<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

      For Fiscal Year Ended December 31, 1998

                                       OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      OF 1934

 [No Fee Required] For the transition period ____________ to _______________

      Commission File Number 0-18842

                            FIRST SEISMIC CORPORATION

               (Exact name of registrant as specified in charter)

             DELAWARE                                    76-0062729
  (State or other jurisdiction of                     (IRS Employer
  Incorporation or organization)                   Identification Number)

        2470 GRAY FALLS
           SUITE 190
        HOUSTON, TEXAS                                   77077-6513
     (Address of principal                               (Zip Code)
      executive offices)

                                 (281) 556-5656
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
              (Former name, former address and former fiscal year,
                         if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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.  No X

Indicate by check mark if disclosure of delinquent files pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to
this Form 10-K.  X

The Common stock of the Registrant is not currently listed on any Exchange,
however the Registrant's common stock has traded from time to time on NASD
"Pink Sheets". On October 20, 1999, a stock transaction reported on the OTC
bulletin board indicated that 400 shares of the stock traded for $0.05 per
share. This activity may not represent market value, however the aggregate
market value obtained by using this valuation on the 6,922,722 shares of the
voting stock held by non-affiliates of the registrant in December 1999 would
be approximately $346,136. For these purposes, the term "affiliate" is deemed
to mean officers and directors of the registrant.

<PAGE>

                            FIRST SEISMIC CORPORATION
                           ANNUAL REPORT ON FORM 10-K
                                TABLE OF CONTENTS

<TABLE>
<S>        <C>                                                        <C>
PART I

Item 1.    Business ................................................   3
Item 2.    Properties...............................................  12
Item 3.    Legal Proceedings........................................  12
Item 4.    Submission of Matters to a Vote of Security Holders......  12


PART II

Item 5.    Market for the Registrant's Common Equity and
             Related Stockholder Matters............................  12
Item 6.    Selected Consolidated Financial Data.....................  14
Item 7.    Management's Discussion and Analysis of Financial
             Condition and Results of Operations ...................  15
Item 7A.   Quantitative and Qualitative Disclosures About
             Market Risk............................................  18
Item 8.    Financial Statements and Supplementary Data..............  18
Item 9.    Changes in and Disagreements With Accountants on
             Accounting and Financial Disclosure ...................  18


PART III

Item 10.   Directors and Executive Officers of the Registrant.......  18
Item 11.   Executive Compensation ..................................  20
Item 12.   Security Ownership of Certain Beneficial Owners
             and Management.........................................  22
Item 13.   Certain Relationships and Related Transactions...........  23


PART IV

Item 14.   Exhibits, Financial Statement Schedules, and
             Reports on Form 8-K....................................  25


SIGNATURES .........................................................  26
</TABLE>


                                      2
<PAGE>

PART ONE

ITEM 1. BUSINESS

GENERAL

         FIRST SEISMIC Corporation provides to its customers seismic data and
other geoscientific information that is primarily used in oil and gas
exploration and production efforts. We sell licenses to use our proprietary
information as well as information owned by others under broker and agency
arrangements to oil and gas companies. We also invest in select upstream oil
and natural gas exploration through our recently acquired wholly owned
subsidiary FORTESA Corporation, a Texas Corporation. See Note 10 to our
Consolidated Financial Statements for financial information relating to our
March 30, 1999 acquisition of FORTESA. We were originally incorporated in
Delaware in July 1990. Our data information operations are primarily
conducted through our three wholly owned subsidiaries, which are FIRST
EXCHANGE Corporation, a Delaware corporation, FIRST EXCHANGE Limited, a
United Kingdom corporation, and Blackwell Supply, Inc., d.b.a. Blackwell
Trading, Inc., a Delaware corporation.

         Since 1993, sales of licenses to use our seismic information have
substantially declined due to reduced demand for 2-D seismic data. Prior to
1993, license sales of 2D data had been the source of substantially all of
our business. In response, we have redefined our business. Our main source of
revenues since 1993 have been license sales, brokerage, packaging,
publication, and related services pertaining to diverse geoscientific
information which we seek to acquire, package, own or represent in order to
make it available for licensing to oil and gas industry exploration
customers. This geoscientific information is comprised of studies, research,
measurements, interpretations, information compilations, translations,
special reports, well data, correlations, graphical displays, databases of
values, and maps. The scientific disciplines covered by these geoscientific
information packages include geophysics, geology, geochemistry, engineering,
environmental, and regional synthesis of such information in various
combinations, all oriented towards providing exploration visibility in
specific geographic areas to our customers. We have copyrighted the completed
published materials in each geographic area of our endeavor, and our
customers license the use of this information from us for their own internal
use.

          We have made capital expenditures of over $1,000,000 in the
acquisition, processing and packaging of such geoscientific information
during the four years ended December 31, 1998 and are actively pursuing the
licensing of this data, as well as related geoscientific services which are
required by our customer base.

         As discussed in detail below under Oil & Gas Exploration and
Production Operations, we are also pursuing select opportunities in the oil &
gas exploration and production business where such endeavors complement
relationships with our suppliers, customers and co-venturers. We plan to
devote a greater percentage of our financial and other resources in the
future to oil and gas exploration and production and the promotion of
investment opportunities for the oil and gas industry at large. Management
believes that our future financial success depends largely on the success of
these related oil and gas ventures. See "Oil and gas Exploration and
Production Operations" below for a discussion of these oil and gas ventures.

SEISMIC OPERATIONS

         Historically, we have engaged in the development of a proprietary
seismic data library. Our seismic data library consists exclusively of
two-dimensional or 2D data, and was developed over a period of approximately
ten years. As of 1991 our seismic data library consisted of over 11,000 miles
of domestic 2D seismic line data. As of December 31, 1998, our seismic data
library consisted of approximately 8,500 miles of domestic and foreign 2D
seismic line data. Our library is marketed to major and independent oil and
gas companies under use-license arrangements. Additionally, we have been
involved in the sale of licenses for seismic data owned by others, under
brokerage and agency agreements. Seismic surveys and the analysis of seismic
data for the identification and definition of underground geological features
and structures are principal techniques used in oil and gas exploration and
development to determine possible locations of subsurface hydrocarbons.

         Beginning in 1992, technology that enabled geoscientists to obtain
seismic data in three dimensions ("3D") became much more cost effective and
universally available. 3D seismic data makes possible a graphic geophysical
depiction of the substrata geology from two (instead of just one, as in 2D
seismic) horizontal dimensions and one vertical dimension. This process
provides a substantially more accurate representation than 2D data and
significantly enhances the ability to evaluate the probable existence and
location of subsurface hydrocarbons.


                                      3
<PAGE>

         Accordingly, 3D seismic data became the information of choice among
our historical customers, and as a result, the demand for and the relative
value of our extensive 2D library decreased significantly. Both the volume of
2D seismic licenses sold and the prices which customers were willing to pay
for such information suffered severe downturns beginning in late 1991. While
a market remains for this information and the Company continues to engage in
this business, management believes that future prospects for growth in
ownership and marketing of 2D information are below a critical mass necessary
to be of significant commercial interest to the Company. During 1998, sales
of 2D seismic information accounted for approximately 20% of the Company's
revenues. Approximately 30% of our revenues come from associated services
such as reproduction and interpretation of such data.

GEO-TECHNICAL PUBLISHING AND SERVICES

         Cash flow from our operations since 1993 has increasingly come from
license fee and service revenue generated by our exploration and
geoscientific research, as well as geo-technical services performed directly
for our customers. In these areas, we compete on the basis of expertise in
packaging, marketing, and supplying interrelated data for a particular area
of geologic interest. We perform these functions exclusively for oil
companies, either by our preparation of direct information on an exclusive
basis for the customer, or as multi-client studies on which (i) we attempt to
retain an ownership interest in the resulting study for on-going income, and
(ii) our customer receives the right to use the compiled information for
internal use under a licensing agreement.

         We have developed and added geotechnical publications used for
multi-client sales into our data library. Typically we realize a better
margin in these products due to our partial or full ownership position in
them, as compared to information brokerage and commission revenue from data
that we do not own. Potential customers may inspect abstracts of information
and data types and determine their usefulness for a particular project via
our website at www.first-exchange.com. Our geotechnical publication products
and services tend to be more cost effective for customers than those which
they develop at their own expense as we provide the needed exploration
information in a useful form with pricing based on a percentage of our costs
for originating the information. Further licenses for these same reports are
sold or resold for varying prices based on market demand.

         In conjunction with these services, we generate commission and
service revenue related to the compilation, interpretation, imaging and
marketing of geoscientific data. These services typically involve fees for
performance arrangements with customers who own or desire to obtain mineral
rights and are seeking to determine viability for drilling programs. We seek
to compete in this area by exploiting our upstream relationships, data
sources, and experience in emerging areas such as Africa, South America and
Eurasia. Revenue from geoscientific information and services accounted for
approximately 50% of our revenue in 1998.

OIL AND GAS EXPLORATION AND PRODUCTION OPERATIONS

          We intend to utilize our expertise in the application of
geoscientific technology, as well as our relationships with suppliers and
owners of information and our customers to participate in oil and gas
exploration and production in selected situations which do not conflict with
the business interests of our customers. Through our subsidiary FORTESA, we
are currently pursuing several oil & gas prospects in the U.S. as well as in
West Africa. These prospects are in various stages of development, however
none are actively drilling as of December 1999. The majority of these
investments were accounted for at cost as the Company held a minority
ownership interest in 1998 in the West African opportunity. At December 31,
1998, the Company wrote down a prospect in East Texas by $34,920 due to a
decline in fair market value. The Company's cost basis in all of these oil &
gas positions totaled approximately $171,000. During 1998, two wells in
Kansas began producing with cash distributions expected to begin after the
operator has recovered the drilling costs.

RECENT DEVELOPMENTS

FORTESA ACQUISITION

         Effective March 30, 1999, we purchased all of the outstanding shares
of stock of FORTESA Corporation, a Texas corporation, from the Beall Living
Trust, its sole shareholder, the trustee for which is Rogers E. Beall, our
chairman and chief executive officer, in exchange for 50,000 shares of the
Company's Series A Convertible Preferred Stock plus 8,055 shares of Common
stock. At the time of the acquisition, FORTESA's assets consisted of oil and
gas interests located in East Texas and the Republic of Senegal and were
valued at approximately $171,000, a figure that represents the book value of
the assets to FORTESA.


                                      4
<PAGE>

FORTESA ASSETS

         Mr. Rogers E. Beall, our chairman and chief executive officer formed
FORTESA in May 1997 to pursue an opportunity to develop natural gas reserves
in an onshore block owned by Petrosen, the national oil company of the
Republic of Senegal and referred to as the THIES Block. Such opportunity was
not available to us at the time due to our financial condition. The THIES
Block consists of approximately 998,000 onshore acres adjacent to Dakar, the
Capital of Senegal. In February 1997, Petrosen drilled an exploratory well on
the acreage that was tested successfully in two zones, including a flow of
4.3 million cubic feet per day from one of the intervals, a Campanian sand
interval, at 4,200 feet. The Company estimates that the required expenditures
for the initial development of the THIES Block will be approximately $5.4
million.

         To develop the THIES Block, FORTESA entered into a joint venture in
December 1997 with Benton Oil and Gas Company under which FORTESA retained a
15% working interest in the project. The terms of the joint venture required
Benton to act as the operator of the venture and to commit the first $5.4
million required to develop the interest. FORTESA was required to fund its
share of capital requirements after Benton's committed expenditures were
made. We estimated that the development of the THIES Block will require
drilling two to five additional wells and the construction of a pipeline to
deliver the natural gas produced to the local power generating facility
approximately 42 kilometers from the field. In November 1999 we entered into
a gas sales agreement to sell our future production to this power plant. See
"Recent Developments Concerning Fortesa" below.

         FORTESA also holds a small position in exploration acreage in east
Texas that we believe is prospective for gas exploration. This acreage is
adjacent to known productive areas that have exhibited commercial production
in the 1990's.

RECENT DEVELOPMENTS CONCERNING FORTESA

         On October 23, 1999, our subsidiary FORTESA entered into a new
agreement with Benton Oil and Gas Company (Senegal) Ltd. by which FORTESA has
assumed all obligations and rights of Benton Oil and Gas Company under the
joint venture in the THIES Block. In addition, Benton purchased 135,000
shares of the Company's Series B Convertible Preferred Stock, liquidation
value $10.00, for $750,000 in cash, and in consideration for services
rendered consisting of Benton's prior development expenditures on the THIES
Block. In connection with the issuance of Series B Convertible Preferred
Stock, the Company also granted Benton registration rights for common stock
underlying Benton's shares of preferred stock.

         A condition precedent to this agreement was the granting of a
release from Petrosen to Benton of the latter's obligations under the prior
joint venture agreement. On November 16, 1999, we obtained that release for
Benton from our other partner, PETROSEN. Under this agreement, we also
released Benton on our behalf from Benton's above obligation to spend
$5,400,000 to develop the Gadiaga Field. As a result, we are now obligated to
develop the Gadiaga Field without Benton, and we have assumed the role of
`operator' of this project from Benton, with the consent of PETROSEN.

         Our agreement with Benton requires FORTESA to obtain additional
equity financing of at least $500,000 on terms equivalent to those of the
Series B Convertible Preferred Stock. Upon obtaining a letter of intent to
fund the additional equity, FORTESA was required to issue a purchase order
for pipe to be used in our construction of the pipeline that will transport
gas produced from the Gadiaga Field in the THIES Block. FORTESA issued the
required purchase order for the pipe on November 24, 1999. FORTESA is also
required promptly to commence efforts to obtain additional financing in the
form of a construction loan of up to $1,000,000 to complete installation of
the pipeline. As of the date of this filing FORTESA is engaged in discussions
to secure the required additional equity financing from third-party investors
and the required construction financing from an international bank with
offices in Senegal.

         On November 23, 1999 FORTESA executed a gas sales agreement to
supply natural gas produced from the THIES Block to the main Senegalese power
plant at Cap Des Biches, Senegal. Under the terms of this agreement we have
agreed to dedicate to the main power plant, and the power plant has agreed to
take, all of the natural gas to be produced from the Gadiaga field for at
least two years, at a fixed price. The Company may also sell any production
from the THIES Block, outside of its Gadiaga Field, to the same power plant
or other local energy users and industries.

         We plan to complete construction of the gas delivery pipeline in the
second quarter of 2000, and realize cash flow from gas sales within 90 days
of the first gas transmission. Concurrent with the commencement of this cash
flow, we plan the drilling of two to five additional wells in 2000 and 2001.
In order to satisfy our obligations under the contract with Benton, we must
raise or otherwise promote from new co-venturers the additional funds to
drill at least two wells before February 2001. We plan to use a combination
of cash flow from the production of the first well discussed above, new
capital from private or other sources, project financing or capital from
future co-venturers to fund the additional required wells. We intend to fund
further


                                      5
<PAGE>

development of the Gadiaga gas field, as well as other exploration on the
THIES Block, in the same manner. We have no assurance that we will be able to
successfully obtain this financing on terms acceptable to us, complete the
project and realize continuing revenues from the gas supply contracts.

TERMS OF THE SERIES A CONVERTIBLE PREFERRED STOCK

         The terms of the Series A Convertible Preferred Stock provide for
dividends at a rate of 6% of the liquidation value per annum which will
accrue and accumulate beginning March 31, 2001. We may not pay dividends on
our common stock unless and until all accrued and unpaid dividends on the
Series A Convertible Preferred Stock are paid. Shares of the Series A
Convertible Preferred Stock are convertible into shares of common stock at
the holders' option after March 31, 2001 at a conversion ratio that varies
proportionally with an increase in value of the assets of FORTESA. Initially
the Series A Convertible Preferred Stock will be convertible at a ratio of 10
shares of Common stock for each share of Series A Convertible Preferred
Stock. On each of December 31, 2001, 2002 and 2003, the conversion ratio
shall be adjusted in proportion to the increase in value of the assets of
FORTESA, if any, as determined by an annual PV10 valuation of the assets
performed by an independent engineer. In any event, the conversion ratio
shall not exceed a maximum of 40 shares of common stock for each share of
Series A Convertible Preferred Stock. The maximum ratio would correspond to
an increase in value for the FORTESA assets acquired on March 30, 1999 to
$2,925,000 as determined by the independent valuation.

TERMS OF THE SERIES B CONVERTIBLE PREFERRED STOCK

         The terms of the Series B Convertible Preferred Stock entitle the
holder(s) at any time to convert each share into 10 shares of Common stock at
their option. In addition, we have the right to redeem all or part of the
outstanding shares of Series B Convertible Preferred Stock at the $10.00 per
share liquidation value. If the shares are redeemed prior to three years from
the date of issuance, we must also pay a premium equal to 6% of the
liquidation value per annum from the date of issuance until the date of such
redemption.

EXCHANGE OF COMMON STOCK FOR 12% SENIOR NOTES

         In October 1997, we entered into agreements with the current holders
of all of the Company's 12% Senior Notes due December 31, 1996 which modified
the terms of these Senior Notes. Prior to entering into these individual loan
modification agreements, we had been in non-compliance with various
provisions including payment of interest on these Senior Notes since
September 30, 1993. The provisions of the loan modification agreements
reduced the balance due on the Senior Notes to the outstanding principal
amount only and forgave unpaid interest and suspended other remedies
available to the Note holders. These modification agreements required us to
retire these Senior Notes prior to September 30, 1999. In March of 1999, we
were able to satisfy the balance of our obligations that were not already
paid in cash under the terms of the modification agreement by issuing
1,241,596 shares of common stock, valued at two times the book value of the
Company, in exchange for most of the outstanding Senior Notes. We paid the
remaining outstanding principal balance on the Senior Notes as of September
1999.

EXCHANGE OF COMMON STOCK FOR 6% NOTES, AND WARRANTS TRANSACTIONS

         In March 1999 we issued 977,508 shares of common stock, together
with new warrants to purchase an aggregate 475,000 additional shares of
common stock at a price of $0.30 per share, in exchange for all of our
outstanding 6% Secured Promissory Notes. These 6% Notes had an original
principal amount of $500,000, with an outstanding principal balance of
$411,178 plus accrued interest as of March 29, 1999. In connection with this
transaction, the Noteholders, who were also the warrant holders, agreed to
exercise at least 80% of the outstanding $0.50 warrants, thereby purchasing
shares of new common stock for cash. As an inducement, we offered 150% of the
number of shares of common stock called for by the warrants as originally
issued in 1993 for each warrant exercised. As of October 1999 all of the
Noteholders accepted the offer to exchange their Note for common stock. Of
these converting Noteholders, 92.5% also purchased an aggregate 712,500
shares of common stock for $237,500 in cash. One holder of 25,000 warrants
issued in 1993 at a strike price of $0.50 chose not to exercise his warrants
early. Those 25,000 warrants expire in June 2000.


                                      6
<PAGE>

CUSTOMERS

         We market our geoscientific products and services to major and
independent oil and gas companies. During 1998, 35% of revenues were
attributable to three customers, each of which individually accounted for
over 10% of our revenues. During 1997 and 1996 no one customer accounted for
as much as 10% of our revenues. Although we believe that revenues from our
seismic and geoscientific data library operations will maintain a minimum
level of activity sufficient to sustain that effort, we believe any future
revenue growth is limited to our oil and gas exploration and promotion
activities. We also believe that these activities will require more
co-venturing and partnering with our historical customers and others with
whom we have relationships, than do those of our geoscientific information
business

COMPETITION

         The sale of seismic data and geoscientific analysis, information and
reports is highly competitive in the United States and Western Europe where
we earn most of our revenues. We rely on supplier and owner relationships to
obtain information, data, analysis, and previously compiled studies to market
to our customer base. Our relationships and supplier contracts are with major
and independent oil and gas companies, national oil companies in the U.S. and
Europe, independent geological and geophysical data compilers that own
proprietary equipment, processes, and technologies, and technical institutes
and agencies that employ scientists to advance such research. Due to our
supplier and owner relationships, we are able to leverage expertise from our
suppliers and realize significant efficiencies in data gathering, processing
and analysis activities. We have successfully built these relationships in
key areas of Western Europe, the Caspian Sea, West Africa, and South America.
In addition, we use our proprietary data library of geotechnical reports and
seismic data to provide information cost-effectively to our customer base
compared to similar alternative products offered by our competitors.

         There are a number of other independent oil service companies and
numerous oil and gas companies that create and market seismic data, create
research studies and maintain their own seismic data libraries. Many of our
competitors have longer operating histories, greater financial resources and
larger sales volumes than we have. In 1998, there were approximately ten
companies with operations similar to our operations. Additionally, over one
hundred service companies create new information for sale to the upstream oil
industry in competition with us worldwide. We consider all of these entities
to be significant competitors.

         In the oil and gas exploration and production business there are
many companies competing for the acquisition of mineral properties. Many of
these competitors are better capitalized than we are. We seek to compete in
the exploration for and development of natural gas and crude oil reserves on
the basis of our contacts, relationships, understanding of the application
and use of geoscientific technology and information in the location and
extraction of commercially producible hydrocarbons, and our expertise in
geoscientific disciplines. No assurances can be made that we will have the
resources necessary to fully develop the properties that we currently own or
to acquire new properties for development.

SEASONALITY AND TIMING FACTORS

         Our results of operations can fluctuate from quarter to quarter. The
fluctuations are caused by a number of factors.

         Our seismic licensing, brokering, geotechnical publishing and
service activities are significantly influenced by oil and gas industry
capital expenditure budgets and spending patterns. The timing of oil and gas
industry capital expenditures can be irregular, since spending patterns are
affected by individual oil and gas company requirements as well as
industry-wide conditions. As a result, our geoscientific data licensing
revenue does not necessarily flow evenly or progressively on a sequential
quarterly basis during the year.

         No revenues have been realized from our Oil and Gas activities as of
December 31, 1998. We may bring wells on-line in the future that may cause
significant fluctuations in our financial results. Our future oil and gas
exploration and production operations may be impacted by certain
weather-related events as well as by mechanical and equipment problems or
shortages and other factors, which may delay the hookup of successfully
completed wells and delay the resultant production revenue. Also, due to the
seasonal variations in oil and gas prices, our results from future oil and
gas operations may be subject to significant fluctuations due to variations
in commodity prices.


                                      7
<PAGE>

EMPLOYEES

         As of December 31, 1998 in all of our operations we had 16 full-time
employees and several employees who devote part of their time to our business
who are also officers of other affiliated corporations. Of these full-time
employees, 7 work in geoscientific information, 7 in corporate staff or
administrative operations, and 2 in oil and gas operations. None of our
employees are covered under collective bargaining agreements, and we believe
we have a favorable relationship with our employees. We have employment
contracts with our chief executive officer who also acts as the president of
our FIRST EXCHANGE subsidiary, and also with the president of FORTESA, our
oil and gas subsidiary.

RISK FACTORS AND INFORMATION REGARDING FORWARD LOOKING STATEMENTS

ANY INVESTMENT IN OUR SECURITIES INVOLVES RISK. INVESTORS SHOULD CAREFULLY
CONSIDER, IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS REPORT,
RISKS SUCH AS THOSE DESCRIBED BELOW BEFORE MAKING ANY INVESTMENT DECISION.

         This Annual Report on Form 10-K includes forward-looking statements
and assumptions we have made within the meaning of Section 27A of the
Securities Act of 1933 and Section 21 E of the Securities Exchange Act of
1934. These statements relate to future events or our future financial
performance and involve known and unknown risks, uncertainties and other
factors that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different from any
future results, levels of activity, performance or achievements expressed or
implied by the forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"potential," or other comparable terminology. Although we believe that our
expectations are based on reasonable assumptions, we can give no assurance
when or if our goals will be achieved. Important factors that could cause
actual results to differ materially from those in the forward looking
statements we have made in this report include at a minimum changes in the
exploration budgets of our customers for seismic data, geoscientific studies
and related services. Some additional factors will be actual customer demand
for our seismic data, geoscientific studies and related services, the extent
of our success in acquiring oil and gas properties and in discovering,
developing and producing reserves, the timing and extent of changes in
commodity prices for natural gas, crude oil and condensate and natural gas
liquids and conditions in the capital and equity markets during the periods
covered by the forward looking statements. These are all factors that will be
experienced in the future that we have based our estimates and plans on, and
they may vary significantly from the present and cause us not to realize our
plans in the future.

DECREASES IN ENERGY INDUSTRY SPENDING COULD ADVERSELY AFFECT OUR BUSINESS

         Overall demand for 2D seismic data, geoscientific information, and
the type of related services that we provide depends primarily upon the level
of spending by oil and gas companies for exploration, production and
development activities. Industry spending levels may follow increases and
decreases in the commodity prices for oil and gas, so that demand for our
products and services may be affected to some degree by market prices for
natural gas and crude oil. These prices have historically been very volatile
due to the sensitivity of product prices to market demand. As a result of the
very significant weaknesses in oil and gas commodity prices starting in
mid-1998 and through mid-1999, the level of overall oil and gas industry
exploration activity had declined from levels experienced in recent years.
This has resulted in a significant consolidation in the number of major
customers for our geoscientific products. Our customers' capital spending
decreased significantly in the period immediately after the 1998 annual
report contained herein, due to these recent industry trends. This resulted
in a significant adverse effect in 1999 upon the demand for our services and
our resulting level of operations and cash flow. In addition, potential
revenues to be generated in the future by our oil and gas exploration and
development business may fluctuate with increases and decreases in the market
prices of oil and gas. Many factors beyond our control may affect such oil
and gas operations. These factors include financing activities, the level of
worldwide supply of natural gas and oil, the availability of adequate
pipeline and other transportation and processing facilities and the marketing
of competitive fuels, and similar worldwide factors.


                                      8
<PAGE>

DATA LIBRARY INVESTMENT AND FUTURE LICENSING

         Our method of selling use-licenses for our data library allows us to
sell the same information to multiple buyers. However, data that we have
developed and invested in may not continue to be of interest to customers in
the future due to changes in areas of interest, licensing of the underlying
lands for hydrocarbon exploration by companies, product pricing factors,
political risk changes and perceptions, and changes in financial and other
conditions that can reduce the viability of hydrocarbon extraction in areas
for which we own data. In such cases, we may not fully recover our costs in
acquiring and developing geophysical and other geoscientific data through
future licenses of that data. As a result, we would have to expense costs of
that data library asset without having corresponding revenues, thereby
causing a loss in those periods affected.

AMORTIZATION OF OUR DATA LIBRARY

         Our methods for accounting for investment in our data library can
have a significant effect on the results of our operations for any given
period of time. We amortize our data library based in part on our estimates
of future sales of licenses to our data or over a regular minimum period,
whichever is greater. Estimates are inherently imprecise and may vary from
period to period depending on market developments and our expectations. If we
see that the values in our data library are not being recovered through
revenues at any point in time, we may increase the amortization rates. This
may result in impairments of our data library assets in periods of low
exploration industry interest, and such impairments can have a significant
effect on our reported results of operations.

GOVERNMENT REGULATIONS

         Our operations are affected by a variety of laws and regulations,
including laws relating to the use of information, the environment, taxes,
exports and imports, safety, permitting operations, and investment in certain
countries that may become out of favor with the U.S. or other governments. We
invest in financial and management resources in order to comply with such
regulations and laws, but we cannot always anticipate changes in the laws and
politics, and errors in compliance by operatives of our company. Such
modifications and non-compliance can cause us to lose our investment or
become liable for errors in judgment or actions that will result in losses.

INTERNATIONAL EXPOSURE AND RISKS

         As we increase our investment in countries outside of the U.S., we
increase our exposure to risks that we cannot always anticipate or control by
the rule of law or compliance with standards normal for our business. In the
future, we believe that an increasing amount of our revenue will come from
sales of information and natural resources originating in Senegal and other
countries outside of the U.S., and these revenues will be subject to risks
that are inherent in doing business abroad. These risks include the
possibilities of expropriation of our assets and investments, changes in tax
and other laws, currency exchange rate fluctuations and devaluations, labor
and political disturbances, insurrection or war, disruptions or delays of
licensing, permitting, or leasing activities, and the requirements of partial
local ownership of our operations.

INSURANCE LIMITATIONS

         We attempt to insure against normal liabilities, and to protect our
assets and investments against losses. However, we cannot always obtain
insurance for our operating risks. In addition, sometimes insurance is not
available at cost-effective rates. We will periodically review the insurance
coverage we have in effect, and try to insure against possible losses when
coverage is available at rates that do not make our projects non-commercial.


                                      9
<PAGE>

DRILLING HAZARDS AND DRY HOLES COULD AFFECT OUR OIL AND GAS ACTIVITIES

         Our oil and gas operations will be subject to hazards incident to
the drilling of oil and gas wells, such as cratering, explosions,
uncontrollable flows of oil, gas or well fluids, fires, pollution, or other
environmental risks, as well as to the risk that we may not encounter
commercially productive natural gas or oil reserves. Some of these hazards
can cause personal injury and loss of life, severe damage to and destruction
of property and equipment, environmental damage and suspension of operations.
However, since we sometimes may not act as operator in our oil and gas
drilling business, these factors may be dependent upon our petroleum company
co-venturers to conduct operations in a manner so as to minimize these
operating risks. In accordance with industry practice, we will maintain
insurance against some, but not all, of these operating risks. There can be
no assurance that adequate insurance will be available in the future, or that
we will be able to maintain adequate insurance on terms and conditions
acceptable to management. As a result of the risks inherent in oil and gas
operations, the success of our oil and gas exploration, development and
production activities is uncertain.

LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT OUR BUSINESS

          Our operations are dependent upon a relatively small group of
management and technical personnel. The loss of one or more of these
individuals could have a material adverse effect on our operations and future
results. Equity ownership and other incentives are offered to attract and
retain our key employees. In addition, we have employment agreements with our
chairman and chief executive officer, Rogers E. Beall, who also acts as the
President of our FIRST EXCHANGE subsidiary, and also with FORTESA president,
Hayne S. Blakely.

OUR ABILITY TO OBTAIN ADDITIONAL FINANCING COULD IMPAIR OUR FUTURE OIL AND
GAS ACTIVITIES

         The success of our oil and gas development activities depends
substantially on our ability to obtain additional financing. In particular,
our activities in Senegal require us to make significant capital expenditures
to continue the development of that project, which will depend upon our
ability to obtain additional financing. See "Oil and Gas Exploration and
Production Operations - Recent Developments." Although discussions with
potential equity and debt investors and lenders are ongoing, we have no firm
commitments for such additional financing, and no assurances can be made that
additional financing will be obtained.

REGIONAL EVENTS MAY AFFECT OUR GEOGRAPHICALLY CONCENTRATED OPERATIONS

         Most of the seismic data in our library is 2D data covering lands
located in the Rocky Mountains, Michigan Basin and other onshore areas of the
U.S. The majority of our compiled geoscientific data and studies cover areas
in the Caspian Sea, South America and western Africa. Our interests in oil &
gas properties are concentrated in east Texas and The Republic of Senegal in
western Africa. Any regional events that increase costs, reduce availability
of equipment or supplies, reduce demand or limit production will impact us
adversely in these specific areas.

EXTENSIVE GOVERNMENTAL REGULATION

         The oil and gas industry in general is subject to extensive
governmental regulation, which changes from time to time in response to
economic or political conditions. In particular, oil and gas exploration and
production are subject to international and U.S. federal and state
regulations governing environmental quality and pollution control, state
limits on allowable rates of production by well or peroration unit, and other
similar regulations. These regulations generally are intended to prevent
waste of natural gas and oil, protect rights to produce natural gas and oil
between owners in a common reservoir and control the amount of natural gas
and oil produced in order to avoid waste and reservoir damage, by assigning
allowable rates of production and control contamination of the environment.
Environmental regulations will affect our operations on a daily basis. Also,
we believe that the trend toward more expansive and stricter environmental
laws and regulations will continue. At present, we do not yet expend material
amounts to comply with such regulations. The implementation of new, or
changing of existing laws or regulations affecting the oil and gas industry
could have a material adverse impact on us in the future.


                                      10
<PAGE>

           The following organization chart gives an overview of our structure,
organization and operations.


                           [CORPORATE COMPANY CHART]



                                      11
<PAGE>

ITEM 2.  PROPERTIES

         We lease office space under non-cancelable operating leases. Our
lease for our corporate and operating offices in Houston, Texas amounts to
7,650 square feet and expires in January 2001. Our lease for our U.K.
operations amounts to 1,565 square feet for our facilities just south of
London, England, and expires in June 2000. Our offices in Baku, Azerbaijan
are in the facilities of one of our publication co-venturers and the space is
made available to us at no charge.

         We hold rights to a natural gas discovery known as the Gadiaga Field
that is located in the THIES Block in the Republic of Senegal through our
wholly owned FORTESA subsidiary. Proven reserves from the initial well in the
THIES Block are approximately 2BCF of natural gas. In order to exploit our
rights under the agreement with Petrosen, we are obligated to make
expenditures in the amount of $5,400,000 to fund the construction of a
delivery pipeline and the drilling of two development wells in the Gadiaga
gas field. See "Liquidity and Capital Resources" and "Oil and Gas Exploration
and Production Operations - Recent Developments".

         We also hold various mineral lease rights on certain speculative oil
& gas acreage located in east Texas. Expenditures made to secure these rights
are recorded at cost in the accompanying financial statements. We
periodically evaluate the expected future value of these rights in order to
determine if they have become impaired or reduced in value. As of December
1998 the value of these rights was approximately $171,000. (See Note 1
- Summary of Accounting Policies, Oil & Gas Properties in the accompanying
financial statements)

ITEM 3.  LEGAL PROCEEDINGS

         We are a defendant in a lawsuit filed on October 28, 1997 in the
U.S. District Court for the Northern District of Oklahoma, brought by two
parties claiming to be the successors-in-interest to McKenzie Management
Inc., a minority owner of 1,200 miles of 2-D seismic data acquired by us in
September 1990 from McMoran Oil & Gas Company and Adobe Resources
Corporation. A portion of this data was originally owned by a joint venture
comprised of McMoran, Adobe and McKenzie Management Inc. At the time of our
original purchase of this data, McMoran and Adobe could not locate McKenzie
and indemnified us "against any and all future claims, costs, expenses or
causes of action that may be asserted by the referenced minority owner...."
In June 1994, we sold our interest in this data to Seitel Corporation and
indemnified Seitel against claims relating to the seismic data being sold.
The plaintiffs seek approximately $600,000 to $1,500,000, plus punitive
damages and attorney's fees. We believe we are indemnified against loss based
on our purchase contract with McMoran and Adobe. This lawsuit is still in the
early stages of discovery and we cannot predict the extent of our liability,
if any. No specific provision has been recorded in the accompanying financial
statements for any loss that may be realized from this matter.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         NONE


PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

         Our common stock was formerly traded on the NASDAQ NMS system. In
March of 1993 our common stock was de-listed from the NASDAQ and any trading
activity since that time has taken place through the OTC Bulletin Board
System (Pink Sheets) The following table sets forth the high and low bid
information for the common stock for 1998 and 1997 as reported by the OTC
Bulletin Board System.

<TABLE>
<CAPTION>
                                   1998                  1997
                              ------------------------------------
                               Low      High         Low      High
                              ------------------------------------
         <S>                  <C>       <C>         <C>       <C>
         First Quarter        $.02      $.20        $.02      $.20
         Second Quarter        .02       .20         .02       .20
         Third Quarter         .02       .20         .02       .20
         Fourth Quarter        .02       .20         .02       .20
</TABLE>


                                      12
<PAGE>

         This Annual Report on Form 10-K represents the first filing we have
submitted to the Securities and Exchange Commission since our filing on Form
10-Q for the period ended September 30, 1992. See "Fortesa Acquisition" above
for description of the Company's Convertible Preferred Stock series A and B
that was issued during 1999.

         To our knowledge as of November 30, 1999 there are approximately 600
holders of record of our Common stock.

DIVIDEND POLICY

         We have not paid cash dividends since 1990, and we intend to retain
future earnings from the next several years to provide funds for use in the
expansion of our business. We do not intend to pay dividends in the
foreseeable future.

RECENT SALES OF UNREGISTERED SECURITIES

         In December 1996 the President of the Company purchased 253,790
shares common stock at $.02 per share. The issuance of such shares was exempt
from registration under Section 4(2) of the Securities and Exchange Act of
1933.

         On January 1, 1997, the Company issued 150,000 shares of its common
stock at par value to its Executive Vice President in exchange for all of the
shares of Blackwell Supply, Inc. Through Blackwell, the Company conducts its
domestic geophysical information activity, including the marketing and sale
of airborne remote sensing surveys. The issuance of such shares was exempt
from registration under Section 4(2) of the Securities and Exchange Act of
1933.

         Effective March 30, 1999, we issued 50,000 shares of our Series A
Preferred Stock and 8,055 shares of our common stock in exchange for all of
the common stock of Fortesa. Shares of our Series A Preferred Stock are
convertible to shares of common stock at an initial ratio of 10 shares of
common stock for each share of Series A Preferred Stock. The conversion ratio
is adjustable in proportion to an increase in value for the FORTESA assets
acquired on March 30, 1999. In any event the conversion ratio shall not
exceed a maximum of 40 shares of common stock for each share of Series A
Convertible Preferred Stock. The issuance of such shares was exempt from
registration under Section 4(2) of the Securities and Exchange Act of 1933.

         In March 1999 we issued 977,508 shares of common stock, together
with new warrants to purchase an aggregate 475,000 additional shares of
common stock at a price of $0.30 per share, in exchange for all of our
outstanding 6% Secured Promissory Notes. The issuance of such shares and
warrants was exempt from registration under Section 3(a)(9) of the Securities
and Exchange Act of 1933.

         In March of 1999, we issued 1,241,596 shares of common stock, valued
at two times the book value of the Company, in exchange for outstanding 12%
Senior Notes. The issuance of such shares was exempt from registration under
Section 3(a)(9) of the Securities and Exchange Act of 1933.

         As part of our transaction with Benton, we issued 135,000 shares of
the Company's Series B Convertible Preferred Stock, liquidation value $10.00,
for $750,000 in cash and in consideration for the prior expenditures of
Benton to develop our interest in the Senegal gas prospect. Each share of
Series B Convertible Preferred Stock is convertible into 10 shares of common
stock. The issuance of such shares was exempt from registration under Section
4(2) of the Securities and Exchange Act of 1933. See "Recent
Developments - RECENT DEVELOPMENTS CONCERNING FORTESA" in Item 1 for a
discussion of this transaction.


                                      13
<PAGE>

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

SELECTED FINANCIAL STATEMENT INFORMATION

The following table sets forth selected historical consolidated financial
data for the periods indicated.

All intangible and tangible assets are recorded at cost

<TABLE>
<CAPTION>
                                                             Year Ended December 31,
                                                             -----------------------
                                             1998             1997             1996             1995
                                             ----             ----             ----             ----
<S>                                     <C>              <C>              <C>              <C>

STATEMENT OF OPERATIONS:
REVENUES:
Company owned Geophysical               $    149,750     $    236,244     $    188,569     $    556,395
Company owned Geological                   1,294,646          699,732          412,856          245,333
Net revenue interest                          89,889          216,870          159,486          148,938
Brokerage of third party Geophysical         694,474          378,009          672,853        1,301,124
Brokerage of third party Geological          406,981          449,882          649,343          287,028
Commissions                                   54,002          270,063           35,734           55,330
Reproduction and other                       274,688          119,572          112,353          150,819
                                        ------------     ------------     ------------     ------------

Total Revenues                          $  2,964,430     $  2,370,372     $  2,231,194     $  2,744,967
                                        ============     ============     ============     ============

COST OF SALES                              1,454,145        1,120,119        1,018,708        1,456,953

EXPENSES
Selling, general and administrative
  expenses                                 1,056,397          949,968          953,411        1,247,285
Depreciation and amortization                447,294          295,240          753,877        1,018,044
Interest expense                              42,293           25,458           12,247           14,213
Interest income                               (3,857)          (2,121)          (2,388)            (928)
Other income                                  (1,006)               -                -                -
Other expense                                 34,920                -           32,896              824
                                        ------------     ------------     ------------     ------------
Total Expenses                             1,576,041        1,268,545        1,750,043        2,279,438
                                        ------------     ------------     ------------     ------------

NET LOSS BEFORE SETTLEMENTS/LIABILITY
EXTINGUISHMENTS                              (65,756)         (18,292)        (537,557)        (991,424)

SETTLEMENTS/LIABILITY EXTINGUISHMENTS
(Includes $48,687 gain from a FORTESA
  transaction in 1998)                       305,489          177,324          925,178        1,755,554
                                        ------------     ------------     ------------     ------------

NET INCOME                                   239,733          159,032          387,621          764,130

COMPREHENSIVE INCOME
FOREIGN CURRENCY TRANSLATION
  ADJUSTMENTS                                 (6,509)          (5,420)               -                -
                                        ------------     ------------     ------------     ------------

COMPREHENSIVE INCOME                    $    233,224     $    153,612     $    387,621     $    764,130
                                        ============     ============     ============     ============

BASIC EARNINGS PER SHARE:
    NET LOSS BEFORE SETTLEMENTS/
      LIABILITY EXTINGUISHMENTS
      PER SHARE                         $      (0.01)    $      (0.00)    $      (0.11)    $      (0.20)
                                        ============     ============     ============     ============

    SETTLEMENTS/LIABILITY
      EXTINGUISHMENTS PER SHARE         $       0.05     $       0.03     $       0.19     $       0.36
                                        ============     ============     ============     ============

    NET INCOME PER SHARE                $       0.04     $       0.03     $       0.08     $       0.16
                                        ============     ============     ============     ============

</TABLE>

<TABLE>
<CAPTION>
                                                                   December 31,
                                                                   ------------
BALANCE SHEET DATA:                          1998             1997             1996             1995
                                             ----             ----             ----             ----
<S>                                     <C>              <C>              <C>              <C>

ASSETS:
Total Current Assets                         580,359          706,760          660,034        1,335,389
Data library, net                          2,462,964        2,117,109        2,257,401        2,513,319
Data and Agency use positions, net            23,185           26,435           41,232          155,144
Property and equipment, net                   52,983           45,705           47,620           43,209
Investment in oil and gas properties,
   at cost                                   170,710          178,630          102,025          102,025
Other assets                                  40,384           42,670           37,232           31,655
                                        ------------     ------------     ------------     ------------
TOTAL ASSETS                             $ 3,330,585      $ 3,117,309      $ 3,145,544      $ 4,180 741
                                        ============     ============     ============     ============

LIABILITIES AND STOCKHOLDERS' EQUITY
    (DEFICIT)

Long-term debt                             1,442,674        1,613,919        1,375,607        1,715,607

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)         564,681          266,957           11,845         (634,642)
                                        ------------     ------------     ------------     ------------

TOTAL LIABILITIES AND STOCKHOLDERS'
   EQUITY (DEFICIT)                      $ 3,330,585      $ 3,117,309      $ 3,145,544      $ 4,180,741
                                        ============     ============     ============     ============

</TABLE>


                                      14
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

RESULTS OF OPERATIONS

SALES OF SEISMIC AND GEOSCIENTIFIC DATA

       Total revenue for the year ended December 31, 1998 increased
approximately $594,000 or 25% compared to the same period in 1997. Revenues
by category fluctuated but the primary net increase was due to increased
licensing and brokerage of geoscientific products related to the Caspian Sea
region. Declines in revenue from our commission income are primarily
attributable to a decrease in oil and gas exploration activity in East Texas
and a resultant decrease in demand for our domestic sales of geophysical
information. We also experienced a decline in net revenue interest payments
accruing to us from the sale of seismic data, in which we have an expiring
interest, by third parties. Revenues for the year ended December 31, 1997
were up over 1996 by approximately $139,000 or 6%, as a result of
international promotion successes in 1997 in West Africa, and increases
realized in our Caspian Sea geologic products.

OIL AND GAS

         Our investments in oil & gas properties have produced no operational
revenue as of this filing. The natural gas reserves held by our subsidiary
FORTESA are not yet producing. Revenue associated with these reserves is
subject to certain capital expenditures for which we are obligated and which
have yet to be made. See "- Liquidity and Capital Resources" for a discussion
of these capital expenditure requirements.

COST OF SALES

         Cost of sales is composed of employee and administrative costs directly
associated with specific projects or sales, and of partner and data owner
payments for licensed and brokered data. These costs do not include the
amortization of the associated data library that is included in Expenses after
Gross Margin. Costs of sales have regularly averaged approximately 50% of
revenues during the period covered herein, in spite of product mix fluctuations.


CORPORATE AND OTHER

         Selling and General and Administrative expenses increased
approximately 12% or $110,000 for the year ended December 31, 1998 as
compared to year ended December 31, 1997 primarily as the result of increased
accounting costs associated with our efforts to comply with public company
reporting requirements and increased bad debt expense. Such expenses did not
materially change during fiscal years 1996 and 1997.

         Depreciation and amortization expense, which consists primarily of
amortization of our data libraries, increased approximately 50% or $152,000
for the year ended December 31, 1998 as compared to the year ended December
31, 1997. This was due to the increased level of capital expenditures for new
geoscientific reports in the Caspian Sea region that were completed and
placed on the market during 1998. These reports are normally amortized over
approximately three years. Depreciation and amortization expense for the year
ended December 31, 1997 decreased approximately 60% compared to the 1996
period such decrease was due to a final regular amortization of our 2D
seismic library to its residual carrying value made in 1996. Subsequent to
December 31, 1996, amortization charges to the 2D library were made on only
the residual value of the seismic library, which represents a 10% residual on
the original cost, over a 15 year period which resulted in significantly
lower amortization charges than were previously made.

         During the three years ended December 31, 1998, we recognized gains
totaling approximately $1.4 million in connection with settlements and
statutory extinguishments of debt with certain trade creditors. These
non-cash gains occurred in connection with the decline of our 2D seismic
brokerage activities and were substantially offset by the associated
product-line final regular amortization costs of the 2D data library. These
costs were shown as operating costs. These final settlements and
extinguishments are shown as extraordinary items in the accompanying
financial statements. We do not believe significant gains or compromised
amounts of this nature are likely to be realized in the future, as these
amounts resulted from the substantial elimination of our operations in the
domestic seismic brokerage business by the end of 1993.


                                      15
<PAGE>

         Interest expense increased in each of the last three years in
connection with the 6% Notes until they were converted into common stock and
warrants in March 1999. After 1993, due to the uncertainty of our ability to
pay amounts due until they were converted into common stock and warrants in
March 1999 for interest on our outstanding debt, interest was not accrued
ratably on any of our debt obligations, except for interest that was actually
paid. See Note 10 - Subsequent Events in the accompanying financial
statements.

LIQUIDITY AND CAPITAL RESOURCES

         Our cash flow from operations was $1,106,439, $540,742 and $347,181
for each of the three years ended 1998, 1997 and 1996 respectively. A line of
credit with our bank for $100,000 is secured by our Accounts Receivable, and
has an available amount of $100,000 as of December 31, 1999. Our president
had personally guaranteed this line of credit, pending completion of our
restructuring.

         We had a working capital deficit at December 31, 1998 of
approximately $670,000. Of this, we expect to be able to settle liabilities
included in the current section of the accompanying balance sheet in the
amount of approximately $200,000 from non-cash transactions in the form of
services or trades of information.

         Expenditures on acquisition of data for resale were approximately
$765,000 and $81,000 in 1998 and 1997 respectively. We expect to fund capital
expenditures in the next 12 months through customer pre-commitments to any
approved new projects, prior to capital expenditures exceeding $25,000 on any
single project.

         We believe that cash flows from operations will be sufficient to
fund our working capital needs for the next 12 months, except for required
expenditures in conjunction with Oil and Gas development in the Republic of
Senegal, which will require additional financing.

         See "FORTESA Acquisition" and "Recent Developments" in ITEM 1 for
possible future impacts to Liquidity and Capital Resources.

RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." The
Statement establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. The Statement requires that changes in
the derivative's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met. Special accounting for qualifying
hedges allows a derivative's gains and losses to offset related results on
the hedged item in the income statement, and requires that a company must
formally document, designate, and assess the effectiveness of transactions
that receive hedge accounting. Statement 133 is effective for fiscal years
beginning after June 15, 1999 and cannot be applied retroactively. Statement
133 must be applied to (a) derivative instruments and (b) certain derivative
instruments embedded in hybrid contracts that were issued, acquired, or
substantively modified after December 31, 1997 (and, at our election, before
January 1 1998). We have not, and we are not engaging in hedging activities,
and we do not buy or sell derivative instruments. Therefore we do not believe
that application of this recent statement will have any effect on our
consolidated financial statements.


                                      16
<PAGE>

YEAR 2000

         Many currently installed computer systems and software products are
coded to accept only two-digit entries in the date code field. Beginning in
the year 2000, these date code fields will need to accept four-digit entries
to distinguish 21st century dates from 20th century dates. As a result,
computer systems and software used by many companies may need to be upgraded
to comply with such "Year 2000" requirements. Significant uncertainty exists
concerning the potential effects associated with such compliance, but systems
that do not properly recognize such information could generate erroneous data
or cause a system to fail.

         Compliance Program.  In order to address the Year 2000 issue, our
information technology manager reviewed key automated systems and related
processors to assess if they would remain functional through the year 2000.
We have concluded that the software and systems utilized in our operations
are compliant regarding Year 2000 issues. All of the software and systems
utilized are of the "off the shelf" variety and the various vendors have
supplied certifications to us to the effect that their software will not be
subject to problems related to the date change.

         Our State of Readiness.  A review and assessment of the information
technology and non-information technology systems was completed as of October
29, 1999 and did not identify any systems which are not Year 2000 compliant.
Due to the non-automated nature of our relationships with both our suppliers
and customers we believe that our operations will not be significantly
disrupted, even if third parties with whom we have relationships are not Year
2000 compliant. In the event that our customers are not Year 2000 compliant,
their businesses could be affected such that they might not order our
products during periods of their internal correction methods

         Costs to Address Year 2000 Compliance Issues.  We believe that we
will not be required to make any material expenditure to address the Year
2000 problem as it relates to our existing systems. To date, costs incurred
to address Year 2000 compliance have been related to or licensing updated
software systems for our internal computers, the costs of which have not been
material. We have charged to income those upgrading costs as we incurred
them. These costs have been funded from cash provided by operating activities.

         Risk of Non-Compliance and Contingency Plan.  The goal of the Year
2000 project has been to ensure that all of the critical systems and
processes, which are under our direct control, remain functional. However,
because certain systems and processes may be interrelated with systems
outside of our control, there can be no assurance that all of our
implementations have been successful. There can be no assurance that
unexpected Year 2000 compliance problems from either the Company or our
vendors, customers and service providers would not materially and adversely
affect our business, financial condition or operating results. We will
continue throughout 1999 to consider the likelihood of a material business
interruption due to the Year 2000 issue.

IMPACT OF INFLATION AND CHANGING PRICES

         The general levels of exploration activity in the oil and gas
industry directly affect the cost of acquiring, processing and reselling
geoscientific data and exploration and development costs of advancing our gas
projects. The pricing of our products and services, and of the costs we must
pay for hydrocarbon development are primarily a function of these factors.
For these reasons, we do not believe inflationary trends have had any
significant impact on its financial operating results during the three years
ended December 31, 1998. But management believes the large fluctuations in
the worldwide hydrocarbon product pricing during this period, and oil field
services excesses and shortages resulted in cost fluctuations that presented
significant challenges to us for planning the development of the Senegalese
project, and our cash flow management


                                      17
<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Our exposure to market risk, including adverse changes in commodity
prices, interest rates and foreign currency exchange rates is discussed below.

COMMODITY PRICE RISK

         We have not produced revenues as of December 1999 related to sales
of natural gas, crude oil, condensate and natural gas liquids. We have no
program in place to undertake to hedge our position with respect to these
commodities and does not originate or buy derivative type instruments.
However, to initially minimize price fluctuation risk factors of our gas
development project in Senegal, we agreed to a fixed price per MCF in our gas
supply agreement over the next two years with the power plant that is party
to such agreement.

         Fluctuations in hydrocarbon commodity prices could have a material
impact on the level of revenues in future periods.

INTEREST RATE RISK

         We have no variable rate debt, and therefore we have no open
interest `rate swap' or interest rate `lock agreements'.

CURRENCY EXCHANGE RATES

         We conduct some of our business in British `pounds sterling', and in
`CFA' in the Republic of Senegal (the CFA is directly tied monetarily to the
French Franc which will be replaced by the `Euro' in the next year).
Therefore we are subject to foreign currency exchange rate risk on cash flows
related to sales, expenses, financing and investing transactions. Exposure
from market rate fluctuations related to activities in the Republic of
Senegal, where the Company's functional currency is the CFA, and in the
United Kingdom, where the Company's functional currency is British Pounds
Sterling, is not material at this time, but future increases in the strength
of the USA `dollar' could have a negative effect on our revenues from
international information license sales and gas sales transactions.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The financial statements and financial statement schedules required
by this Item are set forth on pages F1 through F26 hereof and incorporated
herein by reference.

ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

         NONE


PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

BOARD OF DIRECTORS

ROGERS E. BEALL, CHAIRMAN--52 years old. FIRST SEISMIC and its predecessors
have employed Mr. Rogers Beall continuously since February 1974 (26 years).
Previously Mr. R. E. Beall was employed for 3 years as the Comptroller of the
NATIONAL AERONAUTICAL AND SPACE ADMINISTRATION'S Slidell Louisiana Computer
Center, during the Skylab program. Prior to that time, Arthur Andersen & Co.
employed him in their audit and tax divisions in Cleveland Ohio for 4 years.
Mr. Beall received his CPA certification in Ohio and Louisiana, and a
Bachelor of Arts degree in Business Administration, with a concentration in
Accounting and a minor in Economics from Baldwin-Wallace College in Berea
Ohio.


                                      18
<PAGE>

ALEXANDER E. BENTON, DIRECTOR--55 years old. Mr. Benton has served as a
Director of FIRST SEISMIC since September 1990. In 1988, he was a founder,
and is presently on the Board and an Executive Officer of an affiliate of
BENTON OIL & GAS Company, of Carpinteria California, a NYSE listed,
international oil & gas operator. Previously he served as the President of
Benton Petroleum Company from 1985 to 1988. Mr. Benton began his career at
Amoco Production Company and ultimately became a `Director of Applied
Geophysical Research' at Amoco's research center in Tulsa Oklahoma. Mr.
Benton also was employed in senior positions with TransOcean Oil Co., May
Petroleum, and also with MOBIL Oil Company. Mr. Benton has a B.S. in
Geophysics from California State University, and served as the American
Association of Geologists as one of their AAPG Distinguished Lecturers in
1998.

EDWARD M. TRAPP, DIRECTOR--70 years old. Mr. Trapp is a shareholder in FIRST
SEISMIC, presently owning 110,000 shares of our common stock. Mr. Trapp
serves on the Audit and Compensation Committees of the Company. Mr. Trapp
worked as a geophysical consultant from 1989 to present, and assists the
Company in this regard, as requested. From 1953 to 1989, Mr. Trapp was
employed by AMOCO Production in Europe and the USA, in varying responsible
positions in Geophysical Operations, ending his career at Amoco as the
Regional Geophysicist for the Europe, Latin America, and Far East Region. Mr.
Trapp has a Bachelor of Science degree in geophysics from St. Louis
University, and is a veteran of the US Army from the Korean era.

AUTHUR O. BEALL, P.H.D. DIRECTOR--65 years old. Dr. Beall (no relation to Mr.
Rogers E. Beall) was appointed to the Board in early 1998, and serves on the
Audit & Compensation Committees. Since 1994, Dr. Beall has worked as an
international Oil & Gas Consultant, and advisor to J. Ray McDermott Co., and
to others. Since 1997, ELF Exploration, Inc., of France has retained Dr.
Beall as International Business Development Advisor, in Houston. From 1989 to
1994, Dr. Beall was the President/General Manager of British Gas (Americas)
(formerly Tenneco International) running an international exploration program
with 450 employees and working in Africa, Latin America, and the USA. Prior
to 1989, Dr. Beall ran international exploration programs for Tenneco Int'l,
Hamilton Int'l Oil Co. (VP), and CONOCO. Dr. Beall received his Ph.D. in
Geology from Stanford University (1964), MS in Management from M.I.T. (1976),
and his MS and BS in Geology from Baylor University where he completed his
studies in 1961.

EXECUTIVE OFFICERS

         The current executive officers of the Company are:

ROGERS E. BEALL, CEO and Acting Chief Accounting Officer of FIRST SEISMIC,
and President of FIRST EXCHANGE. Biographical information regarding Rogers
E. Beall is set forth above, under the Directors' section.

The following biographies describe the business experience of the remaining
executive officers.

HAYNE S. BLAKELY, PRESIDENT OF FORTESA--49 years old. Mr. Blakely joined
Fortesa on January 1, 1998. Previously he was the President of Quintana
Minerals - Peru and served as Vice President of Operations and as a
consultant for Quintana Minerals Corporation in Houston, for a total of
eleven years. He began his career in oil and gas industry in 1974 with
Schlumberger, and then worked in various engineering positions for AMOCO and
Terra Resources. Later he served as Vice President and partner of Pure Energy
Production Company, and President and owner of Blakely Engineering &
Associates providing consulting services. Mr. Blakely has a Bachelor of
Science degree in Industrial Engineering from the University of Tennessee and
is a registered engineer in the states of Texas and Kansas.

NICHOLAS E. ROCKECHARLIE, VICE PRESIDENT OF FINANCE--53 years old. Mr.
Rockecharlie is the Managing Director of Rockecharlie & Co., a merchant
banking firm he founded in 1979. Rockecharlie & Co. has sponsored and/or
arranged a variety of transactions including leveraged buyouts,
recapitalizations, mergers, acquisitions and private equity placements. From
1984-1993 Mr. Rockecharlie organized and served as managing general partner
of Elisa Research Ltd., a Texas limited partnership engaged in medical
diagnostic research performed by leading virologists from the Baylor College
of Medicine. From 1977-1979, he was vice president of Charter New York
Leasing Corporation (a unit of Irving Trust Co.). Mr. Rockecharlie was vice
president of Commercial Credit Capital Corp. responsible for institutional
placement of equity interests in leveraged leases arranged by the firm. In
1968-1971, Mr. Rockecharlie served in the US Army, graduated from the
Infantry Officer Candidate School at Ft. Benning, GA, and served in the
Republic of Viet Nam. He holds a Bachelor of Science Degree in Mathematics
from Loyola College in Baltimore and a Master of Administrative Science
Degree from Johns Hopkins University.


                                      19
<PAGE>

WALTER H. WALNE, III, SECRETARY--52 years old. Mr. Walne is an attorney in
private practice. From 1980 to 1986, Mr. Walne was an officer and founding
director of Blackstone Oil Company, an exploration company. Mr. Walne's
practice is focused on energy industry related matters, including reserve
based loan document preparation for commercial banks; providing counsel to
various independent oil & gas producers engaged in domestic onshore and
offshore exploration and production operations regarding issues arising out
of acquisitions, operations, financing, administrative compliance, and
operating agreements. Mr. Walne holds a BA in English from Princeton
University (1969), and a law degree from the University of Texas (1973). He
served in the United States Marine Corps Reserve from 1969 to 1975, obtaining
the rank of captain.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") requires the directors, executive officers and persons
who own more than ten percent of the outstanding shares of common stock of
the Company to file initial reports of ownership and reports of changes in
ownership (Forms 3, 4, and 5) of common stock with the SEC. Directors,
executive officers and greater than ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all such forms that they
file.

         To the Company's knowledge based solely on its review of the copies
of such reports received by it and on written representations by certain
reporting persons that no reports on Forms 3, 4 and 5 were required, the
Company believes that during the fiscal year ending December 31, 1998, all
Section 16(a) filing requirements applicable to its directors, executive
officers and ten percent stockholders were complied with.

ITEM 11. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

         The following table summarizes, with respect to the cash
compensation paid by our subsidiary First Exchange to the chief
executive officer. No other executive officer received cash
compensation in excess of $100,000 in years 1996 through 1998.


                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                            ANNUAL COMPENSATION (1)       LONG-TERM
                                                                         COMPENSATION

NAME AND PRINCIPAL POSITION               FISCAL     SALARY     BONUS     SECURITIES       ALL OTHER
                                           YEAR                           UNDERLYING     COMPENSATION (2)
                                                                            OPTIONS
                                                                           (NUMBER)

<S>                                       <C>       <C>         <C>      <C>             <C>
Rogers E. Beall, CEO of First Seismic,     1998     $105,000      -        300,000           $  167
  President of First Exchange
                                           1997       93,500      -         50,000              951

                                           1996       71,500      -         50,000            3,782
</TABLE>

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

(1)  During the years ending December 31, 1996, 1997 and 1998, perquisites
     for the individual named in the Summary Compensation Table aggregated
     less than 10% of the total annual salary and bonus reported for such
     individual in the Summary Compensation Table. Accordingly, no such
     amounts are included in the Summary Compensation Table.

(2)  Consists of matching contributions and Company contributions through its
     retirement plans, amounts paid under certain insurance plans and a
     transportation allowance.

                                      20
<PAGE>

STOCK OPTION GRANTS

         The following table sets forth certain information with respect to
stock option grants made to the Named Executive Officer during 1998 under
the Company's Stock Option Plan, (the "Stock Option Plan").

<TABLE>
<CAPTION>
                          OPTION GRANTS IN LAST FISCAL YEAR
                                 INDIVIDUAL GRANTS

      NAME              NUMBER OF      % OF TOTAL     EXERCISE OF     EXPIRATION     POTENTIAL REALIZABLE
                        SECURITIES       OPTIONS       BASE PRICE        DATE           VALUE AT ASSUMED
                        UNDERLYING     GRANTED TO       ($/SH)                           ANNUAL RATE
                         OPTIONS       EMPLOYEES                                        OF-STOCK-PRICE
                         GRANTED        IN 1998                                        APPRECIATION-FOR
                                                                                        OPTION TERM (1)

                                                                                      5%             10%
<S>                     <C>            <C>            <C>             <C>            <C>             <C>
Rogers E. Beall          300,000          60%           $0.20           6/00          -               -
  CEO and Chairman

</TABLE>

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

(1)  The dollar amounts under these columns represent the potential
     realizable value of each grant of options assuming that the market price
     of common shares appreciate in value from the date of grant at the 5%
     and 10% annual rates prescribed by the SEC and therefore is not intended
     to forecast possible future appreciation, if any, of the price of common
     shares.

1998 OPTION EXERCISES AND YEAR-END VALUE TABLE

         The following table sets forth for the Named Executive Officers in
the Summary Compensation Table above information regarding options held by
them at December 31, 1998.

<TABLE>
<CAPTION>
                                                    SECURITIES UNDERLYING          VALUE OF SECURITIES UNDERLYING
                                                 UNEXERCISED OPTIONS HELD AT        UNEXERCISED OPTIONS HELD AT
                                                      DECEMBER 31, 1998                 DECEMBER 31, 1998 (1)

      NAME              SHARES         VALUE     EXERCISABLE    UNEXERCISABLE      EXERCISABLE     UNEXERCISABLE
                       ACQUIRED      REALIZED
                          ON
                       EXERCISE
                       OF OPTION

<S>                    <C>           <C>         <C>           <C>                 <C>            <C>
Rogers E. Beall (2)     300,000          -            -               -                  -                -

</TABLE>

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

     (1)  Computed based on the difference between aggregate fair market
          value and aggregate exercise price. The fair market value of the
          common stock on December 31, 1998 was based on the average of the
          high and low sales prices on the OTB Bulletin Board on the most
          recent date preceding December 31, 1998 on which a sale of common
          stock occurred.

     (2)  The value of the acquired shares was less than the exercise price.


                                      21
<PAGE>

COMMITTEES OF THE BOARD

         The board has two standing committees, the identities, memberships
and functions of which are described below.

         AUDIT COMMITTEE.  The members of the Audit Committee of the board are
Edward M. Trapp and Arthur O. Beall. The Audit Committee's functions include
making recommendations concerning the engagement of independent auditors,
reviewing with the independent auditors the plan and results of the auditing
engagement, approving professional services provided by the independent
auditors, and reviewing the adequacy of the Company's internal accounting
controls and reviewing our refinancing plans and strategies.

         COMPENSATION COMMITTEE.  All of the outside directors are members of
the Compensation Committee. They are Edward M. Trapp and Arthur O. Beall. The
Compensation Committee's functions include a general review of the Company's
compensation and benefit plans to ensure that they meet corporate objectives.
The Compensation Committee reviews the Chief Executive Officer's
recommendations on (a) compensation of the senior executive officers of the
Company, (b) granting of awards under the Company's stock option and other
benefit plans and (c) adopting and changing major Company compensation
policies and practices. In addition to reviewing the compensation for the
Chief Executive Officer, the Compensation Committee reports its
recommendations to the whole board for approval.

INFORMATION REGARDING MEETINGS

         The Board and the Audit Committee each held two meetings in 1998.
Compensation Committee issues were also discussed at each board meeting and
all outside directors are members of the Compensation Committee. Each
director attended all of the meetings of the board and of the committees
(if any) on which such person served.

EMPLOYEE STOCK OPTION PLAN

     In July 1990, the Company reserved 500,000 shares of common stock for
issuance under its Employee Stock Option Plan. All Incentive Stock Options
("ISO's") will be granted to employees at an exercise price of not less than
the fair market value of the stock on the date of grant. All Non-incentive
Stock Options ("NSO's") will be granted at an exercise price of not less than
85% of the fair market value of the stock on the date of grant. The Company
and the Board's Compensation Committee, on February 3, 1998, re-assigned the
entire 500,000 options from terminated employees to current employees of the
Company. The strike price was set at $.20 per share. Of the 500,000 shares
granted, the Company's President was granted 300,000 shares or 60% of the
total available shares. Due to the Company's liquidity requirements in August
1998, the President agreed to exercise all of his options, thereby infusing
$60,000 of cash into the Company. The remaining 200,000 options are
outstanding at December 31, 1998.

DIRECTOR STOCK OPTIONS

     In July 1990, we also reserved 150,000 shares of common stock for
issuance under its Directors' Stock Option Plan. All options will be granted
to non-employee directors at an exercise price of not less than the fair
market value on the date of grant. Each year, the directors are granted
options to purchase 10,000 shares of common stock as compensation for their
services.

DIRECTOR COMPENSATION

         In addition to the stock options discussed above, the directors were
paid 10,000 shares of common stock as compensation for their services. The
directors are reimbursed for all out of pocket expenses incurred in attending
any meeting of the board or any committee thereof.

ITEM 12. SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The table below sets forth certain information, as of September 30,
1999, with respect to the common shares beneficially owned by (a) each person
known by the Company to own beneficially five percent or more of the
outstanding shares of common stock, (b) each director and nominee for
director, (c) each of the executive officers and (d) all directors, nominees
for director and executive officers as a group.

                                      22
<PAGE>

<TABLE>
<CAPTION>
   NAME OF BENEFICIAL OWNER (1)            SHARES OF COMMON STOCK      PERCENTAGE OF
                                              OF FIRST SEISMIC       OUTSTANDING SHARES
                                             BENEFICIALLY OWNED        OF COMMON STOCK
<S>                                        <C>                       <C>
Rogers E. Beall, Chairman and
  Chief Executive Officer                       2,956,288 (2)                32.65%

Edward M. Trapp, Director                         117,500 (3)                 1.21%

Alexander E. Benton, Director                      32,500 (4)                   *

Arthur O. Beall, P.H.D.                            17,500 (3)                   *

All directors and
  executive officers as a group                 3,086,288                    34.08%
</TABLE>

----------
*  Represents less than 1%.

    (1)  Unless otherwise indicated, each person has sole voting power and
         investment power with respect to the shares of Common stock listed.

    (2)  Includes 100,000 shares underlying warrants exercisable at $.30 per
         share. The Beall Living Trust owns the remaining shares, the
         trustees of which are Rogers E. Beall and his spouse.

    (3)  Includes 7,500 shares underlying stock options exercisable within 60
         days after December 31, 1998 at a strike price of $0.20 per share.

    (4)  Includes 22,500 shares underlying stock options exercisable within
         60 days after December 31, 1998 at a strike price of $0.20 per share.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Set forth below is a description of certain transactions entered
into between the Company and certain of its directors, nominees for director
and stockholders.

         During the period 1993 until 1996, the President of the Company had
not received his contracted salary amount in cash compensation due to cash
liquidity problems. The unpaid salary was accrued. In December 1996, the
President entered into an agreement to purchase 253,000 shares of common
stock at $0.02 cash per share and to forego the $253,000 compensation due
him, for a total value increase to the Company of $258,860. The accompanying
financial statements reflect this agreement to forego cash compensation, and
to reflect the issuance of stock.

         In 1993, the President of the Company agreed to act as the general
partner of a limited partnership formed to make investments in oil and gas
exploration, development, reserves, and to make financing investments to
facilitate portions of our business plan that were outside of our financing
capabilities. The 15 owners of this limited partnership consist of our
shareholders and our noteholders. FIRST SEISMIC owns a minority interest in
the limited partnership which was granted in exchange for data use positions
extended by us to the limited partnership. The limited partnership is engaged
in leasing interests in East Texas with natural gas prospects.

         In 1993, the Company sold one license for its East Texas data-set to
the limited partnership, prior to posting that data-set for sale for the
benefit of the Senior Noteholders, for consideration of $16,000 in cash and
$84,000 upon our successful promotion of the East Texas prospect(s) and
receiving reimbursement for seismic data costs from the promoted incoming
partners. We successfully leased the prospect but elected not to promote it
until a 3-D seismic survey could be arranged over the prospect. In 1997,
arranged for a 3-D seismic survey over this acreage that was interpreted in
1998 and indicated only moderate commercial viability. Therefore, the $84,000
contingent receivable is not reflected in the financial statements, and will
be reported as a gain in the year received from LTD, if the Company promotes
this first, or one of the other prospects successfully with seismic costs
reimbursed.

         On January 1, 1997, the Company issued 150,000 shares of its common
stock at par value to its Executive Vice President in exchange for all of the
shares of Blackwell Supply, Inc. Blackwell is used to conduct the domestic
geophysical activity of the Company, including its airborne remote sensing
surveys.

                                      23
<PAGE>

         We entered into a series of transactions in March 1999 with the
holders of our 6% Notes and our 12% Notes. Please refer to the section of
this report entitled "Recent Transactions" for a detailed discussion of these
transactions.

         In March of 1999, we acquired all of the shares of stock of Fortesa
Corporation, a Texas Corporation ("Fortesa"), from its sole shareholder,
Rogers Beall who is our President and CEO. Mr. Beall formed Fortesa in May of
1997 for the purpose of acquiring certain oil and gas interests in the
country of Senegal. Prior to forming Fortesa, Mr. Beall presented this
development opportunity to our board of directors. After considering the
opportunity, we declined to invest in the opportunity due to our financial
position. Subsequent to its formation, Fortesa entered into a joint venture
with Benton Oil, a Delaware corporation, ("Benton") to develop these
interests. In February 1999, Mr. Beall again presented our board the
opportunity to participate in the Senegal joint venture through the purchase
of Fortesa stock. Upon consideration of the prospects of the venture and the
potential return of the investment, the members of the board, other than Mr.
Beall who did not take part in the meeting, voted to acquire all of the
outstanding shares of Fortesa in exchange for 50,000 shares of the Company's
Series A Preferred Stock and 8,055 shares of our Common stock.


                                      24
<PAGE>

PART IV

ITEM 14. EXHIBITS. FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)  EXHIBITS

<TABLE>
<S>             <C>
       2.1      Stock Purchase Agreement between First Seismic Corporation and
                the Beall Living Trust, dated as of March 29, 1999.

       3.1      Certificate of Incorporation of First Seismic Corporation, as
                amended.

       3.2      Bylaws of First Seismic Corporation, as amended.

       4.1      Form of common stock certificate.

       4.2      Series A Convertible Preferred Stock, Certificate of
                Designation.

       4.3      Series B Convertible Preferred Stock, Certificate of
                Designation

       4.4      Form of Warrant - 1993 $0.50 per share

       4.5      Form of Warrant - 1999 $0.30 per share

       4.6      6% Notes purchase Agreement

       4.7      Loan Modification Agreement

       10.1     Senegal pre-1999 Contract with Benton

       10.2     Revolving Credit Agreement

       10.3     Management Contract with Hayne Blakely

       10.4     Management Contract with Rogers Beall

       10.5     Directors' Stock Option Plan

       10.6     Employees' Stock Option Plan

       10.7     October 1999 Agreement with Benton

       10.8     Assignment and Release with Benton

       10.9     Registration Rights Agreement for Benton

       11       Statement Regarding Computation of Earnings per Share

       21       List of Subsidiaries of the Company

       27.1     Financial Data Schedule
</TABLE>


                                      25
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report on Form 10-K to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Houston, State of Texas, on the 10th of January, 2000.

                                     FIRST SEISMIC Corporation

                                     By:  /s/ Rogers E. Beall
                                          ------------------------------------
                                          Rogers E. Beall
                                          President, Chief Executive Officer,
                                          Principle Accounting Officer

Pursuant to the requirements of the Securities Act of 1934, the following
persons in their official capacities and on the date indicated have signed
this Report on Form 10-K below.


       SIGNATURE                    TITLE                    DATE
       ---------                    -----                    ----
/s/ Rogers E. Beall                 Chairman                 January 10, 2000
------------------------
Rogers E. Beall



/s/ Alexander E. Benton             Director                 January 10, 2000
------------------------
Alexander E. Benton



/s/ Edward M. Trapp                 Director                 January 10, 2000
------------------------
Edward M. Trapp


/s/ Arthur O. Beall                 Director                 January 10, 2000
------------------------
Arthur O. Beall

                                      26
<PAGE>

                   FIRST SEISMIC Corporation and Subsidiaries

                                    INDEX TO
                        CONSOLIDATED FINANCIAL STATEMENTS

                      DECEMBER 31, 1998, 1997, 1996 & 1995
<TABLE>
<S>                                                                                                                        <C>
Independent Auditors Report...........................................................................................     F-2

Consolidated Balance Sheets as of
     December 31, 1998, 1997, 1996, 1995..............................................................................     F-3

Consolidated Statements of Income and Comprehensive Income for the years ended
     December 31, 1998, 1997, 1996, 1995..............................................................................     F-4

Consolidated Statements of Stockholders' Equity as of
     December 31, 1998, 1997, 1996, 1995..............................................................................     F-5

Consolidated Statements of Cash Flows for the years ended
     December 31, 1998, 1997, 1996, 1995..............................................................................     F-6

Notes to Consolidated Financial Statements
     December 31, 1998, 1997, 1996, 1995..............................................................................     F-7


</TABLE>
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
FIRST SEISMIC Corporation and Subsidiaries
Houston, Texas

We have audited the accompanying consolidated balance sheets of FIRST SEISMIC
Corporation and Subsidiaries as of December 31, 1998, 1997, 1996 and 1995,
and the related consolidated statements of operations, changes in
stockholders' equity (deficit) and cash flows for the years 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 audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of FIRST
SEISMIC Corporation and Subsidiaries at December 31, 1998, 1997, 1996 and
1995, and the results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles.

As discussed in Note 1, the Company has a substantial working capital deficit.


/s/ Harper & Pearson Company


Houston, Texas
October 22, 1999


                                        F-2
<PAGE>


                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                                    CONSOLIDATED BALANCE SHEETS
                                     AS OF DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                        ASSETS                                    1998             1997            1996            1995
                        ------                                    ----             ----            ----            ----
<S>                                                          <C>              <C>              <C>              <C>
CURRENT ASSETS
Cash                                                         $   169,487      $   184,186      $   209,999      $   439,818
Accounts receivables, trade, net                                 385,568          491,768          450,035          895,571
Due from FORTESA                                                  25,304           30,806                -                -
                                                             -----------      -----------      -----------      -----------

TOTAL CURRENT ASSETS                                             580,359          706,760          660,034        1,335,389

Data library, net (Notes 1 and 2)                              2,462,964        2,117,109        2,257,401        2,513,319
Data and agency use position, net (Notes 1 and 2)                 23,185           26,435           41,232          155,144
Property and equipment, net (Notes 1 and 2)                       52,983           45,705           47,620           43,209
Investment in oil and gas prospects, at cost (Note 1)            170,710          178,630          102,025          102,025
Other assets                                                      40,384           42,670           37,232           31,655
                                                             -----------      -----------      -----------      -----------

TOTAL ASSETS                                                 $ 3,330,585      $ 3,117,309      $ 3,145,544      $ 4,180,741
                                                             -----------      -----------      -----------      -----------
                                                             -----------      -----------      -----------      -----------

    LIABILITIES AND STOCKHOLDERS' EQUITY
               (DEFICIT)

CURRENT LIABILITIES
Current portion of long-term debt (Note 3)                   $         -      $   175,321      $   751,178      $   679,490
Accounts payable, trade                                        1,083,581          671,286          470,951        1,719,196
Accrued expenses                                                 148,431           60,199           39,217           35,901
Accrued compensation                                              17,408           10,000           10,000          263,790
Unearned Income                                                        -           56,888                -                -
                                                             -----------      -----------      -----------      -----------

TOTAL CURRENT LIABILITIES                                      1,249,420          973,694        1,271,346        2,698,377

Long-term debt (Note 3)                                        1,442,674        1,613,919        1,375,607        1,715,607
Data use payables, net                                            73,810          112,739          186,746          101,399
Reserve for potential liabilities (Note 1)                             -          150,000          300,000          300,000
                                                             -----------      -----------      -----------      -----------

TOTAL LIABILITIES                                              2,765,904        2,850,352        3,133,699        4,815,383
                                                             -----------      -----------      -----------      -----------

COMMITMENTS (NOTE 6)

STOCKHOLDERS' EQUITY (DEFICIT) (Note 4)
Preferred stock, $1.00 par value, 1,000,000 shares
authorized; no shares issued or outstanding
Common stock, voting, $.01 par value, 10,000,000
shares authorized; 5,776,865,  5,365,365, 5,115,365
and 4,861,575 shares issued and 5,733,010, 5,321,510,
5,071,510 and 4,817,720 shares outstanding at
December 31, 1998, 1997, 1996 and 1995, respectively              57,769           53,654           51,154           48,616
Additional paid-in capital                                     9,531,278        9,470,893        9,371,893        9,115,565
Retained earnings (deficit)                                   (8,947,083)      (9,186,816)      (9,345,848)      (9,733,469)
Foreign currency translation adjustments                         (11,929)          (5,420)               -                -
Less treasury stock, 43,855 shares at cost                       (65,354)         (65,354)         (65,354)         (65,354)
                                                             -----------      -----------      -----------      -----------

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                             564,681          266,957           11,845         (634,642)
                                                             -----------      -----------      -----------      -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)         $ 3,330,585      $ 3,117,309      $ 3,145,544      $ 4,180,741
                                                             -----------      -----------      -----------      -----------
                                                             -----------      -----------      -----------      -----------


</TABLE>

                                        F-3
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                     AS OF DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                        1998           1997              1996            1995
                                                                        ----           ----              ----            ----
<S>                                                               <C>              <C>              <C>              <C>
REVENUE (Note 2)
Company owned geophysical                                         $   149,750      $   236,244      $   188,569      $   556,395
Company Owned geological                                            1,294,646          699,732          412,856          245,333
Net revenue interest                                                   89,889          216,870          159,486          148,938
Brokerage of third party geophysical                                  694,474          378,009          672,853        1,301,124
Brokerage of third party geological                                   406,981          449,882          649,343          287,028
Commissions                                                            54,002          270,063           35,734           55,330
Reproduction and other                                                274,688          119,572          112,353          150,819
                                                                  -----------      -----------      -----------      -----------
                                                                    2,964,430        2,370,372        2,231,194        2,744,967

COST OF SALES                                                       1,454,145        1,120,119        1,018,708        1,456,953
                                                                  -----------      -----------      -----------      -----------

Gross Margin                                                        1,510,285        1,250,253        1,212,486        1,288,014
                                                                  -----------      -----------      -----------      -----------

EXPENSES
Selling, general and administrative expenses                        1,056,397          949,968          953,411        1,247,285
Depreciation and amortization (Note 1)                                447,294          295,240          753,877        1,018,044
Interest expense (Note 3)                                              42,293           25,458           12,247           14,213
Interest income                                                        (3,857)          (2,121)          (2,388)            (928)
Other income                                                           (1,006)               -                -                -
Other expense                                                          34,920                -           32,896              824
                                                                  -----------      -----------      -----------      -----------

Total Expenses                                                      1,576,041        1,268,545        1,750,043        2,279,438
                                                                  -----------      -----------      -----------      -----------

NET LOSS BEFORE SETTLEMENTS/LIABILITY
EXTINGUISHMENTS                                                       (65,756)         (18,292)        (537,557)        (991,424)

SETTLEMENTS/LIABILITY EXTINGUISHMENTS (Note 1)
(Includes $48,687 gain from a FORTESA transaction in 1998)            305,489          177,324          925,178        1,755,554
                                                                  -----------      -----------      -----------      -----------

NET INCOME                                                            239,733          159,032          387,621          764,130

COMPREHENSIVE INCOME
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS                               (6,509)          (5,420)               -                -
                                                                  -----------      -----------      -----------      -----------

COMPREHENSIVE INCOME                                              $   233,224      $   153,612      $   387,621      $   764,130
                                                                  -----------      -----------      -----------      -----------
                                                                  -----------      -----------      -----------      -----------

BASIC EARNINGS PER SHARE:
    NET LOSS BEFORE SETTLEMENTS/LIABILITY
      EXTINGUISHMENTS PER SHARE                                   $     (0.01)     $     (0.00)     $     (0.11)     $     (0.20)
                                                                  -----------      -----------      -----------      -----------
                                                                  -----------      -----------      -----------      -----------

    SETTLEMENTS/LIABILITY EXTINGUISHMENTS PER
      SHARE                                                       $      0.05      $      0.03      $      0.19      $      0.36
                                                                  -----------      -----------      -----------      -----------
                                                                  -----------      -----------      -----------      -----------

    NET INCOME PER SHARE (Note 12)                                $      0.04      $      0.03      $      0.08      $      0.16
                                                                  -----------      -----------      -----------      -----------
                                                                  -----------      -----------      -----------      -----------

    WEIGHTED NUMBER OF SHARES USED IN
      COMPUTING NET INCOME (LOSS) PER SHARE                         5,552,869        5,251,647        5,071,510        4,817,720
                                                                  -----------      -----------      -----------      -----------
                                                                  -----------      -----------      -----------      -----------
</TABLE>

                                        F-4
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
                       FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                             Foreign
                            Common Stock        Additional    Retained       Currency      Treasury Stock        Total
                            ------------         Paid-In      Earnings      Translation    --------------       Equity
                         Shares     Par Value    Capital      (Deficit)     Adjustments   Shares      Cost     (Deficit)
                         ------     ---------    -------      --------      -----------   ------      ----     ---------
<S>                      <C>        <C>         <C>           <C>           <C>           <C>       <C>       <C>
BALANCE,
December 31, 1994        4,861,575    $ 48,616    9,115,565   (10,497,599)     $     -    43,855    (65,354)  (1,398,772)


NET INCOME                      -           -            -        764,130            -         -          -      764,130
                         ---------    --------    ---------    ----------      --------   ------     ------    ---------

BALANCE,
December 31, 1995        4,861,575      48,616    9,115,565    (9,733,469)           -    43,855    (65,354)    (634,642)

STOCK ISSUE TO
OFFICER FOR
SERVICES                   253,790       2,538      256,328             -            -         -          -      258,866


NET INCOME                      -           -            -        387,621            -         -          -      387,621
                         ---------    --------    ---------    ----------      --------   ------     ------    ---------

BALANCE,
December 31, 1996        5,115,365      51,154    9,371,893    (9,345,848)           -    43,855    (65,354)      11,845

STOCK ISSUE IN
SETTLEMENT OF
DEBT                       100,000       1,000       99,000             -            -         -          -      100,000

STOCK ISSUE TO
PURCHASE
BLACKWELL                  150,000       1,500            -             -            -         -          -        1,500

TRANSLATION
ADJUSTMENT                       -           -            -             -       (5,420)        -          -       (5,420)


NET INCOME                      -           -            -        159,032            -         -          -      159,032
                         ---------    --------    ---------    ----------      --------   ------     ------    ---------

BALANCE,
December 31, 1997        5,365,365      53,654    9,470,893    (9,186,816)      (5,420)   43,855    (65,354)     266,957

EXERCISE OF EMPLOYEE
STOCK OPTIONS BY
OFFICER                    300,000       3,000       57,000             -            -         -          -       60,000

STOCK ISSUED
FOR SERVICES               111,500       1,115        3,385             -            -         -          -        4,500

TRANSLATION
ADJUSTMENT                       -           -            -             -       (6,509)        -          -       (6,509)

NET INCOME                       -           -            -       239,733            -         -          -      239,733
                         ---------    --------    ---------    ----------      --------   ------     ------    ---------

BALANCE,
December 31, 1998        5,776,865    $ 57,769    9,531,278   $(8,947,083)   $ (11,929)   43,855    (65,354)  $  564,681
                         ---------    --------    ---------    ----------      --------   ------     ------    ---------
                         ---------    --------    ---------    ----------      --------   ------     ------    ---------

</TABLE>


                                        F-5
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                  1998           1997           1996          1995
                                                                  ----           ----           ----          ----
<S>                                                               <C>            <C>            <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Net income                                                        $ 239,733       $ 159,032     $ 387,621     $ 764,130
                                                                 ----------      ----------    ----------     ---------
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation and amortization (Note 1)                              447,294         295,240       753,877     1,018,044
Net change in allowance for doubtful accounts                       124,481               -             -             -
Settlements/liability extinguishments (Note 1)                     (155,489)        (27,324)     (925,178)   (1,755,554)
Reserve for potential liabilities (Note 1)                         (150,000)       (150,000)            -       300,000
Reduction in carrying value of oil & gas investment                  34,920               -             -             -
Stock issued as compensation                                          4,500               -             -             -
Changes in operating assets and liabilities:
   Accounts receivable, trade                                       (18,281)        (41,733)      445,536      (272,663)
   Other current assets                                                   -               -             -           700
   Accounts payable, trade                                          540,529         227,657      (323,066)      529,318
   Accrued expenses                                                  88,232          20,982         3,316        (2,968)
   Accrued compensation, officer (Note 5)                             7,408               -         5,075        65,190
   Unearned Income                                                  (56,888)         56,888             -             -
                                                                 ----------      ----------    ----------     ---------

Total adjustments                                                   866,706         381,710       (40,440)     (117,933)
                                                                 ----------      ----------    ----------     ---------

Net cash flows provided by operating activities                   1,106,439         540,742       347,181       646,197
                                                                 ----------      ----------    ----------     ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of other assets                                               -         (34,744)      (10,075)      (10,000)
Disposition of other assets                                          15,786               -         4,500             -
Acquisition of property and equipment                               (19,444)        (18,146)      (17,980)      (20,990)
Acquisition of data library                                        (765,793)        (81,006)     (378,000)       60,000
Investment in oil and gas prospects                                       -         (76,605)            -      (102,017)
Acquisition of data and agency use positions                              -               -             -       (25,000)
Dispositions of data library                                              -               -         7,522             -
Increase/(Decrease) in data use payables                            (70,794)       (118,510)       85,346        13,247
                                                                 ----------      ----------    ----------     ---------

Net cash used by investing activities                              (840,245)       (329,011)     (308,687)      (84,760)
                                                                 ----------      ----------    ----------     ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Restricted stock issued                                              60,000               -             -             -
Payments to FORTESA                                                 (21,607)              -             -             -
Borrowings on line of credit                                        693,000               -             -             -
Payments on line of credit                                         (693,000)              -             -             -
Principal payments on long-term debt                               (319,286)       (237,544)     (268,313)     (233,966)
                                                                 ----------      ----------    ----------     ---------

Net cash used by financing activities                              (280,893)       (237,544)     (268,313)     (233,966)
                                                                 ----------      ----------    ----------     ---------

NET INCREASE (DECREASE) IN CASH                                     (14,699)        (25,813)     (229,819)      327,471

CASH AT BEGINNING OF YEAR                                           184,186         209,999       439,818       112,347
                                                                 ----------      ----------    ----------     ---------

CASH AT END OF YEAR                                              $  169,487      $  184,186    $  209,999     $ 439,818
                                                                 ----------      ----------    ----------     ---------
                                                                 ----------      ----------    ----------     ---------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest                                           $   42,293      $   25,488    $   12,247     $  14,213
                                                                 ----------      ----------    ----------     ---------
                                                                 ----------      ----------    ----------     ---------
</TABLE>

                                        F-6
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------


NOTE 1        SUMMARY OF ACCOUNTING POLICIES

              The reporting entity in these financial statements consists of
              FIRST SEISMIC Corporation ("FIRST"), its three wholly-owned
              subsidiaries: FIRST EXCHANGE Corporation ("FEC"), First Exchange
              Limited ("FEL") and Blackwell Supply, Inc., d.b.a. Blackwell
              Trading, Inc. (BTI) collectively referred to as the Company.
              FIRST, FEC and BTI are incorporated in the State of Delaware. FEL
              is a United Kingdom Corporation. The Company originates, markets,
              and owns domestic geophysical and international geological
              information for licensing to oil and gas exploration companies.
              The Company's customers are primarily located in the United States
              and Western Europe, and its suppliers are primarily major oil
              companies, national government oil companies, or independent
              geo-scientific consulting firms and oil service providers.

              The Company acquired 100% of the stock of its former 75% net
              revenue interest affiliate, Blackwell Supply, Inc., effective
              January 1, 1997 for issuance of stock. (See Note 5)

              The Company went public in September 1990, however the last 10-K
              filed with the SEC was for the period ending December 31, 1991.
              Currently, the Company is not in compliance with SEC requirements
              for filing and reporting. However, the Company intends to become
              current with all SEC requirements as soon as practicable.

              PRINCIPLES OF CONSOLIDATION

              The consolidated financial statements include the accounts of
              FIRST, FEC, BTI and FEL. All material intercompany accounts and
              transactions have been eliminated in consolidation.

              ESTIMATES

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


                                        F-7
<PAGE>


                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------


NOTE 1        SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

              CONCENTRATIONS OF CREDIT RISK

              Financial instruments which potentially subject the Company to
              concentrations of credit risk consist principally of trade
              receivables and cash. The Company places its cash with high credit
              quality financial institutions. Generally, no collateral or other
              security is required to support customer receivables. To reduce
              credit risk, a customer's credit history is reviewed before
              extending credit. In addition, an allowance for doubtful accounts
              is established as needed based upon factors surrounding the credit
              risk of specific customers, historical trends, and other
              information. Management has established an allowance for doubtful
              accounts at December 31, 1998 in the amount of $124,481. There was
              no allowance as of December 31, 1997, 1996 and 1995. During 1998,
              35% of revenues were attributable to three customers.

              CASH

              The Company has an interest bearing account primarily dedicated
              for payments to the 12% Senior Noteholders. In addition to other
              uses, the Company has used this account to deposit funds earned by
              the Company from the sale of certain licenses of Company owned
              data or revenue interest payments, pending disbursements to the
              Senior Noteholders. Payments to these Noteholders have been
              periodically made when sufficient levels of cash have accumulated
              to justify disbursement. Cash pledged for payment to the Senior
              Noteholders held in this account at December 31, 1998, 1997, 1996
              and 1995 was $11,786, $93,357, $27,024 and $50,143, respectively.
              The amounts were subsequently disbursed by the Company pro rata to
              each of the 12% Senior Noteholders.

              Cash and cash equivalents consist of demand deposits and money
              market funds and other unrestricted liquid investments held at
              depository institutions with maturity of three months or less.

              DATA LIBRARY

              The costs included in Data Library represent company owned seismic
              data, net revenue interests in seismic data previously owned and
              sold to third parties, and geo-scientific reports. The Company
              capitalizes third party costs plus internal direct costs loaded
              with overhead relating to the acquisition of the Data Library.
              Amortization of these costs commences as soon as a new project is
              completed.


                                        F-8
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 1        SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

              Seismic costs are amortized over the greater of the estimated
              volume of anticipated revenues that the Company expects to realize
              from the licensing of its Company owned seismic data or a five
              year period with a (10%) ten percent residual value using the 150%
              declining balance method. In 1992, the Company's investment in its
              data library had a residual value of $2,653,290. Beginning in
              1992, the Company elected to amortize the residual balances on a
              straight-line basis over a fifteen-year period. The residual value
              amortization amounted to $176,886 for each of the years ending
              December 31, 1998, 1997, 1996, and 1995.

              Net revenue interest in seismic data previously owned and sold to
              third parties is amortized over a five-year period with no
              residual value using the 150% declining balance method.

              The Company's ownership interest in geo-scientific reports is
              amortized over three years to a ten-percent residual value. The
              amortization during the three-year period is the greater of 4.5%
              per sale up to 20 licenses or 2.5% per month cumulative minimum.
              The residual value is then amortized over 15 years on a
              straight-line basis.

              DATA AND AGENCY POSITIONS

              Data and agency positions include Seismic Data Rights and agency
              agreements with certain foreign governments. The Company
              capitalizes third party costs plus an allocation of internal
              overhead costs relating to the acquisition of data and agency
              positions.

              Data Use Rights represent the value of data that the Company has
              to use or has to give to others regarding the license of seismic
              data relative to third parties. Such rights were obtained or are
              owned primarily by trade of the use of seismic data or of services
              provided by the Company.

              Agency agreements represent the Company's costs of organizing
              third parties' data and opportunities into marketable products or
              promotion for fees to energy companies on a multi client basis.
              Such costs are amortized over five years, or written off if the
              Company concludes the relationship has no future earning value.

              PROPERTY AND EQUIPMENT

              Property and equipment are recorded at cost. Depreciation of
              property and equipment is provided using accelerated methods over
              the estimated useful lives of three to five years.


                                        F-9
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 1        SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

              INVESTMENT IN OIL AND GAS PROSPECTS

              In 1993, the Company initiated efforts and agreements to earn
              interests in oil and gas reserves in both the domestic and the
              international arena by organizing and promoting acreage and
              opportunities, and by using its information to obtain rights for
              hydrocarbon reserve ownership. As of 1997, the Company has
              positions in East Texas (See Note 5), Kansas, and Guinea-Bissau,
              West Africa. The necessary investment to advance these positions
              had either been raised from third parties, thus carrying the
              Company on a portion of the exploration results, or the acreage
              has been analyzed and leased for exploration rights which include
              the Company. The Company owns the "right of first refusal' to
              acquire a similar and more presently significant interest in
              Senegal, West Africa (See Note 10).

              These investments are accounted for at cost as the Company holds a
              minor ownership interest. At December 31, 1998, the Company wrote
              down one prospect by $34,920 due to a decline in fair value. The
              Company's cost basis in these investments totaled approximately
              $170,710. During 1998, two wells in Kansas began producing with
              cash distributions expected to begin after drilling costs are
              paid.

              INCOME TAXES

              The Company uses the balance sheet approach for recording deferred
              taxes. The balance sheet approach accounts for deferred income
              taxes by applying statutory tax rates in effect at the balance
              sheet date to differences between the book basis and the tax basis
              of assets and liabilities. The resulting deferred tax assets and
              liabilities are adjusted to reflect changes in tax law or rates.

              The Company and its wholly owned U.S. subsidiaries file a
              consolidated federal income tax return.

              OPERATIONS

              As shown in the accompanying financial statements, the Company had
              losses before settlements/liability extinguishments of $65,756,
              $18,292, $537,557 and $991,424 in 1998, 1997, 1996 and 1995,
              respectively. As of December 31, 1998, current liabilities
              exceeded current assets by $669,061.


                                        F-10
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 1        SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

              The Company's trade payables are reviewed periodically to
              determine the requirement for payment. Due to the Company's
              liquidity crisis since 1992 resulting from the loss of commercial
              viability of the domestic 2-D seismic licensing business, the
              Company ended many related contracts and operations. Payables from
              discontinued contracts over four years in age with no
              correspondence, negotiations or payments involving the vendor
              during the four year period for the particular payable in question
              exceed the statute of limitations whereby such accounts payable
              may be enforceable and have been written down by the Company.
              Formal settlements of liabilities resulting in reduced payment
              requirements were also recorded in this settlements/gain account
              and not against regular operations. At December 31, 1998, the
              Company anticipates no further settlement gains resulting from
              trade payables for which the statute of limitations will expire.

              During 1995 the Company established a $300,000 reserve for
              liabilities which had been written off in prior periods but which
              could possibly have been subject to future collection efforts by
              the creditors involved. Management subsequently determined that
              this reserve was no longer required as no such liabilities became
              known, nor were any asserted over the passage of time. Accordingly
              the reserve was decreased to $150,000 at December 31, 1997, and
              eliminated at December 31, 1998.

              REVENUE RECOGNITION

              Gross revenues for Company owned information (Data Library) are
              recognized when the information is transmitted to clients. Any
              related expenses incurred as a result of data licensing, such as
              commissions or revenue sharing arrangements, are expensed at the
              time revenues are recognized. In instances where the Company owns
              only a revenue interest in seismic data, then only the Company's
              net proceeds are recorded as revenue. The Company changed its
              accounting procedures effective January 1, 1998 to align itself
              with SEC policy. The effect was to allow the recognition of
              revenues when the materials licensed were completed products and
              available for delivery by the Company, but held temporarily at the
              request of the customer. This new policy would have had no impact
              on the 1995, 1996, or 1997 financial statements. In 1998, $36,000
              of revenues were recognized for data available for delivery but
              not picked up by the customer at year end.

              Third Party Data revenues are recognized when the information is
              transmitted to the clients. The Company assists certain of its
              clients in qualifying their seismic data licensing and trading
              transactions as "like kind exchange" transactions qualifying for
              nonrecognition of gain under Section 1031 of the Internal Revenue
              Code.


                                        F-11
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 1        SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

              Commission revenues are generated when the Company serves only as
              an agent for licensing geoscientific information owned by another
              company. Commission revenues are recognized on a pro rata basis as
              the completion of such firm orders progress.

              Reproduction and other revenue are recognized as the service is
              completed.

              NET INCOME (LOSS) PER SHARE

              Net income (loss) per share is computed by dividing net income
              (loss) by the common and common equivalent shares considered
              outstanding during each period. Equivalent shares issuable under
              stock options are determined using the treasury stock method.
              There is no difference between basic and fully diluted earnings
              per share for all periods presented.

NOTE 2        SELECTED FINANCIAL STATEMENT INFORMATION

<TABLE>
<CAPTION>

              All intangible and tangible assets are
              recorded at cost                              1998             1997              1996              1995
                                                            ----             ----              ----              ----
<S>                                                    <C>               <C>               <C>               <C>
              DATA LIBRARY:
              Company owned seismic data               $ 26,659,117      $ 26,585,533      $ 26,545,505      $ 26,545,505
              Net revenue interest                       12,296,044        12,296,044        12,296,044        12,296,044
              Geoscientific reports                       1,312,847           576,978           536,000           166,282
              Less accumulated amortization             (37,805,044)      (37,341,446)      (37,120,148)      (36,494,512)
                                                       ------------      ------------      ------------      ------------

              Data library, net                        $  2,462,964      $  2,117,109      $  2,257,401      $  2,513,319
                                                       ------------      ------------      ------------      ------------
                                                       ------------      ------------      ------------      ------------

              AGENCY USE POSITIONS:
              Agency agreements                        $    255,983      $    255,983      $    255,983      $    255,983
              Less accumulated amortization agency
              agreements                                   (232,798)         (229,548)         (214,751)         (100,839)
                                                       ------------      ------------      ------------      ------------

              Agency use positions, net                $     23,185      $     26,435      $     41,232      $    155,144
                                                       ------------      ------------      ------------      ------------
                                                       ------------      ------------      ------------      ------------

              PROPERTY AND EQUIPMENT:
              Office furniture and equipment           $    126,138      $     94,564      $     76,418      $     58,438
              Less accumulated depreciation                 (73,155)          (48,859)          (28,798)          (15,229)
                                                       ------------      ------------      ------------      ------------

              Property and equipment, net              $     52,983      $     45,705      $     47,620      $     43,209
                                                       ------------      ------------      ------------      ------------
                                                       ------------      ------------      ------------      ------------

</TABLE>


                                        F-12
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 2        SELECTED FINANCIAL STATEMENT INFORMATION (CONTINUED)

<TABLE>
<CAPTION>

                                                                1998             1997            1996             1995
                                                                ----             ----            ----             ----
<S>                                                          <C>             <C>              <C>             <C>
              DATA USE PAYABLES/(RECEIVABLES), NET:
              Data use payables                              $  233,854      $  282,112       $  360,118      $  274,771
              Seismic data rights                              (776,317)       (798,715)        (798,715)       (798,715)
              Less valuation allowance, seismic data
              rights                                            616,273         629,342          625,343         625,343
                                                            -----------     -----------      -----------     -----------

              Data use payables/(receivables), net            $  73,810      $  112,739       $  186,746      $  101,399
                                                            -----------     -----------      -----------     -----------
                                                            -----------     -----------      -----------     -----------
              REVENUES:
              Company owned Geophysical                      $  149,750         236,244       $  188,569      $  556,395
              Company owned Geological                         1,29,646         699,732          412,856         245,333
              Net revenue interest                               89,889         216,870          159,486         148,938
              Brokerage of third party Geophysical              694,474         378,009          672,853       1,301,124
              Brokerage of third party Geological               406,981         449,882          649,343         287,028
              Commissions                                        54,002         270,063           35,734          55,330
              Reproduction and other                            274,688         119,572          112,353         150,819
                                                            -----------     -----------      -----------     -----------
              Revenues                                      $ 2,964,430     $ 2,370,372      $ 2,231,194     $ 2,744,967
                                                            -----------     -----------      -----------     -----------
                                                            -----------     -----------      -----------     -----------

</TABLE>

NOTE 3        DEBT

<TABLE>
<CAPTION>

                                                                  1998           1997           1996            1995
                                                                  ----           ----           ----            ----
<S>                                                          <C>            <C>             <C>             <C>
              LONG-TERM DEBT:

              Senior noteholders                             $ 1,031,496    $ 1,303,062     $ 1,410,607     $ 1,668,919
              Six percent noteholders                            411,178        411,178         411,178         421,178
              Convertible debenture                                    -              -         100,000         100,000
              Vendor note payable                                      -         75,000         205,000         205,000
                                                             -----------    -----------     -----------     -----------

              Total debt                                       1,442,674      1,789,240       2,126,785       2,395,097

              Less current portion                                     -        175,321         751,178         679,490
                                                             -----------    -----------     -----------     -----------

              Long-term debt                                   1,442,674    $ 1,613,919     $ 1,375,607     $ 1,715,607
                                                             -----------    -----------     -----------     -----------
                                                             -----------    -----------     -----------     -----------
</TABLE>

              Scheduled principal payments or demand balances due for the years
              subsequent to December 31, 1998 are as follows:

<TABLE>
<S>                                                                                                          <C>
              1999                                                                                           $1,442,674
                                                                                                             ----------
                                                                                                             ----------
</TABLE>

              The Company was granted a line of credit by its principal bank in
              the amount of $100,000 on August 13, 1997. This line of credit,
              which expires October 29, 1999, is secured by the accounts
              receivable of the Company and was obtained through a personal
              guaranty of the President of the Company. Interest at prime plus
              1.5% is payable monthly. No balance was payable on this line as
              of December 31, 1998.


                                        F-13
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 3        DEBT (CONTINUED)

              During 1991, FIRST issued $2,240,000 of 12% senior notes. These
              notes required 10% principal payments annually for four years
              beginning December 31, 1992 along with a final 60% principal
              payment on December 31, 1996. Interest was payable quarterly.
              These notes are secured by FIRST's seismic data library. Only one
              scheduled 10% principal payment was paid to the noteholders.
              Subsequent to 1993, all payments made by FIRST were applied to the
              reduction of principal, due to the uncertainty of complete
              satisfaction of the debt. The outstanding principal balances at
              December 31, 1998, 1997, 1996 and 1995 were $1,031,496,
              $1,303,062, $1,410,607 and $1,668,919, respectively. The
              outstanding principal balance is past due. On October 7, 1997,
              FIRST offered a loan modification agreement to the holders of the
              notes.

              The loan modification agreement extends the maturity date of the
              notes to September 30, 1999, waives any and all unpaid interest,
              and at the option of FIRST can be converted into FIRST's common
              stock in one of three ways: FIRST may convert the outstanding
              principal balance to shares of the Company's common stock by
              dividing the average five day ask price of the public market
              trading price five days prior to the proposed exchange; FIRST may
              convert the outstanding principal balance valued at a stock price
              per share within forty-five days of a significant private
              placement; or FIRST may convert the outstanding principal balance
              at two times the actual net book value of FIRST's equity per share
              per the most recent quarterly financial statements immediately
              prior to such exchange.

              In addition to the loan modification agreement in 1998, FORTESA
              signed agreements with certain noteholders whereby their notes
              would be satisfied for a discounted amount. The substance of the
              transaction was for FORTESA to transfer funds to the Company to
              facilitate a payoff to the noteholders. The gain from the
              extinguishments of debt was $48,687 and is included in the
              $305,489 settlements/liability extinguishments on the Company's
              1998 statement of income and comprehensive income. With the
              intercession of FORTESA (See Note 10), all present holders of the
              12% senior notes accepted the loan modification agreement as of
              June 1998. Consequently, these amounts are classified as
              non-current in the accompanying balance sheets.

              During 1993, FIRST issued $500,000 of 6% notes. The 6% notes
              required interest only quarterly payments with the principal due
              in full, May 31, 1996. The 6% notes are secured by 100% of the
              stock of the Company's subsidiary for international information
              licensing, FEC. In addition, the 6% noteholders received 500,000
              warrants to purchase the Company's common stock at $.50 per share
              expiring June 1, 2000. Total assets and equity of FEC at December
              31, 1998 were $1,117,300 and 474,069, respectively. The
              outstanding principal balance of these 6% notes amounted to
              $411,178 at December 31, 1998, 1997 and 1996 and $421,178 at
              December 31, 1995. On December 28, 1998, the Company offered to
              exchange the principal and interest balances owed on the 6% notes
              for equity in the Company contingent upon at least 80% of the
              warrants held by these 6% noteholders being exercised early. As of
              October 1999, all of the 6% noteholders had accepted this offer.


                                        F-14
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 3        DEBT (CONTINUED)

              The $100,000 convertible debenture, which matured on June 30,
              1991, was reissued with interest at the rate of 10% payable
              semi-annually, maturing June 30, 1992. On September 12, 1997,
              interest was waived and the debenture was converted into 100,000
              shares of the Company's common stock. Consequently, this amount is
              classified as non-current in the accompanying 1996 and 1995
              balance sheets.

              On May 17, 1993, FIRST entered into a settlement agreement with a
              vendor for $300,000. The terms of the agreement have been modified
              several times due to the Company's liquidity crisis. In September
              1997, FIRST renegotiated the terms of the vendor settlement
              agreement which then had a $205,000 balance. A payment of $30,000
              was paid on September 30, 1997, $100,000 was paid on December 15,
              1997 and the $75,000 balance was paid by December 15, 1998.
              Therefore, the outstanding principal balance at December 31, 1998,
              1997 and 1996 was $0, $75,000 and $205,000, respectively.

NOTE 4        STOCKHOLDERS' EQUITY

              The Company is authorized to issue up to 10,000,000 shares of
              common stock with a par value of $.01 per share and up to
              1,000,000 shares of preferred stock with a par value of $1.00 per
              share. At a meeting held on January 7, 1999 the Board of Directors
              recommended re-establishing the original 1990 authorized
              capitalization, which was 20,000,000 common shares and 10,000,000
              preferred shares. A majority of the shareholders is required to
              approve this transaction.

              STOCK RIGHTS OUTSTANDING

              EMPLOYEE STOCK OPTION PLAN - In July 1990, the Company reserved
              500,000 shares of common stock for issuance under its Employee
              Stock Option Plan. All Incentive Stock Options ("ISO's") will be
              granted to employees at an exercise price of not less than the
              fair market value of the stock on the date of grant. All
              Non-incentive Stock Options ("NSO's") will be granted at an
              exercise price of not less than 85% of the fair market value of
              the stock on the date of grant. The Company and the Board's
              Compensation Committee, on February 3, 1998, re-assigned the
              entire 500,000 options from terminated employees to current
              employees of the Company. The strike price was set at $.20 per
              share. The fair market value was difficult to access due to the
              fact that the Company's common stock is traded on the pink sheets
              which is not a clear indicator of fair market value. Of the
              500,000 shares granted, the Company's President was granted
              300,000 shares or 60% of the total available. Due to the Company's
              liquidity requirements in August 1998, the President agreed to
              exercise all of his options, thereby infusing $60,000 of cash into
              the Company. As a further inducement for the early exercise of
              these options, the Company granted the President a security
              interest in its tangible personal property. The remaining 200,000
              options are outstanding at December 31, 1998.


                                        F-15
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 4        STOCKHOLDERS' EQUITY (CONTINUED)

              DIRECTOR STOCK OPTIONS - In July 1990, the Company also reserved
              150,000 shares of common stock for issuance under its Directors'
              Stock Option Plan. All options will be granted to non-employee
              directors at an exercise price of not less than the fair market
              value on the date of grant.

              NOTEHOLDERS WARRANTS - Warrants are outstanding to the 6%
              Noteholders Group for 500,000 shares at $.50 per share which
              expire June 1, 2000. The Company's offer of December 28, 1998 to
              the 6% noteholders would call for early exercise of most of these
              warrants (see Note 3) and cause the issuance of the same number of
              new warrants to these warrant holders (see Note 10).

NOTE 5        TRANSACTIONS WITH RELATED PARTIES

              During the period 1993 until 1996, the President of the Company
              had not received his contracted salary amount in cash compensation
              due to the Company's cash liquidity problems. The unpaid salary
              was accrued. In December 1996, the President entered into an
              agreement to purchase 253,000 shares of common stock at $0.02 cash
              per share and to forego the $253,000 compensation due him, for a
              total value increase to the Company of $258,860. The accompanying
              financial statements reflect this agreement to forego cash
              compensation, and to reflect the issuance of stock.

              In 1993, a limited partnership ("LTD") was established and the
              Company's President agreed to act as the general partner of this
              enterprise. LTD was founded to make investments in oil and gas
              exploration, development, reserves, and to make financing
              investments to facilitate portions of the Company's business plan
              that were outside of the financing capabilities of the Company.

              The 15 owners of LTD are all shareholders or noteholders of the
              Company. The Company itself also owns a minority percentage of
              LTD, granted for data use positions extended by the Company to LTD
              for the benefit of LTD leasing land in East Texas over one of the
              Company's prospects for natural gas. LTD funded all of the cash to
              acquire those leases, resulting in the Company having a 33%
              interest in the prospect and LTD having a 12% interest for its
              lease money and reimbursable data use rights expended thereon.
              However, it was LTD's cash extended to lease acreage that enabled
              the Company to complete the cycle to obtain the exclusive drilling
              rights to the first of the five prospects in East Texas generated
              in which the Company has an interest.


                                        F-16
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 5        TRANSACTIONS WITH RELATED PARTIES (CONTINUED)

              In 1993, the Company sold one license for its East Texas data-set
              to LTD, prior to posting that data-set for sale for the benefit of
              the Senior Noteholders, LTD agreed to pay a total of $100,000 on
              terms of $16,000 cash advanced to the Company and the $84,000
              balance to be paid if the Company successfully promotes the East
              Texas prospect(s) and receives reimbursement for seismic data
              costs from the promoted incoming partners. The Company
              successfully leased the prospect but elected not to promote it
              until a 3-D seismic survey could be arranged over the prospect.
              The Company was successful in arranging for a 3-D seismic survey
              over this acreage in 1997. The 3-D seismic data was interpreted in
              1998 and indicated only moderate commercial viability. The
              Company's $84,000 contingent receivable is not reflected in the
              financial statements, and will be reported as a gain in the year
              received from LTD, if the Company promotes this first, or one of
              the other prospects successfully with seismic costs reimbursed.

              On January 1, 1997, the Company issued 150,000 shares of its
              common stock at par value to its Executive Vice President in
              exchange for all of the shares of Blackwell Supply, Inc. Blackwell
              is used to conduct the domestic geophysical activity of the
              Company, including its airborne remote sensing surveys. (See
              Note 1)

              During 1998 and 1997, the Company provided office space and
              administrative services to FORTESA at no charge.

              In March 1998, a company controlled by the President leased a
              laser copier to the Company for a period of 24 months at $424 per
              month on terms substantially identical to those paid by the
              President's company. The Company required use of the machine in
              connection with its new geologic report publishing business. At
              the end of the lease term, the Company will own the copier.

              See Note 10 for additional disclosures of related party
              transactions which occurred after 1998.


                                        F-17
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 6        COMMITMENTS

              The Company entered into an agreement with a major oil company to
              use certain geo-scientific information to create a synthesized
              study of current interest to the industry. Among other things, the
              agreement requires the Company to make five annual payments,
              depending on the level of sales, starting December 31, 1996
              through December 31, 2000. The minimum payments required are
              $75,000, $75,000, $75,000, $25,000 and $25,000, respectively. In
              1997, the agreement was amended satisfying the December 31, 1997
              payment of $75,000 through performance of consulting services by
              the Company and $60,000 of the $75,000 due in 1998 were paid as of
              December 31, 1998. In 1999, the agreement was further amended
              satisfying the final $75,000, $25,000, and $25,000 minimum
              payments through successful 1998 performance of consulting
              services by the Company for this major oil company.

              LEASES

              The Company leases office space under noncancelable operating
              lease agreements. Rent expense for the years ended December 31,
              1998, 1997, 1996 and 1995 was $118,602, $67,136, $71,835 and
              $62,442, respectively. The Company leases office space until March
              2000 for FEL and January 2001 for FEC.

              The minimum rental commitment under these leases, as currently
              modified to reflect the subsequent amendment/extension of lease
              agreements, at December 31, 1998 is as follows:
<TABLE>

<S>                                                                               <C>
              1999                                                                $  89,416
              2000                                                                   75,427
              2001                                                                    6,116
                                                                                  ---------
              Total                                                               $ 170,959
                                                                                  ---------
                                                                                  ---------
</TABLE>

NOTE 7        INCOME TAXES

              Income tax expense is comprised of the following:
<TABLE>
<CAPTION>

                                                                  1998            1997            1996           1995
                                                                  ----            ----            ----           ----
<S>                                                              <C>             <C>             <C>           <C>
              Current                                            $     -         $     -         $     -       $     -
              Deferred                                                 -               -               -             -
                                                                 -------         -------         -------       -------

                                                                 $     -         $     -         $     -       $     -
                                                                 -------         -------         -------       -------
                                                                 -------         -------         -------       -------

</TABLE>


                                        F-18
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 7        INCOME TAXES (CONTINUED)

              No income tax is expensed as the Company is in an NOL Carryforward
              position and has been charging income against prior losses on its
              income tax return. The difference between the effective rate of
              income tax expense and the amount which would be determined by
              applying the statutory U.S. income tax rates to income before
              income tax expense is explained below according to the tax
              implications of the various items of income or expense:

<TABLE>
<CAPTION>

                                                              1998            1997            1996            1995
                                                              ----            ----            ----            ----
<S>                                                      <C>              <C>             <C>             <C>
              Federal income tax expense at statutory
              rate                                      $     (81,509)   $     (60,290)  $    (131,791)  $    (259,804)
              Change in deferred tax valuation
              allowance                                        81,509           60,290         131,791         259,804
                                                        -------------    --------------  --------------  -------------

                                                        $           -    $           -   $           -   $           -
                                                        -------------    --------------  --------------  -------------
                                                        -------------    --------------  --------------  -------------

</TABLE>

              The components of deferred income taxes are as follows:

<TABLE>
<CAPTION>

                                                             1998            1997             1996            1995
                                                             ----            ----             ----            ----
<S>                                                         <C>            <C>               <C>             <C>
              Deferred Tax Asset:
              Net operating loss carryover (as
              amended, at 34%)                              $ 5,018,830     $ 5,100,339      $ 5,232,310     $ 5,492,114
              Deferred Tax Liability:
              Valuation allowance for net deferred
              tax assets                                     (5,018,830)     (5,100,339)      (5,232,310)     (5,492,114)
                                                            ------------    ------------     ------------    ------------

              Deferred Taxes, Net                           $        -      $        -       $        -      $        -
                                                            ------------    ------------     ------------    ------------
                                                            ------------    ------------     ------------    ------------

</TABLE>

              Although the Company has reported taxable income in each of the
              past four years, management believes there is a greater than 50%
              possibility that the deferred tax assets may not be realized with
              the next fiscal year; therefore, a valuation allowance has been
              established to offset these assets. If the proposed restructuring
              succeeds, including the merger of Fortesa into the Company, and
              successful development of its Senegal, West Africa gas field, the
              Company believes the future tax benefit resulting from its net
              operating losses will be more substantially realizable.
              Consequently, the valuation account may be substantially reduced
              depending upon the effects of the restructuring and acquisition of
              Fortesa. A significant increase in equity would result at that
              time.


                                        F-19
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 7        INCOME TAXES (CONTINUED)

              Tax basis net operating loss carryforwards at December 31, 1998
              and their respective expiration dates are as follows:

<TABLE>

<S>                                                                               <C>
              2006                                                                  $ 1,269,471
              2007                                                                    5,256,991
              2008                                                                      355,091
              2009                                                                    7,879,712
                                                                                    -----------
              Total                                                                 $14,761,265
                                                                                    -----------
                                                                                    -----------

</TABLE>

              The amount of these net operating loss carryovers have been
              revised for recent amendments to the Company's federal income tax
              returns. These carryovers could be revised upon IRS audit or
              restricted as to the Company's ability to utilize them to offset
              future taxable income.

NOTE 8        FAIR VALUES

              The estimated fair values of the Company's financial instruments
              at December 31 are as follows:

<TABLE>
<CAPTION>

                       1998       1998       1997       1997       1996       1996       1995       1995
                       ----       ----       ----       ----       ----       ----       ----       ----
                     Carrying     Fair     Carrying     Fair     Carrying     Fair     Carrying     Fair
                      Value      Value      Value      Value      Value      Value      Value      Value
                      -----      -----      -----      -----      -----      -----      -----      -----
<S>                 <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
ASSETS
Cash and cash
equivalents         $  169,487 $  169,487 $  184,186 $  184,186 $  209,999 $  209,999 $  439,818 $  439,818
                    ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
                    ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------

LIABILITIES
Senior noteholders   1,031,496    933,504  1,303,062  1,117,496  1,410,607  1,136,337  1,668,919  1,305,161
Convertible
  debenture                  0          0          0          0    100,000    100,000    100,000    100,000
Six percent
  noteholders          411,178    397,273    411,178    397,273    411,178    384,279    421,178    381,879
Vendor note payable          0          0     75,000     68,738    205,000    182,357    205,000    168,128
                     ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------

                    $1,442,674 $1,330,777 $1,789,240 $1,583,507 $2,126,785 $1,802,973 $2,395,097 $1,955,068
                    ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
                    ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------

</TABLE>


                                        F-20
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 8        FAIR VALUES (CONTINUED)

              The following methods and assumptions were used to estimate the
              fair value of each class of financial instruments for which it is
              practical to estimate fair value.

              Cash and cash equivalents - The carrying amount approximates fair
              value because of the short maturity of those instruments.

              Long-term debt - The fair value is based upon discounting the debt
              such that the effective interest rate is prime plus 1% (9.5%)
              utilizing actual and intended repayments. No discount was applied
              to the convertible debenture.

NOTE 9        GEOGRAPHIC AREAS

              The Company's geographic data for the years ended December 31, are
              as follows:

<TABLE>
<CAPTION>

                                                                  1998          1997           1996            1995
                                                                  ----          ----           ----            ----
<S>                                                             <C>            <C>            <C>            <C>
              REVENUE:

              United States                                      $1,996,715    $1,685,112     $1,865,999     $1,781,553
              Foreign Subsidiary                                    967,715       685,260        365,195        963,414
                                                                 ----------    ----------     ----------     ----------

              Revenue                                            $2,964,430    $2,370,372     $2,231,194     $2,744,967
                                                                 ----------    ----------     ----------     ----------
                                                                 ----------    ----------     ----------     ----------
              NET INCOME/(LOSS) BEFORE
              SETTLEMENTS/LIABILITY EXTINGUISHMENTS:
              United States                                      $  (40,987)   $  (13,800)    $ (418,420)    $ (970,978)
              Foreign Subsidiary                                    (24,769)       (4,492)      (119,137)       (20,446)
                                                                 ----------    ----------     ----------     ----------

              Net Income/(Loss) Before
              Settlements/Liability Extinguishments              $  (65,756)   $  (18,292)    $ (537,557)    $ (991,424)
                                                                 ----------    ----------     ----------     ----------
                                                                 ----------    ----------     ----------     ----------

              TOTAL ASSETS:
              United States                                      $3,281,524    $3,044,413     $3,001,927     $3,400,736
              Foreign Subsidiary                                     49,061        72,896        143,617        780,005
                                                                 ----------    ----------     ----------     ----------

              Total Assets                                       $3,330,585    $3,117,309     $3,145,544     $4,180,741
                                                                 ----------    ----------     ----------     ----------
                                                                 ----------    ----------     ----------     ----------

</TABLE>


                                        F-21
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 10       SUBSEQUENT EVENTS

              On December 28, 1998 the Company made a proposal to its 6%
              Noteholders to participate in a restructuring program, the major
              components of which are as follows:

              -    Conversion of the entire outstanding 6% Note balance
                   ($448,285 including accrued interest as of December 31,
                   1998) into 977,508 FIRST common shares.

              -    Early exercise of a minimum of 400,000 of the 6%
                   Noteholders' 500,000 $0.50/share warrants (at an effective
                   price of $0.33 per share) and issuance of a new $0.30 per
                   share warrant in exchange for each $0.50/share warrant
                   exercised early.

              -    Issuance of an additional number of shares of common stock
                   equal to 50% of the number of shares issued in connection
                   with the $.50 warrants.

              -    Merger of FORTESA into FIRST, and the changing of FIRST'S
                   name to FORTESA.

              -    Conversion of 100% of the outstanding (55) FIRST 12 % Senior
                   Notes into 1,241,596 FIRST common shares, as provided for in
                   the existing October 7, 1997 Loan Modification Agreements
                   with each of said 12% Noteholders.

              All of the 6% Noteholders agreed to the offer to convert, and the
              key elements of this restructuring program were completed on the
              30th of March 1999. To date, 475,000 of the $.50 and $.33 warrants
              have been exercised. Common stock was issued to both the 12% and
              the 6% Noteholders. Concurrently with this extinguishing of all of
              the Company's long-term debt, the Company acquired FORTESA
              Corporation from the President of the Company. This included a
              working interest in a commercially viable gas discovery in
              Senegal, West Africa with a carried interest to allow the pipeline
              to be connected to the local market, and most existing Warrant
              Holders exercised causing a cash infusion of $237,000 of new
              working capital.

              The President sold FORTESA at his cost basis to the Company for
              50,000 shares of a special convertible preferred stock in the
              Company and 8,055 shares of common stock. These preferred shares
              are convertible into not less than 500,000 common shares and not
              more than 2 million common shares, based on 40% of the net value
              actually realized by the Company from FORTESA assets over the
              ensuing five-year period. The Company will have to either 1)
              purchase additional shares in the open market as Treasury Stock,
              or 2) increase its authorized number of common shares in the
              future to honor an ultimate conversion by the President of the
              Preferred Stock to common, should the FORTESA assets cause the
              subsequent issuance of the additional 1,500,000 shares of Common
              Stock to the President as a result of successful value increase of
              FORTESA assets. Regarding the West African working interest,
              FORTESA had paid for all the technical costs of defining and
              presenting the geoscientific basis for the gas development
              project, and the Company had paid for communication thereof to
              potential partners in return for the right to acquire the results.


                                        F-22
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 10       SUBSEQUENT EVENTS (CONTINUED)

              A firm commitment for $5,400,000 in development expenditures was
              obtained from a third party co-venturer in January 1998. This
              partner commenced expenditures in the first quarter of 1998 to
              advance the commercial exploitation of the 1997 Senegalese Gas
              Discovery, including the position of FORTESA and its co-venturers
              in this development project. FORTESA is not required to expend any
              development funds until the $5,400,000 has been expended. FORTESA
              owns a 15% working interest in the entire development project,
              after project payout, and benefits from 7.5% (50% of 15%) of the
              project's cash flow after production costs prior to payout of the
              $5,400,000 of carried development expenditures. The discovery well
              made in January 1997 on the block indicated a minimum of 2 BCF of
              reserves in just this first well. (See Note 5)

              The FORTESA acquisition will be accounted for similarly to a
              pooling of interests using the historical cost basis of the
              President.

              During 1999, oil prices fell dramatically. As a result, the
              Company's database of exploration materials and opportunities was
              temporarily impaired for licensing to the exploration industry, as
              many of those companies suffered significantly reduced capital
              expenditure budgets. The Company has adjusted during the period
              subsequent by suspending most all new projects, and seeking to
              deliver contract services using its experienced staff directly to
              certain of its oil industry customers. Revenues in the first half
              of 1999 were at very low levels, below that necessary to sustain
              the Company. Prices have subsequently recovered. The Company
              believes that revenues for the balance of 1999 will be adequate to
              recover the momentum enjoyed by the Company in 1998.

NOTE 11       LEGAL PROCEEDINGS

              The Company is a defendant in a lawsuit brought by two parties
              claiming to be the successors-in-interest to McKenzie Management
              Inc., a minority owner of certain seismic data acquired by the
              Company in September 1990 from McMoRan Oil & Gas Company and Adobe
              Resources Corporation. The data was originally owned by a joint
              venture comprised of McMoRan, Adobe and McKenzie Management Inc.
              At the time of its assignment to the Company, McMoRan and Adobe
              could not locate McKenzie and indemnified the Company "against any
              and all future claims, costs, expenses or causes of action that
              may be asserted by the referenced minority owner...." In June
              1994, the Company resold the data to Seitel Corporation and
              indemnified Seitel against claims relating to the seismic data
              being sold. The plaintiffs seek approximately $600,000 to
              $1,500,000, plus punitive damages and attorney's fees.


                                        F-23
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 11       LEGAL PROCEEDINGS (CONTINUED)

              Management believes it is indemnified against loss based on its
              purchase contract with McMoRan and Adobe. The Company has hired
              defense counsel and has made demand on IMC Global (as successor to
              McMoRan) and Santa Fe Resources (as successor to Adobe) to honor
              the indemnity running to First Seismic, but so far they have
              refused. Merits discovery is just commencing and it cannot be
              predicted what, if any, liability the Company may ultimately have
              in the case. The Company intends to offer a vigorous defense based
              on several theories including statute of limitations, and a claim
              the McKenzie did not even own an interest in all the subject
              seismic data. No specific provision has been recorded in the
              accompanying financial statements for any loss which may be
              realized from this matter.

NOTE 12       EARNINGS PER SHARE

              The following sets forth the computation of basic earnings per
              share at December 31, 1998, 1997, 1996 and 1995.

<TABLE>
<CAPTION>

              NUMERATOR                                             1998            1997            1996         1995
              ---------                                             ----            ----            ----         ----
<S>                                                             <C>              <C>            <C>          <C>
              NET LOSS BEFORE SETTLEMENTS/LIABILITY
              EXTINGUISHMENTS                                   $  (65,756)      $  (18,292)    $ (537,557)  $ (991,424)

              SETTLEMENTS/LIABILITY EXTINGUISHMENTS (Note 1)       305,489          177,324        925,178    1,755,554
                                                                ----------       ----------     ----------   ----------

              NET INCOME                                        $  239,733       $  159,032     $  387,621    $ 764,130
                                                                ----------       ----------     ----------   ----------
                                                                ----------       ----------     ----------   ----------

              DENOMINATOR FOR BASIC EARNINGS PER SHARE

              WEIGHTED NUMBER OF SHARES USED
              IN COMPUTING NET INCOME (LOSS)
              PER SHARE                                          5,552,869        5,251,647      5,071,510    4,817,720

              NET LOSS BEFORE SETTLEMENTS/
              LIABILITY EXTINGUISHMENTS
              PER SHARE                                          $   (0.01)       $   (0.00)     $   (0.11)   $   (0.20)
                                                                ----------       ----------     ----------   ----------
                                                                ----------       ----------     ----------   ----------

              SETTLEMENTS/LIABILITY
              EXTINGUISHMENTS PER SHARE                          $    0.05        $    0.03      $    0.19    $    0.36
                                                                ----------       ----------     ----------   ----------
                                                                ----------       ----------     ----------   ----------

               NET INCOME PER SHARE                             $    0.04        $    0.03      $    0.08     $    0.16
                                                                ----------       ----------     ----------   ----------
                                                                ----------       ----------     ----------   ----------

</TABLE>

              Based on estimated fair market values, outstanding options and
              warrants are considered antidilutive for all years presented.
              After year end, 50,000 shares of convertible preferred stock and
              8,055 shares of common stock were issued in connection with the
              FORTESA merger, as well as common shares issued in connection with
              the conversion of long-term debt.


                                        F-24
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 13       PROFORMA MERGER

              Following is selected proforma data of the company for the year
              ended December 31, 1998 had the merger with Fortesa Corporation
              taken place as of that date. FORTESA had no significant operations
              prior to 1998.

<TABLE>

<S>                                                                               <C>
              REVENUE                                                             $3,131,360
                                                                                  ----------
                                                                                  ----------

              NET INCOME                                                          $  357,171
                                                                                  ----------
                                                                                  ----------

              EARNINGS PER SHARE                                                  $      .05
                                                                                  ----------
                                                                                  ----------

</TABLE>

              There are no anticipated changes in accounting methods in
              conjunction with the merger.

NOTE 14       NONCASH INVESTING AND FINANCING ACTIVITIES

              During 1998 the Company received consulting services from Fortesa
              totaling $40,500, which were capitalized. This amount is included
              in investment in oil and gas prospects on the balance sheet and
              is a reduction in the amount due from Fortesa.

              During 1998 the Company financed the purchase of an automobile
              with an $11,940 note payable.


                                        F-25
<PAGE>

                                     FIRST SEISMIC CORPORATION AND SUBSIDIARIES
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           DECEMBER 31, 1998, 1997, 1996 & 1995
-------------------------------------------------------------------------------

NOTE 15       STOCK OPTIONS AND WARRANTS

              The Company has elected to follow Accounting Principles Board
              Opinion No. 25, "Accounting for Stock Issued to Employees (APB
              25) and related interpretations in accounting for its employee
              stock options. Under APB 25, because the exercise price of
              employee stock options is equal to the estimated market price of
              the underlying stock on the date of grant, no compensation
              expense is recorded. The Company has adopted the disclosure-only
              provisions of Statement of Financial Accounting Standards No.
              123, Accounting for Stock-Based Compensation. The value of
              options and warrants granted during 1998 as computed under SFAS
              123, is deemed insignificant.

              The following summarizes the option and warrant activity and
              balances for the year ended December 31, 1998:

              At December 31, 1998, outstanding options and warrants consisted
              of the following:

<TABLE>
<CAPTION>

                                                                    Number of       Exercise        Expiration
                                                                     Shares          Price             Date
                                                                    ---------      ----------      -------------
<S>                                                                 <C>            <C>             <C>
               Outstanding Options                                    200,000      $      .20      Feb. 4, 2008

               Outstanding Warrants                                   500,000      $      .50      June 1, 2000

</TABLE>

               All warrants are currently exercisable.

               All outstanding options were nonqualified options. No
               compensation expense related to stock option grants was recorded,
               as the option exercise prices were equal to the estimated fair
               market value on the date of the grant.


                                        F-26