<PAGE>
                          SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.  20549

                                     FORM 10-KSB
                       Annual Report Under Section 13 or 15(d)
                        of the Securities Exchange Act of 1934
                     For the Fiscal Year Ended: December 31, 1998
                             Commission File No. 0-25658

                                Kalan Gold Corporation
          (Exact Name of Small Business Issuer as specified in its charter)

             Colorado                               84-1357927
          ---------------                   --------------------------
          (State or other                   (IRS Employer File Number)
          jurisdiction of
          incorporation)

          Tower II, Suite 100, 
          12835 E. Arapahoe Road
          Englewood, Colorado                               80112
          -------------------------                      ----------
          (Address of principal executive offices)       (zip code)

                                    (303) 706-1606
                                    --------------
                 (Registrant's telephone number, including area code)

    Securities to be Registered Pursuant to Section 12(b) of the Act: None
                                           
      Securities to be Registered Pursuant to Section 12(g) of the Act:

                   Common Stock, $0.00001 per share par value

     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.      Yes:  X     No:
                                                        -----      -----

     Check if there is no disclosure of delinquent filers in response to Item 
405 of Regulation S-B is 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. [ ]

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

     The aggregate market value of the voting stock of the Registrant held by 
non-affiliates as of December 31, 1998 was approximately $2,000,000.

     The number of shares outstanding of the Registrant's common stock, as of 
the latest practicable date, April 7, 1999, was 7,990,999.

                         DOCUMENTS INCORPORATED BY REFERENCE     
                         -----------------------------------

<PAGE>

               Documents incorporated by reference are found in Item 13.

                                       PART I 

ITEM 1.   DESCRIPTION OF BUSINESS.

          (a)  GENERAL DEVELOPMENT OF BUSINESS

     Kalan Gold Corporation (the "Company" or the "Registrant"), is a 
Colorado corporation.  The principal business address is Tower II, Suite 100, 
12835 E. Arapahoe Road, Englewood, Colorado  80112. Its phone number is (303) 
706-1606.   

     The Company was originally incorporated under the laws of the State of 
Colorado on September 19, 1985 as a gas exploration company under the name 
Knight Natural Gas, Inc. On January 1, 1993, the Company entered into the 
development stage.

     The Company has had no operations since 1989.  On November 1, 1994, the 
Company did a one-for-twenty reverse split of its common stock and began 
searching for an acquisition candidate.  On August 26, 1996, the Company 
entered into an acquisition of certain defined assets and liabilities of 
Sedcore Exploration Company Limited ("Sedcore") in exchange for 5,000,000 
common shares of the Company. On August 27, 1996, the Company entered into an 
additional acquisition of certain additional defined assets of Sedcore in 
exchange for 8,500,000 common shares of the Company. This second acquisition 
was rescinded on December 30, 1996 and the shares returned to treasury and 
canceled.

     The Company's name was changed to "KALAN GOLD CORPORATION" in November, 
1996.

      As of December 31, 1998, the Company had a total of 7,990,999 common 
shares issued and outstanding. The Company has not been subject to any 
bankruptcy, receivership or similar proceeding. 

          (b)  NARRATIVE DESCRIPTION OF THE BUSINESS

     GENERAL

     From December, 1989 until the acquisition of the Sedcore assets, the 
Company has had no activities. The Company currently has no operations and is 
in the development stage.  Since 1989, the Company has carried no inventories 
or accounts receivable. No independent market surveys have ever been 
conducted to determine demand for the Company's products and services, since 
the Company has never had any products or services which it has provided to 
anyone. During this period, the Company has carried on no operations and 
generated no revenues.  

                                       2

<PAGE>

     OIL AND GAS OPERATIONS

     From inception to December, 1989, the Company operated briefly as an oil 
and gas company. No operations remain from this period.  The Company 
investigated certain possibilities but drilled no oil or gas wells. This was 
the entire extent of the Company's activities.

     GOLD OPERATIONS

     The Company has succeeded to Sedcore's interests in certain defined gold 
concessions and plans to undertake to prove the commercial feasibility of the 
concessions. Once these concessions have been proven to be economically 
feasible, the Company plans to undertake commercial development, either 
itself or with a joint venture partner, or the Company may sell its interests 
in these concessions to third parties.
          
     ORGANIZATION

     The Company presently comprises one corporation with no subsidiaries or 
parent entities and is in the developmental stage.

          (c)  OPERATIONS

     PROPOSED BUSINESS

     From January 1, 1993 until August, 1996, the primary activity of the 
Company had been directed towards organizational efforts. With the 
acquisition of the Sedcore assets, the focus of the Company shifted.
     
     It was initially the plan of the Company's management that the Company 
focus in the gold mining business solely with respect to the two concessions 
which were assigned to the Company by Sedcore. The Company's management 
planned to develop operations through the use of additional capital which the 
Company would plan to seek through a public or private offering, through debt 
financing, or through internally generated profits. However, at this point, 
and for the foreseeable future, the Company has shifted its business focus.

     Sedcore had originally entered into a two year agreement with Ahanta 
Mining Co. Limited ("Ahanta"), a Ghanian corporation, to undertake 
exploration for gold in the Butre River area in the Western Region of Ghana. 
Ahanta assigned its exclusive mineral rights under Mining Concession No. 111 
to Sedcore for the period of the agreement. Sedcore, in turn, has assigned 
its rights under this agreement with Ahanta to the Company. The Company 
succeeded to all of Sedcore's rights and responsibilities.  This agreement 
with Ahanta has been terminated. The Company plans no further activity with 
respect to this project.

                                       3

<PAGE>

     In addition, Sedcore had assigned to the Company its two and one-half 
year agreement with Esikaman Mining Company Limited ("Esikaman") to conduct a 
reconnaissance for gold in a licensed area located in the Wassa Amanfi 
district of Ghana. The Company succeeded to all of Sedcore's rights and 
responsibilities. During 1998, this agreement with Ahanta has been 
terminated. The Company plans no further activity with respect to this 
project.

     In March, 1997, the Company completed an agreement with Trio Gold Corp., 
an Alberta public corporation (Trio), whereby Trio would earn a 50% ownership 
interest in the Ahanta and Esikaman Concessions in return for the payment of 
$144,000 to the Company and for the expenditure of $375,000 on geochemical 
studies on both properties. Trio was to be responsible for all operations on 
these properties. With the termination of the Ahanta agreement, the agreement 
with Trio is no longer applicable.

     On February 9, 1998, the Company entered into an exclusive agreement 
with ASEAN GOLD INDUSTRIES, INC. (Asean Gold), whereby the Company will 
provide to Asean Gold all technical advice regarding the building, 
constructing, and operation of Asean Gold's gold milling, smelting, and 
refining facilities in the Province of Lanao Del Norte, Mindanao, the 
Philippines. Under this agreement, Registrant would also manage and oversee 
the day-to-day operations of these facilities. This Agreement was terminated 
in 1998.

     In October, 1998, the Company issued a total of 1,300,000 shares for 
four gold properties in the country of Burkina Faso. This agreement has been 
rescinded.

     In January, 1999, the Company entered a letter of intent to acquire 100% 
of the issued and outstanding common shares of Animated Electronic Industries 
Sdn Bhd, a private Malaysian company (AEI), in exchange for approximately 94% 
of the ownership of the Company, subject to the completion of due diligence 
by both parties, the approval of the shareholders of both companies, and the 
divestiture of the assets and liabilities of the Company. The letter of 
intent was extended until May, 1999.

     For the coming fiscal year, the Company's primary focus will be to seek, 
investigate and, if such investigation warrants, acquire controlling interest 
in business opportunities presented to it by persons or firms who are 
involved in any appropriate business and wish to seek the advantages of being 
acquired by the Company. The Company would not restrict any acquisitions to 
the gold business but would examine any business which would be beneficial 
for its shareholders. The Company would be the surviving entity in each case. 
It is anticipated that the search for acquisition candidates would be a 
material focus of the Company in the next fiscal year.

     In seeking business opportunities, the management decision of the 
Company will be based upon the objective of seeking long-term appreciation in 
the value of the Company. Current income will be a significant factor in such 
decisions, although long-term appreciation of the operations will be the 
prime consideration.

                                       4

<PAGE>

     (d)  MARKETS

     The Company's marketing plan for coming fiscal year and the foreseeable 
future will be principally focused upon seeking an acquisition candidate.

     (e)  RAW MATERIALS

     The use of raw materials will not be a material factor in the Company's 
activities.

     (f)  CUSTOMERS AND COMPETITION

     At the present time, the primary focus of the Company will be on seeking 
an acquisition candidate.

     (g)  BACKLOG

     At December 31, 1998, the Company had no backlogs.

     (h)  EMPLOYEES

     As of December 31, 1998, the Company had one part-time employee. The 
Company's Treasurer is a part-time employee who is paid at the rate of $1,000 
per month. The Company does not plan to hire additional employees until it 
has begun operations.

     (i)  PROPRIETARY INFORMATION

     The Company has no proprietary information.

     (j)  GOVERNMENT REGULATION

     The Company is not subject to any material governmental regulation or 
approvals.

     (k)  RESEARCH AND DEVELOPMENT

     The Company has never spent any amount in research and development 
activities.

     (l)  ENVIRONMENTAL COMPLIANCE

     At the present time, the Company is not subject to any material costs 
for compliance with any environmental laws.

                                       5

<PAGE>

     (m)  SUBSEQUENT EVENT

     In January, 1999, the Company entered a letter of intent to acquire 100% 
of the issued and outstanding common shares of Animated Electronic Industries 
Sdn Bhd, a private Malaysian company (AEI), in exchange for approximately 94% 
of the ownership of the Company, subject to the completion of due diligence 
by both parties, the approval of the shareholders of both companies, and the 
divestiture of the assets and liabilities of the Company. The letter of 
intent was extended until May, 1999.

     In April. 1999, the Company announced rescission its previous 
acquisition of four properties located in Bukina Faso, West Africa. The 
acquisition had been made in exchange for 1,300,000 restricted common shares 
of the Company. 
     
Item 2.   DESCRIPTION OF PROPERTIES.

     As of December 31, 1997, the Company's business office was located at 
Tower II, Suite 100, 12835 E. Arapahoe Road, Englewood, Colorado  80112,  for 
which it pays approximately $1,000  per month in rent on a month-to-month 
lease from the parent company of the principal shareholder of the Company. 
The Company owns office furniture and equipment which it utilizes at its 
principal office. 

     Sedcore originally entered into a two year agreement with Ahanta Mining 
Co. Limited ("Ahanta"), a Ghanian corporation, to undertake exploration for 
gold in the Butre River area in the Western Region of Ghana. Ahanta assigned 
its exclusive mineral rights under Mining Concession No. 111 to Sedcore for 
the period of the agreement. Sedcore, in turn, has assigned its rights under 
this agreement with Ahanta to the Company. The Company has succeeded to all 
of Sedcore's rights and responsibilities. This agreement has been terminated.

     Further, Sedcore assigned to the Company its two and one-half year 
agreement with Esikaman Mining Company Limited ("Esikaman") to conduct a 
reconnaissance for gold in a licensed area located in the Wassa Amanfi 
district of Ghana. The Company has succeeded to all of Sedcore's rights and 
responsibilities, including the requirement to make scheduled payments to 
Esikaman of a total of $90,000 through November, 1998.   The Company has 
negotiated an extension of this agreement with Esikaman to end in July, 1998. 
The Company is currently evaluating its plans with respect to this situation. 
This agreement has been terminated.

     In April. 1999, the Company announced rescission its previous 
acquisition of four properties located in Bukina Faso, West Africa. The 
acquisition had been made in exchange for 1,300,000 restricted common shares 
of the Company. 

     Otherwise, the Company has no other properties.

                                       6

<PAGE>

Item 3.   LEGAL PROCEEDINGS.

     No legal proceedings of a material nature to which the Company is a 
party were pending during the reporting period, and the Company knows of no 
legal proceedings of a material nature pending or threatened or judgments 
entered against any director or officer of the Company in his capacity as 
such.

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

     The Company did not submit any matter to a vote of security holders 
through solicitation of proxies or otherwise during the fourth quarter of the 
fiscal year covered by this report.

                                       PART II

Item 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     (a)  PRINCIPAL MARKET OR MARKETS.

      The Company's began trading in January, 1997. Prior to that time, the 
Company's securities had never been listed for trading on any market.  Market 
makers and other dealers provide bid and ask quotations of the Company's 
Common Stock under the symbol "KNGC." Trading is conducted in the 
over-the-counter market on the NASD's "Electronic Bulletin Board."

     The table below represents the range of high and low bid quotations of 
the common shares of the Company as reported during the reporting period 
herein. The following bid price market quotations represent prices between 
dealers and do not include retail markup, markdown, or commissions; hence, 
they may not represent actual transactions.

<TABLE>
<CAPTION>
Fiscal Year 1998              High          Low
                              ----          ---
<S>                          <C>           <C>
  First Quarter                 
Common Shares                $ .75         $ .875

  Second Quarter
Common Shares                $ .75         $ .843

  Third Quarter
Common Shares                $ .90         $1.00

  Fourth Quarter
Common Shares                $1.75         $1.875

</TABLE>

                                       7

<PAGE>

<TABLE>
<CAPTION>
Fiscal Year 1997              High          Low
                              ----          ---
<S>                          <C>           <C>
    First Quarter                 
Common Shares                $5.875        $2.50

    Second Quarter
Common Shares                $3.375        $1.50

    Third Quarter
Common Shares                $3.44         $0.68

    Fourth Quarter
Common Shares                $5.56         $1.34

</TABLE>

     (b)  APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK

     As of March 15, 1999, a total of 7,990,999 of shares of the Company's 
Common Stock were outstanding and the number of holders of record of the 
Company's common stock at that date was approximately 200. However, the 
Company estimates that it has a significantly greater number of shareholders 
because a substantial number of the Company's shares are held in nominee 
names by the Company's market makers.

     (c)  DIVIDENDS

     Holders of common stock are entitled to receive such dividends as may be 
declared by the Company's Board of Directors.  No dividends on the common 
stock were paid by the Company during the periods reported herein nor does 
the Company anticipate paying dividends in the foreseeable future. 
     
Item 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF  OPERATION.

     Results of Operations

     The Company has generated no substantial revenues from its operations 
and has been a development stage company since inception. Since the Company 
has not generated revenues and has never been in a profitable position, it 
operates with minimal overhead. The Company's primary activity for the next 
fiscal year will be to seek, investigate and, if such investigation warrants, 
acquire controlling interest in business opportunities presented to it by 
persons or firms who are involved in any appropriate business and wish to 
seek the advantages of being acquired by the Company. The  Company would not 
restrict any acquisitions to the gold business but would examine any business 
which would be beneficial for its shareholders. The Company would be the 
surviving entity in each case. It is anticipated that the search for 
acquisition candidates would be a material focus of the Company in the next 
fiscal year.  

                                       8

<PAGE>

     Liquidity and Capital Resources

     As of the end of the reporting period, the Company had no material cash 
or cash equivalents. There was no significant change in working capital 
during this fiscal year.

     Management feels that the Company has inadequate working capital to 
pursue any gold discoveries which can be commercially extracted from its 
lease properties. To develop these properties, the Company must utilize 
additional capital which it must acquire, either itself or with joint venture 
partners or investors. The Company has not entered into any agreement with a 
partner but expects to require additional financing for its properties. The 
Company will have negligible capital requirements prior to the decision to 
develop these areas. The timing for the development of any commercially 
feasible properties will be contingent upon the current price of gold rising 
to more commercially reasonable levels. The Company cannot predict when this 
will occur.

     The Company has no plans to pay dividends to its shareholders.

Item 7.   FINANCIAL STATEMENTS.

          The complete financial statements are included at Item 13 herein.
          
Item 8.   DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND  FINANCIAL 
          DISCLOSURE.

          The Company did not have any disagreements on accounting and 
financial disclosures with its present accounting firm during the reporting 
period.

                                       PART III

Item 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

     The Directors and Executive Officers of the Company, their ages and 
positions held in the Company as of December 31,  1998 are as follows:

<TABLE>
<CAPTION>
     NAME                     AGE                 POSITION HELD
     ----                     ---                 -------------
<S>                           <C>            <C>
     Sanford Altberger        62             President

     Michael Raisch           47             Secretary-Treasurer and Director

</TABLE>

     The Company's Directors will serve in such capacity until the next 
annual meeting of the Company's shareholders and until their successors have 
been elected and qualified.  The officers serve at the discretion of the 
Company's Directors. There are no family relationships 

                                       9

<PAGE>

among the Company's officers and directors, nor are there any arrangements or 
understandings between any of the directors or officers of the Company or any 
other person pursuant to which any officer or director was or is to be 
selected as an officer or director. 

SANFORD ALTBERGER.  Mr. Altberger has been the President and a Director of 
the Company since August, 1997.   From 1988 to the present, he has been the 
President and principal owner of Orovi Corporation, a private corporation in 
the minerals exploration business. He has been involved in various capacities 
with the oil, gas, and mining business for approximately thirty years. He has 
a degree in Mining Engineering from the University of Arizona and a degree in 
Petroleum Engineering from Oklahoma University. Mr. Altberger will devote a 
minimum of forty hours per week to the affairs of the Company.  

MICHAEL RAISCH. Mr. Raisch has been a Director of the Company and the 
Secretary-Treasurer since March, 1997.  He was in public accounting with the 
firm of Zaveral, Boosalis, Raisch from 1990 to September, 1995. At that time, 
he became the Chief Financial Officers of George T. Sanders Company, a 
private plumbing supply company. Mr. Raisch has a Bachelor's degree in 
Accounting from the University of Colorado. He will devote a minimum of ten 
hours per week to the affairs of the Company.

     COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934.

     Section 16(a) of the Securities Exchange Act of 1934 (the "34 Act") 
requires the Company's officers and directors and persons owning more than 
ten percent of the Company's Common Stock to file initial reports of 
ownership and changes in ownership with the Securities and Exchange 
Commission ("SEC"). Additionally, Item 405 of Regulation S-B under the 34 Act 
requires the Company to identify in its Form 10-KSB and proxy statement those 
individuals for whom one of the above referenced reports was not filed on a 
timely basis during the most recent fiscal year or prior fiscal years. Given 
these requirements, the Company has the following report to make under this 
section.  All of the Company's officers or directors, and all persons owning 
more than ten percent of its shares have filed the subject reports, if 
required, on a timely basis during the past fiscal year. 

Item 10.  EXECUTIVE COMPENSATION.

     The following table sets forth the Summary Compensation Table for the 
Chief Executive Officer and other executive officer who were serving as 
executive officers at the end of the last completed fiscal year. No other 
compensation not covered in the following table was paid or distributed by 
the Company to such persons during the period covered. Employee Directors 
receive no additional compensation for service on the Board of Directors of 
the Company. Outside Directors received no compensation from the Company as 
such during this period except as indicated below. 

                                       10

<PAGE>

     The Company had granted a stock option to Mr. Raisch, the current 
Secretary-Treasurer and a Director, for 75,000 common shares at $.02 per 
share until November 14, 2001. This option has not been exercised. As of the 
date hereof, the Company has no other options issued or outstanding. The 
Company has no retirement, pension, profit sharing, stock option, insurance 
or other similar programs.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
              Annual Compensation                        Long Term Compensation
              -------------------                        ----------------------
                                                     Awards                Payouts
                                                     ------                -------
                                            Other           
                                            Annual          Restricted          All
                                          Bonus Compen-       Stock          LTIP Other
                              Salary         sation           Award(s)     Options/Payouts
Name               Year         ($)        ($)    ($)         SARs(#)          ($)  
----               ----       ------      -----  -----      ----------     ---------------
<S>                <C>        <C>         <C>    <C>        <C>            <C>
Sanford            1998       $-0-               (1)
Altberger          1997       $-0-
Chairman           1996       $-0-

Michael            1998       $5,000             (2)
Raisch             1997       $8,308
Treasurer          1996       $-0-

</TABLE>

(1)   Orovi Corporation, a private company controlled by Mr. Altberger, and 
one of the owners of Sedcore advanced loans to the Company from time to time 
for operational purposes. As of January 1, 1998, the Company owed Orovi 
Corporation $84,926. An additional $41,300 was advanced through December 31, 
1998. The balance owed, plus accrued interest, was satisfied by the Company 
issuing 465,000 shares of its restricted common stock as payment of the debt.

(2)   The Company issued 235,000 shares of its restricted common stock to Mr. 
Raisch for services. 

Item 11.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

      The following sets forth the number of shares of the Registrant's 
$0.00001 par value common stock beneficially owned by (I) each person who, as 
of December 31, 1998, was known by the Company to own beneficially more than 
five percent (5%) of its common stock; (ii) the individual Directors of the 
Registrant and (iii) the Officers and Directors of the Registrant as a group. 
As of December 31, 1998, there were 7,990,999 common shares issued and 
outstanding.

                                       11

<PAGE>

<TABLE>
<CAPTION>
Name and Address                       Amount and Nature                  Percent of
of Beneficial Owner                 of Beneficial Ownership(1)(2)           Class
-------------------                 -----------------------------         ----------
<S>                                 <C>                                   <C>
Orovi Corporation                          4,196,611                        46.68%
Suite 100
12385 E. Arapahoe Road, 
Englewood, CO 80112

Sanford Altberger                                -0-
Suite 100
12385 E. Arapahoe Road, 
Englewood, CO 80112

Michael Raisch                               235,000(3)                      2.61%
Suite 100
12385 E. Arapahoe Road, 
Englewood, CO 80112

All Officers and Directors as              4,431,611                        49.29%
a Group (two persons)

</TABLE>


(1)  All ownership is beneficial and on record, unless indicated otherwise.

(2)  Beneficial owners listed above have sole voting and investment power with
     respect to the shares shown, unless otherwise indicated. 

(3)  Mr. Raisch has an option for 75,000 common shares at $.02 per share until
     November 14, 2001.

Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Orovi Corporation, a private company controlled by Mr. Altberger, and 
one of the owners of Sedcore advanced loans to the Company from time to time 
for operational purposes. As of January 1, 1998, the Company owed Orovi 
Corporation $84,926. An additional $41,300 was advanced through December 31, 
1998. The balance owed, plus accrued interest, was satisfied by the Company 
issuing 465,000 shares of its restricted common stock as payment of the debt. 
The Company issued 235,000 shares of its restricted common stock to Mr. 
Raisch for services. 

                                       12

<PAGE>

     The Company entered into a verbal agreement to rent office space from 
Orovi Corporation, effective September 1, 1997. The agreement calls for 
monthly payments of $1,000 per month. No payments have been made to date.

                                       PART IV

Item 13.  EXHIBITS AND REPORTS ON FORM 8-K.

               (a)  The following financial information is filed as part of this
          report:
                    (1)  FINANCIAL STATEMENTS

<PAGE>

                             KALAN GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                          Index to Financial Statements

<TABLE>
<CAPTION>
                                                                                                     Page
                                                                                                     ----
<S>                                                                                                  <C>
Independent auditors' report.......................................................................  F-2

Balance sheet, December 31, 1998...................................................................  F-3

Statements of operations, for the years ended December 31, 1998 and 1997,
     and from January 1, 1993 (inception) through December 31, 1998 (unaudited) ...................  F-4

Statement of shareholders' deficit, Janaury 1, 1993 (inception)
     through December 31, 1998 (unaudited).........................................................  F-5

Statements of cash flows, for the years ended December 31, 1998 and 1997,
     and from January 1, 1993 (inception) through December 31, 1998 (unaudited) ...................  F-7

Notes to financial statements......................................................................  F-9

</TABLE>

                                       F-1


<PAGE>

To the Board of Directors and Shareholders
Kalan Gold Corporation

                             INDEPENDENT AUDITORS' REPORT

We have audited the balance sheet of Kalan Gold Corporation (a development 
stage company) as of December 31, 1998 and the related statements of 
operations, shareholders' deficit and cash flows for the years ended December 
31, 1998 and 1997.  These financial statements are the responsibility of the 
Company's management.  Our responsibility is to express an opinion on these 
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of Kalan Gold Corporation, as 
of December 31, 1998 and the results of its operations and cash flows for the 
years ended December 31, 1998 and 1997, in conformity with generally accepted 
accounting principles.

The accompanying financial statements have been prepared assuming the Company 
will continue as a going concern.  As discussed in Note H, the Company's net 
capital deficiency and a working capital deficit raise substantial doubt 
about its ability to continue as a going concern.  Management's plans in 
regard to these matters are also described in Note H.  The financial 
statements do not include any adjustments that might result from the outcome 
of this uncertainty.


Cordovano and Harvey, P.C.
Denver, Colorado
March 26, 1999
                                        F-2

                                          
<PAGE>

                             KALAN GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                                  Balance Sheet

                                December 31, 1998

<TABLE>
<S>                                                                       <C>
                                     ASSETS

CASH ................................................................    $     487
FURNITURE AND EQUIPMENT, less accumulated depreciation
  of $2,585 (Note C) ................................................        2,861
                                                                         ---------
                                                                         $   3,348
                                                                         ---------
                                                                         ---------

                 LIABILITIES AND SHAREHOLDER'S DEFICIT
LIABILITIES
  Accounts payable ..................................................    $  40,950
  Accrued liabilities ...............................................        4,383
                                                                         ---------
                                                    TOTAL LIABILITIES       45,333
                                                                         ---------

SHAREHOLDERS' DEFICIT (Notes D&E)
  Preferred stock, $.10 par value; 1,000,000 shares authorized;
    -0- shares issued and outstanding ...............................            -
  Common stock, $.00001 par value; 100,000,000 shares authorized;
    7,990,999 shares issued and outstanding .........................           80
  Additional paid-in capital ........................................      392,341
  Unearned compensation..............................................      (48,000)
  Retained deficit ..................................................     (386,406)
                                                                         ---------
                                          TOTAL SHAREHOLDER'S DEFICIT      (41,985)
                                                                         ---------
                                                                         $   3,348
                                                                         ---------
                                                                         ---------

</TABLE>

               See accompanying notes to the financial statements.
                                       F-3

<PAGE>

                             KALAN GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                             Statement of Operations

<TABLE>
<CAPTION>
                                                                                              January 1,
                                                                                                 1993
                                                                For The Years Ended           (inception)
                                                                    December 31,               Through
                                                            --------------------------       December 31,
                                                               1998            1997              1998
                                                            ----------      ----------       -----------
                                                                                             (unaudited)
<S>                                                         <C>             <C>              <C>
COSTS AND EXPENSES
     Salaries and payroll taxes...................          $   55,204      $   91,933       $  173,240
     Compensation (Note E)........................                   -         129,500          129,500
     Professional fees............................              32,824          33,272           86,375
     General and administrative...................              24,361          43,414           77,354
     Depreciation.................................               1,161           1,160            2,585
                                                            ----------      ----------       ----------
                                    OPERATING LOSS            (113,550)       (299,279)        (469,054)
                                                            ----------      ----------       ----------
NON-OPERATING INCOME (EXPENSES)                                           
     Interest expense.............................              (8,069)        (10,030)         (20,516)
     Gain on the sale of property (Note B)........                   -          86,041           86,041
     Gain on agreement termination (Note B).......               4,517          12,606           17,123
                                                            ----------      ----------       ----------
                          LOSS BEFORE INCOME TAXES            (117,102)       (210,662)        (386,406)

INCOME TAXES (Note F).............................                   -               -                -
                                                            ----------      ----------       ----------
                                          NET LOSS          $ (117,102)     $ (210,662)      $ (386,406)
                                                            ----------      ----------       ----------
                                                            ----------      ----------       ----------
Basic weighted average common shares                                      
outstanding.......................................           7,383,917       7,074,375        3,597,590
                                                            ----------      ----------       ----------
                                                            ----------      ----------       ----------
Basic loss per common share.......................          $    (0.02)     $    (0.03)      $    (0.11)
                                                            ----------      ----------       ----------
                                                            ----------      ----------       ----------
Diluted weighted average common shares                                    
outstanding.......................................           7,832,666       7,423,333        3,736,913
                                                            ----------      ----------       ----------
                                                            ----------      ----------       ----------
Diluted loss per common share.....................          $    (0.01)     $    (0.03)      $    (0.10)
                                                            ----------      ----------       ----------
                                                            ----------      ----------       ----------

</TABLE>

               See accompanying notes to the financial statements.
                                       F-4

<PAGE>

<TABLE>
<CAPTION>
                                                                                                                           
                                                                                                                           
                                                          Preferred Stock       Common Stock      Additional               
                                                         -----------------  --------------------   Paid-in    Outstanding  
                                                         Shares  Par Value   Shares    Par Value   Capital      Options    
                                                         ------  ---------  ---------  ---------  ----------  -----------  
<S>                                                      <C>     <C>        <C>        <C>        <C>         <C>          
Balance, January 1, 1993 (inception)(Note A).......          -     $    -     553,499    $    6      418,949     $    -    

Net income for the year ended 12/31/93.............          -          -           -         -            -          -    
                                                         ------    ------   ---------    ------   ----------     ------    
                         BALANCE, DECEMBER 31, 1993          -          -     553,499         6      418,949          -    

Shares issued for services, at cost................          -          -   1,500,000        15            -          -    

Net income for the year ended 12/31/94.............          -          -           -         -            -          -    
                                                         ------    ------   ---------    ------   ----------     ------    
                         BALANCE, DECEMBER 31, 1994          -          -   2,053,499        21      418,949          -    

Capital contribution (Note B)......................          -          -           -         -        3,700          -    

Net income for the year ended 12/31/95.............          -          -           -         -            -          -    
                                                         ------    ------   ---------    ------   ----------     ------    
                         BALANCE, DECEMBER 31, 1995          -          -   2,053,499        21      422,649          -    

Termination of S corporation (Note D)..............          -          -           -         -     (422,023)         -    

Shares issued for property acquisition (Note B)....          -          -   5,000,000        50       19,982          -    

Capital contribution (Note B)......................          -          -           -         -        5,027          -    

Net income for the year ended 12/31/96.............          -          -           -         -            -          -    
                                                         ------    ------   ---------    ------   ----------     ------    
                         BALANCE, DECEMBER 31, 1996          -          -   7,053,499        71       25,635          -    


<CAPTION>
                                                                        Deficit                
                                                                       Accumulated             
                                                                          During               
                                                           Deferred    Development             
                                                         Compensation     Stage        Total   
                                                         ------------  ------------  --------- 
<S>                                                      <C>           <C>           <C>       
Balance, January 1, 1993 (inception)(Note A).......        $     -     $ (417,421)   $  1,534  
                                                                                               
Net income for the year ended 12/31/93.............              -           (336)       (336) 
                                                           -------     ----------    --------  
                         BALANCE, DECEMBER 31, 1993              -       (417,757)      1,198  
                                                                                               
Shares issued for services, at cost................              -              -          15  
                                                                                               
Net income for the year ended 12/31/94.............              -           (289)       (289) 
                                                           -------     ----------    --------  
                         BALANCE, DECEMBER 31, 1994              -       (418,046)        924  
                                                                                               
Capital contribution (Note B)......................              -              -       3,700  
                                                                                               
Net income for the year ended 12/31/95.............              -         (3,977)     (3,977) 
                                                           -------     ----------    --------  
                         BALANCE, DECEMBER 31, 1995              -       (422,023)        647  
                                                                                               
Termination of S corporation (Note D)..............              -        422,023           -  
                                                                                               
Shares issued for property acquisition (Note B)....              -              -      20,032  
                                                                                               
Capital contribution (Note B)......................              -              -       5,027  
                                                                                               
Net income for the year ended 12/31/96.............              -        (58,642)    (58,642) 
                                                           -------     ----------    --------  
                         BALANCE, DECEMBER 31, 1996              -        (58,642)    (32,936) 

</TABLE>

               See accompanying notes to the financial statements.

                                       F-5

<PAGE>


                             KALAN GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                       Statement of Shareholders' Deficit

              January 1, 1993 (inception) through December 31, 1998


<TABLE>
<CAPTION>
                                                                                                                           
                                                                                                                           
                                                          Preferred Stock       Common Stock      Additional               
                                                         -----------------  --------------------   Paid-in    Outstanding  
                                                         Shares  Par Value   Shares    Par Value   Capital      Options    
                                                         ------  ---------  ---------  ---------  ----------  -----------  
<S>                                                      <C>     <C>        <C>        <C>        <C>         <C>          
Outstanding stock options (Note E)......................     -          -           -         -            -     129,500   

Shares issued upon exercise of stock options (Note E)...     -          -      37,500         -          750           -   

Net income for the year ended 12/31/97..................     -          -           -         -            -           -   
                                                          ----     ------   ---------    ------   ----------   ---------   
                              BALANCE, DECEMBER 31, 1997     -          -   7,090,999        71       26,385     129,500   

Shares issued upon exercise of stock options (Note E)...     -          -     200,000         2        3,998           -   

Shares issued to officer to repay advances, accrued
  interest and accrued rent (Note B)....................     -          -     465,000         5      154,913           -   

Shares issued to officer to repay accrued salaries,
  accrued interest and deferred compensation (Note B)...     -          -     235,000         2       77,545           -   

Cancellation of outstanding stock options (Note E)......     -          -           -         -      129,500    (129,500)  

Net income for the year ended 12/31/98...................    -          -           -         -            -           -   
                                                          ----     ------   ---------    ------   ----------   ---------   
                               BALANCE, DECEMBER 31, 1998    -       $  -   7,990,999    $   80    $ 392,341   $       -   
                                                          ----     ------   ---------    ------   ----------   ---------   
                                                          ----     ------   ---------    ------   ----------   ---------   

<CAPTION>

                                                                          Deficit                
                                                                         Accumulated             
                                                                            During               
                                                             Deferred    Development             
                                                           Compensation     Stage        Total   
                                                           ------------  ------------  --------- 
<S>                                                        <C>           <C>           <C>       
Outstanding stock options (Note E)......................           -              -      129,500    
                                                                                                       
Shares issued upon exercise of stock options (Note E)...           -              -          750    
                                                                                                       
Net income for the year ended 12/31/97..................           -       (210,662)    (210,662)  
                                                           ---------     ----------    ---------  
                              BALANCE, DECEMBER 31, 1997           -       (269,304)    (113,348)
                                                                                                       
Shares issued upon exercise of stock options (Note E)...           -              -        4,000    
                                                                                                       
Shares issued to officer to repay advances, accrued                                                    
  interest and accrued rent (Note B)....................           -              -      154,918    
                                                                                                       
Shares issued to officer to repay accrued salaries,                                                    
  accrued interest and deferred compensation (Note B)...     (48,000)             -       29,547    
                                                                                                       
Cancellation of outstanding stock options (Note E)......           -              -            -   
                                                                                                       
Net income for the year ended 12/31/98...................          -       (117,102)    (117,102)     
                                                           ---------     ----------    ---------  
                               BALANCE, DECEMBER 31, 1998  $ (48,000)    $ (386,406)   $ (41,985)    
                                                           ---------     ----------    ---------  
                                                           ---------     ----------    ---------  

</TABLE>

               See accompanying notes to the financial statements.

                                       F-6

<PAGE>

                             KALAN GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                             Statement of Cash Flows

<TABLE>
<CAPTION>
                                                                                                 January 1,
                                                                                                    1993
                                                                     For The Years Ended        (inception)
                                                                         December 31,             Through
                                                                --------------------------      December 31,
                                                                   1998            1997             1998
                                                                ----------      ----------      ------------
                                                                                                (unaudited)
<S>                                                             <C>             <C>             <C>
OPERATING ACTIVITIES
  Net loss..............................................        $ (117,102)     $ (210,662)     $ (386,406)
  Transactions not requiring cash:
    Depreciation........................................             1,161           1,160           2,585
    Amortization of notes payable.......................                 -           4,836           7,252
    Contributed services................................                 -               -           5,027
    Stock issued for other than cash....................            58,239               -          58,254
    Gain on agreement termination (Note B)..............            (4,517)        (12,606)        (17,123)
    Gain on sale of properties (Note B).................                 -         (86,041)        (86,041)
    Compensation related to stock options...............                 -         129,500         129,500

  Changes in current assets and current liabilities:
    Increase/(decrease) in accounts payable and other 
      current liabilities...............................            16,438          26,905          45,333
                                                                ----------      ----------      ----------
                                      NET CASH (USED IN)
                                    OPERATING ACTIVITIES           (45,781)       (146,908)       (241,619)
                                                                ----------      ----------      ----------

INVESTING ACTIVITIES
  Purchase of equipment.................................                 -               -          (5,446)
  Proceeds from the sale of property (Note B)...........                 -         145,945         145,945
                                                                ----------      ----------      ----------
                          NET CASH PROVIDED BY (USED IN)
                                    INVESTING ACTIVITIES                 -         145,945         140,499
                                                                ----------      ----------      ----------

FINANCING ACTIVITIES
  Proceeds from exercise of stock options...............             4,000             750           4,750
  Proceeds from advances from affiliate.................            41,300         101,400         229,070
  Repayments to affiliate...............................                 -        (107,447)       (107,447)
  Principal payments on long-term debt..................                 -               -         (30,000)
  Capital contribution..................................                 -               -           3,700
                                                                ----------      ----------      ----------
                          NET CASH PROVIDED BY (USED IN)
                                    FINANCING ACTIVITIES            45,300          (5,297)        100,073
                                                                ----------      ----------      ----------

</TABLE>

               See accompanying notes to the financial statements.

                                       F-7

<PAGE>

                             KALAN GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                             Statement of Cash Flows

<TABLE>
<CAPTION>
                                                                                       January 1,
                                                                                          1993
                                                             For The Years Ended       (inception)
                                                                December 31,            Through
                                                           ----------------------     December 31,
                                                             1998         1997            1998
                                                           --------     ---------     ------------
                                                                                      (unaudited)
<S>                                                        <C>          <C>           <C>
                             NET INCREASE IN CASH             (481)       (6,260)         (1,047)
Cash, beginning of period........................              968         7,228           1,534
                                                            ------      --------        --------
                              CASH, END OF PERIOD           $  487      $    968        $    487
                                                            ------      --------        --------
                                                            ------      --------        --------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
  Interest.......................................           $    -      $      -        $      -
                                                            ------      --------        --------
                                                            ------      --------        --------
  Income taxes...................................           $    -      $      -        $      -
                                                            ------      --------        --------
                                                            ------      --------        --------

</TABLE>

NON-CASH INVESTING AND FINANCING ACTIVITIES:

During the year ended December 31, 1998, the Company acquired or paid the 
following in exchange for common stock (see Notes B&D):

     1. Advances and accrued interest due an affiliate totaling $126,226 and
        $12,692, respectively; 

     2. Accrued rent payable due an affiliate totaling $16,000; 

     3. Salaries and accrued interest due an officer totaling $29,000 and $547,
        respectively; 

     4. Unearned compensation to an officer totaling $48,000;

Effective December 31, 1998, the Company cancelled options to purchase 
350,000 shares of the Company's common stock. As a result, the $129,500 
recorded as outstanding stock options was reclassified to additional paid-in 
capital.

During 1998, the Company terminated its agreement with Esikiman. This 
transaction resulted in the elimination of $42,858 included in property 
acquisition costs and the related note payable to Esikiman of $45,647. After 
the write-off of the remaining discount on the note payable, the Company 
recorded a net gain of $4,517.

During 1997, the Company terminated its agreement with Ahanta. This 
transaction resulted in the elimination of $17,046 included in property 
acquisition costs and the related note payable to Ahanta of $28,220. After 
the write-off of the remaining discount on the note payable, the Company 
recorded a net gain of $12,606.

Amortized discount on the notes payable for the years ended December 31, 1998 
and 1997 were $-0- and $4,836, respectively.

               See accompanying notes to the financial statements.

                                       F-8


<PAGE>

                               KALAN GOLD CORPORATION
                           (A DEVELOPMENT STAGE COMPANY)
                                          
                           NOTES TO FINANCIAL STATEMENTS

                                 December 31, 1998
                                          
NOTE A:  SIGNIFICANT ACCOUNTING POLICES AND NATURE OF ORGANIZATION

DEVELOPMENT STAGE

Kalan Gold Corporation (the "Company") is in the development stage in 
accordance with Statement of Financial Accounting Standards No. 7. 

USE OF ESTIMATES

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

CASH 

Cash consists of federally insured amounts maintained in a checking account 
at a bank.

INCOME TAXES

Income taxes are provided for the tax effects of transactions reported in the 
financial statements and consist of taxes currently due plus deferred taxes 
related primarily to differences between the recorded book basis and tax 
basis of assets and liabilities for financial and income tax reporting.  The 
deferred tax assets and liabilities represent the future tax return 
consequences of those differences, which will either be taxable or deductible 
when the assets and liabilities are recovered or settled.  Deferred taxes are 
also recognized for operating losses that are available to offset future 
taxable income and tax credits that are available to offset future federal 
income taxes.

PROPERTY AND DEPRECIATION

Computer equipment and office furniture is recorded at cost and depreciated 
on the straight-line basis over a period of 36 months. 

RECLASSIFICATIONS

Certain amounts in the prior year financial statements have been reclassified 
for comparative purposes to conform to the presentation in the current year 
financial statements.

                                         F-9

<PAGE>

                               KALAN GOLD CORPORATION
                           (A DEVELOPMENT STAGE COMPANY)
                                          
                           NOTES TO FINANCIAL STATEMENTS

                                 December 31, 1998

NOTE A:  SIGNIFICANT ACCOUNTING POLICES AND NATURE OF ORGANIZATION CONTINUED

STOCK-BASED COMPENSATION

SFAS No. 123, "Accounting for Stock-Based Compensation" was issued in October 
1995.  This accounting standard permits the use of either a fair value based 
method or the method defined in Accounting Principles Board Opinion 25, 
"Accounting for Stock Issued to Employees" ("APB 25") to account for 
stock-based compensation arrangements.  Companies that elect to use the 
method provided in APB 25 are required to disclose pro forma net income and 
earnings per share that would have resulted from the use of the fair value 
based method.  The Company has elected to continue to determine the value of 
stock-based compensation arrangements under the provisions of APB 25 and, 
accordingly, has included pro forma disclosures under SFAS No. 123 in Note E.

FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS 107, "Disclosure About Fair Value of Financial Instruments," requires 
certain disclosures regarding the fair value of financial instruments.  The 
Company has determined, based on available market information and appropriate 
valuation methodologies, the fair value of its financial instruments 
approximates carrying value.  The carrying amounts of cash, accounts payable, 
and other accrued liabilities approximate fair value due to the short-term 
maturity of the instruments.

EARNINGS PER COMMON SHARE

Effective December 31, 1997, SFAS 128 "Earnings per Share" requires a dual 
presentation of earnings per share-basic and diluted.  Basic earnings per 
common share has been computed based on the weighted average number of common 
shares outstanding.  Diluted earnings per share reflects the increase in 
weighted average common shares outstanding that would result from the assumed 
exercise of outstanding stock options.  All prior periods presented have been 
restated to reflect the adoption of this standard.

                                        F-10

<PAGE>

                               KALAN GOLD CORPORATION
                           (A DEVELOPMENT STAGE COMPANY)
                                          
                           NOTES TO FINANCIAL STATEMENTS
                                          
                                 December 31, 1998

NOTE A:  SIGNIFICANT ACCOUNTING POLICES AND NATURE OF ORGANIZATION CONTINUED

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The Company has adopted the following new accounting pronouncements for the 
year ended December 31, 1998.  There  was no effect on the financial 
statements presented from the adoption of the new pronouncements.  SFAS No. 
130, "Reporting Comprehensive Income," requires the reporting and display of 
total comprehensive income and its components in a full set of 
general-purpose financial statements. SFAS No. 131, "Disclosures about 
Segments of an Enterprise and Related Information," is based on the 
"management" approach for reporting segments.  The management approach 
designates the internal organization that is used by management for making 
operating decisions and assessing performance as the source of the Company's 
reportable segments.  SFAS No. 131 also requires disclosure about the 
Company's products, the geographic areas in which it earns revenue and holds 
long-lived assets, and its major customers. SFAS No. 132, "Employers' 
Disclosures about Pensions and Other Post-retirement Benefits," which 
requires additional disclosures about pension and other post-retirement 
benefit plans, but does not change the measurement or recognition of those 
plans.
                                          
NATURE OF ORGANIZATION

The Company, formed to explore for natural gas, was incorporated on September 
19, 1985 as Knight Natural Gas, Inc. in the State of Colorado.  In December 
1989, the Company ceased operations in the oil and gas business.  Effective 
January 1, 1993, under new management, the Company began the search for and 
evaluation of privately owned operating companies.  During 1996, the 
Company's board of directors changed the name of the Company to Kalan Gold 
Corporation. The Company was engaged in operations associated with the gold 
mining business after acquiring, on August 26, 1996, two gold mine 
concessions in the Republic of Ghana, which were assigned to the Company by 
Sedcore Exploration Company Limited ("Sedcore").  During 1997, the Company 
terminated the agreement to one of the concessions and in 1998 terminated the 
agreement related to the other concession.  As of December 31, 1998 the 
Company had no operations.    

On February 8, 1998 the Company had entered into an agreement with an 
affiliated corporation to provide technical advice regarding the building, 
constructing, and operation of the affiliate's gold milling, smelting, and 
refining facilities in the Philippines.  This agreement was terminated in 
1998.  

                                        F-11

<PAGE>

                               KALAN GOLD CORPORATION
                           (A DEVELOPMENT STAGE COMPANY)
                                          
                           NOTES TO FINANCIAL STATEMENTS

                                 December 31, 1998

NOTE B:  RELATED PARTY TRANSACTIONS

In August 1996, the Company acquired, from Sedcore Exploration ("Sedcore"), 
mining concessions in Ghana ("Ahanta" and "Esikiman") and the related notes 
payable to the owners of the concessions in exchange for 5,000,000 shares of 
the Company's common stock.  This transaction resulted in Sedcore becoming a 
71% owner of the Company's outstanding common and voting shares.  Sedcore 
retained the obligation to incur exploration and related costs associated 
with the development of the concessions, therefore no amounts related to 
those expenditures are recorded in the financial statements of the Company.  
As of December 31, 1998 the agreements related to the mining concessions had 
been terminated.

During 1995 and 1996, certain shareholders of the Company made contributions 
to the Company in the form of professional services.  The value of these 
services totaled $3,700 and $5,027, respectively, and is included in the 
accompanying financial statements as contributed capital.

On February 18, 1997, the Company entered into a joint venture agreement with 
Trio Gold Corp. ("Trio"), whose President was also a director of the Company. 
 For a 50% participating interest in the Company's share of the Ahanta and 
Esikiman mining concessions, Trio paid the Company $145,945 and agreed to pay 
on behalf of Sedcore,  $310,000 in expenditures related to the geological and 
exploratory costs and operate the concessions.  Trio also agreed to reimburse 
an affiliate of the Company $74,000 for exploration costs expended prior to 
the closing of the agreement.  The Company recorded a gain of $86,041 on the 
sale of 50% of the $119,808 deferred costs ($59,904) associated with the 
properties. Concurrent with the Company's termination of both of the mining 
concessions (see the following discussion), the agreement with Trio was also 
terminated.

During the fourth quarter of 1997, management contemplated the merits of 
terminating the Ahanta agreement.  On March 18, 1998, the Company formally 
terminated its agreement with Ahanta, As a result, the Company wrote-off 
property acquisition costs of $17,046 and the note payable to Ahanta totaling 
$30,000 (including $348 unamortized discount).  The formal termination of 
this agreement occurred subsequent to December 31, 1997 however, management 
determined the event was significant and therefore recognized the gain on 
termination of this agreement totaling  $12,606 in the year ended December 
31, 1997.

                                        F-12

<PAGE>

                               KALAN GOLD CORPORATION
                           (A DEVELOPMENT STAGE COMPANY)
                                          
                           NOTES TO FINANCIAL STATEMENTS

                                 December 31, 1998

NOTE B:  RELATED PARTY TRANSACTIONS CONTINUED

In April 1998, the Company was given an option to extend its agreement with 
Esikiman. As of December 31, 1997, the Company had recorded a deferred gain 
of $4,517 in anticipation of not exercising its option to renew the agreement 
in 1998.  Accordingly, management decided not to pursue its option to extend 
the agreement, therefore, for the year ended December 31, 1998; the Company 
recognized the deferred gain of $4,517 on the termination of the agreement. 
The property acquisition costs and outstanding balance on the note payable to 
Esikiman were $42,858 and $45,647, respectively.  After giving effect to the 
unamortized discount on the note, the net gain for the year ended December 
31, 1998 was $4,517.

As of January 1, 1998, the Company owed an affiliate $84,926 for short-term 
cash advances made during prior years.  The affiliate also advanced an 
additional $41,300 in 1998 for working capital purposes.   The balance of 
$126,226 and related accrued interest totaling $12,692 due to the affiliate 
was satisfied with the Company issuing 465,000 shares of its restricted 
common stock to the affiliate as payment for the debt. 

The Company entered into a verbal agreement to rent office space from the 
affiliate effective September 1, 1997.  The agreement calls for monthly 
payments of $1,000.  As of December 31, 1998, the Company has accrued  
$16,000, which was also satisfied with the issuance of the 465,000 shares 
described above.

The Company issued 235,000 shares of its restricted common stock to an 
officer of the Company as payment for past and future services.  The past 
services totaled $29,000 and have been recorded in the financial statements 
as compensation expense.  Related accrued interest on the services totaled 
$547. The future services totaled $48,000 and have been recorded in the 
financial statements as unearned compensation, a component of shareholders' 
equity. 

                                        F-13

<PAGE>

                               KALAN GOLD CORPORATION
                           (A DEVELOPMENT STAGE COMPANY)
                                          
                           NOTES TO FINANCIAL STATEMENTS

                                 December 31, 1998

NOTE C:  FURNITURE AND EQUIPMENT

Furniture and equipment consisted of the following at December 31, 1998:

<TABLE>
<S>                                                               <C>
Furniture ....................................................     $ 4,909
Equipment ....................................................         537
                                                                   -------
                                                                     5,446
Less accumulated depreciation.................................      (2,585)
                                                                   -------
                                                                   $ 2,861
                                                                   -------
                                                                   -------

</TABLE>

Depreciation expense for the years ended December 31, 1998, 1997 and 
inception (January 1, 1993) through December 31, 1998 totaled $1,161, $1,160, 
and $2,585, respectively. 

NOTE D:  SHAREHOLDERS' EQUITY

PREFERRED STOCK

The Company is authorized to issue one million shares of $.10 par value 
preferred stock which may be issued in series with such designations, 
preferences, stated values, rights, qualifications or limitations as 
determined by the Board of Directors.

TERMINATION OF "S" CORPORATION STATUS

At December 31, 1995, the Company had elected to be taxed as a subchapter "S" 
corporation, meaning that the tax expense and/or benefits accrued to the 
shareholders.  During the year ended December 31, 1996, the number of 
shareholders increased to approximately 100, terminating the "S" election. 
Beginning in 1996, the income tax expense and/or benefit accrued to the 
Company. 

                                        F-14

<PAGE>

                               KALAN GOLD CORPORATION
                           (A DEVELOPMENT STAGE COMPANY)
                                          
                           NOTES TO FINANCIAL STATEMENTS

                                 December 31, 1998

NOTE E:  STOCK OPTIONS

1996

On November 14, 1996, the Company granted non-compensatory options for 
312,500 shares of its common stock to officers of the Company.   The options 
which are vested and exercisable as of the grant date, allow the officers of 
the Company to purchase 37,500; 75,000; 75,000; and 125,000 shares of common 
stock at $.02 per share.  The Company's common stock did not begin trading in 
the public market until January 1997, therefore the exercise price of $.02 
per share on the date of grant approximated management's estimate of the fair 
value of the Company's common stock.  The options expire on November 14, 
2001.  During 1998 and 1997, 200,000 and 37,500 options were exercised, 
respectively.  At December 31, 1998, 75,000 are outstanding.

1997

On December 24, 1997 the Company granted compensatory options for 350,000 
shares, exercisable for $1.00 per share of its common stock to officers and 
directors of the Company.   All 350,000 options were cancelled effective 
December 31, 1998.

As of December 24, 1997 the fair market value of the Company's common stock 
as determined by a national quotation system, was $1.37.  In accordance with 
APB 25, the Company recognized $129,500 of compensation expense related to 
the fully vested stock options exercisable at $1.00, granted December 24, 
1997.  Following the cancellation of the options, the $129,500 recorded in 
equity as outstanding stock options was reclassified to additional paid-in 
capital.

SUMMARY

A summary of the status of the Company's stock option awards as of December 
31, 1998, and the changes during the period ended December 31, 1998 and 1997 
is presented below:

<TABLE>
<CAPTION>
                     Fixed Options                           Number
          -----------------------------------               --------
<S>                                                      <C>
          Outstanding at January 1, 1997.....                312,500
          Granted ...........................                350,000
          Exercised .........................                (37,500)
          Canceled ..........................                      -
                                                            --------
          Outstanding at December 31, 1997...                625,000
                                                            --------
                                                            --------
          Granted ...........................                     -
          Exercised .........................               (200,000)
          Canceled ..........................               (350,000)
                                                            --------
          Outstanding at December 31, 1998...                 75,000
                                                            --------
                                                            --------

</TABLE>

                                        F-15

<PAGE>

                               KALAN GOLD CORPORATION
                           (A DEVELOPMENT STAGE COMPANY)
                                          
                           NOTES TO FINANCIAL STATEMENTS

                                 December 31, 1998

NOTE E:  STOCK OPTIONS CONTINUED

The weighted average exercise price per share for the 75,000 outstanding 
options at December 31, 1998 was $.02.

SFAS 123

In October 1995, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No. 123 (SFAS 123), "Accounting form 
Stock-Based Compensation".  SFAS 123 encourages the use of a fair value based 
method of accounting for compensation expense associated with stock option 
awards and similar plans.  However, SFAS 123 permits the continued use of the 
intrinsic value based method prescribed by APB 25, but requires additional 
disclosures, including pro forma calculations of net earnings and earnings 
per share as if the fair value method of accounting prescribed by SFAS 123 
had been applied in 1997. SFAS 123 is not applicable to the non-compensatory 
awards granted in 1996. 

Based on the use of the Black-Scholes option pricing model, the fair value of 
the stock options granted during 1997 was $ .897.  The Black-Scholes option 
valuation model was developed for use in estimating the fair value of traded 
options, which have no vesting restrictions and are fully transferable.  
Option valuation models also require the input of highly subjective 
assumptions such as expected option life and expected stock price volatility. 
 Because the Company's stock-based awards have characteristics significantly 
different from those of traded options and because changes in the subjective 
input assumptions can materially affect the fair value estimate, the Company 
believes that the existing option valuation models do not necessarily provide 
a reliable single measure of the fair value of its stock-based awards.

The required pro forma and additional information is presented below:

<TABLE>
<CAPTION>
                                                                      1997
                                                      ---------------------------------
                                                        As Reported          Pro Forma
                                                      ----------------      -----------
<S>                                                   <C>                   <C>
Net loss                                              $      (210,662)      $ (395,112)
Basic loss per share                                  $          (.03)      $     (.06)
Diluted loss per share                                Less than $(.01)      $     (.01)

BLACK-SCHOLES OPTION PRICE MODEL ASSUMPTIONS:
Risk-free interest rate                                                     5.3750%
Expected life (years)                                                       5
Volatility                                                                  63.73%
Dividend yield                                                              None
Fair value of $1.00 options                                                 $ .897

</TABLE>

                                        F-16

<PAGE>

                               KALAN GOLD CORPORATION
                           (A DEVELOPMENT STAGE COMPANY)
                                          
                           NOTES TO FINANCIAL STATEMENTS

                                 December 31, 1998

Note F:  INCOME TAXES

A reconciliation of the U.S. statutory federal income tax rate to the effective
tax rate follows for the years ended December 31, 1998 and 1997:

<TABLE>
<CAPTION>
                                                                         January 1,
                                                                            1993
                                                                         (Inception)
                                                   December 31,           Through
                                                ------------------      December 31,
                                                 1998        1997          1998
                                                ------      ------      ------------
<S>                                             <C>         <C>           <C>
U.S. statutory federal rate ................     23.94%      30.63%        34.00%
State income tax rate,
   net of federal benefit ..................      3.80%       3.47%         3.30%
Net operating loss for which no tax
   benefit is currently available ..........    (27.74%)    (34.10%)      (37.30%)
                                                ------      ------        ------
                                                     -%          -%            -%
                                                ------      ------        ------
                                                ------      ------        ------

</TABLE>

At December 31, 1998 and 1997, deferred taxes consisted of the following:

<TABLE>
<CAPTION>
                                             December 31,
                                       ------------------------
                                          1998          1997
                                       ---------      ---------
<S>                                    <C>            <C>
Deferred tax assets,
  Net operating loss...............    $ 141,754      $ 109,263
Valuation allowance................     (141,754)      (109,263)
                                       ---------      ---------
  Net deferred taxes...............    $       -      $       -
                                       ---------      ---------
                                       ---------      ---------

</TABLE>

The valuation allowance offsets the net deferred tax asset for which there is 
no assurance of recovery.  The change in the valuation allowance for the 
years ended December 31, 1998 and 1997 totaled $32,491 and $71,833, 
respectively.  The net operating loss carryforward expires through the year 
2018.

The valuation allowance will be evaluated at the end of each year, 
considering positive and negative evidence about whether the deferred tax 
asset will be realized.  At that time, the allowance will either be increased 
or reduced; reduction could result in the complete elimination of the 
allowance if positive evidence indicates that the value of the deferred tax 
assets is no longer impaired and the allowance is no longer required.

                                        F-17

<PAGE>

                               KALAN GOLD CORPORATION
                           (A DEVELOPMENT STAGE COMPANY)
                                          
                           NOTES TO FINANCIAL STATEMENTS

                                 December 31, 1998

Note F:  INCOME TAXES, CONTINUED

Should the Company undergo an ownership change as defined in Section 382 of 
the Internal Revenue Code, the Company's tax net operating loss carryforwards 
generated prior to the ownership change will be subject to an annual 
limitation which could reduce or defer the utilization of these losses.
                                          
NOTE G:  OTHER TRANSACTIONS

On October 28, 1998, the Company issued 1,300,000 shares of its $.00001 par 
value restricted common stock in exchange for the license rights to four gold 
properties.  On March 31, 1999, the transaction was rescinded, therefore, the 
rights were returned and the shares were cancelled as of October 28, 1998. 
Accordingly, the accounting for the transaction was reversed and the 
transaction does not appear in the Company's books.

On October 28, 1998, the Company issued 1,000,000 shares of its $.00001 par 
value restricted common stock in exchange for services valued at a cost of 
$50,000 as determined by the board of directors.  On April 10, 1999, the 
transaction was rescinded as of October 28, 1998 as the services did not 
provide a benefit to the Company.  Accordingly, the accounting for the 
transaction was reversed and the transaction does not appear in the Company's 
books.

On November 30, 1998, the Company entered into a letter of intent to acquire 
100 percent of the issued and outstanding common shares of the wholly-owned 
subsidiary of Popbridge Industrial Limited (PIL), a manufacturing company 
located in Hong Kong.  In exchange, the Company would issue 15,000,000 shares 
of its $.00001 par value common stock.  In addition, the Company needed a 
third party commitment to raise $2.5 million following the closing of the 
transaction. In January 1999, the Company rescinded the letter of intent.   
                                          
NOTE H:  GOING CONCERN

As of December 31, 1998, the Company had a net capital deficiency and a 
working capital deficit, which raises substantial doubt about its ability to 
continue as a going concern. The Company plans to continue as a shell 
corporation that will seek, investigate and, if such investigation warrants, 
acquire a controlling interest in various business opportunities.  In 
addition, from time to time certain officers infuse cash for working capital 
purposes on an as-needed basis. There is no assurance that the Company will 
achieve profitable operations. The financial statements do not include any 
adjustments that might result from the outcome of this uncertainty.

                              F-18

<PAGE>

                               KALAN GOLD CORPORATION
                           (A DEVELOPMENT STAGE COMPANY)

                           NOTES TO FINANCIAL STATEMENTS

                                 December 31, 1998

NOTE I:  SUBSEQUENT EVENT

In January 1999, the Company entered into a letter of intent to acquire 100 
percent of the issued and outstanding common shares of Animated Electronic 
Industries Sdn Bhd (AEI), a private Malaysian company, in exchange for 
approximately 94 percent of the ownership of the Company, subject to the 
completion of due diligence by both parties, the approval of the shareholders 
of both companies, and the divestiture of the assets and liabilities of the 
Company.  The letter of intent expires 60 days from March 23, 1999.

                                        F-19


<PAGE>

                    (2)  SCHEDULES
                    (3)  EXHIBITS.  The following exhibits required by Item 601
                         to be filed herewith are incorporated by reference to
                         previously filed documents:

<TABLE>
<CAPTION>
                                                             Exhibit number to
Item 601                                                    Registration Statement
Exhibit No.    Description                                      on Form 10-SB
-----------    -----------                                  ----------------------
<S>            <C>                                          <C>
 *  3A         Articles of Incorporation
 *  3B         Articles of Amendment              
 *  3C         Bylaws
 *  3D         Articles of Amendment to change name to 
               KALAN GOLD CORPORATION.
 * 10A         August 26, 1996 Purchase Agreement for 
               defined assets and liabilities of SEDCORE 
               EXPLORATION COMPANY LIMITED
 * 10B         Agreement between the Company and Asean 
               Gold Industries, Inc.

</TABLE>

*Previously Filed

               (b) REPORTS ON FORM 8-K.  The Company filed two reports on Form
          8-K during the fourth quarter of the fiscal year ended 
          December 31, 1998. One report was filed on November 3, 1998. The 
          other report was filed on November 30, 1998.

                                       13

<PAGE>

                                    SIGNATURES

     In accordance with 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.


                                       Kalan Gold Corporation


Dated: 4/12/99                         By:     /s/ Sanford Altberger
                                          -------------------------------------
                                                   Sanford Altberger
                                          President and Chief Executive Officer


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


                                       CHIEF FINANCIAL AND ACCOUNTING OFFICER


Dated: 4/12/99                         By:        /s/ Michael Raisch
                                          -------------------------------------
                                                       Michael Raisch
                                                         Treasurer

                                       14

<PAGE>

                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549


                                 FORM 10-KSB

                                    EXHIBITS
                                       TO
                             Kalan Gold Corporation

                                       15

<PAGE>

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit                                                                   Page or
Number      Description                                                   Cross Reference
-------     -----------                                                   ---------------
<S>         <C>                                                           <C>
 *  3A      Articles of Incorporation

 *  3B      Articles of Amendment              

 *  3C      Bylaws

 *  3D      Articles of Amendment to change name to KALAN GOLD
            CORPORATION.

 * 10A      August 26, 1996 Purchase Agreement for defined assets 
            and liabilities of SEDCORE EXPLORATION COMPANY LIMITED

 * 10B      Agreement between the Company and Asean Gold Industries, Inc.

</TABLE>

*Previously Filed