U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-K/A

         [x] Annual report under Section 13 or 15 (d) of the Securities Exchange
             Act of 1934 (No fee required, effective October 7, 1996.)

                   For the fiscal year ended December 31, 1998

        [ ] Transition report under Section 13 or 15(d) of the Securities
             Exchange Act of 1934 (No fee required)

         For the transition period from _____________ to _____________ .

                         Commission file number 33-20582

                                 Equity AU, Inc.
                 (Name of Small Business Issuer in Its Charter)

              Delaware                                 75-2276137
 (State or Other Jurisdiction of                   (I.R.S. Employer
  Incorporation or Organization)                   Identification No.)

          P.O. Box 940037, Maitland, Florida          32794-0037
      (Address of Principal Executive Offices)         (Zip Code)

                                 (407) 647-3952
                (Issuer's Telephone Number, Including Area Code)

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

                                      None

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

                 Class A Common Stock, par value $.001 per share
                                (Title of Class)

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

Yes [   ]      No [ x ]


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

<PAGE>

Note 1:  Amended 10K/A

         This amended 10K/A reflects the audited financial  statements of Equity
         AU,  Inc.  for the year ended  December  31, 1998  performed  by Jones,
         Jensen, and Company of Salt Lake City, Utah.

         The issuer's revenues for the year ended December 31, 1998 were $0.

         The aggregate  market value of the voting stock held by  non-affiliates
         computed by reference to the price at which the stock was sold,  or the
         average bid and asked prices of such stock,  as of October 28, 1999 was
         $292,667.

         The number of shares  outstanding of the issuer's common equity,  as of
         December 31, 1998 was 9,972,350 shares.

         Transitional  Small Business  Disclosure Format (check one): Yes [ ] No
         [x]



                                     PART I

Item 1.   Business.

GENERAL

          Reference is hereby made to item 1 of the previously filed 10K.


HISTORY AND CURRENT ACTIVITY

         Reference is hereby made to item 1 of the previously filed 10K.



Item 2.   Properties.

          Reference is hereby made to item 2 of the previously filed 10K.

Item 3.   Legal Proceedings.

          Reference is hereby made to item 3 of the previously filed 10K.

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

          Reference is hereby made to item 4 of the previously filed 10K.

                                     PART II

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

          Reference is hereby made to item 5 of the previously filed 10K

                                       2
<PAGE>

RECENT SALES OF UNREGISTERED SECURITIES

         On June 6,  1997 the  Company  issued  8,900,000  restricted  shares to
General  Enterprises  and Trading  Company (Isle of Man) Ltd. for the promise to
loan  the  Company  $100,000  and to  pledge  to the  Company  a  Capital  Asset
Certificate for $5,000,000.  These shares were exempt from registration pursuant
to Section 4(2) of the Securities Act of 1933.

         On October 3, 1997 the  Company  repaid  indebtedness  to various  note
holders by issuing  257,500  shares of its common stock.  The shares were exempt
from registration pursuant to Sections 4(2) or 3(b) under the Securities Act.

         On  October 3, 1997 the  Company  issued  1,029,500  shares to the past
president  of  the  Company  for  wages  owed.   The  shares  were  exempt  from
registration pursuant to Sections 4(2) or 3(b) under the Securities Act.

         On June 8, 1998 the Company issued  1,123,984 shares to the Chairman of
the  Company  for debt and related  interest  owed.  The shares were exempt from
registration pursuant to Sections 4(2) of 3(b) under the Securities Act.

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

         Statements  made or  incorporated  in this  report  include a number of
forward-looking statements within the meaning of Section 27(a) of the Securities
Act  of  1933  and  Section  21(e)  of the  Securities  Exchange  Act  of  1934.
Forward-looking  statements include,  without limitation,  statements containing
the words "anticipates",  "believes",  "expects", "intends", "future", and words
of similar import which express management's belief,  expectations or intentions
regarding the Company's future performance or future events or trends.  Reliance
should not be place on forward-looking statements because they involve known and
unknown risks,  uncertainties and other factors, which may cause actual results,
performance or achievements of the Company to differ materially from anticipated
future  results,  performance  or  achievements  expressly  or  implied  by such
forward-looking statements. In addition, the Company undertakes no obligation to
publicly update or revise any forward-looking statement,  whether as a result of
new information, future events or otherwise.

RESULTS OF OPERATIONS

For the Year Ended  December  31, 1998  compared to the Year Ended  December 31,
1997.

         During the year ended December 31, 1998 the Company had no operations.

         General and administrative expenses were $146,688 for the year of 1998.
Expenses  include  the rental of office  space and  consulting  fees to keep the
corporation  current and dividends on preferred stock. Any changes in the profit
and loss accounts are due to the terminated  operations.  The Company recorded a
net loss of $146,688 in 1998, compared to $115,504 in 1997.

For the Year Ended  December  31, 1997  compared to the Year Ended  December 31,
1996.

         During the year ended  December  31, 1996 the Company  briefly  resumed
mining operations which had been terminated in 1994.  Operations yielded $413 of
gold sales to the Dallas Gold  Exchange.  The cost of contract  labor to produce
the gold was  $15,569,  resulting in a gross  profit of  ($15,156).  During 1995
there were no mining operations.

         General and administrative expenses increased $96,770, 51%, to $287,836
during fiscal 1996 from $191,066  during fiscal 1995.  These expenses  primarily
include  professional  fees,  salary  to the  Company's  president  and  accrued
dividend expense.

         The Company had other  income of $99,968  during  fiscal 1996  compared
with other  expense of ($19,048)  during  fiscal  1995.  The  difference  is due
primarily  to the gain  recognized  when notes  payable  were called due and the
pledged assets were  foreclosed on. The assets had previously  been written down
to salvage value during prior years.

                                       3
<PAGE>

         The Company  experienced a net loss of $203,024 in fiscal 1996 compared
with a net loss of $212,633 in fiscal 1995.

LIQUIDITY AND CAPITAL RESOURCES

         At  December  31,  1998,  the  Company  had $4820 in  assets  and total
stockholders  deficit of  $(142,408)  compared with total assets of $0 and total
stockholders  deficit of $(135,181) at December 31, 1997.  The Company  borrowed
$31,000 from Kentrust  Corporation for general operating expenses.  In 1997, the
Company was able to reduce some debt by issuing  common stock.  The Chairman has
been paying the expenses of the Company  until an  acquisition  or merger can be
made. There is no assurance that the Chairman can or will,  continue to fund the
company and no  assurance  as to when or if the  company  will be able to find a
merger or acquisition.

         At December  31,  1997,  the  Company had total  assets of $0 and total
stockholders  deficit of $(135,181) compared with total assets of $154 and total
stockholders  deficit of $(335,967) at December 31, 1996.  The decrease in total
assets  of  $171,774,  between  1995  and  1996 is due to the  write  off of the
Company's property and equipment upon foreclosure by a note holder for which the
property and equipment had been pledged.  Total liabilities at December 31, 1996
increased $31,250, 10%, from $304,871 to $336,121. The increase is due primarily
to the accrual for dividends payable of $114,766.

Item 7.   Financial Statements and Supplementary Data.

         The following financial  statements and documents are filed herewith on
the pages listed below, as part of Item 7 of this report.  The December 31, 1997
and December 31, 1998 balances were audited while the December 31, 1996 balances
have not been audited as  management  has deemed the Company  inactive,  as that
term is defined in Rule 3-11 of Regulation S-X.

              Document ............................................     Page

              Balance Sheet........................................     F-1

              Statement of Operations..............................     F-2

              Statement of Stockholder's Equity....................    F-3,4

              Statement of Cash Flows..............................     F-5

              Notes to Financial Statements........................  F-6 to 10


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

         Management  deems the  Company  an  "inactive  entity"  as that term is
understand under Rule 3-11 of Regulation S-X. The Registrant has therefore filed
unaudited  financial  statements for reports  required for fiscal years 1996 and
1997,  for purposes of reports  required  under the  Securities  Exchange Act of
1934.  The Company did not retain or engage the services and has  dismissed  the
firm  of  J.S.  Osborn,  P.C.,  Certified  Public  Accountants,  as  independent
accountants  for the  Company.  Management  has secured  the  services of Jones,
Jensen and  Company of Salt Lake City,  Utah to perform  the audits for year end
December 31, 1997 and December 31, 1998.  (Refer to the Company's Form 8-K filed
with the Commission on March 22, 1997.)

                                       4
<PAGE>

                                 C O N T E N T S

Independent Auditors' Report............................................. F-2

Balance Sheet............................................................ F-3

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

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

Statements of Cash Flows................................................. F-9

Notes to the Financial Statements....................................... F-11

                                       F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Equity AU, Inc.
(A Development Stage Company)
Maitland, Florida

We have audited the accompanying balance sheet of Equity AU, Inc. (a development
stage company) as of December 31, 1998 and the related statements of operations,
stockholders' equity (deficit),  and cash flows for the years ended December 31,
1998 and 1997 and from  inception  of the  development  stage on January 1, 1994
through December 31, 1998. These financial  statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Equity AU, Inc. (a development
stage company) as of December 31, 1998 and the results of its operations and its
cash flows for the years ended December 31, 1998 and 1997, and from inception of
the development stage on January 1, 1994 through December 31, 1998 in conformity
with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 6 to the
financial statements,  the Company is a development stage company with recurring
losses which raises  substantial  doubt about its ability to continue as a going
concern.  Management's  plans in regard to these  matters are also  described in
Note 6. The  financial  statements  do not  include any  adjustments  that might
result from the outcome of this uncertainty.

Jones, Jensen & Company
Salt Lake City, Utah

January 19, 1999

                                       F-2
<PAGE>
<TABLE>
<CAPTION>

                                 EQUITY AU, INC.

                          (A Development Stage Company)

                                  Balance Sheet

                                     ASSETS

                                                                                                    December 31,
                                                                                                            1998
                                                                                               -----------------
CURRENT ASSETS
<S>                                                                                            <C>
   Cash                                                                                        $           4,820

     Total Current Assets                                                                                  4,820
                                                                                               -----------------

     TOTAL ASSETS                                                                              $           4,820
                                                                                               =================

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

   Accounts payable                                                                            $           1,398
   Accrued expenses (Note 2)                                                                              58,830
   Dividends payable (Note 4)                                                                             20,000
   Notes payable (Note 3)                                                                                  6,000
   Notes payable - related party (Note 3)                                                                 61,000
                                                                                               -----------------

     Total Current Liabilities                                                                           147,228
                                                                                               -----------------

     Total Liabilities                                                                                   147,228
                                                                                               -----------------

CONTINGENCIES AND COMMITMENTS (Note 2)

STOCKHOLDERS' EQUITY (DEFICIT)

   Preferred stock, Class A, $1.00 par value, 2,000,000 shares
    authorized, 50,000 shares issued and outstanding                                                      50,000
   Preferred stock, Class B, $1.00 par value, 300,000 shares
    authorized, -0- shares issued and outstanding                                                         -
   Preferred stock, Class C, $1.00 par value, 100,000 shares
    authorized, -0- shares issued and outstanding                                                         -
   Common stock, Class A, $0.001 par value, 99,900,000 shares
    authorized, 9,972,350 shares issued and outstanding                                                    9,972
   Common stock, Class B, $0.01 par value, 100,000 shares
    authorized, 100,000 shares issued and outstanding                                                      1,000
   Additional paid-in capital                                                                         12,324,191
   Accumulated deficit                                                                               (12,527,571)
                                                                                               -----------------

     Total Stockholders' Equity (Deficit)                                                               (142,408)
                                                                                               -----------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                      $           4,820
                                                                                               =================
</TABLE>

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

                                       F-3
<PAGE>
<TABLE>
<CAPTION>
                                 EQUITY AU, INC.

                          (A Development Stage Company)

                            Statements of Operations

                                                                                                  From
                                                                                            Inception of the
                                                                                               Development
                                                                                                  Stage
                                                                                               on January 1,
                                                                                                   1994
                                                               For the Years Ended                Through
                                                                    December 31,                December 31,
                                                              1998               1997               1998
                                                          ---------------    ---------------    ----------------
<S>                                                       <C>                <C>                <C>
REVENUES                                                  $        -         $        -         $         -
                                                          ---------------    ---------------    ----------------
EXPENSES

   General and administrative                                     146,688            110,398             257,086
                                                          ---------------    ---------------    ----------------

   Total Expenses                                                 146,688            110,398             257,086
                                                          ---------------    ---------------    ----------------

LOSS FROM OPERATIONS                                             (146,688)          (110,398)           (257,086)
                                                          ---------------    ---------------    ----------------

OTHER INCOME (EXPENSE)

   Interest expense                                                (4,135)            (5,106)             (9,241)
                                                          ---------------    ---------------    ----------------

     Total Other Income (Expense)                                  (4,135)            (5,106)             (9,241)
                                                          ---------------    ---------------    ----------------

LOSS BEFORE DISCONTINUED OPERATIONS                              (150,823)          (115,504)           (266,327)

LOSS ON DISCONTINUED OPERATIONS                                    -                  -               (3,870,504)
                                                          ---------------    ---------------    ----------------

NET LOSS                                                  $      (150,823)   $      (115,504)   $     (4,136,831)
                                                          ===============    ===============    ================

BASIC LOSS PER SHARE                                      $         (0.02)   $         (0.09)
                                                          ===============    ===============
WEIGHTED AVERAGE NUMBER OF
 COMMON SHARES OUTSTANDING                                      7,407,442          1,296,194
                                                          ===============    ===============
</TABLE>

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

                                       F-4
<PAGE>
<TABLE>
<CAPTION>
                                 EQUITY AU, INC.

                          (A Development Stage Company)

                  Statements of Stockholders' Equity (Deficit)
 From Inception of the Development Stage on January 1, 1994 to December 31, 1998


                                       Preferred Stock - A           Preferred Stock - B          Preferred Stock - C
                                 ----------------------------   ----------------------------   ---------------------------
                                     Shares          Amount         Shares          Amount        Shares          Amount
                                 ------------    ------------   ------------    ------------   -----------   -------------
<S>                              <C>             <C>             <C>            <C>            <C>           <C>
Balance, January 1, 1994              148,000    $    148,000         78,500    $     78,500        -        $      -

Preferred stock issued for
 cash at $1.00 per share               -               -             203,500         203,500         6,000           6,000

Preferred stock issued for
 services at $1.00 per share           -               -               6,200           6,200         4,200           4,200
                                 ------------    ------------   ------------    ------------   -----------   -------------
Balance
 December 31, 1994                    148,000         148,000        288,200         288,200        10,200          10,200
                                 ------------    ------------   ------------    ------------   -----------   -------------
Balance
 December 31, 1995                    148,000         148,000        288,200         288,200        10,200          10,200
                                 ------------    ------------   ------------    ------------   -----------   -------------
Balance
 December 31, 1996                    148,000         148,000        288,200         288,200        10,200          10,200

Shares converted to
 Class A common stock                  -               -              (5,000)         (5,000)       -               -

Shares converted to
 Class A common stock                  -               -             (11,000)        (11,000)       -               -

Canceled shares                       (98,000)        (98,000)      (272,200)       (272,200)      (10,200)        (10,200)
                                 ------------    ------------   ------------    ------------   -----------   -------------
Balance
 December 31, 1997                     50,000          50,000         -               -             -               -
                                 ------------    ------------   ------------    ------------   -----------   -------------
Balance,
 December 31, 1998                     50,000    $     50,000         -         $     -             -        $      -
                                 ============    ============   ============    ============   ===========   =============
</TABLE>

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

                                       F-5
<PAGE>
<TABLE>
<CAPTION>
                                 EQUITY AU, INC.

                          (A Development Stage Company)

            Statements of Stockholders' Equity (Deficit) (Continued)
 From Inception of the Development Stage on January 1, 1994 to December 31, 1998

                                        Class A Common                 Class B Common          Additional
                                 ----------------------------   ----------------------------    Paid-in       Accumulated
                                    Shares           Amount        Shares          Amount       Capital         Deficit
                                 ------------    ------------   ------------    ------------  -------------  -------------
<S>                              <C>             <C>             <C>            <C>           <C>            <C>
Balance
 January 1, 1994                      571,254    $        570        100,000    $      1,000  $  11,216,634  $  (8,390,740)

Common stock issued for
 services at $0.10 per share           35,000              35         -               -              95,071         -

Common stock issued for
 services at $0.10 per share            4,598               5         -               -              45,974         -

Common stock issued for
 dividends at $0.11 per share           1,619               2         -               -              17,715         -

Net loss for the year ended
 December 31, 1994                     -               -              -               -              -          (3,563,526)
                                 ------------    ------------   ------------    ------------  -------------  -------------
Balance,
 December 31, 1994                    612,471             612        100,000           1,000     11,375,394    (11,954,266)

Common stock issued for
 cash at $0.01 per share              270,789             271         -               -             184,029         -

Common stock issued for
 services at $1.05 per
 share                                 25,000              25         -               -              26,225         -

Common stock issued for
 dividends at $10.94 per
 share                                  1,619               2         -               -              17,715        (17,717)

Common stock issued for
 dividends at $10.93 per
 share                                  1,353               1         -               -              14,799        (14,800)

Net loss for the year ended
 December 31, 1995                     -               -              -               -              -            (212,633)
                                 ------------    ------------   ------------    ------------  -------------  -------------
Balance,
 December 31, 1995                    911,232             911        100,000           1,000     11,618,162    (12,199,416)

Net loss for the year ended
 December 31, 1996                     -               -              -               -              -             (61,828)
                                 ------------    ------------   ------------    ------------  -------------  -------------
Balance
 December 31, 1996                    911,232    $        911        100,000    $      1,000  $  11,618,162  $ (12,261,244)
                                 ------------    ------------   ------------    ------------  -------------  -------------
</TABLE>

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

                                       F-6
<PAGE>
<TABLE>
<CAPTION>
                                 EQUITY AU, INC.

                          (A Development Stage Company)

            Statements of Stockholders' Equity (Deficit) (Continued)
 From Inception of the Development Stage on January 1, 1994 to December 31, 1998

                                        Class A Common                 Class B Common          Additional
                                 ----------------------------   ----------------------------    Paid-in       Accumulated
                                    Shares           Amount        Shares          Amount       Capital         Deficit
                                 ------------    ------------   ------------    ------------  -------------  -------------
<S>                              <C>             <C>             <C>            <C>           <C>            <C>
Balance
 December 31, 1996                    911,232    $        911        100,000    $      1,000  $  11,618,162  $ (12,261,244)

Stock issued in exchange
 for preferred B stock at
 $6.25 per share                          800               1         -               -               4,999         -

Fractional shares issued                  315          -              -               -                   1         -

Stock issued for services
 at $0.06 per share                   200,000             200         -               -              11,800         -

Stock issued for debt
 at $0.20 per share                   257,500             258         -               -              51,242         -

Stock issued for services
 at $0.10 per share                 1,029,500           1,030         -               -             100,970         -

Stock issued for services
 at $0.06 per share                    20,000              20         -               -               1,180         -

Stock issued in exchange
 for preferred B stock
 at $6.88 per share                     1,599               2         -               -              10,998         -

Contributed capital on
 cancellation of shares                (8,402)             (9)        -               -             388,802         -

Net loss for the year ended
 December 31, 1997                     -               -              -               -              -            (115,504)
                                 ------------    ------------   ------------    ------------  -------------  -------------
Balance
 December 31, 1997                  2,412,544    $      2,413        100,000    $      1,000  $  12,188,154  $ (12,376,748)
                                 ------------    ------------   ------------    ------------  -------------  -------------
</TABLE>

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

                                       F-7
<PAGE>
<TABLE>
<CAPTION>
                                 EQUITY AU, INC.

                          (A Development Stage Company)

            Statements of Stockholders' Equity (Deficit) (Continued)
 From Inception of the Development Stage on January 1, 1994 to December 31, 1998

                                        Class A Common                 Class B Common          Additional
                                 ----------------------------   ----------------------------    Paid-in       Accumulated
                                    Shares           Amount        Shares          Amount       Capital         Deficit
                                 ------------    ------------   ------------    ------------  -------------  -------------
<S>                              <C>             <C>             <C>            <C>           <C>            <C>
Balance
 December 31, 1997                  2,412,544    $      2,413        100,000    $      1,000  $  12,188,154  $ (12,376,748)

Reversal of cancellation of
 common A shares                      214,000             214         -               -                (214)        -

Shares issued at $0.063 per
 share to repay note payable           86,841              86         -               -               5,384         -

Shares issued to officer at
 $0.063 per shares for consulting
 services rendered                      6,836               7         -               -                 424         -

Shares issued at $0.063 per
 share to officer for consulting
 services rendered                  1,123,984           1,124         -               -              70,030         -

Shares issued at $0.063 per
 share to officer for consulting
 services rendered                    128,145             128         -               -               7,955         -

Shares issued to officer to
 pay off note payable for
 consulting services rendered       6,000,000           6,000         -               -              52,458         -

Net loss for the year ended
 December 31, 1998                     -               -              -               -              -            (150,823)
                                 ------------    ------------   ------------    ------------  -------------  -------------
Balance, December 31, 1998          9,972,350    $      9,972       100,000     $      1,000  $  12,324,191  $  12,527,571
                                 ============    ============   ===========     ============  =============  =============
</TABLE>

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

                                       F-8
<PAGE>
<TABLE>
<CAPTION>
                                 EQUITY AU, INC.

                          (A Development Stage Company)

                            Statements of Cash Flows

                                                                                                           From
                                                                                                      Inception of the
                                                                                                         Development
                                                                                                           Stage
                                                                                                        on January 1,
                                                                                                           1994
                                                                    For the Years Ended                   Through
                                                                          December 31,                   December 31,
                                                                 1998                  1997                 1998
                                                            -----------------     ---------------    ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                         <C>                   <C>                <C>
   Net loss                                                 $        (150,823  )  $      (115,504)   $       (4,136,831)
   Adjustments to reconcile net loss to net
    cash used by operating activities:
     Common stock issued for services                                  79,668             115,201               284,815
     Preferred stock issued for services                               -                   -                     10,400
     Depreciation and amortization                                     -                   -                     70,532
     Bad debt expense                                                  -                   -                    129,240
     Discontinued operations                                           -                   -                  2,820,586
     Dividend expense                                                  -                   -                     29,801
   Changes in operating assets and liabilities:
     Decrease in accounts receivable                                   -                   -                     20,921
     Increase (decrease) in accounts payable                              379             (30,102)              (21,397)
     Increase (decrease) in accrued expenses                            9,126               5,107                40,723
                                                            -----------------     ---------------    ------------------
       Net Cash Used by Operating Activities                          (61,650 )           (25,298)             (751,210)
                                                            -----------------     ---------------    ------------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of equipment                                               -                   -                     (3,201)
   Sale of land                                                        -                   -                     64,000
                                                            -----------------     ---------------    ------------------
       Net Cash Provided by Investing Activities                       -                   -                     60,799
                                                            -----------------     ---------------    ------------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Sale of common stock                                                -                    8,394               287,800
   Sale of preferred stock                                             -                   -                    209,500
   Proceeds from long-term debt                                        66,470              16,590               187,937
   Principle payments on long-term debt                                -                   -                     (5,500)
                                                            -----------------     ---------------    ------------------
       Net Cash Provided by Financing Activities                       66,470              24,984               679,737
                                                            -----------------     ---------------    ------------------
NET INCREASE (DECREASE) IN CASH                                         4,820                (314)              (10,674)

CASH AT BEGINNING OF PERIOD                                            -                      314                15,494
                                                            -----------------     ---------------    ------------------
CASH AT END OF PERIOD                                       $           4,820     $        -         $            4,820
                                                            =================     ===============    ==================
</TABLE>

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

                                       F-9
<PAGE>
<TABLE>
<CAPTION>
                                 EQUITY AU, INC.

                          (A Development Stage Company)

                      Statements of Cash Flows (Continued)

                                                                                                           From
                                                                                                      Inception of the
                                                                                                         Development
                                                                                                           Stage
                                                                                                        on January 1,
                                                                                                           1994
                                                                    For the Years Ended                   Through
                                                                          December 31,                   December 31,
                                                                 1998                  1997                 1998
                                                            -----------------     ---------------    ------------------
Cash paid during the year for:
<S>                                                         <C>                   <C>                 <C>
   Interest                                                 $           -         $         2,302     $           8,509
   Income taxes                                             $           -         $        -          $          -

NON-CASH FINANCING:
   Common stock issued for services                         $           79,668    $       115,201     $         284,815
   Preferred stock issued for services                      $           -         $        -          $          10,400
   Common stock issued for dividends                        $           -         $        -          $          50,234
   Paid-in capital through cancellation of
    preferred stock                                         $           -         $       380,400     $         380,400
   Paid-in capital through cancellation of
    common stock                                            $           -         $         8,394     $           8,394
   Common stock issued for debt                             $           63,928    $        51,500     $         115,428
</TABLE>

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

                                      F-10
<PAGE>

                                 EQUITY AU, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 1998

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         a. History

         The Company was  organized  on March 4, 1988 as a Delaware  corporation
         under the name Sherry Lynn Corporation.  The Company was organized as a
         public  company  for the  purpose  of  finding a  suitable  combination
         partner.

         On December 6, 1988, the Company  changed its name to Equity Gold, Inc.
         The number of shares of common stock  authorized  to be issued  changed
         from 50,000,000 to 150,000,000  with a par value of $0.001 per share of
         common stock.

         On December 14,  1989,  the Company  merged with Gold  Equity,  Inc., a
         Delaware corporation. The surviving corporation was Equity Gold, Inc.

         On February 7, 1989, the Company changed its name to Equity AU, Inc.

         On April 14, 1989, the Company changed the number of authorized  shares
         of common stock to 99,900,000.

         On  November  7,  1991,  the  Company  authorized  2,000,000  shares of
         preferred stock with a par value of $1.00 each.

         On February 19, 1992, the Company authorized 99,900,000 shares of Class
         A common  shares  with a par value of $0.001  per  share.  The  Company
         authorized  100,000 shares of Class B common shares with a par value of
         $0.01 per share.

         The Company engaged in research and development of a process to extract
         gold and other precious  metals on various real  properties  located in
         Arkansas.  Partnerships  were formed prior to 1994 by the Company or by
         affiliates of the Company to raise  working  capital,  acquire  mineral
         claims,  rights,  facilities  and equipment and to explore for precious
         metals.  In 1994,  the Company was notified by general  partners of the
         partnerships that they were terminated and dissolved.

         The Company has had no  significant  operations  since  August 1993 and
         entered  the  development  stage on January 1, 1994.  During  September
         1996, the Company resumed operations and again suspended  operations in
         December  1996.  The Company can make no  assumptions as to if and when
         operations will resume again.

         b. Accounting Method

         The  Company's  financial  statements  are  prepared  using the accrual
         method of accounting. The Company has elected a December 31 year end.

         c. Use of Accounting Estimates

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires  management  to make certain
         estimates  and  assumptions  that  affect the  amounts  reported in the
         financial  statements  and  accompanying  notes.  Actual  results could
         differ from those estimates.

                                      F-11
<PAGE>

                                 EQUITY AU, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 1998

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         (Continued)

         d. Basic Loss Per Share

         The  basic  loss per  share of  common  stock is based on the  weighted
         average  number of shares issued and  outstanding  during the period of
         the financial  statements.  Preferred stock and stock warrants prior to
         conversion  are not  included in the basic  calculation  because  their
         inclusion  would be  antidilutive,  thereby  reducing  the net loss per
         common share.

         e. Income Taxes

         The Company is subject to the greater of federal  income taxes computed
         under the regular  system of the  alternative  minimum tax system.  The
         Company adopted  Statement of Financial  Accounting  Standards No. 109,
         "Accounting  for Income  taxes." The  statement  requires the use of an
         asset and liability approach for the accounting and financial reporting
         of income  tax.  No  deferred  tax asset  has been  recognized  for the
         operating loss carryforward as it is more likely than not that all or a
         portion  of the  net  operating  loss  will  not be  realized  and  any
         valuation allowance would reduce the benefit to zero.

         f. Cash and Cash Equivalents

         For purposes of financial statement presentation, the Company considers
         all highly liquid  investments with a maturity of three months or less,
         from the date of purchase to be cash equivalents.

NOTE 2 - CONTINGENCIES AND COMMITMENTS

         The Company  owed $58,830 and $54,695 as of December 31, 1998 and 1997,
         respectively,  in federal  taxes.  Penalties  and interest  continue to
         accrue. Management has determined that this will have no significant or
         material adverse effect on the results of operations.

         On December  31,  1997,  the Company  canceled  8,402 Class A shares of
         common stock.  These shares had been  authorized for issue during prior
         years. No details were available as to whom the shares should be issued
         to.  Management  canceled  these shares which  resulted in  contributed
         capital of $8,394.

         On December 31, 1997,  the Company  canceled  98,000  shares of Class A
         preferred stock,  272,200 shares of Class B preferred stock, and 10,200
         shares of Class C preferred  stock. No record of owners of these shares
         could be determined.  The results of the  cancellation  of these shares
         was contributed capital of $380,400.  All dividends associated with the
         canceled  shares were also  canceled.  The Company may be liable to the
         owners  of  these  shares,   should  the  owners  of  these  shares  be
         identified.

         At December 31,  1998,  a creditor  has made a claim for  approximately
         $20,000.   Management   contends   the   amount  is  not  owed  due  to
         non-performance  by the Lessor.  the amount has been due since February
         1994.

                                      F-12
<PAGE>

                                 EQUITY AU, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 1998

NOTE 2 - CONTINGENCIES AND COMMITMENTS (Continued)

         At December 31,  1998,  a creditor  has made a claim for  approximately
         $19,000.   Management   contends   the   amount  is  not  owed  due  to
         non-performance  by the  creditor.  The  amount has been due since June
         1996.

NOTE 3 - NOTES PAYABLE
<TABLE>
<CAPTION>
         Notes payable of the Company are as follows:
                                                                                               December 31,
                                                                                                       1998
                                                                                          -----------------
        <S>                                                                               <C>
         Unsecured note payable to a related party,
          due December 14, 1999, bearing 10% interest.                                    $          61,000

         Unsecured promissory notes bearing interest
          at 10%.  Interest payable annually in either stock
          or cash, or both.  The lenders may earn bonus
          distributions based on the productivity of mining
          operations.  Due on demand.                                                                 6,000

         Less related party notes                                                                   (61,000)
                                                                                          -----------------
         Total notes payable                                                                          6,000

         Less current portion                                                                        (6,000)
                                                                                          -----------------
         Total Long-Term Debt                                                             $          -
                                                                                          =================
         Scheduled maturities of notes payable are as follows:
                 1999                                                                     $          67,000
                 2000                                                                                -
                 2001                                                                                -
                 2002                                                                                -
                 2003                                                                                -
                 Thereafter                                                                          -
                                                                                          -----------------
                                                                                          $          67,000
                                                                                          =================
</TABLE>

NOTE 4 - CAPITAL STOCK

         a. Preferred Stock - Series A

         The  Company  is  authorized  to issue  200,000  shares  of  non-voting
         preferred  shares,  at a par value of $1.00  per  share.  These  shares
         accrue a 10% dividend  annually.  The cumulative amount of dividend was
         $20,000 and $15,000 at December 31, 1998 and 1997, respectively.  These
         preferred  shares  are  convertible  into  Class A  common  stock  at a
         conversion  rate of 5.5 common shares for each preferred  share.  There
         were 50,000  shares  issued and  outstanding  at December  31, 1998 and
         1997.

                                      F-13
<PAGE>

                                 EQUITY AU, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 1998

NOTE 4 - CAPITAL STOCK (Continued)

         Dividends paid during 1995 amounted to $17,717 for 1993 and $14,800 for
         1994. No dividends were paid during 1998, 1997 and 1996.

         b. Preferred Stock - Class B

         The  company  is  authorized  to issue  300,000  shares  of  non-voting
         preferred  shares,  at a par value of $1.00  per  share.  These  shares
         accrue a 10%  dividend  payable  annually on June 30 of each year.  The
         cumulative amount of dividend was $-0- and $83,020 at December 31, 1998
         and 1997,  respectively.  These preferred  shares are convertible  into
         Class A common stock at a conversion  rate of 16 common shares for each
         preferred  share.  There  were no  shares  issued  and  outstanding  at
         December  31, 1998.  Management  canceled  all  outstanding  shares and
         related dividends payable in 1997.

         c. Preferred Stock - Class C

         The  Company  is  authorized  to issue  100,000  shares  of  non-voting
         preferred shares at a par value of $1.00 per share. These shares accrue
         a 10% dividend annually.  The cumulative amount of dividend was $-0- at
         December 31, 1998 and 1997. These preferred shares are convertible into
         Class A common stock at a conversion  rate of 12 common shares for each
         preferred  share.  There were $-0-  shares  issued and  outstanding  at
         December  31, 1998.  Management  canceled  all  outstanding  shares and
         related dividends payable in 1997.

         d. Preferred Stock

         The Company is authorized to issue  1,400,000  shares of its non-voting
         preferred stock at a par value of $1.00 per share. There were no shares
         issued and outstanding at December 31, 1998.

         e. Common Stock - Class A

         The Company is authorized to issue 99,900,000 Class A common shares, at
         a par value of $0.001 per share.  These shares have full voting rights.
         There were 9,972,350 shares outstanding as of December 31, 1998.

         In October 1997,  the Company  issued  9,150,000  post-split  shares of
         Class A common  stock for cash and mining  rights.  These  shares  were
         canceled due to non-performance of the terms of the agreements.  25,000
         shares were  returned in October  1997.  1,487,000 of these shares were
         used to settle debt of the  Company.  At  December  31,  1998,  145,000
         remained outstanding.

         In September  1997,  the Company  authorized  a reverse  stock split of
         100-for-1. Shares outstanding have retroactively been restated.

         The Company  issued 161,944 and 135,284 shares as dividends in 1995 for
         1993 and 1994 dividends accrued.

         In May 1995, the Company issued in error 9,617,000  shares to a related
         party that were returned to the Company and canceled during 1996. There
         was no consideration exchanged in the issuance or cancellation of these
         shares.

                                      F-14
<PAGE>

                                 EQUITY AU, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 1998

NOTE 4 - CAPITAL STOCK (Continued)

         f. Common Stock - Class B

         The Company is authorized to issue 100,000 shares of its Class B common
         shares at a par value of $0.01 per share.  The Class B shares  have the
         right to elect a majority  of the Board of  Directors  of the  Company.
         There were 100,000  shares  issued and  outstanding  as of December 31,
         1998.  All  Class B shares of common  stock are held by a  director  at
         December 31, 1998.

NOTE 5 - RELATED PARTY TRANSACTIONS

         Arkansas  American  Mining and  Exploration,  Inc. (AAME) was owned and
         controlled  by the founders of the  Company.  In 1988,  AAME  exchanged
         mining  claims,  milling  facility  and a core  drilling  rig,  for the
         Company's common stock.

         In 1994,  a related  party loaned the Company  $152,000  secured by the
         Company's land, buildings, and equipment. This note, plus interest, was
         due in the fourth quarter of 1996.  The Company  defaulted on the note.
         The property and equipment  were claimed by the note holder and written
         off by the Company.

         During 1995, the Company paid $25,000 for services  rendered by related
         parties  and  issued  2,500,000  shares  of  Class A common  stock  for
         additional services valued at $26,225.

         During 1997, the Company issued 1,029,500 shares of common A stock to a
         former  President  of the Company for services  valued at $102,000.  An
         agreement  has  been  made  with  this  former  officer  for  continued
         consulting services.

         On December 23, 1998, the Company borrowed $61,000 from Kentrust, Inc.,
         an entity  whose CEO is a director of the  Company.  The note carries a
         10% interest rate, and is due in full on December 23, 1999.

NOTE 6 - GOING CONCERN

         The  Company  has  no  capital  resources  available  to  meet  current
         obligations  and develop its  properties  and bring into  production  a
         profitable  mining  operation.  The  adverse  effect  on the  Company's
         results  of  operation  due to its  lack of  capital  resources  can be
         expected to continue until such time as the Company is able to generate
         additional capital from other sources.

         These conditions raise substantial doubt about the Company's ability to
         continue as a going concern.  Management has implemented,  or developed
         plans to  implement,  a number of actions to address  these  conditions
         including:  maintaining the most attractive mining properties;  selling
         the precious gems; obtaining additional financing;  and,  investigating
         various joint venture opportunities.

                                      F-15
<PAGE>

                                 EQUITY AU, INC.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 1998

NOTE 6 - GOING CONCERN (Continued)

         Additional  funding will be  necessary  for the  Company's  development
         plans.  There  can be no  assurance  that  additional  funding  will be
         available  when  needed  or,  if  available,  that  the  terms  of such
         financing  will  not  adversely  affect  the  Company's   results  from
         operations.

         The financial  statements do not include any  adjustment to reflect the
         possible future effects on the  recoverability  and  classification  of
         assets or the amounts and classification of liabilities that may result
         from the outcome of this uncertainty.

                                      F-16
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                                            EQUITY AU, INC.
                                                             (Registrant)

                                                    BY:  /s/  James Arch
                                                        -----------------------
                                                         JAMES ARCH, President

Dated:     January 27, 2000

                                        5