environmental regulations, and the new management will reconsider the significance of the
Bochinche opportunity in comparison to its other initiatives.

Fortuna I Concession

In October 1994, the Company
purchased the La Fortuna I Mining Concession from Inversiones Megold C.A.
(Inversiones), for a total purchase price of $2,000,000. Fortuna I is located
about 45 kilometers north of Las Cristinas, Placer Domes 7.7 million ounce gold
find, at kilometer 88 in Bolivar State. Fortuna I is accessible by a paved road to 34
kilometers then a 4 by 4 gravel road 22 kilometers to the property with a ferry crossing
at the Cuyuni River. The Las Cristinas area is considered by many North American mining
experts to be the prime gold exploration area in Venezuela and significant exploration
activity is taking place at this time. Fortuna I possesses both alluvial deposits and
veins. The petrology of the La Fortuna Concession area is made up of basic to intermediate
volcanics, Pastora-Botanamo Super Group rock, mainly metabasalts and metagalbroc and
Caballape Formation, andesite agglomerates. The host rocks in mineralized areas have been
subjected to carbonate and sericite alteration.

During the first Quarter of 1996 the
Trenching Exploration Phase of La Fortuna I Mining Concession was completed. Two broad
zones of mineralization were identified, both 100 meters (330 feet) in width, and with
assay results of 1.05 grams per tonne in saprolite rock. A further trenching program
conducted at La Fortuna I Mining Concession during the Second and third Quarter of 1996
confirmed results of previous trenching, and better defined targets for drill-holes into
Central Zone. In December 1997 the companys consulting engineer estimated a mineral
inventory, based on trenching and drilling results, of 2,102,061 tonnes of saprolite
grading 0.558 grams per tonne, to a maximum depth of fifty meters, in four zones. This
inventory is open to expansion through additional trenching and drilling but is not
currently a viable resource for development. Additional trenching of the Fortuna Zone and
other targets in the concession was completed at the end of the year. During 1997 an
initial drilling program was conducted. A total of 1013 m of drilling was completed and
770 samples were analyzed for gold. Diamond drilling confirmed the mineralization
indicated in the trenching. Additional trenching and drilling was recommended by the
Companys Geologist and Professional Engineering Consultant. During 1998 exploration
activity was suspended pending completion of the re  organization plan.

# Santa Rosa

Pursuant to an agreement signed July
1998 with Vanessa Ventures Corporation (VSE) AGD holds the option to earn a 50% direct
interest in the Santa Rosa exploration concessions in Roraima State, Brazil through
exploration and development expenditures totaling $5 million over an unspecified period of
time. The Santa Rosa Project consists of 120,000 hectares in six exploration concessions.

The Santa Rosa concessions cover
deformed Archean rocks similar in character to those which host major gold deposits in
other in other productive shield areas around the world. The Santa Rosa Property was the
site of a gold production boom with a peak population of 11,000 artisanal miners in 1981.

Subsequent field studies by the
Brazilian Geological Survey outlined geochemical anomalies in the Santa Rosa Property
area, which are the primary focus for the AGD  Vannessa Joint Venture. Consulting
reports prepared for Vannessa Ventures, the vendor and joint venture partner, report the
presence of high-grade vein mineralization of potential economic significance.

5

AGD is the project operator. The
proposed evaluation will commence with a thorough field review to confirm the reported
importance of the area and select priority targets for development.

(2)    
          Distribution methods of the products or services.

Currently, the Company has not
produced any gold for distribution. If and when, the Company is in a position to
distribute gold, such distribution will be subject to regulation by the Venezuelan
government. The regulations concerning the sales and export of gold have been liberalized
considerably during the last year, and 80% of gold produced can now be exported directly.
~ Business  Effect of existing or probable governmental regulations on the
business.

(3)    
          Status of any publicly announced new product or services.

See Business 
Principal Products or Services and Their Markets for a description of the current
status of the Companys mining operations.

(4)    
          Competitive business conditions and the small business issuers competitive
          position in the industry and methods of competition.

The Company will remain a minor
participant among the firms, which engage in gold prospecting. There are many other
established firms with significantly greater capitalization and financial resources. In
view of the Companys lack of financial resources, the Company will be at a
competitive disadvantage compared to its competitors. However the new management team,
with extensive experience and contacts in the exploration and mining businesses, and
access business opportunities and equity markets, will bring with it a substantial
improvement in the Companys competitive position.

(5)    
          Sources and availability of raw material and the names of principal suppliers.

Not applicable.

(6)    
          Dependence on one or a few major customers.

See Effect of existing
or probable governmental regulations on the business. The objective of the company
is production and sale of gold and diamonds. Although marketing of these products requires
experience and security precautions, many customers exist and the market is open.

(7)    
          Patents, trademarks, licenses, franchises, concessions, royalty agreements or
          labor contracts, including duration.

The Company currently has the
following mining concessions: El Bochinchito and Fortuna I Concession. The Company is also
negotiating to acquire the Bochinche 4 Concession from the Venezuelan government. For
further information with respect to the Companys Concessions see Business
 Principal products or services and their markets.

(8)    
          Need for any governmental approval of principal products or services. Not
          applicable.

6

(9)    
          Effect of existing or probable governmental regulation on the business.

The regime for the commercialization
of gold in Venezuela is essentially divided into two areas: (i) internal commercialization
of gold and (ii) external commercialization of gold. On January 1, 1996 Resolution N°
96-1202 enter into effect, issued by the Central Bank of Venezuela, establishing the norms
on gold and gold alloys exports. The most significant aspects of this resolution are the
following:

| | o | Gold and gold alloys exports are allowed, and interested parties should be registered in
the Gold Exporters Registry at the Central Bank of Venezuela.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Authorization request will be processed by the Central Bank of Venezuela, accompanied by a
certification marked out for the internal market, in bars, a minimum equivalent to 15% of
the amount calculated in kilograms of refined or melted gold, resulting from adding the
amount whose authorization to be exported is requested, and the amount destined for the
local market. Said authorization will be granted in a term of 45 consecutive calendar
days. If and when the Company is in a position to produce and distribute gold the effect
of the regulation could have a significant impact on the Companys operations.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(10)    
          Estimate of the amount spent during each of the last two fiscal years on
          research and development activities, and if applicable the extent to which the
          cost of such activities are borne directly by consumers.

The Company has spent approximately $
322,000 in gold deposit exploration during 1996, $ 235,429 during 1997, and suspended its
exploration activities during 1998.

(11)    
          Costs and effects of compliance with environmental laws.

The Company has spent approximately
$1,000 in compliance with Venezuelan environmental laws.

(12)    
          Number of total employees and full time employees. At March 21, 1998, the
          Company employed Twelve (12) employees.

Item 2. Description of Property.

The Companys principal
executive offices are located in Calle Paris, Edificio B, mezzanina 5, La
California Norte, Caracas 1070, Venezuela. This facility consists of approximately 300
square feet and is occupied under a lease.

The Company leases a second facility
in Tumeremo, a small town near the Bochinche, and Fortuna I concessions. This second
facility has office and storage space.

For information relating to the
Companys mining concessions, see Business  Business of Issuer.

Item 3. Legal Proceedings.     Not
applicable.

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

During July 1998, 82% of the
shareholders consented to a 1 for 10 reverse split and a private placement of shares.
Neither of these transactions were completed during fiscal 1998.

7

PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.

The Common Stock of the Company was formerly traded on the NASDAQ Small Cap Market ("NASDAQ") until July 1998,
when trading was moved to the OTC Bulletin Board and in June 1999, was moved to the Pink Sheets, where it
currently trades under the symbol "AGDM". The high and low bid quotations for each quarterly
period for fiscal 1997 and fiscal 1998 are listed below. The quotations set forth in the
table reflect inter-dealer prices, without retail mark-up, markdown or commission, and may
not necessarily represent actual.

As indicated bellow, the
Companys Common Stock has been trading below $1.00 per share. Under new rules
promulgated by NASDAQ, a security is subject to delisting from NASDAQ if its trading price
is below $1.00. Trading, if any, of the Common Stock would thereafter be conducted in the
OTC Bulletin Board or the OTC Pink Sheets. As a result of such ineligibility for quotations, an investor may find
it more difficult to dispose of, or to obtain accurate quotations as to the market value
of the Common Stock. Furthermore, the regulations of the Securities and Exchange
Commission (Commission) promulgated under the Securities Exchange Act of 1934,
as amended (Exchange Act), require additional disclosure relating to the
market for penny stocks. Commission regulations generally define a penny stock to be an
equity security that has a market price of less than $5.00 per share, subject to certain
exceptions. A disclosure schedule explaining the penny stocks market and the risks
associated therewith is required to be delivered to a purchaser and various sales practice
requirements are imposed on broker-dealers who sell penny stocks to persons other than
established customers and accredited investors (generally institutions). In addition, the
broker-dealer must provide the customer with current bid and offer quotations for the
penny stock, the compensation of the broker-dealer and its salesperson in the transaction
and monthly account statements showing the market value of each penny stock held in the
customers account. If the Companys securities become subject to the
regulations applicable to penny stocks, the market liquidity for the Companys
securities could be severely affected. In such an event, the regulations on penny stocks
could limit the ability of broker-dealers to sell the Companys securities and thus
the ability of purchasers of the Companys securities to sell their securities in the
secondary market. In the absence of an active trading market, holders of the Common Stock
may experience substantial difficulty in selling their securities.

|Fiscal 1996 | High | Low
|----------- | ---- | ---
|1st quarter | 1.00 | .56
|2nd quarter | .87  | .56
|3rd quarter | .75  | .50
|4th quarter | 1.37 | .37

|Fiscal 1997 | High | Low
|----------- | ---- | ---
|1st quarter | 1.14 | .82
|2nd quarter | .82  | .68
|3rd quarter | .83  | .73
|4th quarter | .64  | .45

|Fiscal 1998 | High | Low
|----------- | ---- | ---
|1st quarter | .72  | .31
|2nd quarter | .59  | .28
|3rd quarter | .44  | .15
|4th quarter | .22  | .02

8

Pursuant to instructions from the SEC
in July 1998, the trading of the companys shares in the NASDAQ market was suspended,
pending completion of the proposed re-organization plan. During this period of inactivity
the management also undertook a review and revised report of the financial statements for
1996 and 1997.

(a)    
          The Company has not paid any cash dividends on its Common Stock and does not
          intend to pay cash dividends on its Common Stock for the foreseeable future. The
          Company intends to retain future earnings, if any, to finance future
          development.

(b)    
          As of March 20, 1999, there were approximately 325 holders of record of the
          Companys Common Stock. The Company believes that at such date there were
          in excess of 500 beneficial owners of the Companys Common Stock.

Item 6. Managements Discussion
and Analysis or Plan of Operation.

Overview

The Company has only recently begun
its business activities and accordingly has generated limited revenues. The Company has
generated an accumulated deficit of $ 8,980,978 through December 31 1998, due to its
Significant research, development, administrative and exploration expenses and
insufficient revenues in relation to its operating expenses. Management believes that
losses will continue to be incurred until it is able to successfully acquire or place a
property in operation. There can be no assurance that management will be successful in
accomplishing this task. The independent auditors report for the fiscal year ended
December 31 1998 has been prepared assuming that the Company will continue as a
going concern.

During 1993, the Company purchased
the alluvial exploitation and exploration rights of a gold and diamond mine over a land
extension known as Bochinche. This concession covers a surface area of approximately 250
acres and is located in the Jurisdiction of the Tumeremo Municipality, District of
Sifontes, in the State of Bolivar. The cost of the concession was approximately $811,905.

In October 1994, the Company
purchased the La Fortuna I Mining Concession form Inversiones Megold C.A., for a total
purchase price of $2,000,000 as follows:

The purchase price for the
Fortuna I property was agreed upon by the seller and Americana Gold &
Diamond Holdings, Inc. after due diligence. Americana paid in cash and shares with the
amount of shares being calculated by dividing the unpaid balance (after the cash payment)
by the market price of the shares at the time of the purchase. As of December 31, 1998,
the remaining portion of debt outstanding of US$ dollars 229,819. As part of the
acquisition contract of this concession, the Company agreed to pay to a third company
between 3% and 5% of the net profits that would be obtained from mining of the property.

Pursuant to a restructuring plan
presented to the shareholders in July 1998, the company obtained an unsecured interest
free loan to payout its high interest loans from a Venezuelan Bank, completed a $450,000
private subscription for which the funds were committed but which was subject to
NASDAQ/SEC approval as part of the restructuring plan, along with $450,000 in warrants
subject to exercise within six months. Completion of this subscription and the associated
warrants was delayed as a consequence of delay of SEC approval.

Pursuant to an agreement completed
September 15, 1998 between AGD and the Homestake Mining Company of California
(Homestake), in consideration of a 3% net smelter royalty on production in
excess of the drill indicated resources defined by Homestake, 100% of the shares of Minera
Rio Carichapo S.A. and Minera Rios del Oriente S.A., the beneficial owners of an option to
earn a 90% vested interest in the El Foco and Chicanan  Chicanan Contract Areas.
This transaction was a significant development for AGD, adding fixed assets, mineral
resources and potential.

9

AGD acquired this project to optimise
the value of its adjoining Fortuna Property and with the intention of selling the
consolidated project to Zaruma Mining Corporation ASA (Zaruma) for a total consideration
of $4 million payable as $200,000 in cash and the balance in shares. This transaction was
contemplated in a letter agreement dated September 17, 1998 but not completed during 1998.
As of year-end 1998 Minera Rio Carichapo C.A. and Minera Rios del Oriente C.A. shall be
considered subsidiaries subject to a pending sale.

# Results of Operations

Fiscal year ended December 31, 1998
Compared to Fiscal year ended December 31, 1997.

Total income for the year ended
December 31, 1998 was $686 compared to $23,903 for the year ended December 31, 1997, a net
decrease of $23,903. This decrease is primarily attributable to a decrease in gains from
foreign currency exchanges.

Administrative expenses were $528,941
for the year ended December 31, 1998 compared to $488,803 for the year ended December 31,
1997, and exploration cost were $235,429 June, 1997.

Primarily due to a continued lack of
revenues from operations, the net loss for the year ended December 31, 1998 was $588,232
as compared to a net loss of $810,642 for the year ended December 31, 1997.

# Liquidity and Capital
Resources

The Company had a deficit of $440,475 in working
capital as of December 31, 1998, compared with a deficit working capital of $876,559 during 1997.

The 1998 working capital increase was
primarily due to the receipt of proceeds from private placements offering described below
offset by the funding of operations and payments of bank loan in Venezuela and U.S.A.

At December 31, 1998 the Company has
an overdraft loan at an average annual interest of 7,95%. Accounts payable of the Company
relating to liabilities assumed by the Company for the purchase of exploration and
explorations rights of mining concessions currently amounts to $229,819. Such amount
relates to payments due on the Fortuna I concession.

In 1994, the Company received an
aggregate of approximately $400,000 in net proceeds from a private placement of Series B
Convertible Preferred Stock. In addition, certain officers and directors agreed to convert
approximately $605,000 of debt into the Series B Preferred Convertible Stock.

Such Series B Convertible Preferred
Stock paid a cumulative interest rate of 12% per annum and were convertible into common
stock at a 25% discount from the bid price of the Companys common stock at the time
of conversion.

In 1995 and January 1996 the Company
raised approximately $350,000 from a private placement of 35 Units, each unit consisting
of a $10,000 principal amount promissory note. The note was due and payable on July 19,
1996 and beared interest at 8%. The note was converted, into 20,000 shares of the
Companys Common Stock for each unit. In March 1996 the purchasers of the 35 units of
the private placement elected to convert their notes into shares of the Companys
Common Stock.

In 1996 the Company raised
approximately $677,843 from Private Placements of Common Stock to investors who reside
outside the United States including officers and directors of the Company. The Company
issued 1,250,000 shares of its Common Stock in connection with the Private Placements.

10

In 1997 the Company raised
approximately $285,989 from Private Placements of Common Stock to investors who reside
outside the United States including officers and directors of the Company. The Company
issued 609,952 shares of its Common Stock in connection with the Private Placements.

In 1998 the Company raised
approximately $423,482, from Private Placements of Common Stock and contribution for
interest capital increase, from the United States including officers and directors of the
Company. The Company issued 440,404 Shares of its Common Stock in connection with the
Private Placements.

The Companys management is
currently seeking to raise Funds to ensure that the Companys operations will
continue and that the Company can operate the La Fortuna concession. The Company is also
exploring whether to enter into joint ventures or partnerships with other mining companies
in the La Fortuna area. There can be no assurance that the Company will be successful in
raising the necessary funds or finding other alternatives to ensure that the Company will
continue and that the Company can operate the La Fortuna concession. Moreover, the sale of
additional equity or convertible debt securities could result in addition dilution to the
Companys Stockholders.

The Company will continue to rely
upon management until additional sources of financing are secured or a suitable property
is acquired with sufficient cash flow to sustain the Company.

# Restated Financial Statements

During 1998, the management also undertook a review, and thereafter, revised and restated the financial
statements for 1996 and 1997 to comply with U.S. GAAP.

# Inflation

Venezuela has historically had a high
rate of inflation and the Company is potentially impacted by currency rate exchanges.
While neither high inflation or currency rate exchanges have had a material adverse effect
on the Company, there can be no assurance that such developments will not have a material
adverse effect on the Company in the future.

Forward Looking Statements

This Form 1O-QSB contains certain
forward-looking statements within the meaning of Section 27 A of the Securities Act of
1993, as amended, and Section 21 E of the Securities Exchange Act of 1934, amended.
Investors are cautioned that all forward looking statements involve risks and uncertainty,
including without limitation, the viability of gold mines, exploration cost, foreign
currency exchange rates and general market conditions. Although the Company believes the
assumptions underlying the forward-looking statements contained herein are reasonable, any
of the assumptions could be inaccurate, and therefore, there can be no assurance that the
forward-looking statements contained in the report will prove to be accurate.

Item 7. Financial
Statement

See Consolidated Financial Statement
listed in the accompanying index to Consolidated Financial Statements on Page F-1 herein.

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

Not applicable.

11

PART III

Items 9, 10, 11, and 12. Directors,
Executive Officers, Promoters and Control Persons: Compliance with Section 16(a) of the
Exchange Act; Executive Compensation; Security Ownership of Certain Beneficial Owners and
Management; Certain Relationships and Related Transactions.

The information required by these
Items is omitted because the Company will file a definitive proxy statement pursuant to
Regulation 14A, which information is herein incorporated by reference as if set out in
full.

Item 13. Exhibits and Reports on Form
8-K.

(a)    
          Exhibit No.

3.1 The Companys
Amended and Restated Certificate of Incorporation**

3.2 The Companys By-laws.
**

3.3 Certificate of Designation for
the Series A. Series B and Series C Convertible Preferred Stock. *

4.1 Form of Common Stock
Certificate. **

10.1 Agreement between Inversiones
Megold, C.A. and the Company.*

10.2 Form of Promissory Note issued
in a 1996 Private Placement. ***

31.1 Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934,
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Incorporated by reference to the
Companys Form 10KSB for the fiscal year ended December 31, 1994.

** Incorporated by reference to the
Companys Form S-A, dated February 10, 1993.

*** Incorporated by reference to the
Companys Form 10KSB for the Fiscal year ended December 31, 1996.

12

SIGNATURES

In accordance with Section 13 or
15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Caracas, Country of
Venezuela 30th day of September 2003.

Signatures

In accordance with the requirements
of the Exchange Act, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|September 30, 2003 | Americana Gold and Diamond Holdings, Inc./s/ David Bending
David Bending, President and Director
|------------------ | ------------------------------------------------------------------------------------------------

In accordance with the
Exchange Act, this report has been signed below by the following persons on behalf of the
registrant and in the capacities on the dates indicated.

|Signature       
Gerald Sneddon  
Gordon Gutraith 
Daniel Kunz | Title    
Director 
Director 
Director | Date
2/21/2000
2/21/2000
2/21/2000
|-------------------------------------------------------------- | -------------------------------------- | ----------------------------------

13

HLBPistone Montuori &
Asociados Accountants and
Consultants

# AMERICANA GOLD AND
DIAMOND HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL
STATEMENTS AS OF DECEMBER 31 1998 AND
1997 TOGETHER WITH AUDITORS REPORT

Ay.    
          Andres Bello, Edit. Atlantic, Piso 3, Otic. 1-7, Los Palos Grandes, Telephone: +
          58 (02) 285 5269/ 285 9161 /285 624 / 285 8361 / 285 5435 Fax: 58-2-285 0581
           E-mail pistone @ true.net  Apartado: 61202, Caracas 1060 
          Venezuela

Pistone Montuori & Asociados is a
member of HLB International. A worldwide organization of accounting firms and business
advisers.

INDEX TO FINANCIAL STATEMENTS

|                                      | PAGE
|------------------------------------- | ----
|Auditors' Report                      | F-1 
|Financial Statements:                
|Balance Sheet                         | F-3 
|Statement of Operations               | F-5 
|Statement of Stockholders' Deficiency | F-6 
|Statement of Cash Flows               | F-7 
|Notes to Financial Statements         | F-9 
|                                      |     

To the Shareholders of: 
AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES

We have audited the accompanying
consolidated balance sheet of AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES,
(a development stage company) as of December 31, 1998, and the related consolidated
statements of operations, shareholders equity and cash flows for the year then
ended. These consolidated financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. We did not audit the consolidated
financial statements as of December 31, 1997. These statements were audited by other
independent auditors whose report dated February 13 and October 15, 1998, expressed an
unqualified opinion on those statements, however, an explanatory paragraph of emphasis
matter due to going concern was disclaimed, as mentioned in note 11.

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

Ay.    
          Andres Bello, Edit. Atlantic, Piso 3, Otic. 1-7, Los Palos Grandes, Telephone: +
          58 (02) 285 5269/ 285 9161 /285 624 / 285 8361 / 285 5435 Fax: 58-2-285 0581
           E-mail pistone @ true.net  Apartado: 61202, Caracas 1060 
          Venezuela

Pistone Montuori & Asociados is a
member of HLB International. A worldwide organization of accounting firms and business
advisers.

F-1

HLB Pistone Montuori &
Asociados Accountants and Consultants

AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES

In our opinion, the consolidated
financial statements referred in the first paragraph above present fairly, in all material
respects, the consolidated financial position of the Company as of December 31, 1998, and
the results of its operations and its cash flows for the year then ended in conformity
with generally accepted accounting principles in the United States.

The Company have an accumulated
losses in development stage of U.S. dollars 8,980,978. This factor, along with other
matters as set forth in the following paragraph raise a doubt that Company will be able to
continue as a going concern. The consolidated financial statements have been prepared
under the assumption that the Company will be able to continue in operation, having
sufficient financial support from the shareholders. See note 8.

As explained in note 1 and 5, during
1998, the Companys operation is temporal inactive. Managements plans
concerning the matters are also described in note 1; we do not express an opinion
regarding the feasibility of such plans. The Companys continuity as a going concern
are subject to or the success of the Companys future operations. The consolidated
financial statements do not include any adjustments that might result from the outcome of
these uncertainties.

HLB PISTONE MONTUORI
& ASOCIADOS

/s/ Mario Pistone

Mario PistoneCertified
Public Accountant C.P.A. No. 1.579

Caracas, April 14, 1999

F-2

AMERICANA GOLD AND DIAMOND HOLDINGS,
INC. AND SUBSIDIARIES (A development stage Company)

CONSOLIDATED BALANCE SHEETS 
ASSETS DECEMBER 31, 1998 AND 1997 (Expressed in US dollars)

|                                          | 1998 | 1997
|----------------------------------------- | ---- | ----
|ASSET                                     |      |     
|CURRENT ASSET:                            |      |     
|Cash                                      |      |     
|Temporary investment                      |      |     
|Prepaid expenses and other current assets |      |     
|                                          |      |     
|Total current assets                      |      |     
|                                          |      |     
|PROPERTY AND EQUIPMENT, net               |      |     
|                                          |      |     
|MINING CONCESSIONS-                       |      |     
|In exploration activities                 |      |     
|                                          |      |     
|MINING CONCESSIONS-                       |      |     
|Suspended exploration activities          |      |     
|                                          |      |     
|OTHER ASSETS                              |      |     
|                                          |      |     
|                                          |      |     
|                                          |      |     

The accompanying notes (1 to 13) form
an integral part of these consolidated financial statements

HLB Pistone Montuori &
AsociadosAccountants and Consultants

Pistone Montuori & Asociados is a
member of HLB International. A worldwide organization of accounting firms and business
advisers.

F-3

AMERICANA GOLD AND DIAMOND HOLDINGS,
INC. AND SUBSIDIARIES (A development stage Company)

CONSOLIDATED BALANCE SHEETS--LIABILITIES AND SHAREHOLDERS' EQUITY DECEMBER 31, 1998 AND 1997
(Expressed in U.S. dollars)

|                                          | 1998 | 1997
|----------------------------------------- | ---- | ----
|LIABILITIES AND SHAREHOLDERS' EQUITY      |      |     
|CURRENT LIABILITIES:                      |      |     
|Bank loans                                |      |     
|Accounts payable                          |      |     
|Accrued liabilities                       |      |     
|                                          |      |     
|Total current liabilities                 |      |     
|PROVISION FOR EMPLOYEE SEVERANCE BENEFITS |      |     
|                                          |      |     
|Total liabilities                         |      |     
|                                          |      |     
|SHAREHOLDERS' EQUITY:                     |      |     
|Capital stock                             |      |     
|                                          |      |     
|Accumulated losses                        |      |     
|                                          |      |     
|Total shareholders' equity                |      |     
|                                          |      |     
|                                          |      |     
|                                          |      |     

The accompanying notes (1 to 13) form
an integral part of these consolidated financial statements

HLB Pistone Montuori &
AsociadosAccountants and Consultants

Pistone Montuori & Asociados is a
member of HLB International. A worldwide organization of accounting firms and business
advisers.

F-4

AMERICANA GOLD AND DIAMOND HOLDINGS,
INC. AND SUBSIDIARIES (A development stage Company)

CONSOLIDATED OPERATIONS STATEMENTS
FOR THE YEARS ENDED - DECEMBER 31, 1998 AND 1997(Expressed in U.S. dollars)

|                                 | 1998 | 1997 | Cumulative
incef
1991 to 1998
|-------------------------------- | ---- | ---- | -----------------------------
|EXPLORATION COST                 |      |      |                              
|ADMINISTRATIVE EXPENSES          |      |      |                              
|                                 |      |      |                              
|Operating loss                   |      |      |                              
|OTHER (EXPENSES) INCOME:         |      |     
|Financial interest expenses, net |      |      |                              
|Currency translation adjustment  |      |      |                              
|Other income                     |      |      |                              
|                                 |      |      |                              
|                                 |      |      |                              
|                                 |      |      |                              
|Net loss                         |      |      |                              
|                                 |      |      |                              
|Net loss per share - pre split   |      |     
|basis weighted average           |      |      |                              
|                                 |      |      |                              
|Shares - pre split basis         |      |      |                              
|                                 |      |      |                              

The accompanying notes (1 to 13) form
an integral part of these consolidated financial statements

HLB Pistone Montuori &
AsociadosAccountants and Consultants

Pistone Montuori & Asociados is a
member of HLB International. A worldwide organization of accounting firms and business
advisers.

F-5

AMERICANA GOLD AND DIAMOND HOLDINGS,
INC. AND SUBSIDIARIES (A development stage Company)

CONSOLIDATED STATEMENTS
OF SHAREHOLDERS EQUITYFOR THE YEARS ENDED DECEMBER 31 1998 AND 1997 
(Expressed in U.S. dollars)

|                                | CAPITAL
STOCK | ACCUMULATED
LOSSES | TOTAL
SHAREHOLDERS'
EQUITY
|------------------------------- | ------------- | ------------------ | --------------------------
|Balance as of December 31, 1996 |               |                    |                           
|                                |               |                    |                           
|Capital increase                |               |                    |                           
|Net loss                        |               |                    |                           
|                                |               |                    |                           
|Balance as of December 31, 1997 |               |                    |                           
|Capital increase                |               |                    |                           
|Contribution for future         |               |                   
|capital increase                |               |                    |                           
|Net loss                        |               |                    |                           
|                                |               |                    |                           
|Balance as of December 31, 1998 |               |                    |                           
|                                |               |                    |                           

The accompanying notes (1 to 13) form
an integral part of these consolidated financial statements

HLBPistone Montuori &
AsociadosAccountants and Consultants

Pistone Montuori & Asociados is a
member of HLB International. A worldwide organization of accounting firms and business
advisers.

F-6

AMERICANA GOLD AND DIAMOND HOLDINGS,
INC. AND SUBSIDIARIES (A development stage Company)

CONSOLIDATED STATEMENTS
OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (Expressed in U.S. dollars)

|                                             | 1998 | 1997
|-------------------------------------------- | ---- | ----
|OPERATING ACTIVITIES:                        |      |     
|Net loss                                     |      |     
|                                             |      |     
|Adjustments to reconcile net loss to net     |      |     
|cash used from operating activities:         |      |     
|Depreciation of property and equipment       |      |     
|Gain in translation of foreign currency      |      |     
|Provision for employee severance benefits    |      |     
|                                             |      |     
|                                             |      |     
|                                             |      |     
|Changes in operating assets and liabilities: |      |     
|(Increase) decrease in:                      |      |     
|Prepaid expenses and other current assets    |      |     
|Other assets                                 |      |     
|                                             |      |     
|                                             |      |     
|                                             |      |     
|Increase (decrease) in:                      |      |     
|Accounts payable                             |      |     
|Accrued liabilities                          |      |     
|Payments of employee severance benefits      |      |     
|                                             |      |     
|                                             |      |     
|                                             |      |     
|Net changes                                  |      |     
|                                             |      |     
|NET CASH USED IN OPERATING ACTIVITIES        |      |     
|                                             |      |     

The accompanying notes (1 to 13) form
an integral part of these consolidated financial statements

HLB Pistone Montuori &
AsociadosAccountants and Consultants

Pistone Montuori & Asociados is a
member of HLB International. A worldwide organization of accounting firms and business
advisers.

F-7

AMERICANA GOLD AND DIAMOND HOLDINGS,
INC. AND SUBSIDIARIES (A development stage Company)

CONSOLIDATED STATEMENTS
OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997(Expressed in U.S. dollars)

|                                            | 1998 | 1997
|------------------------------------------- | ---- | ----
|INVESTING ACTIVITIES:                       |      |     
|Purchase of temporary investment            |      |     
|Retirement of property and equipment        |      |     
|                                            |      |     
|NET CASH PROVIDED FROM INVESTING ACTIVITIES |      |     
|                                            |      |     
|FINANCING ACTIVITIES:                       |      |     
|Bank loan payment                           |      |     
|In long term account payable                |      |     
|Capital stock increase                      |      |     
|                                            |      |     
|NET CASH PROVIDED FROM FINANCING ACTIVITIES |      |     
|                                            |      |     
|EFFECT IN EXCHANGE RATE                     |      |     
|                                            |      |     
|DECREASE IN CASH                            |      |     
|                                            |      |     
|CASH BEGINNING OF YEAR                      |      |     
|                                            |      |     
|CASH END OF YEAR                            |      |     
|                                            |      |     

The accompanying notes (1 to 13) form
an integral part of these consolidated financial statements

HLB Pistone Montuori &
AsociadosAccountants and Consultants

Pistone Montuori & Asociados is a
member of HLB International. A worldwide organization of accounting firms and business
advisers.

F-8

AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDECEMBER, 31 1998 AND 1997

Note 1 
Incorporation. purpose and operation of the Company:

The Company was incorporated in 1993,
through the merger of Americana Gold an Diamond Mining Corporation (incorporated in
Tortola, British Virgin Island on April 3, 1990) and Blue Willows Holdings Inc.
(incorporated in the United States of America) with the purpose of negotiating, exploring,
exploiting, transporting and performing all those activities related to the handling of
gold, diamonds and precious metals and stones, as well as participating in any related
activities.

The Company is under development
stage and its activity is performed through the acquisition and exploration of mining
concessions, acquired through its subsidiaries domiciled in Venezuela. During 1998, the
companies temporal inactivated the exploration of certain mines acquired in concession
(See note 5). Likewise, the Company has incurred losses since its incorporation, and has
undergone a working capital deficit, especially during 1998 and 1997. The deficiency in
working capital and the operating losses since inception raise a doubt as to the
Companys ability to continue as a going concern. Managements plans concerning
these matters are described below.

The Company is still applying the
Restructuring Plan adopted in July 1998, and completed the following steps during the
second semester of 1998:

| | o | The company obtained an unsecured loan, which was used to payout the high interests loan
at the Venezuelan bank and to pay down the loan with a local bank. The Company has an
overdraft loan at an average annual interest of 7.95 %. See note 7.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | The shareholders partially paid U.S. dollars 210,300 of the subscription to an amount of
U.S. dollars 450,000 private placement for which the funds were committed but which was
subject to NASDAQ/SEC approval as part of the restructuring plan, along with U.S. dollars
450,000 in warrants subject to exercise within six or seven months. Completion of this
subscription and the associated warrants was delayed as a consequence of delay in SEC
approval. See note 8.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Requested and received shareholders consent (82%) for a 1 for 10 reverse stock split
and the private placement.
| | - | ----------------------------------------------------------------------------------------------------------------

| | o | Acquired an option to hold 50% of the Santa Rosa Property in Brazil with the intention of
defining drilling targets. (unaudited)
| | - | --------------------------------------------------------------------------------------------------------------------------------

| | o | Acquired the El Foco Development Project in Venezuela through acquisition debt
free, of the Venezuelan Companies, which hold those rights. The property has a drill
indicated resource of 300,000 ounces of gold with significant potential for new
discoveries and has a fully functional operations site with offices, staff and crew
housing, and a core management facility. See note 3.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

HLB Pistone Montuori &
AsociadosAccountants and Consultants

Pistone Montuori & Asociados is a
member of HLB International. A worldwide organization of accounting firms and business
advisers.

F-9

AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES
Notes to the consolidated financial statements

| | o | Negotiation of the agreement for the sale of this project for a total amount of U.S. 4
million dollars, plus royalties to Zaruma Mining Corporation, a Norwegian Company
undertaking an initial public offering during the second semester of 1999. This
negotiation was completed in March 1999. See note 13.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Reduced overhead by removing 5 director positions, laying off some excess personnel, and
subleasing office space.
| | - | -----------------------------------------------------------------------------------------------------------------

| | o | Engaged in conversations and negotiations with Capital Finance Companies to provide
project financing for the Santa Rosa Project in Brazil and with Marketing
Companies to assist with the promotion of the Company. (unaudited)
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The activities related to financing
and restructuring of the company were delayed through the first half of 1999, pending SEC
approval of the reviewed financial statements for the 1997 and 1996. During the first
quarter of 1999, the incumbent directors delayed all significant business pending
completion and approval of these statements in compliance with generally accepted
accounting principles in the United States.

It is managements intent to
continue with a policy of austerity but at the same time move ahead with the completion of
the exploration financing and a subsequent work program on the Santa Rosa
Brazil project and continue with the exploration of La Fortuna and
Bochinche concessions which will remain a major focus of the Company
activities. At the same time the Company will benefit from activities on its own interest
in the joint ventures in Venezuela (El Foco).

Note 2  Summary of
significant accounting principles and practices:

The most significant accounting
policies followed by the Company in the recording of its operations and in the
preparations of its consolidated financial statements are summarized as follows:

a)    
          Consolidation principles The consolidated financial statements includes the
          accounts of Americana Gold and Diamond Holdings Inc. and those of its wholly
          owned subsidiaries: Latinvan Metal Trading Ltd, C.A., Consorcio Minero Miamo,
          C.A. and Americana Gold and Diamond Holdings Inc. de Venezuela, C.A. (companies
          domiciled in Venezuela) as of December 31, 1998 and 1997. All intercompany
          balances and transactions have been eliminated in the consolidation.

HLB Pistone Montuori &
AsociadosAccountants and Consultants

Pistone Montuori & Asociados is a
member of HLB International. A worldwide organization of accounting firms and business
advisers.

F-10

AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES
Notes to the consolidated financial statements

b)    
          Property and equipment-

Proper1y and equipment are recorded
at acquisition cost. Repairs and maintenance expenses are charged directly to operations,
and improvements and renovations are added to the cost of the corresponding proper1y.
Depreciation is determined based on the straight-Line method, in accordance with the
estimated useful lives of the assets. When assets are sold or retired, the corresponding
cost and accumulated depreciation are eliminated from the accounts, and the gain or loss
is reflected in the years operations.

c)    
          Mining Concessions-

The mining concessions are owned by
the subsidiaries Latinvan Metal Trading Ltd, C.A. and Consorcio Minero Miamo, C.A. and are
recorded at the acquisitions cost, consisting of the price agreed upon to obtain the
rights of exploration and exploitation. Concessions are reviewed for recoverability as
10ng-Iived assets. Provisions for write downs are recorded when it is determined that the
asset is impaired.

As of December 31, 1998 and 1997,
there is no charge for depletion, due to the fact that the capacity of the mines to be
exploited has not been determined, and the Company has not initiated extraction
activities.

d)    
          Translation of financial statements The financial statements of the subsidiaries
          are denominated in bolivars and have been translated into U.S. dollars using the
          following procedure: all monetary assets and liabilities denominated in bolivars
          were translated at the floating market exchange rates of Bs. 566.19 and Bs.
          502.79 to U.S. dollar 1.00, in effect as of December 31, 1998 and 1997,
          respectively. United States of America dollars may be freely purchased at
          demand. Proper1y and equipment, other assets and shareholders equity have
          been translated at historical exchanges rates; and transactions have been
          included in the statement of operations at an average exchange rate in each
          month of the period in which the transactions were effected. Subsidiaries
          operate in a highly inflationary economy.

HLB Pistone Montuori &
AsociadosAccountants and Consultants

Pistone Montuori & Asociados is a
member of HLB International. A worldwide organization of accounting firms and business
advisers.

F-11

AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES
Notes to the consolidated financial statements

e)    
          Use of estimates-

The preparation of the consolidated
financial statements in conformity with generally accepted accounting principles in the
United States requires that management make estimations and assumptions, that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the income and
expenses reported during the reported period. Actual results may differ from these
estimates.

f)    
          Presentation of the consolidated financial statement Certain amounts of the
          consolidated financial statements as of December 31, 1997, have been
          reclassified in order to conform with 1998 presentation.

Note 3  Temporary
investments:

On September 15, 1998, Homestake
Mining Company of California sold to the Company its subsidiarys capital stock
Minera Rios Del Oriente, S.A., (who owns 11.10% of the capital stock of
Minera Rio Carichapo, S.A.), represented by 80.028 shares with a face value of
U.S. dollars 17.66 each share, and the 88,90% of its subsidiarys capital stock
Minera Rio Carichapo, S.A., represented by 125,178 shares with a face value of
U.S. dollars 1.77 each share.

The agreed sell price between parties
have been conformed by a) an initial portion of U.S. dollars 1.000, and b) a 3% of the
Smelter Net Return, with respect to all diamonds and gold not previously identified by
Homestake Mining Company of California before September 15, 1998, as part of mineral
resources areas regarding El Foco y Fundador.

The selling price indicated in b), of
the above paragraph, corresponds to 70% of shares from Minera Rios Del Oriente,
S.A. and the remaining balance 30% of the shares from Minera Rio Carichapo,
S.A. 

The shares identified are shown in
the consolidated balance sheets as of December 31, 1998, under temporary investment. See
note 13.

HLB Pistone Montuori &
AsociadosAccountants and Consultants

Pistone Montuori & Asociados is a
member of HLB International. A worldwide organization of accounting firms and business
advisers.

F-12

AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES
Notes to the consolidated financial statements

Note 4  Property
and equipment:

The amounts shown in the consolidated
balance sheets as property and equipment as of December 31, are represented as follows:

|                               | 1998 | 1997 | Annual
depreciation
rates
|------------------------------ | ---- | ---- | -------------------------
|
|
|Machinery and equipment        |      |      |                          
|Office furniture and equipment |      |      |                          
|Vehicles                       |      |      |                          
|Tools and utensils             |      |      |                          
|Facilities and improvements    |      |      |                          
|Computer equipment             |      |      |                          
|                               |      |      |                          
|                               |      |      |                          
|Less: accumulated depreciation |      |      |                          
|                               |      |      |                          
|                               |      |      |                          
|                               |      |      |                          

Note 5  Mining
Concessions:

o   In exploration activities:

| | The
balances for mining concessions in explorations activities, shown in the consolidated
balance sheets as of December 31, 1997, represent the acquisition of the concession known
as Fortuna I. For the acquisition of this concession, the Company paid U.S.
dollars 110,000, in cash, and U.S. dollars 1,500,000, with the shares of Consorcio Minero
Miamo, C.A., owner of Fortuna I concession. The purchase price for the
Fortuna I property was agreed upon by the seller and Americana Gold and
Diamond Holdings after due diligence. Americana paid in cash and shares with the amount of
shares being calculated by dividing the unpaid balance (after the cash payment) by the
market price of the shares at the time of the purchase. As of December 31, 1998 and 1997,
the remaining portion of debt outstanding of U.S. dollars 229,819 and U.S. dollars
390,000, respectively, are included in the accounts payable shown in the consolidated
balance sheets. As part of the acquisition contract of this concession, the Company agreed
to pay to a third company between 3% and 5% of the net benefit that would be obtained from
gold ore exploitation. As of December 31, 1998, Fortuna I concession shown in
the consolidated balance sheets under temporal inactivity exploration, due to the
financial situation described in the following paragraph.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

HLB Pistone Montuori &
AsociadosAccountants and Consultants

Pistone Montuori & Asociados is a
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F-13

AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES
Notes to the consolidated financial
statements

o    Temporal inactivity exploration:

| | The
balances for mining concessions in temporal inactivity exploration, shown in the
consolidated balance sheets as of December 31, 1998 and 1997, represent the acquisition of
the concession known as Bochinche. The Company is looking for more financing
at this time to comply with equipment requirements, obtain the necessary permits and
finance ongoing exploration. The reports of N.L. Tribe, Professional engineer, indicates a
reserve of latest 4,000,000, grams of gold, and recommended that exploration be continued
on Bochinche concession.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 6  Other
assets:

Balances of other assets shown in the
consolidated balance sheets as of December 31, are represented as follows:

|                                  | 1998 | 1997
|--------------------------------- | ---- | ----
|
|
|Future mineral exploitation plant |      |     
|Other                             |      |     
|                                  |      |     
|                                  |      |     
|                                  |      |     

Note 7  Bank loans:

The amounts shown as bank loans in
the balance sheets as of December 31, are represented by loans to be paid during 1998, as
follows:

|                     | 1998 | 1997 | Interest
rate %
|-------------------- | ---- | ---- | ---------------
|
|
|Local bank overdraft |      |      |                
|Local bank loan      |      |      |                
|Foreign bank loan    |      |      |                
|                     |      |      |                
|                     |      |      |                
|                     |      |      |                

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F-14

AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES
Notes to the consolidated financial statements

Note 8  Capital
stock:

For the years ended December 31, 1998
and 1997, the following capital stock modifications were made (number of shares are on a
pre-split basis).

During 1998:

|o
 
o
 
o
 
o | U.S.  dollars 213, 182, by the issuance of 440,404,  common  shares of the Company's  common stock paid by
different shareholders in cash.
U.S. dollars 289,417,  by the issuance of 573,334,  common shares by capitalization of debts maintained to
the directors, officers and suppliers for services rendered.
U.S.  dollars 217,318,  by the issuance of 2, 173, 180, common shares paid based on the agreement  between
the Company and Inversiones Megold. See note 5.
U.S.  dollars  210,300,  paid by different  shareholders  in cash for  contribution  of the future capital
increase.
|------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During 1997:

|o | U.S. dollars 285,989,
for the issuance of 609,952, common shares of the Company's common stock paid by different shareholders in cash.
|- | --------------------------------------------------------------------------------------------------------------------------------------

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F-15

AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES
Notes to the consolidated financial statements follows:

As of December 31, 1998, the
Companys capital stock on a pre-split basis, is constituted as follows:

|Class of shares | Shares | U.S. dollars | Manner of Payment
|--------------- | ------ | ------------ | -----------------
|Preferential    |        |              |                  
|                |        |              |                  
|Common          |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|Total Common    |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|                |        |              |                  
|Total           |        |              |                  
|                |        |              |                  

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F-16

AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES
Notes to the consolidated financial statements

Note 9 
Administrative expenses:

Administrative expenses for the years
ended December 31, 1998 and 1997, are represented as follows:

|                                                | 1998 | 1997
|----------------------------------------------- | ---- | ----
|
|
|Compensation to directors and officers          |      |     
|Professional fees                               |      |     
|Especial Bonus                                  |      |     
|Annual Franchise tax, Deleware                  |      |     
|Annual Fee NASDAQ listing                       |      |     
|Salaries, wages ad other benefits for personnel |      |     
|Depreciation                                    |      |     
|Net loss retirement of fixed assets             |      |     
|Other general and administrative expenses       |      |     
|                                                |      |     
|                                                |      |     
|                                                |      |     

Note 10  Year 2000:

The Company have undertaken a plan of
the management systems in place as to ascertain the potential impact of the date change at
the end of the century. These plans are being used to identify the extent to which changes
must to be made to enable management systems and products to become compliant with date
controls for the 21st century. It is not currently envisaged that compliance costs will be
material.

Note 11 
1997 Financial Statements:

On February 13, 1998, were issued a
report on the consolidated financial statements of the Company as of and for the years
ended December 31, 1997 and 1996, which had a qualified opinion, since the Company had not
performed and independent technical mining appraisal on the concessions owned, denominated
El Progreso 4 and El Progreso 5 with a book value of U.S dollars
5,931,535 as of December 31, 1997 and 1996, in order to determine their net realizable
value at the aforementioned dates, in accordance with generally accepted accounting
principles in the United States. As of October 15, 1998, subsequent to the issuance of
said report, the Company terminated the contract pertaining to the concessions and
reversed the above mentioned effect to reflect the write off on the book value of the above mentioned
concessions. Accordingly, the current unqualified opinion on the restated! 1997 and 1996
consolidated financial statements, as expressed herein, is different from that expressed
in the prior report (February 13, 1998) on the previously issued 1997 and 1996,
consolidated financial statements as it related to this matter.

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F-17

AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES
Notes to the consolidated financial statements

During 1998, the Company reversed the
carrying value of El Progreso 4 and El Progreso 5 concessions
restated in 1997, consolidated financial statement to retroactively recognize the
respectively effect, as follows:

|                      | 1997
|--------------------- | ----
|
|
|Assets-               |     
|Concessions:          |     
|"Fortuna I"           |     
|Acquisition cost      |     
|Exploration cost      |     
|                      |     
|                      |     
|                      |     
|"Bochinche"           |     
|Acquisition cost      |     
|Exploration cost      |     
|                      |     
|                      |     
|                      |     
|"El Progreso 4 and 5" |     
|Acquisition cost      |     
|Exploration cost      |     
|                      |     
|                      |     
|                      |     
|                      |     
|                      |     
|Liabilities-          |     
|Long-term debt        |     
|                      |     
|Accumulated losses    |     
|                      |     
|Loss for the year     |     
|                      |     

Note 12  Legal
matters related to subsidiaries:

a)    
          Provision for employee severance benefits

Benefits
have been accrued at an amount sufficient to cover the employees vested benefits as
set forth under Venezuelan labor legislation, net of anticipated payments. As of December
31, 1997 the company adopted the new legislation reform of June 1997 I and paid the
total liabilities of the prior legislation.

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F-18

AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES
Notes to the consolidated financial statements

b)    
          Provision for income tax and corporate assets tax

The
provision for income tax is calculated based on a reasonable estimate of net taxable
income for the year, in accordance with current tax legislation, which also establishes
the annual readjustment for tax inflation of its non monetary assets, foreign accounts
payable and shareholders equity as an increase or decrease on the net taxable
income. Likewise, the Income Tax Law authorizes the transfer of tax losses carry forward
for a term of up to three (3) years. The subsidiaries tax losses available to offset
future taxable income, are as follows:

|Subsidiaries                           | Amount | Year
incurred | Carry forward
up to
|-------------------------------------- | ------ | ------------- | -------------------
|
|
|A.G.D. Holdings Inc. de Venezuela, C.A |        |               |                    
|Latinvan Metal Trading LTD             |        |               |                    
|                                       |        |              
|                                       |        |               |                    
|                                       |        |              
|A.G.D. Holdings Inc. de Venezuela, C.A |        |               |                    
|Consorcio Minero Miamo, C.A            |        |               |                    
|                                       |        |              
|                                       |        |               |                    
|                                       |        |              
|A.G.D. Holdings Inc. de Venezuela, C.A |        |               |                    
|Consorcio Minero Miamo, C.A            |        |               |                    
|Latinvan Metal Trading LTD             |        |               |                    
|                                       |        |              
|                                       |        |               |                    
|                                       |        |              

The effect of the inflation indexes
and the adjustments, caused on the net taxable income (loss) as of December 31, 1998, are
as follows:

|Description                        | A.G.D.
Holding Inc.
de Venezuela
C.A. | Consorcio
Minero
Miamo, C.A. | Latinvan
Metal
Trading
LTD.
|---------------------------------- | ------------------------------------- | ---------------------------- | ---------------------------
|
|
|Property and equipment, net        |                                       |                              |                            
|Foreign accounts payable           |                                       |                              |                            
|Shareholders' equity               |                                       |                              |                            
|                                   |                                       |                              |                            
|Increase (decrease) on net taxable |                                       |                             
|Income (loss)                      |                                       |                              |                            
|                                   |                                       |                              |                            

The adjusted values of the property
and equipment should be depreciated over the remaining useful lives of the assets.
Depreciation is deductible for tax purposes.

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F-19

AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES
Notes to the consolidated financial statements

Likewise,
current tax legislation establishes the corporate assets tax, which is determined applying
1% to the average of the Subsidiaries assets adjusted for inflation invested in
income production during the fiscal year. Corporate assets tax expense will be subject to
the income tax calculation, and the excess generated by the comparison with income tax
will be considered as a corporate assets tax expense. The amount paid for corporate assets
tax during the period also constitutes a credit against income tax arising during the
three (3) subsequent fiscal periods.

The legislation establishes an
exemption for companies during development stage of two (2) years thereafter initiation of
its operating activities. If and when the Company is in a position to produce and
distribute gold the effect of the regulation could have a significant impact on the
Companys operations.

c)    
          Other relevant norms-

| | o | Wholesale
and Luxury Tax
| | - | ------------------------

| | Valued
added tax applies on services and imports of goods. During 1998, the wholesale and luxury
tax were 16.5% and 10.0% respectively. From May 1, 1999, the effective wholesale tax rate
will be 15.5%. As of December 31, 1998, the subsidiaries may compensate the fiscal credit
of U.S. dollars 56.658.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Taxpayers shall be exempted for a
five (5) years and subject to authorization from the Council of Ministers, from payment of
the Wholesale and Luxury Consumption Tax on imports, capital goods and services during
development stage of the implementation of industrial projects.

| | o | Norms
on Gold and Gold Alloys Exports
| | - | -------------------------------------

| | On
January l 1996, Resolution No.96-12-02 entered into effect, issued by the Central
Bank of Venezuela, establishing the norms on gold and gold alloys exports. The most
significant aspects of this resolution are the following:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Gold and gold alloys exports are allowed, and interested parties should be registered in
the Gold Exporters Registry to be kept by the Central Bank of Venezuela.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Authorization requests will be effected before the Central Bank of Venezuela, accompanied
by a certification marked out for the internal market, in bars, a minimum equivalent to
15% of the amount calculated in kilograms of refined or melted gold, resulting from adding
the amount whose authorization to be exported is requested, and the amount destined for
the local market. Said authorization will be granted in a term of 45 consecutive calendar
days. If and when the Company is in a position to produce and distribute gold the effect
of the regulation could have a significant impact on the Companys operations.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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F-19

AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES
Notes to the consolidated financial
statements

| | o | Mining
taxes
| | - | ------------

| | In
addition to the normal taxes that any private company in Venezuela has to pay, the Mining
Law establishes the following taxes:
| | ---------------------------------------------------------------------------------------------------------------------------------

| | o | Exploration
 tax:  A single  payment  of U.S.  dollars  0.0004 /  hectare  for the  right to  explore
 the concession.
| | - | ----------------------------------------------------------------------------------------------------------------------

| | o | Surface
tax: An annual payment in proportion to the number of hectares granted.  For alluvial
 concessions          the rate is U.S.  dollars 0.001 / hectare a year, and for vein
 concessions U.S. dollars 0.002 / hectare a          year. The tax is levied only after
the concession title is published in the official gazette.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

d)    
          Foreign investment treatment regulations

Actual
foreign investment regulations on foreign capital, trademarks, patents, licenses and
royalties allow the foreign companies, among other, the following:

| | o | Reinvestment of net income; distribution, profit remittance of dividends to foreign
investors and re-exportation of the foreign shareholders investment will not require
authorization from the Superintendence of Foreign Investments (SIEX.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | All agreements regarding Information Technology and use of Patent and Trademarks are
authorized, regardless of the modality that said agreements adopt. There is a subsequent
obligation to register such agreements with the Superintendence of Foreign Investments
(SIEX).
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Foreign companies are allowed to take
out loans from local banks and to raise credit on the Venezuelan capital markets,
including the sale of stocks and bonds on local exchanges. External credits do not require
prior authorization or registration.

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F-20

AMERICANA GOLD AND DIAMOND HOLDINGS, INC. AND SUBSIDIARIES
Notes to the consolidated financial statements

e)    
          Capital stock

As
of December 31, 1998, the Companys subsidiaries accrued losses that exceeds more
than two thirds (2/3) of the capital stock. According to the Venezuelan Commercial Code
establishes the following: When capital stock as per records decrease more that
33,33% (1/3) of the capital stock of the Company, must be restored or reintegrated to
capital stock in that amount, or limit it, to the remaining balance. When
capital stock decreases exceeds more than 66,66% (2/3) of the capital stock, company must
be liquidated or dissolved, if shareholders does not reintegrate or limit to the remaining
balance.

The
shareholder intention is to give financial support to the Company in order to continue
operating.

Note 13  Subsequent
events:

In March 1999, the Company completed
the share purchase agreement, in accordance therewith the purchase price will be the
equivalent of U.S. dollars 4,000,000, which the parties agree is . the fair market
value of the shares and that such fair value shall be paid by means of payment in cash and
share of Zaruma Mining Corporation ASA, a corporation organized and existing under the
laws of Norway, as follows:

| | o | U.S. dollars 200,000 in cash (the U.S. dollars Fund) and U.S. dollars
3,800,000, which the parties agree shall be paid through the delivery of 1,900,000 shares
of Zaruma (the Share Fund) issued at NOK 0.50 per share at a subscription
price of NOK 15 per share, pursuant to the capital increase of Zaruma, which will take
place in April-March 1999. The parties agree that the exchange rate of NOK 7.50 per 1.00
U.S. dollar shall be applicable for the value of the shares to be delivered hereunder.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | As additional consideration for the purchase of the shares, Zaruma grants Americana a 1 %
Net Smelter Returns (NSR) royalty from all metal production from the El
Foco areas and a 1% royalty on the realized value of all diamonds produced from the
El Foco areas.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | The Seller undertakes, as a consideration for the sale of the shares that it shall not,
without prior written consent from the Purchaser, for a period terminating on March 31,
2002, interfere of seek to interfere or take such steps as may interfere with the
continuance of supplies to Carichapo (or the terms relating to such supplies)
from the suppliers who have been supplying components materials or service to
Carichapo.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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F-21