UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549



                                   FORM 10-KSB


                                   (Mark One)
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                     For the fiscal year ended MAY 31, 1999

                                       OR

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

                         Commission file number 0-25117

                      NEVADA MANHATTAN GROUP, INCORPORATED
              ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                   NEVADA                              88-0219765
     -------------------------------             ----------------------
     (State or other jurisdiction of               (I.R.S. Employer
      incorporation or organization              Identification Number)


      2151 MICHELSON, SUITE 150, IRVINE, CALIFORNIA            92612
      ---------------------------------------------          ---------
          (Address of principal executive offices)           (Zip Code)

       Registrant's telephone number, including area code: (949) 477-9965

      Securities registered pursuant to Section 12(b) of the Act:  None



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

       Title of each class           Name of each exchange on which registered
     Common Stock, $.01 Par Value                  OTC

     Preferred Stock, $1.00 Par Value


                                       1

<PAGE>


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,  and (2) has been subject to such filing  requirements
for the past 90 days. Yes   No X

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Issuer's revenues for its most recent fiscal year.               $0

The  aggregate  market value of the Common Stock held by  non-affiliates  of the
registrant,  based on the average of the high and low prices of the Common Stock
on the OTC Bulletin Board on March 1, 2000, was $2,512,112. For purposes of this
computation, all officers, directors, and 5% beneficial owners of the registrant
(as indicated in Item 12) are deemed to be affiliates. Such determination should
not be deemed an  admission  that such  directors,  officers,  or 5%  beneficial
owners are, in fact, affiliates of the registrant.

Number of shares of Common Stock, $.01 Par Value,  outstanding at March 1, 2000,
1998, was 72,730,376.

                     Documents incorporated by reference:     None



                                       2
<PAGE>





                   TABLE OF CONTENTS - 1999 FORM 10-KSB REPORT

                                                                       Page
                                                                      Numbers
                                                                    -----------
                                     PART I

Item   1.      Business                                                    4

Item   2.      Properties                                                  6

               Risk Factors                                                7

Item   3.      Legal Proceedings                                          13

Item   4.      Submission of Matters to a Vote of Security Holders        15

                                     PART II

Item   5.      Market for Registrant's Common Equity and Related
               Stockholder Matters                                        16

Item   6       Management's Discussion and Analysis of Financial
               Condition and Results of Operations                        18

Item   7.      Financial Statements                                       20
                                                                      F1-F32

Item   8.      Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure                        21

                                    PART III

Item  9.       Directors, Executive Officers, Promoters and
               Control Persons; Compliance with Section 16(a)
               of the Exchange Act                                        21

Item  10.      Executive Compensation                                     23

Item  11.      Security Ownership of Certain Beneficial Owners
               and Management                                             26

Item  12.      Certain Relationships and Related Transactions             29

Item  13.      Exhibits and Reports on Form 8-K                           30

Signatures                                                                33


                                       3
<PAGE>

                                     PART I

                                   1. BUSINESS

    Nevada Manhattan Group, Incorporated (the "Company"), was formed on June 10,
1985, in the state of Nevada1.  The Company's Articles,  as amended December 11,
1998,  currently  authorize the issuance of  250,000,000  shares of Common Stock
with a par value of one cent  ($.01)  per share and  250,000  shares of Series A
Preferred  Stock  with a par value of $1.00 per share  (the  "Preferred  Stock")
convertible into Common Stock on the terms and conditions described elsewhere in
this Annual Report.

     In August 1998, the management and financial control of the Company changed
pursuant to an agreement  with TiNV1, a California  corporation  (see Part III -
Security Ownership of Certain Beneficial Owners and Management).  Following this
1998 management change, the Company announced  acquisitions in the Federation of
Russia in the fields of  metals/mining  processing and sales,  fish products and
sales, timber  harvesting/processing and sales, coal mining and exploration, oil
and gas products and  technology.  In August 1999, the management of the Company
changed again (see Part III - Officers and Directors). Approximately thirty days
after this 1999  management  change,  John  Deniken,  Company  Chairman  and CEO
visited  the  Federation  of Russia to review the  Company's  operations  there,
meeting with Mr. Vadim A. Maslov,  the Deputy  General  Director of Ecologia,  a
scientific and technology center, which represented the interests of the Company
in the Federation of Russia.

     Management  discussed  the Gold  Mining  operation  in which  Transfor  SIA
transferred  a 51%  interest  to the  Company  for  $15,000,000  in  July  1999.
Apparently,  the  Company  gave  Transfor  SIA  $4,830,000  down  and  signed  a
promissory note for $10,170,000.  According to Mr. Maslov,  the Company was also
required  to provide an  additional  $30,000,000  for capital  improvements  and
operating  funds  for this  project.  Transfor  SIA  believes  that the  Company
breached the agreement and will not honor the terms.

     Also  discussed  with Mr.  Maslov were other  mining and timber  operations
where the Company owned 80% of certain  timber and mining rights of tin,  copper
sulfate, gold and silver (Chrustalnaya). The Company had issued 8,000,000 shares
of restricted  Common Stock in consideration of these assets.  Again, the seller
feels that the Company  breached  this  agreement by  non-performance.  Previous
management never worked out an operating agreement as to the expenses of running
the  operations and how much the operations  would net against  production.  The
agreement only provides that Mr. Alexander  Gonchar,  Vadim's  superior,  was to
finalize the operating agreement.  Current management does not believe it in the
best interest of the Company to invest further in these operations.


--------
1 The Company was  originally  incorporated  on June 10,  1985,  in the state of
Nevada  under the name of Epic  Enterprises,  Ltd. On September  11,  1987,  the
Company  amended  its  Articles  of  Incorporation  to change its name to Nevada
Manhattan Mining Incorporated.  On May 12, 1998, the Company further amended its
Articles to change its name to Terra Natural Resources Corporation.  On December
11, 1998, the Company  further amended its Articles to change its name to Nevada
Manhattan Group, Incorporated.
                                       4
<PAGE>

     Also  discussed  were the fishing ships and fishing  business for which the
Company paid approximately $1,200,000.  The Company was to provide an additional
$1,000,000 for freezing  operations which previous management did not provide in
the prescribed time frame.  Again,  the seller believes the Company breached the
agreement.

     Since the  Company  does not have the  financial  ability to fulfill  these
agreements,  present  management  sees  little  hope of  salvaging  any of these
Federation of Russia acquisitions.

     The  Company  previously  owned  and was  generating  revenue  from  timber
harvesting  and  production  rights and  facilities  on up to  490,000  hectares
located in the state of Para, Brazil ("Brazilian Operations").  In late 1998 and
early 1999, Company management was informed by Brazilian  Operations  management
that without  additional  capital  provided by the Company,  operations  were in
jeopardy as there were unpaid  salaries and creditors.  Further,  if the Company
did not provide this  additional  capital,  Brazilian  Operation  assets were in
jeopardy of seizure  through  legal action by unpaid  employees  and  creditors.
Management  at the time deemed these  operations  uneconomic  and elected not to
provide additional capital. Brazilian Operations ceased.

     The Company previously acquired rights in seven gold mining concessions and
four coal mining concessions in Indonesia.  Current management is of the opinion
that the Company no longer controls any of these concessions.  Political changes
as well  as non  compliance  with  performance  criteria  under  the  concession
agreements, as well as uneconomic mining conditions have predicated management's
current  position.  In support of current  Management's  position,  the  Company
previously  entered into a coal  exploration  and  development  agreement with a
recognized  coal  company  in  North  America  and  found  the  property  to  be
uneconomic.

     The Company  maintains an interest in a gold  exploration  property located
near Tonopah, Nevada. (See "Properties - The Nevada Property").


     The Company has its principal  executive  offices at 2151 Michelson,  Suite
150, Irvine, California, 92612; telephone 949-477-9965; fax 949-477-2150.

     Management of the Company  presently  consists of a seven member board; two
seats are currently vacant. The Company employs one full-time  executive officer
and contracts all other services.


The Company's Subsidiaries

     The Company  previously  reported  subsidiaries,  including NMG Rexco, Inc.
(fishing, processing and distribution),  Terra Resources Brazil, Ltda (Brazilian
Timber  operations),   Science  &  Technology  Resources,  Inc.  (technologies);
Kalimantan  Resources,  Ltd.  (Indonesian mining  concessions).  Because each of
these  operations  has been  abandoned as  uneconomic,  as well as the Company's
inability to fund these  operations,  current  management is of the opinion that
they are no longer operational.


                                       5
<PAGE>

                                  2. PROPERTIES

The Nevada Property
-------------------
    Property  Description.  The Nevada Property is located in an historic mining
district which has experienced  mining  operations from 1866 to the present with
the major  activity in the late 1860's,  between 1906 and 1921, and from 1960 to
the present. Placer and lode mining took place principally in the Reliance Mine,
the White Caps Mine,  the Union  Amalgamated  Mine,  the Manhattan  Consolidated
Mine, the Earle Mine, the Big Four Mine and the April Fool Mine.

    In March 1997, the Company  entered into a Sale and Purchase  Agreement with
the Selig Entities.  The Selig Entities were the original owners of the patented
and unpatented  mining claims  comprising the Nevada Property,  having perfected
their rights to ownership  pursuant to Federal and local law. Under the terms of
this  agreement,  the Selig  Entities  agreed to sell to the Company one hundred
percent  (100%) of their  interests  in a certain  promissory  note (the "Nevada
Note"),  the Deed of Trust and the Nevada  Property for the sum of Three Hundred
Seventy  Five  Thousand  Dollars  ($375,000)  payable as  follows:  One  Hundred
Thousand  Dollars  $100,000)  in March 1997 and the balance plus all accrued and
unpaid interest (calculated at the rate of 5.25%) on or before February 6, 1999.
The Company in fact paid the first  installment of One Hundred  Thousand Dollars
($100,000)  in March 1997 and prepaid the  remaining  balance in June 1997. As a
result, all obligations to the Selig Entities have been fulfilled by the Company
and the  original  note and deed of  trust  have  been  delivered  by the  Selig
Entities to the Company. The agreement also acknowledges that the Company is the
only person or entity  legally  entitled to conduct  mineral  operations  on the
Nevada  Property.  The Company is also  required to pay all U.S.  Bureau of Land
Management  annual  maintenance  fees associated with the claims  comprising the
Nevada Property. Such fees have been paid by the Company through August 2000.

    The Company  entered into a Subscription  Agreement with Silenus  Limited on
April 14,  1997  (the  "Subscription  Agreement").  The  Subscription  Agreement
required  the  Company to grant to Silenus  Limited a  $2,000,000  deed of trust
encompassing  the Nevada  Property  until the  Debentures  issued to Silenus are
converted,  redeemed or paid in full.  The Company  has  neither  delivered  nor
recorded this deed.

    Current  Ownership  Interest.  The Nevada Property  consists of twenty-eight
(28)  patented and one  hundred-eighteen  (118)  unpatented  claims  aggregating
approximately  1,800 acres.  Due to many issues  related to the Nevada  Property
which present  significant  doubt  regarding the future  economic  benefits this
property will have to the Company,  a full reserve has been provided against its
investment in the property.


Abandoned Properties
--------------------
     While the Company has previously  reported  properties in the Federation of
Russia,  Brazil and Indonesia,  current  management is of the opinion that these
properties  have  been  abandoned.  Management  cites  the  Company's  financial
inability to maintain or develop these properties. (See Item 1 - "Business.")


                                       6
<PAGE>

                                  RISK FACTORS

    The purchase of shares of common stock of the company involves a substantial
degree of risk and is suitable only for persons of substantial means who have no
need for liquidity in their  investment.  This section of the Annual Report sets
forth certain of the risks and special considerations which the company believes
may exist  concerning an investment in the common stock.  Prospective  investors
should  recognize  that factors other than those set forth below may  ultimately
affect an  investment  in a manner and to a degree  which  cannot be foreseen at
this time.  All  prospective  investors are urged to consult with their advisors
prior to making an investment in common stock so that they understand  fully the
nature  of the  undertaking  and  the  risks  which  may be  involved  prior  to
investing. Furthermore, all prospective investors are urged to review with their
counsel,   accountants,  and  professional  advisors  the  financial  statements
attached to the Annual  Report.  and  documents  described in this Annual Report
which  have not  been  attached  as  exhibits  may be  obtained  by  prospective
investors and/or their advisors upon request from the company.

    This Annual  Report also contains  certain  forward-looking  statements  and
information that are based upon  management's  beliefs as well as on assumptions
made by and upon  information  currently  available to management.  When used in
this  Annual  Report,  the  words  "expect,"   "anticipate,"  "intend,"  "plan,"
"believe," "seek" and "estimate" or similar expressions are intended to identify
such forward-looking statements. However, this Annual Report also contains other
forward-looking  statements.  Forward-looking  statements  are not guarantees of
future  performance  and  are  subject  to  certain  risks,   uncertainties  and
assumptions,  including,  but not limited to, the following risk factors,  which
could cause the Company's  future results and stock values to differ  materially
from those expressed in any  forward-looking  statements made by or on behalf of
the Company. Many of such factors are beyond the Company's ability to control or
predict.  Readers are  cautioned  not to put undue  reliance on  forward-looking
statements.


LACK OF OPERATIONS

The success of the Company will depend to a great extent on management's ability
to identify a business  opportunity.  While management  intends to seek business
opportunities with entities having established  operating histories there can be
no assurance that the Company will be successful in locating  candidates meeting
such  criteria.  In the event the Company is unable to identify  such an entity,
prospective  investors should be aware that they are at risk for the loss of all
or part of their investment.

NO COMMERCIALLY VIABLE ORE DEPOSITS

    Even  though the  Company  has  reviewed  reports and records of its mineral
properties in Nevada and believes them to have potential,  there is no assurance
that there are commercially viable ore deposits.  Moreover,  the Company has not
established  any proven or probable  gold or ore deposits as of the date of this
Annual Report.


                                       7
<PAGE>

HISTORY OF LOSSES

     Although the Company was formed in 1985 to engage in precious  metal mining
activities, its net worth is limited. The Company has a stockholders' deficiency
of  $$6,213,308 at May 31, 1999. As of May 31, 1999, the Company has realized an
aggregate net loss (since inception) of $47,984,721. Until the fiscal year ended
May 31, 1997,  the Company had failed to post  revenues from  operations.  Total
revenues  for  1998  and  1999  were  $557,691  and  $0.00   respectively   (see
"Management's  Discussion -  Discontinued  operations").  Prospective  investors
should be aware that the Company is a  development-stage  company for  financial
statement of Financial  Accounting Standards only and not for mining operations,
that not until  1997/1998 has begun to report  sales.  There is no guaranty that
the Company's  operations  will be successful or realize a profit in the future.
Moreover,  the  Company's  net  worth  and the value of its  Common  Stock  will
ultimately be dependent upon the overall  success of operations  currently being
contemplated.

    The  financial  information  accompanying  this Annual  Report  reflects the
current financial  condition of the Company. It should be noted that the Company
has not yet reported an annual profit from operations since its inception to the
present.

HISTORY OF UNSUCCESSFUL OPERATIONS

    Mining operations are speculative by their nature. Management of the Company
has in the past  selected  certain  mineral  properties  which have proven to be
uneconomic.  There is no assurance that the present  operations will prove to be
economic or profitable to the Company. If all or most of the businesses prove to
be  uneconomic,  the  Company  will be  unable  to  realize  a  profit  from its
operations  which may have a profound  impact  upon the value of the Company and
the liquidity of the Common Stock.


TITLE FAILURE TO THE NEVADA PROPERTY

    The Company has acquired its rights to the Nevada Property through a variety
of agreements  with  predecessors-in-interest.  The precise nature and amount of
interest  owned by the  Company is now the  subject of a lawsuit  pending in Nye
County and more  particularly  described  in the  Section  of the Annual  Report
entitled "Legal Proceedings." The Company is seeking to obtain an order from the
court  declaring that the Company is the owner of the undivided 100% interest in
a substantial number of the mining claims comprising the Nevada Property. If the
Company is unsuccessful in its request for declaratory relief,  title to certain
of the  interests in the Nevada  Property may be retained by persons or entities
other than the Company.


                                       8
<PAGE>

    The Company  encumbered the Nevada  Property in the principal  amount of Two
Million   Dollars    ($2,000,000)    to   Silenus   Limited    pursuant   to   a
privately-negotiated  placement  of 8%  Senior  Secured  Convertible  Debentures
described  elsewhere in this Annual Report.  Until such time as all  obligations
due under the  Debentures  issued to  Silenus  Limited  are paid,  converted  or
redeemed,  and the  encumbrances  on the Nevada  Property are  reconveyed to the
Company, the Nevada Property will be subject to the terms and conditions of such
instruments.  Any default  under such  agreement  which  remains  uncured  would
subject the Company to the possible loss of the Nevada Property.

GOVERNMENTAL REGULATION

    Mining  operations  on the  Nevada  Property  are  and  will be  subject  to
substantial  federal,  state and local  regulation  concerning  mine  safety and
environmental protection. Some of the laws and regulations which will pertain to
mining operations include  maintenance of air and water quality  standards;  the
protection  of  threatened,   endangered  and  other  species  of  wildlife  and
vegetation;  the preservation of certain cultural  resources and the reclamation
of exploration, mining and processing sites. These laws are continually changing
and, as a general  matter,  are becoming more  restrictive.  The location of the
Nevada Property is found in an area which strongly  encourages mining operation.
However,  the Company's  inability to comply with such  federal,  state or local
ordinances and regulations on an ongoing basis may cause  significant  delays in
the permitting process or in operations.  In addition, delays in such compliance
could result in unexpected and  substantial  capital  expenditures.  Although no
such problems or delays are  anticipated,  no  assurances  can be given that the
Company  will be able to comply  with all  applicable  law and  regulations  and
maintain all necessary  permits,  licenses and approvals or, in the alternative,
that compliance  and/or permitting will be obtained without  substantial  delays
and/or expenses.

    To comply with federal,  state and local laws, the Company may in the future
be required to make capital and operating expenditures on environmental projects
with respect to the Nevada Property. Such projects may include, for example, air
and  water  pollution  control  equipment;   treatment,   storage  and  disposal
facilities  for solid and hazardous  waste;  remedial  actions  required for the
containment  of  tailings  pond  seepage;   continuous  testing  programs;  data
collection and analysis land reclamation  (specifically  including existing mine
and  processing  waste on the Nevada  Property);  landscaping  and  construction
projects.  There is no guaranty that the Company will technically or financially
be able to comply with any or all of these potential requirements.

ENVIRONMENTAL REGULATION AND LIABILITY

    United  States:  The Company's  potential  mineral  operations on the Nevada
Property are and will be subject to environmental  regulation by federal,  state
and local  authorities.  Under applicable federal and state law, the Company may
become  jointly  and  severally  liable with all prior  property  owners for the
treatment,  cleanup,  remediation and/or removal of substances discovered at the
Property  which are deemed by federal  and/or state law to be toxic or hazardous
("Hazardous  Substances").  Liability  may be imposed among other things for the
improper  release,  discharge,  storage,  use,  disposal  or  transportation  of
Hazardous Substances only in the areas which the Company disturbs.


                                       9
<PAGE>

    Applicable law imposes strict joint and several  liability on, among others,
"owners" and "operators" of properties  contaminated with Hazardous  Substances.
Such   liability   may  result  in  any  and  all  "owners",   "operators"   and
"transporters"  of contaminated  property being required to bear the entire cost
of  remediation.  The Company may utilize  substances  which have been deemed by
applicable  law to be  Hazardous  Substances.  The  potential  liability  of the
Company  under such laws will be derived from the  Company's  classification  as
both an "owner" and  "operator" of a  contaminated  property.  While the Company
intends to employ all reasonably practicable safeguards to prevent any liability
under applicable laws relating to Hazardous  Substances,  mineral exploration by
its very nature will subject the Company to  substantial  risk that  remediation
may be  required.  If the cleanup or  remediation  of  hazardous  substances  is
required  on  the  Nevada  Property,  substantial  delays  could  occur  in  the
permitting  process and/or in the extraction of gold and other precious minerals
on the Nevada Property.

LIQUIDITY OF COMMON STOCK; CAPITALIZATION

    As of February 25, 2000,  the Company's  Common Stock is traded on the "pink
sheets," until such time as the Company is in full  compliance with the National
Association of Securities  Dealers,  Inc.  ("NASD")  reporting  requirements for
Over-The-Counter Bulletin Board-traded companies. With the filing of this Annual
Report and subsequent  quarterly  reports,  the Company expects to be reinstated
for  trading on the OTC  Bulletin  Board.  Over the past six (6)  months  ending
February 29, 2000, the average  monthly  trading  volume has been  approximately
3,400,000  shares  (see  Item  5  -  "Market  Price  of  and  Dividends  on  the
Registrant's Common Equity and Related Stockholder  Matters").  In addition, the
number of  outstanding  shares of the Company's  common stock has increased from
12,215,415  shares as of May 31,  1997 to  72,730,376  shares as of January  25,
2000.  The  result  of  this  increase  in  capitalization  results  in  greater
difficulty  for  shareholders  in the  Company  to  realize  a  return  of their
investment based upon price-earning  ratios.  Trading volumes on the pink sheets
and OTC Bulletin Board have been limited and there is no assurance that the pink
sheets or OTC Bulletin Board will provide an effective  market for a prospective
investor to sell his or her shares of Common Stock.

DIVIDENDS

     The Company has not paid cash dividends on any of its Common Stock and does
not  anticipate  paying any cash  dividends  on any of its  Common  Stock in the
foreseeable  future.  Holders of the 1998  Preferred  Stock are  entitled  to an
annual cash or stock  dividend  offered at the rate of eight percent (8%) of par
value  (equal to $.08 per  share)  payable  out of any funds  legally  available
therefor.  Such dividends are cumulative so that if full dividends in respect of
any previous  dividend  period are not paid,  holders of the Preferred Stock are
entitled to receive any deficiency before any dividend or other distribution may
be made or  declared  by the  Company  with  respect to any other class of stock
including  other series of preferred  shares  should the Company  elect to issue
such additional series.


                                       10
<PAGE>

CLASSIFICATION OF SECURITIES

    Currently, the Company's stock is considered to be "penny stock" pursuant to
Section 3(a)(51)(A) of the Securities Exchange Act of 1934. This designation has
resulted from various factors including a lack of performance by the Company and
increased  capitalization.  In the event the price of the Company's Common Stock
remains  below $5.00 per share,  the Company will  continue to be subject to the
increased disclosure  requirements associated with the issuers of "penny stock".
In addition to increased disclosure requirements, such situation may also result
in either a decrease in the liquidity of the stock or a total disappearance of a
market for the Common Stock. In either  instance the difficulty  associated with
disposition of the shares may increase.

CONSENT JUDGMENT AGAINST THE COMPANY AND CERTAIN EMPLOYEES

    In May 1989,  the Company  received  notice that the Securities and Exchange
Commission (the  "Commission") had commenced an informal  investigation into the
Company's  compliance with the registration  and disclosure  requirements of the
Securities Act of 1933 (the " '33 Act") and the Securities  Exchange Act of 1934
(the " '34 Act"). Thereafter the Commission commenced an extensive review of the
Company's  books and  records  relating  to the  Company's  business  and mining
operations,  its capital  raising  activities,  and its financial  condition and
history.  Through  all  stages of the  investigation,  the  Company  voluntarily
cooperated with the Commission.

    On August 3, 1993,  the  Commission  and the Company agreed to terminate the
Commission's  investigation  by the  entry of a  consent  judgment  against  the
Company and certain of the Company's past employees. The terms and conditions of
the consent judgment can be summarized as follows:

        1. The Company and its officers, agents, servants,  employees and others
    receiving  actual notice of the consent judgment neither admitted nor denied
    any of the allegations alleged by the Commission;

        2. The Company and its officers, agents, servants, employees, and others
    receiving actual notice of the consent  judgment are permanently  restrained
    and  enjoined  from  violating  section  5 of the '33  Act or  from  selling
    securities in interstate commerce unless and until a registration  statement
    is in effect or the security or transaction is exempt from the  registration
    provisions of the '33 Act and/or the '34 Act;

        3. The Company and its officers, agents, servants, employees, and others
    receiving actual notice of the consent  judgment are permanently  restrained
    from engaging in any transaction,  practice, or course of conduct, employing
    any course of  conduct,  or  obtaining  any money or property by means of an
    untrue  statement  of a material  fact,  or any omission to state a material
    fact,  necessary to make the statements  made in light of the  circumstances
    under which they were made not  misleading  in  violation  of the  antifraud
    provisions of the '33 Act and '34 Act.


                                       11
<PAGE>

    As part of the  consent  judgment,  the  Company  was  required to engage an
independent  certified public accountant to conduct a full and complete analysis
of the  disposition  of all funds received by the Company from investors and, to
the extent so discovered, to disgorge all ill-gotten gains.

    On April 7, 1994,  in  response  to the audits  completed  by the  certified
public  accountant,  the Company and the  Commission  entered into a stipulation
regarding the  resolution of all  outstanding  issues which then existed,  which
stipulation  was entered as an order by the United States District Court for the
Central District of California.  Such stipulation  contained an  acknowledgement
that the Company and its executive  officers had received no ill-gotten gains as
a result  of prior  activities  by the  Company  in  offering  and  selling  its
securities,  and that the consent judgment resolved once and for all, all issues
raised by the  Commission as a result of the  Company's  prior  activities.  The
Company  and the persons  named in the formal  order of  investigation  were not
required to pay any fines or required to disgorge any monies previously received
by it in connection with its securities.

    On February 27, 1989, the Pennsylvania  Securities Commission issued a cease
and desist  order  against the Company and certain past  employees,  prohibiting
them from  violating  Section  201 of the  Pennsylvania  Securities  Act of 1972
relating to the sale of unregistered "penny stocks."

    As a result of the foregoing  regulatory and judicial  actions,  the Company
may not be able to utilize the  exemptions  from  registration  available  under
Regulation A and Rule 701  promulgated  under the '33 Act and may not be able to
rely upon certain private placement exemptions afforded by applicable state blue
sky laws in  connection  with the offer and sale of  securities in a transaction
which qualifies as exempt from  qualification  under the '33 Act. In such cases,
the Company would be required to  register/qualify  the  transaction  under said
blue sky laws,  which would likely increase the cost of, and extend the time for
completing, any private placement of securities.

FLUCTUATION OF COMMODITY PRICES

    Since its  deregulation  in August 1971,  the market price for gold has been
highly speculative and volatile.  Since 1980, gold has fluctuated from a high of
approximately  $850 per ounce in January 1980 to a low of approximately $280 per
ounce in February,  2000.  Currently gold is trading at  approximately  $290 per
ounce.  In 1996,  gold averaged over $380 per ounce.  Instability in gold prices
may affect the profitability of certain of the Company's future operations.

    See below with respect to the  Company's  lack of engaging in any hedging or
similar transactions with respect to commodity price fluctuations.


                                       12
<PAGE>

LACK OF HEDGING TRANSACTIONS

    With respect to mineral resources,  the Company does not presently engage in
any hedging  transactions  since the Company's  production of such  resources is
limited at the present time.  At such time as the  Company's  production of such
resources begins,  the Company may engage in hedging or other transactions which
are intended to manage risks relating to price  fluctuations  of these minerals.
The Company's failure to engage in any such hedging transactions may result in a
material  adverse effect on the Company if commodity  prices or foreign exchange
rates fluctuate.


USE OF FORWARD-LOOKING STATEMENTS

    This Annual Report contains  "forward-looking  statements".  Such statements
are  found  in  the  Sections  of  this  Annual  Report   entitled   "Business,"
"Properties," and "Management's  Discussion and Analysis of Financial Condition"
and elsewhere.  Prospective  Investors are cautioned that the  assumptions  upon
which such  statements are based cannot be guaranteed by the Company to occur in
the  future or that the  overall  success  of the  Company  might be  materially
adversely affected should such bases (or some of them) not occur.



                              3. LEGAL PROCEEDINGS

o Francis  Parkes,  Dr.  Joe C. Rude III,  Christopher  D.  Michaels  and Nevada
Manhattan Mining, Inc. v. Sheldon Salcman, Arie Rabinowitz,  Mayer Rooz, Thomson
Kernaghan & Co. Limited,  Soreq,  Inc.,  Silenus Limited,  Mary Park Properties,
L.H. Financial  Services,  Austost Anstalt Schaan,  Tusk Investments,  Inc., Top
Holding International,  Ltd., Praha Investments S.A., UFH Endowment, Ltd., Atead
Consulting S.A., and Ausinvest Anstalt Balzers,  (Case No. 98-5624 JSL(CTx) (the
"Securities  Action") was filed in United States  District Court for the Central
District of  California  (the "Court") on July 14, 1998 on behalf of the Company
and  Francis  Parkes,  Dr.  Joe C. Rude and  Christopher  D.  Michaels,  who are
individual Company  shareholders.  In the Securities Action,  plaintiffs contend
that defendants  violated Section 10(b) and 13(g) of the Securities Exchange Act
of 1934, Section 1962(b) of the Racketeer  Influenced and Corrupt  Organizations
Act, and committed  fraud by engaging in a fraudulent  scheme to manipulate  and
artificially  depress the market in and for the Company's common stock by use of
massive short sales. Plaintiffs seek an unspecified amount of damages, including
punitive  damages,  a  judicial  declaration  that  the  terms,  conditions  and
covenants of certain  debentures and  subscription  agreements were violated and
certain injunctive relief. On November 2, 1998, the Court denied various motions
to  dismiss,  strike or  transfer  the  complaint  filed by various  defendants.
Thereafter, separate counterclaims for breach of contract and declaratory relief
were filed by each of Tusk Investments, Inc., Silenus Limited, Thomson Kernaghan
& Co., Ltd. and Mary Park Properties. In February, 2000, the Court dismissed the
Company as a plaintiff for failure to prosecute.


                                       13
<PAGE>

o UFH Endowment,  Ltd. and Austost  Anstalt Schaan v. Nevada  Manhattan  Mining,
Inc., Jeffrey Kramer and Christopher Michaels, (Case No. 98 Civ. 5032) (the "UFH
Action") was filed in United States District Court for the Southern  District of
New York on July 15, 1998, by the  Securities  Action  defendants UFH Endowment,
Ltd.  and Austost  Anstalt  Schaan  against the  Company,  Jeffrey S. Kramer and
Christopher  Michaels,  officers and directors of the Company,  President of the
Company.  The  plaintiffs  in the UFH  Action  claim that the  Company  breached
certain  debentures and subscription  agreements,  and that the other defendants
induced such breach, and thus seek an injunction directing the Company to file a
registration  statement with the Securities and Exchange  Commission ("SEC") and
to issue common stock, as well as damages from the Company and defendants Kramer
and Michaels.  Approximately  one month after first filing their complaint,  the
plaintiffs  amended  their  complaint  to include a claim  purporting  to allege
violations by the Company and Jeffrey S. Kramer and Christopher  Michaels. On or
about July 30, 1998 plaintiffs sought a preliminary  injunction  requesting that
the Company be compelled to file a registration statement with the SEC and issue
stock to the plaintiffs.  This motion was denied.  On July 27, 1998, the Company
and Messrs.  Kramer and Michaels  filed  various  motions to dismiss,  stay,  or
transfer  the UFH  Action.  These  motions  have not yet been  ruled upon by the
United States District Court for the Southern District of New York.


o On November 4, 1996,  the Company  filed a  complaint  (the  "Action")  in Nye
County,  Nevada against Marlowe Harvey,  Maran Holdings Inc.,  Calais  Resources
Inc., and Argus Resources,  Inc. (the "Harvey  Entities").  The complaint in the
Action alleges,  amongst other things,  that the Harvey Entities  breached their
obligations under various  agreements  (including the October 20, 1995 amendment
to the Joint  Venture  Agreement  discussed in further  detail in the Section of
this Annual Report entitled  "Properties" -- The Nevada Property").  The Action,
as amended,  seeks a judicial  declaration  that the Harvey Entities do not have
any joint venture or real property interest in the mining claims included within
the Nevada  Property.  The  Action  also seeks  compensatory  damages  and other
financial  relief  based on the Harvey  Entities'  breach of contract  and other
causes of action.

    During April 1997 the Company through its counsel filed a first amendment to
its complaint in the action. Counsel for the Harvey Entities filed answers and a
counterclaim  in the  Action  during  July  1997.  In their  answer,  the Harvey
Entities have generally  denied the  allegations of the first amended  complaint
and have raised various affirmative defenses. In their counterclaims, the Harvey
entities  were seeking an  injunction  preventing  the Company  from  conducting
activities  related to the Nevada Property  pending  resolution of the issues in
the Action and  compensation  and punitive  damages and other  financial  relief
based on breach of contract and other causes of action.


                                       14
<PAGE>

    In July 1997, the Harvey Entities moved for a preliminary injunction against
the Company  preventing it from conducting  further  activities at the Manhattan
Project without their consent,  from issuing press releases  describing  certain
real  property as being wholly owned by the Company,  and from using the same as
security for loans.  After a two-hour  hearing on  September 4, 1997,  the court
refused to issue an injunction against the Company. Pursuant to stipulation, the
parties have agreed not to interfere with one another's operations on the Nevada
Property.  Additionally,  the  Company  has agreed not to further  encumber  the
Nevada  Property  pending  trial.  A trial  date  was set for  September,  1998.
Settlement discussions have been instituted by the parties without resolve as of
the date of this filing.  On August 28, 1998, on motion  brought by the Company,
the court  granted a  continuance  and  ordered  the  parties to engage in "good
faith" settlement negotiations.

    Presently,  the Company has requested a pre-trial settlement conference with
the defendants. The Court has denied the request and has directed the Company to
commence argument in support of its position.

    If the  Company is  successful  in  obtaining  specific  performance  of the
agreement alleged in the Action, it will effectively  continue to own or control
an undivided 100% interest in the Nevada property.


o A prior  regulatory  proceeding  against  the  Company  and  certain  past key
employees,  which resulted in the entry of a consent judgment,  but subsequently
was followed by a stipulation which contained an acknowledgment that the Company
and its executive officers had received no ill-gotten gains as a result of prior
activities by the Company in offering and selling its  securities,  is described
elsewhere in this Annual  Report (see "Risk Factors - Consent  Judgment  Against
the Company and Certain Employees").


             4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matter was submitted to a vote of security holders in the fourth quarter
of Registrant's fiscal year ended May 31, 1999.


                                       15
<PAGE>

                                     PART II


           5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


     At the annual meeting of stockholders on December 9, 1998, the stockholders
approved an increase in the authorized  common stock from  49,750,000  shares to
250,000,000  shares,  enabling  the  Company  to  have  greater  flexibility  in
considering  potential future actions  involving the issuance of stock which may
be necessary or desirable to accommodate  the Company's  growth plan,  including
capital raising  transactions and acquisitions.  The authorized capital stock of
the  Company  consists of  250,250,000  shares of which  250,000,000  shares are
Common Stock with a par value of one cent ($.01) per share and 250,000 shares of
Series A  Preferred  Stock with a par value of $1.00 per share  (the  "Preferred
Stock")  convertible  into Common  Stock on the terms and  conditions  described
below.  There were  72,730,376  shares of the Company's  Common Stock and 12,150
shares of the Preferred Stock issued and outstanding as of January 25, 2000. The
latest  series of Preferred  Stock was issued as a dividend to  shareholders  on
December 31, 1997 on the basis of one share of Preferred for every 100 shares of
Common Stock.

Public Market
-------------
    The  Company  received  approval  for  trading  of its  Common  Stock on the
Electronic  Bulletin Board (NASDAQ) in March 1996. From the period from December
1995 until March 1996, the Company published "bid" and "ask" prices on the "pink
sheets."

    As of February 25, 2000,  the Company's  Common Stock is traded on the "pink
sheets," until such time as the Company is in full  compliance with the National
Association of Securities  Dealers,  Inc.  ("NASD")  reporting  requirements for
Over-The-Counter Bulletin Board-traded companies. With the filing of this Annual
Report and subsequent  quarterly  reports,  the Company expects to be reinstated
for trading on the OTC Bulletin Board.

    Over the past six (6) months ending  February 29, 2000, the average  monthly
trading volume has been approximately 3,400,000 shares

    Prospective investors should be aware that the volume of trading on the pink
sheets and OTC Bulletin Board traditionally has been limited and there can be no
assurance  that the pink sheets and OTC Bulletin Board will provide an effective
market for a shareholder to sell his or her Common Stock of the Company.

    The Company's  Registration Statement on Form 10 became effective on June 2,
1997.  The  Company is a  "fully-reporting  company"  within the  meaning of the
Securities  and  Exchange  Act of 1934.  As of January  25, 2000 there were 1200
stockholders of record plus approximately 1200 stockholders in "Street Name."


                                       16
<PAGE>

    The high and low interdealer prices for the last two fiscal years and latest
quarterly  periods on the  Electronic  Bulletin  Board  (without  retail markup,
markdown or commission) are as follows:

   Quarter Ended                                    High            Low
   -------------                                 ---------        --------
June 30, 1997...............................     $    9.75        $ 3.0625
September 30, 1997..........................     $    7.50        $ 3.75
December 31, 1997...........................     $    4.5625      $  0.6875
March 31, 1998..............................     $    2.125       $  0.9375
June 30, 1998...............................     $    1.80        $  0.125
September 30, 1998..........................     $    1.41        $  0.15
December 31, 1998...........................     $    1.51        $  0.55
March 31, 1999..............................     $    1.55        $  0.69
June 30, 1999...............................     $    1.04        $  0.20
September 30, 1999..........................     $    0.31        $  0.06
December 31, 1999 ..........................     $    0.12        $  0.037
(Two months ended) February 29, 2000........     $    0.115       $  0.00


Dividends
---------
    The Company has not paid cash  dividends on any of its Common Stock and does
not  anticipate  paying any cash  dividends  on any of its Common  Stock for the
foreseeable future.

    The Board of Directors  declared a dividend to all shareholders of record as
of December  31,  1997  consisting  of one share of a new series of  Convertible
Preferred Stock (the "1998  Preferred  Stock"),  $1.00 par value,  for every 100
shares of Common Stock owned. As authorized in the Company's Amended Certificate
of  Determination  of  Preferences  of Series A  Preferred  Stock filed with the
Nevada  Secretary of State on January 14, 1998, the 1998 Preferred Stock will be
convertible  to one share of  Common  Stock for a period of one year and carry a
dividend  equal to eight percent (8%) of par value,  payable in cash or stock at
the Company's  election from funds legally  available  therefor.  Such dividends
were cumulative such that if full dividends in respect of any previous  dividend
period are not paid, holders of the 1998 Preferred Stock are entitled to receive
any deficiency before any dividend or other distribution may be made or declared
by the Company with respect to any other class of stock  including  other series
of preferred  shares should the Company elect to issue such  additional  series.
Each share of 1998 Preferred  Stock includes a warrant (the "Dividend  Warrant")
to  purchase  two  additional  shares of  Common  Stock at $3.00 per share for a
period of two years. The Dividend Warrants expired on December 31, 1999.

    The 1998  Preferred  Stock was  automatically  converted  to common stock at
December 31, 1998 pursuant to its terms.


                                       17
<PAGE>

                     RECENT SALES OF UNREGISTERED SECURITIES

Sale of Common Stock
--------------------
    From the period  March 1, 1999 to May 31, 1999 the Company  offered and sold
the following unregistered securities:

    On March 23, 1999, the Company issued  135,000  restricted  shares of Common
Stock to Harrison Western  Construction Company in consideration of a settlement
agreement  between the parties.  The shares were offered and sold pursuant to an
exemption from  registration  provided by Section 4 (2) of the Securities Act of
1933 , as  amended,  for  issuances  of  securities  not  involving  any  public
offering.

    On March 29, 1999, the Company issued  200,000  restricted  shares of Common
Stock to AMC Consumer  Services in consideration of financial  services provided
to the Company.  The shares were offered and sold pursuant to an exemption  from
registration  provided  by  Section  4 (2) of the  Securities  Act of  1933 , as
amended, for issuances of securities not involving any public offering.

    On March 29, 1999, the Company issued  180,000  restricted  shares of Common
Stock to Dr. Joe C. Rude,  a director of the  Company,  for a purchase  price of
$.50 per share.  The shares were offered and sold pursuant to an exemption  from
registration  provided  by  Section  4 (2) of the  Securities  Act of  1933 , as
amended, for issuances of securities not involving any public offering.


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

Introduction

     The  Company  owns an  interest in a mining  exploration  property  (Nevada
Property).  Current  management is of the opinion that  acquisitions made in the
fields of timber,  mining,  fishing and  technology in the Federation of Russia,
Brazil and Indonesia are of no current  economic  value to the Company or are no
longer under the Company's control.  The risk and contingencies  associated with
the Nevada Property are more particularly described in the Section of the Annual
Report entitled "Properties" and "Risk Factors."

     Present  Management  was unable to obtain from previous  Management  proper
documentation to sufficiently determine if the Company's revenues of $21,000,000
which were  reported in the second and third  quarter for the year ended May 31,
1999 had,  in fact,  occurred.  As a result,  present  Management  was unable to
validate a receivable  of  $3,320,168  which was a result of the sales  revenue.
These  transactions  were reversed in the fourth  quarter for the year ended May
31, 1999.

Comparison of Results of Operations --Year Ended May 31, 1999
Compared to Year Ended May 31, 1998
--------------------------------------------------------------

     For the year ended May 31, 1999 there were no revenues. Revenues previously
reported  for the year ended May 31, 1998 have been  presented  under "Loss From
Operations of Discontinued Segments".

     General  and  Administrative  expense  for the year ended May 31,  1999 was
$5,024,610  as  compared  to  $5,061,129  for the same  period  in  1998,  which
represents no significant change.

     Other income and expense of $6,125,280  includes  writedowns in fiscal 1999
on mineral  properties  in Indonesia  and timber  investment in Brazil vs. other
income and expense in 1998 of $4,836,000 which included writedowns of $2,936,000
of the  Nevada  Property  acquisition  costs,  $1.2  million  of  the  Indonesia
Concession  acquisition costs and $700,000 of the Jonasa  Concession  (Brazilian
timber) acquisition costs.

                                       18
<PAGE>

Loss from Operations of Discontinued Segments

Timber:

In fiscal 1999, the Company had a loss on discontinued timber operations of $1.3
million,  versus a loss of $2.28 million in fiscal 1998, representing a $971,000
decline.  Part of the decrease is attributable  to no operating  activity in the
fourth quarter and the balance to decreased travel expense.

Fishing Operation

In fiscal 1999,  the Company had a loss on  discontinued  fishing  operations of
$2.1  million.  This  consists of $1.2  million  acquisition  cost and a $900,00
nonrecoverable deposit.


Comparison of Results of Operations --Year Ended May 31, 1998
Compared to Year Ended May 31, 1997
--------------------------------------------------------------

     Revenues  previously  reported  for the year  ended May 31,  1998 have been
presented  in  the  financial   statements   under  "Loss  From   Operations  of
Discontinued Segments".

     The general and administrative  expenses, after adjustment for discontinued
operations,  for the year ended May 31, 1998 were  approximately  $5,061,129  as
compared to $4,270,000 for the same period in 1997. The $791,000  increase was a
result of increases in consulting fees and corporate salaries.  Other income and
expense increased by $5,436,555 which was due to an increase in interest expense
related to the debentures and notes to shareholders  and a $4,836,000  writedown
of mineral  properties and timber  investment  which resulted from  management's
test for impairment.


LIQUIDITY AND CAPITAL RESOURCES

     The Company's  working capital position as of May 31, 1999 was a deficit of
approximately $(5,066,470).  Almost since inception, the Company has experienced
pressure on its working capital position due to operating losses and the need to
continually  invest  in  exploration  activities  on the  Nevada  Property,  the
Brazilian  Properties,   the  Indonesian   Concessions  and  properties  in  the
Federation of Russia.


                                       19
<PAGE>

     Over the past two years, the Company has raised  approximately $4.5 million
from the issuance of stock and approximately $4.5 million from debt instruments.

    The Company  anticipates  that it will  require  additional  capital and may
attempt  to  secure  it by  utilizing  a  publicly  registered  offering  of its
securities or "Private  Placements." No assurances can be given that the Company
will be able to raise such  necessary  working  capital.  Prospective  investors
should be aware that if the Company is unable to secure necessary  operating and
working  capital,  such  investors may be at risk of losing all or part of their
investment.



                            7. FINANCIAL STATEMENTS

The  following  pages  contain the  financial  statements of the Company for the
fiscal years ending May 31, 1998 and 1999.




                                       20
<PAGE>





                  NEVADA MANHATTAN GROUP, INC. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS







Independent Auditors' Report                                             F-1


Consolidated Balance Sheet                                               F-2


Consolidated Statements of Operations                                    F-3

Consolidated Statements of Comprehensive Loss                            F-4


Consolidated Statements of Stockholders' Deficiency                   F-5 - 6



Consolidated Statements of Cash Flows                                F-7 - 8


Notes to Consolidated Financial Statements                           F-9 - 32



<PAGE>



                          INDEPENDENT AUDITORS' REPORT


TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
NEVADA MANHATTAN GROUP, INC.

We have audited the accompanying  consolidated balance sheet of Nevada Manhattan
Group,  Inc. and  Subsidiaries  as of May 31, 1999 and the related  consolidated
statements of operations,  comprehensive loss, stockholders' deficiency and cash
flows  for  each of the two  years  in the  period  ended  May 31,  1999.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

Except as  discussed in the  following  paragraph,  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.

We were unable to determine whether the Company had $21,000,000 of sales,  which
were  reported in the second and third  quarter of  the year ended May 31, 1999,
and were therefore  unable to validate a receivable of  $3,320,168,  which was a
result of the sales.  These transactions were reversed in the fourth quarter for
the  year  ended  May  31,  1999.   Management  was  unable  to  provide  proper
documentation to sufficiently  determine if the sales occurred. Due to a lack of
proper  documentation,  we were unable to satisfy ourselves about the occurrence
and  completeness  of these sales  transactions,  as well as the  existence  and
completeness of the related  accounts  receivable as of May 31, 1999 by means of
other auditing procedures.

Because of the matter  discussed in the third  paragraph,  the scope of our work
was not sufficient to enable us to express, and we do not express, an opinion on
the May 31, 1999 consolidated financial statements.

In our opinion,  except for the effects on the May 31, 1999 financial statements
of the  matter  discussed  in the fourth  paragraph,  the  related  consolidated
statements of operations,  comprehensive loss, stockholders' deficiency and cash
flows of Nevada  Manhattan  Group,  Inc. and Subsidiaries for the year ended May
31,  1998,  present  fairly,  in  all  material  respects,  the  results  of its
operations  and its cash flows for the year ended May 31,  1998,  in  conformity
with generally accepted accounting principles.




                                       MERDINGER, FRUCHTER, ROSEN & CORSO, P.C.
                                       Certified Public Accountants

Los Angeles, California
March 13, 2000

                                      F-1
<PAGE>


                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  MAY 31, 1999

           ASSETS
CURRENT ASSETS
    Cash and cash equivalents                                  $      6,238
    Debt issuance cost                                              140,682
                                                                -----------
       Total Current Assets                                         146,920

FURNITURE AND EQUIPMENT, net                                         76,365

OTHER ASSETS                                                         14,273
                                                                -----------
       TOTAL ASSETS                                             $   237,558
                                                                ===========

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
    Accounts payable and accrued expenses                       $ 3,136,915
    Convertible note payable                                        333,333
    Notes payable to stockholders                                   242,932
    Notes payable - current portion                                 108,329
    Convertible debentures - current portion                      1,425,214
                                                                -----------
       Total Current Liabilities                                  5,213,390

NOTES PAYABLE, less current portion                                  56,982

CONVERTIBLE DEBENTURES, less current portion                      1,180,494
                                                                -----------
       TOTAL LIABILITIES                                          6,450,866

COMMITMENTS AND CONTINGENCIES (Note 6)                                   -

STOCKHOLDERS' DEFICIENCY
    Preferred stock, $1 par value, 250,000 shares
     authorized, 13,500 shares issued and outstanding                13,500
    Common stock, $0.01 par value, 250,000,000 shares
     authorized, 66,454,607 shares issued and outstanding           664,546
    Additional paid-in capital                                   43,079,139
    Accumulated deficit                                         (49,970,493)
                                                               ------------
       TOTAL STOCKHOLDERS' DEFICIENCY                            (6,213,308)
                                                                -----------
       TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY           $   237,558
                                                                ===========




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

                                       F-2
<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS

                                                  For the year ended May 31,
                                                   1999               1998
                                               ------------     -------------
                                                                 (As Restated)
REVENUE                                        $          -     $      41,740
COST OF REVENUE                                           -                 -
                                               ------------     -------------

  GROSS PROFIT                                            -            41,740
GENERAL AND ADMINISTRATIVE EXPENSES               6,919,321         5,061,129
                                               ------------     -------------

LOSS FROM OPERATIONS                             (6,919,321)      ( 5,019,389)
                                               ------------     -------------

OTHER INCOME (EXPENSES)
    Gain on extinguishment of debt                  340,000                 -
    Interest expense                            (   808,505)       (  700,423)
    Impairment of mineral properties and
      timber investment                         ( 6,125,280)       (4,836,000)
                                               ------------     -------------
       Total Other Income (Expenses)            ( 6,593,785)       (5,536,423)
                                               ------------     -------------
LOSS BEFORE PROVISION FOR INCOME TAXES          (13,513,106)      (10,555,812)

PROVISION FOR INCOME TAXES                                -                 -
                                               ------------     -------------
LOSS FROM CONTINUING OPERATIONS                 (13,513,106)      (10,555,812)

DISCONTINUED OPERATIONS
 Loss from  operations of discontinued
  Brazil operations (Net of applicable
  income tax effect of $0, due to valuation
  allowance for uncertainty of realization)      (1,311,460)       (2,282,567)
 Loss from operations of discontinued fish
  operations (Net of applicable income tax
  effect of $0, due to valuation allowance
  for uncertainty of realization)                  (174,622)                -
 Loss on disposal of fish operations
  (Net of applicable income tax effect of $0,
  due to valuation allowance for uncertainty
  of realization)                                (2,097,190)                -
                                                ------------     -------------
NET LOSS                                        (17,096,378)      (12,918,695)

CUMULATIVE PREFERRED DIVIDENDS                            -            80,316
                                               ------------      -------------

NET LOSS APPLICABLE TO COMMON STOCKHOLDER      $(17,096,378)     $(12,918,695)
                                               ============      =============
LOSS PER SHARE - basic and diluted
    Loss from continuing operations            $(      0.27)     $(      0.71)
    Loss from discontinued operations           (      0.07)      (      0.15)
                                               ------------     -------------
       NET LOSS                                $(      0.34)     $(      0.86)
                                               ============      ============
WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING - basic and diluted                50,008,211        14,969,621
                                               ============      ============

The accompanying notes are an integral part of these consolidated financial
statements
                                      F-3
<PAGE>


                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


                                                  For the year ended May 31,
                                                   1999               1998
                                               ------------     -------------
                                                                 (As Restated)

COMPREHENSIVE LOSS
     Net Loss                                   $(17,096,378)    $ (12,918,695)

     Foreign Currency Translation Adjustment     (    24,940)            24,940
                                                ------------     -------------
COMPREHENSIVE LOSS                              $(17,121,318)    $(12,893,755)
                                                ============     =============












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


                                       F-4

<PAGE>


                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
               CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
                         FOR THE YEAR ENDED MAY 31, 1999
<TABLE>
<CAPTION>
                                                                                                Additional
                                            Preferred Stock            Common Stock               Paid-in
                                          Shares       Amount      Shares        Amount          Capital
                                         ----------  ---------    ----------   ----------       -----------
    <S>                                  <C>         <C>          <C>            <C>            <C>
    Balance, May 31, 1998 (Restated)       176,414    $ 176,414     26,492,543    $264,926      $28,715,550

    Common Stock Issued For:
      Cash                                       -            -     25,834,356     258,343        3,604,265
      Property                                   -            -      8,000,000      80,000        4,645,280
      Conversion of Debt and Interest            -            -      1,332,632      13,326        2,467,743
      Conversion of Debentures                   -            -        107,500       1,075           83,925
      Collateral for Stockholders Notes          -            -         98,572         986       (      986)
      Conversion of Preferred Stock       (162,914)    (162,914)       240,186       2,402          160,512
      Liquidated Damages                         -            -        153,849       1,539          206,623
      Services Rendered                          -            -      9,194,969      91,949        2,969,177

    Warrants Issued For:
      Services Rendered                          -            -              -           -          177,050

    Cancellation of Common Stock in Escrow       -            -     (5,000,000)    (50,000)          50,000

    Foreign Currency Translation Adjustment      -            -              -           -                -

    Net Loss                                     -            -              -           -                -
                                          --------    ---------     ----------     --------    ------------
    Balance, May 31, 1999                   13,500    $  13,500     66,454,607     $664,546    $ 43,079,139
                                          ========    =========     ==========     ========    ============
</TABLE>


CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY - continued

<TABLE>
<CAPTION>

                                               Foreign Currency      Accumulated
                                                 Translation            Deficit         Total
                                                -----------------     ------------     ---------
    <S>                                        <C>                   <C>              <C>
    Balance, May 31, 1998 (Restated)           $     24,940          $(32,874,115)    $( 3,692,285)

    Common Stock Issued For:
      Cash                                              -                       -        3,862,609
      Property                                          -                       -        4,725,280
      Conversion of Debt and Interest                   -                       -        2,481,069
      Conversion of Debentures                          -                       -           85,000
      Collateral for Stockholders Notes                 -                       -                -
      Conversion of Preferred Stock                     -                       -                -
      Liquidated Damages                                -                       -          196,909
      Services Rendered                                 -                       -        1,682,276

    Warrants Issued For:
      Services Rendered                                 -                       -          177,050

    Cancellation of Common Stock in Escrow              -                       -                -

    Foreign Currency Translation
     Adjustment                                   (  24,940)                    -      (    24,940)

    Net Loss                                            -             (17,096,378)     (17,096,378)
                                                ------------          -----------      -----------
    Balance, May 31, 1999                       $       -            $(49,970,493)    $( 6,213,308)
                                                ============         ============     ============
</TABLE>

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

                                       F-5


<PAGE>


                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
               CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
                         FOR THE YEAR ENDED MAY 31, 1998

<TABLE>
<CAPTION>
                                                                                                Additional
                                            Preferred Stock            Common Stock               Paid-in
                                          Shares       Amount      Shares        Amount          Capital
                                         ----------  ---------    ----------   ----------       -----------
    <S>                                  <C>         <C>          <C>            <C>            <C>
    Balance, May 31, 1997                  228,319    $ 228,319     12,273,565    $122,736      $23,699,683

    Common Stock Issued For:
      Cash                                       -            -      2,165,400      21,654          547,564
      Property                                   -            -      5,005,000      50,050        3,946,123
      Conversion of Debt and Interest            -            -        582,575       5,826          766,463
      Conversion of Debentures                   -            -        338,302       3,383          331,089
      Collateral for Stockholders Notes          -            -      2,743,698      27,437       (   27,437)
      Conversion of Preferred Stock       (207,444)    (207,444)     2,280,199      22,802          389,886
      Liquidated Damages                         -            -        289,426       2,894          406,606
      Services Rendered                          -            -        814,378       8,144        1,545,026

    Discount for Conversion of Debentures        -            -              -           -          500,000

    Options Issued For:
      Services Rendered                          -            -              -           -          428,996

    Common Stock Dividend
      Issuance of Preferred Stock          167,789      167,789              -           -                -
      Issuance of Common Stock Warrants          -            -              -           -          165,926
      Dividends to be Paid                ( 12,250)    ( 12,250)             -           -                -

    Common Stock in Escrow                       -            -              -           -       (3,984,375)

    Foreign Currency Translation Adjustment      -            -              -           -                -

    Preferred Dividend                           -            -              -           -                -

    Net Loss                                     -            -              -           -                -
                                          --------    ---------     ----------     --------    ------------

    Balance, May 31, 1998 (As Restated)    176,414    $ 176,414     26,492,543     $264,926    $ 28,715,550
                                          ========    =========     ==========     ========    ============
</TABLE>


CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY - continued

<TABLE>
<CAPTION>

                                             Foreign Currency      Accumulated
                                               Translation            Deficit         Total
                                              -----------------     ------------     ---------
    <S>                                      <C>                   <C>              <C>
    Balance, May 31, 1997                    $        -            $(19,633,955)    $  4,416,783

    Common Stock Issued For:
      Cash                                            -                       -          569,218
      Property                                        -                       -        3,996,173
      Conversion of Debt and Interest                 -                       -          772,289
      Conversion of Debentures                        -                       -          334,472
      Collateral for Stockholders Notes               -                       -                -
      Conversion of Preferred Stock                   -                       -          205,244
      Liquidated Damages                              -                       -          409,500
      Services Rendered                               -                       -        1,553,170

    Discountfor Conversion of Debentures              -                       -          500,000

    Warrants Issued For:
      Services Rendered                               -                       -          428,996

    Common Stock Dividend
      Issuance of Preferred Stock                     -         (       167,789)               -
      Issuance of Common Stock Warrant                -         (       165,926)               -
      Dividends to be Paid                            -                  12,250                -

    Common Stock in Escrow                            -                       -       (3,984,375)

    Foreign Currency Translation
     Adjustment   -                                24,940                     -           24,940

    Preferred Dividend                                -             (    80,316)     (    80,316)

    Net Loss                                          -             (15,110,606)     (15,110,606)
                                              ------------          -----------      -----------

    Balance, May 31, 1998 (As Restated)       $     24,940         $(32,874,115)    $( 3,692,285)
                                              ============         ============     ============
</TABLE>

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

                                      F-6


<PAGE>

<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                  For the year ended May 31
                                                     1999              1998
                                               -------------      -------------
CASH FLOWS FROM OPERATING ACTIVITIES                             (As Restated)

 Net loss                                       $(17,096,378)      $(12,918,695)
 Adjustments to reconcile net loss to net
   cash used in operating activities:
      Provision for doubtful accounts                      -            150,000
      Write-off of mineral properties and
        timber investment                          6,125,280          4,836,000
      Common stock issued for services             3,061,125          1,442,447
      Warrants issued for services                   177,050            278,996
      Write-off of officer advances                        -             52,013
      Amortization of debenture discount             377,249            314,598
      Depreciation                                    56,092             35,645
      Write-off of mill acquisition costs                  -            291,246
      Write-off of Brazil fixed assets               282,197                  -
      Gain on extinguishment of debt               ( 340,000)                 -
   (Increase) Decrease
      Accounts receivable                            255,027       (    46,866)
      Inventories                                    108,844        (   108,844)
      Prepaid expenses                               283,353            61,878
      Other assets                                   110,745        (    40,701)
   Increase (Decrease)
      Accounts payable and accrued expenses        2,189,746          1,122,390
                                                   ---------        -----------
    Net Cash Used in Operating Activities         (4,409,670)        (4,529,893)
                                                  -----------       -----------
CASH FLOWS USED IN INVESTING ACTIVITIES
    Purchase of property and equipment               (10,000)       (   333,441)
                                                  -------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES
 Proceeds from issuance of convertible
    debentures                                             -          1,500,000
 Proceeds from the issuance of convertible
    note payable                                     800,000                  -
 Payment for convertible note payable               (500,000)                 -
 Proceeds from issuances of notes payable             39,892                  -
 Payments for notes payable                        (  52,279)        (   29,881)
 Advances from officer                                    -             718,000
 Proceeds from issuances of notes payable to
   stockholders                                      229,499          1,978,075
 Payments for notes payable to stockholders          (10,401)      (    375,000)
 Proceeds from issuance of common stock            3,862,608            569,218
                                               -------------       ------------
    Net Cash Provided by Financing Activities      4,369,319          4,360,412
                                               -------------        -----------

FOREIGN CURRENCY TRANSLATION ADJUSTMENT              (24,940)            24,940
                                               -------------       ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS              (75,291)       (   477,982)

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR         81,529            559,511
                                               -------------       ------------
CASH AND CASH EQUIVALENTS - END OF YEAR        $       6,238      $      81,529
                                               =============      =============

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

                                       F-7


<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

     During the years  ended May 31, 1999 and 1998,  the Company  paid no income
     taxes and no interest.

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING

     During  1998,  the Company  issued  814,378  shares of its common stock for
     services  rendered by employees and third parties for  $1,553,170,  338,302
     shares of its  common  stock for  conversion  of  $334,472  of  convertible
     debentures,  2,280,199  shares of its common  stock for the  conversion  of
     $207,444  of  preferred  stock  and  payment  of  cumulative  dividends  of
     $205,244, 582,575 shares of its common stock for the conversion of $772,289
     of stockholder's notes and interest, 289,426 shares of its common stock for
     the payment of liquidating  damages of $409,500 and 5,005,000 shares of its
     common stock for the purchase of timberlands in Brazil for $3,996,173.

     During 1999,  the Company issued  9,194,969  shares of its common stock for
     services  rendered by employees and third parties for  $3,061,126,  107,500
     shares of its  common  stock  for  conversion  of  $85,000  of  convertible
     debentures,  240,186  shares  of its  common  stock for the  conversion  of
     $162,914 of  preferred  stock,  153,849  shares of its common stock for the
     payment of liquidating damages of $208,192,  8,000,000 shares of its common
     stock for the  acquisition  of an 80% interest in certain timber and mining
     rights of tin, copper  sulfate,  gold and silver from a Russian joint stock
     company for  $4,725,280,  and 1,332,632  shares of its common stock for the
     conversion of stockholders' notes and interest in the amount of $2,481,069.

     During  1999,  the  Company  financed  on a monthly  installment  basis the
     purchase  of a vehicle  for $49,732 and agreed to pay a vendor on a monthly
     installment basis for outstanding invoices of $51,426.

     During 1999, in connection with a consulting agreement,  the Company issued
     an option to purchase 500,000 shares of the Company's common stock at $0.15
     per share,  which expires in July 2000.  The option was valued at $177,050,
     which was expensed.


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

                                       F-8


<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Organization
          ------------
          Nevada Manhattan Group, Inc. and Subsidiaries  (formerly Terra Natural
          Resources  Corporation)  (the  "Company")  was  organized  to acquire,
          explore,  develop,  finance  and sell  mining  and  timber  rights and
          properties.  In December 1998, the Company changed its name from Terra
          Natural Resources  Corporation to Nevada Manhattan Group, Inc. For the
          year ended May 31,  1999,  the  Company had four  operating  segments,
          which included  development  and  exploration  of mineral  properties,
          harvesting of timber, harvesting and distribution of fish and the sale
          of  technology  related  products.  During and  subsequent to the year
          ended May 31, 1999,  the Company ceased to operate any of its holdings
          and all  operations  have been shut down.  The segments were operating
          under the following structure:

          For  the  year  ended  May  31,  1997,  the  Company's  majority-owned
          subsidiary,  Equatorial Resources, Ltd. ("Equatorial"),  conducted the
          Company's  Brazilian  timber  operations.  For the year  ended May 31,
          1998,  the  Company  has  ceased  to  operate  its  Brazilian   timber
          operations  under  Equatorial  and all of its timber  concessions  are
          being assigned to the Company's newly formed majority-owned subsidiary
          Terra Resources  Brazil,  Ltd.  ("Terra").  In approximately the first
          calendar  quarter of 1999,  the  subsidiary  was unable to pay certain
          vendors and employees, who initiated action and received a judgment to
          liquidate  all of the assets of the Company to satisfy  the debt.  The
          subsidiary is a Brazilian  Limited  Corporation  and the Company is of
          legal counsel that Brazilian  debtors are unable to attach the Company
          for any legal obligations; therefore, the assets and liabilities as of
          May 31, 1999 were charged to loss from  discontinued  operations,  see
          Note 8 - Discontinued Operations.

          On November  30,  1998,  the Company  announced  that,  as part of the
          Company's  diversification  plan, the following  three  companies were
          formed  and  were  placed  into  operation:   Science  and  Technology
          Resources, Inc. ("STR"), Nevada Manhattan Tokyo and NV Rexco.

          STR, a Nevada  corporation and wholly owned subsidiary of the Company,
          with offices in  Washington,  DC, was formed to acquire,  initiate and
          utilize a variety  of  patented  technologies,  some of which may have
          important  application  in the area of natural  resources.  Dr. Thomas
          Ward a consultant  to the U.S.  Department  of Energy heads STR.  This
          subsidiary was discontinued as of May 31, 1999 and had no revenues and
          minimal expenses incurred in 1999.

                                       F-9


<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

          Organization (continued)
          ------------
          Nevada  Manhattan  Tokyo was formed to act on behalf of the Company to
          transact the sale and marketing of the  Company's  products as well as
          other  companies'  products  produced  from  diverse  areas around the
          world.  This subsidiary was discontinued as of May 31, 1999 and had no
          revenues  and  minimal  expenses  incurred  in  1999,  see  Note  9  -
          Discontinued Operations.

          NV Rexco, a California corporation, was formed to act on behalf of the
          Company for the fishing, processing and distribution of fish and other
          seafood,  as well as  sales  and  distribution  of  timber  and  other
          resources,  primarily  products from the Far East.  The subsidiary had
          significant  operations  during 1999 for the marketing of fish.  Also,
          the  subsidiary  entered  into an  agreement  to  purchase  a fleet of
          fishing boats and a fish processing  plant,  see Note 9 - Discontinued
          Operations.

          Principles of Consolidation
          ---------------------------
          The  consolidated  financial  statements  include the  accounts of the
          Company  and  its   majority-owned   subsidiaries.   All   significant
          intercompany    accounts   and    transactions   are   eliminated   in
          consolidation.

          Cash and Cash Equivalents
          -------------------------
          For statement of cash flow purposes,  the Company considers short-term
          investments  with  original  maturities  of three months or less to be
          cash  equivalents.

          Concentration of Credit Risk
          ----------------------------
          The Company places its cash with high quality  financial  institutions
          and at times may exceed the FDEC $100,000 insurance limit.


                                       F-10

<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

          Debt Issuance Costs
          -------------------
          Fees associated  with the issuance of the  convertible  debentures are
          being amortized over the life of the convertible debentures,  which is
          two years.

          Furniture and Equipment
          -----------------------
          Furniture  and  equipment  is  stated  at  its  historical  cost  less
          accumulated  depreciation.  Depreciation  is primarily  determined  by
          using the straight-line method over the estimated useful life of seven
          years for furniture and fixtures.

          Impairment of Long-Lived Assets
          -------------------------------
          In accordance  with  Financial  Accounting  Standards  Board  ("FASB")
          Statement  of   Financial   Accounting   Standards   (SFAS)  No.  121,
          "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
          Assets  to  be  Disposed  of",  long-lived  assets  are  reviewed  for
          impairment  whenever events or changes in circumstances  indicate that
          the carrying amounts of such assets may not be recoverable. Impairment
          losses  would be  recognized  if the  carrying  amounts  of the assets
          exceed  the fair  value of the  assets.  The  Company  had  impairment
          write-offs of long-lived assets associated with its mineral and timber
          properties of $6,125,280  and  $4,836,000  for the years ended May 31,
          1999 and 1998, respectively.

          Foreign Currency Translation
          ----------------------------
          For  foreign  subsidiaries  whose  functional  currency  is the  local
          foreign  currency,  the  balance  sheet  accounts  are  translated  at
          exchange rates in effect at the end of the year and income and expense
          accounts  are  translated  at  average  exchange  rates  for the year.
          Translation  gains and losses are included as a separate  component of
          stockholders'  deficiency  and included in the Statement of Operations
          and Comprehensive Income (Loss).

          Revenue Recognition
          -------------------
          Substantially  all revenues are recognized when finished  products are
          shipped with appropriate provision for uncollectible accounts.

                                      F-11


<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

          Income Taxes
          ------------
          The Company accounts for income taxes in accordance with SFAS No. 109,
          "Accounting  for  Income  Taxes".  Deferred  taxes are  provided  on a
          liability  method  whereby  deferred  tax  assets are  recognized  for
          deductible  temporary  differences,  and deferred tax  liabilities are
          recognized for taxable temporary  differences.  Temporary  differences
          are the  differences  between  the  reported  amounts  of  assets  and
          liabilities and their tax bases.  Deferred tax assets are reduced by a
          valuation  allowance  when, in the opinion of  management,  it is more
          likely than not that some  portion or all of the  deferred  tax assets
          will not be realized. Deferred tax assets and liabilities are adjusted
          for the  effects  of  changes  in tax  laws  and  rates on the date of
          enactment.

          Net Loss Per Share
          ------------------
          For the year ended May 31,  1998,  the Company  adopted  SFAS No. 128,
          "Earnings Per Share". Basic loss per share is computed by dividing net
          loss  attributable  to common  stockholders  by the  weighted  average
          number  of  common  shares  outstanding.  Diluted  loss  per  share is
          computed  similar to basic loss per share except that the  denominator
          is increased to include the number of  additional  common  shares that
          would have been  outstanding  if the potential  common shares had been
          issued and if the additional  common shares were dilutive.  At May 31,
          1999 and 1998, the weighted average shares outstanding would have been
          increased by 72,010,539 and 1,635,539  shares of the Company's  common
          stock if the issued and  exercisable  stock options and warrants would
          have been dilutive.

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

                                      F-12

<PAGE>

                           NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


          Fair Value of Financial Instruments
          -----------------------------------
          The  Company   measures  its  financial   assets  and  liabilities  in
          accordance with generally accepted accounting principles.  For certain
          of the  Company's  financial  instruments,  including  cash,  accounts
          receivable,  and accounts payable and accrued  expenses,  the carrying
          amounts  approximate  fair value due to their  short  maturities.  The
          amounts  owed  for  notes  payable  and  convertible  debentures  also
          approximate  fair  value  because  current  interest  rates  and terms
          offered to the Company for similar notes are substantially the same.

          Impact of Year 2000 Issue
          -------------------------
          During  the  year  ended  May  31,  1999,  the  Company  conducted  an
          assessment of issues related to the Year 2000 and  determined  that no
          issues existed which would cause its computer  systems not to properly
          utilize dates beyond December 31, 1999.

          Comprehensive Income
          --------------------
          In June 1997,  FASB  issued  SFAS No.  130,  "Reporting  Comprehensive
          Income",  which  establishes  standards for  reporting and  displaying
          comprehensive income and its components in financial statements.  This
          pronouncement  is effective for fiscal years  beginning after December
          31, 1997. This  pronouncement  is effective for the year ended May 31,
          1999.

          Segment Information
          -------------------
          In June 1997, FASB issued SFAS No. 131, "Disclosures about Segments of
          an Enterprise  and Related  Information",  which requires a company to
          report  certain  information  about its operating  segments  including
          factors used to identify the reportable segments and types of products
          and services from which each reportable  segment derives its revenues.
          Since the  Company has  discontinued  all of its  operating  segments,
          segment  information has not been provided and the segment information
          provided for the year ended May 31, 1998 has been eliminate  since the
          operations have been presented as discontinued operations.

          Recent Accounting Prounouncemens
          ---------------------------------
          Since the fiscal year 1999 FASB issued SFAS 136,  "Transfers of Assets
          to a  Not-for-Profit  Organization or Charitable  Trust That Raises or
          Holds  Contributions  for  Others"  and  SFAS  137,   "Accounting  for
          Derivative   Instruments  and  Hedging   Activities-Deferral   of  the
          Effective  Date of FASB Statement No. 133".  Management  believes that
          these Statements will not have an impact on the Company.

                                      F-13

<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998
NOTE 2-   FURNITURE AND EQUIPMENT

          Furniture and equipment consist of the following as of May 31, 1999:


            Furniture and fixtures                            $   113,737
            Vehicle                                                58,242
                                                              ------------
                                                                  171,979
               Less:  accumulated depreciation                     95,614
                                                              ------------
            Net furniture and equipment                       $    76,365
                                                              ============

          The Company recorded  depreciation  expense of $56,092 and $35,645 for
          the years ended May 31, 1999 and 1998.

NOTE 3 -  IMPAIRMENT OF PROPERTIES AND EQUIPMENT

          Domestic Mineral Properties and Timber Concessions
          --------------------------------------------------
          The Company has restated its  financial  statements as of May 31, 1998
          and for the year then ended to account for  impairment of its Domestic
          Mineral  Properties  ("Nevada  Properties") and its Timber  Concession
          ("Jonasa  Concession")  in accordance with SFAS No. 121, see Note 10 -
          "1998  Restatement".  Subsequent to the previous  issuance of the 1998
          financial statements,  management discovered certain circumstances and
          facts,  which existed,  as of the financial  statement date, that were
          misinterpreted  when evaluating  whether the carrying amounts of these
          two properties were recoverable, as follows:

          -    For the Nevada Properties,  management was unable to substantiate
               proven and probable  reserves of  extractable  ore  sufficient to
               calculate the cash flows required to evaluate the recovery of the
               acquisition costs.

          -    For the Jonasa Concessions,  management did not properly estimate
               the costs required to perfect the title to the property,  and the
               additional  costs  required to transport the harvested  timber to
               the  Company's  new sawmill,  Tropical  Woods.  Given these facts
               management  believes  these  additional  costs would prohibit the
               Company's continuing involvement with this project.

                                     F-14
<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 3 -  IMPAIRMENT OF PROPERTIES AND EQUIPMENT (Continued)

          When properly  applying  these  circumstances  and facts in accordance
          with SFAS No. 121, the Nevada Property acquisition costs of $2,936,000
          and Jonasa Concession  acquisition costs of $700,000 were deemed to be
          unrecoverable and written off during the year ended May 31, 1998.

          Indonesian Mineral Properties
          -----------------------------
          In August 1996 and January 1997, the Company  acquired certain mineral
          properties  known as the Kalimantan  and Cepa projects,  respectively.
          The  Kalimantan  properties  were  acquired by the issuance of 400,000
          common shares valued at $1,200,000  based on the current  market value
          of the  stock  on the  date of  issuance.  The  Cepa  properties  were
          acquired by the issuance of 200,000  common shares issued upon signing
          of the  agreement and an  additional  3,800,000  shares to be released
          only if an independent  valuation of the property exceeds $40,000,000.
          The Company has valued the 200,000 shares at $1,400,000 based upon the
          current  market price of the  Company's  common shares at the time. In
          accordance   with  FASB  No.  121,   management   has   evaluated  the
          recoverability  of these assets and determined that the properties had
          no future economic value to the Company.

          During  the year  ended  May 31,  1998,  Company  determined  that the
          Kalimantan  would not have the  resources  available  to  explore  the
          property for proven and probable reserves,  so the Company recorded an
          impairment loss of $1,200,000.

          Current  management  is of the  opinion  that the  Company  no  longer
          controls  any of the Cepa  concessions.  Political  changes as well as
          non-compliance   with   performance   criteria  under  the  concession
          agreements,  as well as uneconomic  mining  conditions have predicated
          management's  current  position.  In support  of current  management's
          position,  the Company  previously entered into a coal exploration and
          development  agreement  with  a  recognized  coal  company,  in  North
          America, who in the summer of 1999 found the property to be uneconomic
          and  they,  based  on  the  terms  of  the  agreement,  cancelled  the
          agreement. During the year ended May 31, 1999, the Company recorded an
          impairment loss of $1,400,000 related to the Cepa concessions.


                                      F-15

<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 3 -  IMPAIRMENT OF PROPERTIES AND EQUIPMENT (continued)

          Russian Mineral Properties
          --------------------------
          In  December  1998,  the Company  acquired an 80%  interest in certain
          timber and mining rights of tin, copper sulfate,  gold and silver from
          Chrustalnaya,   a  Russian  joint  stock  company   headquartered   in
          Kavalerovo. The Company issued 8,000,000 shares of its Common Stock in
          consideration  of these  assets.  The  investment  was  valued  at the
          current  market price for the shares of $4,725,280.  However,  Company
          management never worked out an operating agreement as to the operating
          and financial activities of the parties for the mining operations. The
          current Company  management has had discussions with the joint venture
          partner. These discussions brought forth an issue that the Company was
          obligated to fund up to $5,000,000 for operating capital.  The Company
          and  management do not have the resources to provide the $5,000,000 of
          funding. Since the Company cannot provide the funds, the joint venture
          partner has  determined  that the Company was in default and cancelled
          the  agreement.  The Company has not been  successful in obtaining the
          8,000,000  shares.  Therefore,  the  Company  has  recorded  a loss on
          impairment of $4,725,280.

NOTE 4 -  NOTES PAYABLE

          Convertible Note Payable
          ------------------------
          In December  1998,  the Company  entered into an agreement to purchase
          shares of an unaffiliated  company. The Company advanced $500,000 as a
          down  payment.   In  February  1999,  after  due  diligence  work  was
          completed,   the  transaction   was  cancelled.   Also,  the  majority
          shareholder of the unaffiliated  company had advanced  $800,000 to the
          Company.  The $500,000 was agreed,  both parties, to be offset against
          the $800,000 loan. In November  1999,  the $300,000,  plus interest of
          $100,000 was converted into 16,000,000 shares of the Company's  common
          stock, at the current market value.

          Notes Payable to Stockholders
          -----------------------------
          Notes  payable to  stockholders  of $242,932  accrue interest at rates
          between 8% and 13.78%, are due on demand and are guaranteed by certain
          Company officers.


                                      F-16


<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 4 -  NOTES PAYABLE (Continued)

          Notes Payable
          -------------
          As of May 31, 1999, notes payable consisted of:

          18%-Note payable with all accrued and interest payable
           due in July 1999                                        $     39,891
          6%-Note payable with monthly payments of $4,375 for
           principal and interest due in January 2000                    34,989
          9.5%-Note payable with monthly payments of $1,035 for
           principal and interest, secured by vehicle purchased
           and due in May 2002                                           45,138
          9%-Note payable to stockholder with monthly payments
           of $1,000 including interest, due in April 2001               21,646
          9%-Note payable to stockholder at $2,000 per
           month including interest                                      23,647
                                                                    -----------
                                                                        165,311
          Less Current portion                                          108,329
                                                                    -----------
          Long-term portion                                         $    56,982
                                                                    ===========

          Maturities  of notes payable  principal are as follows for the years
          ending May 31:

                  2000                                             $    108,329
                  2001                                                   24,866
                  2002                                                   15,061
                  2003                                                   11,278
                  2004                                                    5,777
                                                                   ------------
                                                                    $   165,311
                                                                   ============

NOTE 5 -  CONVERTIBLE DEBENTURES

          In  April  and  July  1997,  the  Company  entered  into  Subscription
          Agreements   related  to  two  negotiated   private   placements  (the
          "Debentures").  These  transactions  were  made in  reliance  upon the
          exemption from registration afforded by Section 4(2) of the Securities
          Act  of  1933.  As a  result,  the  Company  issued  an  aggregate  of
          $3,500,000 of 8% Senior Secured  Convertible  Debentures due March 31,
          2000 and July 1, 2000 for the April ($2,000,000) and July ($1,500,000)
          offerings, respectively.


                                      F-17

<PAGE>

                           NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 4 -  CONVERTIBLE DEBENTURES (Continued)

          The Debentures  may be converted  into shares of the Company's  Common
          Stock  at any time  commencing  June 2,  1997 at a price  equal to the
          lesser of  seventy-five  percent (75%) of the closing bid price of the
          Common Stock on the closing  date;  seventy-five  percent (75%) of the
          closing bid price of the Common  Stock on the day prior to the funding
          of any  subsequent  funding;  or  seventy-five  percent  (75%)  of the
          average  closing  bid  price  for the five  trading  days  immediately
          preceding  the  actual  date of  conversion  of the  Debentures.  With
          respect to the April 1997 funding,  if conversion is made after August
          16,  1997,  the  conversion  price will be  seventy-two  and  one-half
          percent (72.5%) of the above-referenced valuation standards. As of May
          31,  1999,  the Company has  recorded  $344,292 of deferred  financing
          charges for the differences  between the conversion price and the fair
          market value of the stock at the date of each funding. The discount is
          being amortized over the life of the debentures.

          The  Company  was  required  to use  its  "best  efforts"  to  cause a
          Registration  Statement with the Securities and Exchange Commission to
          become  effective.  If  the  Registration  Statement  did  not  become
          effective within 120 days of each respective  funding,  the Company is
          required to pay  liquidated  damages  equal to two percent (2%) of the
          Debentures  for the first thirty days and three percent (3%) per month
          thereafter until the Registration  Statement becomes effective.  As of
          May 31,  1999,  the  Company has  incurred  and  expensed  $717,636 of
          liquidating  damages of which  $617,662 has been  converted to 443,275
          shares of the Company's common stock.

          With  regard to the April 1997  funding,  until at least  seventy-five
          percent (75%) of the Debentures are converted,  a deed of trust on the
          Nevada Property and a pledge of 1,000,000  shares of Common Stock will
          secure the  Debentures.  No such  security is given on the  Debentures
          issued in July 1997.

          The Company has issued  warrants to the  Subscribers  of the April and
          July offerings.  Regarding the Subscribers of the April offering,  the
          Company has granted  62,500  warrants with an exercise price of $8 per
          share and an expiration date of April 16, 2002. Regarding  Subscribers
          of the July 1997  offering,  the Company has granted  75,250  warrants
          with an exercise  price of $6.75 per share and an  expiration  date of
          July 16, 2002.  The exercise price is subject to adjustment to account
          for payments of  dividends,  stock splits,  reverse stock splits,  and
          similar events.

                                      F-18

<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 6 -  COMMITMENT AND CONTINGENCIES

          Leases

          The Company has noncancelable  leases for its office spaces located in
          Los Angeles.  The following  represents  future lease  payments due in
          accordance with the lease agreements:

                  Year Ending May 31,:
                   2000                                           $  174,870
                   2001                                              174,870
                   2002                                              156,870
                   2003                                               43,890
                                                                 -----------
                   Total                                          $  550,500
                                                                 ===========

          Rent   expense  for  the  years  ended  May  31,  1999  and  1998  was
          approximately $122,348 and $6,400, respectively.

          Securities and Exchange Commission
          ----------------------------------
          In fiscal 1994, the Company  entered into a consent  judgment with the
          Securities and Exchange  Commission ("SEC") following an investigation
          into the Company's business activities.

          In connection  with the judgment,  the Company  received the following
          "Stipulation  Regarding Resolution of Outstanding Issues" from the SEC
          closing out the investigation and all related issues:

          "Whereas the disposition of funds analysis  conducted  pursuant to the
          Judgment of Permanent  Injunction and Other Relief  against  Defendant
          NEVADA MANHATTAN GROUP, INC. entered on August 3, 1993 has revealed no
          ill-gotten  gains received by any defendant,  the undersigned  parties
          hereby stipulate that all outstanding  issues in this action have been
          resolved,  including  disgorgement,  and  that  the  judgment  entered
          against the defendants are final."

          The entry of the  judgment may impose  certain  burdens on the Company
          with respect to its future  activities.  The more  significant of such
          burdens are as follows:

          (i)  The  Company  may not be  able to  utilize  the  exemptions  from
               registration  available under Regulation A and Rule 701 under the
               1933 Act.

          (ii) The  Company  may not be able  to rely on the  private  placement
               exemptions   provided  in  various  state   securities   laws  in
               connection   with  the  offer  and  sale  of   securities   in  a
               transaction,  which  qualifies  as an exempt  sale of  securities
               under the 1933 Securities Act.

                                      F-19


<PAGE>
                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 5 -  COMMITMENT AND CONTINGENCIES (continued)

          Securities and Exchange Commission (continued)
          ----------------------------------
          In such case, the Company would be required to qualify the transaction
          under the state  securities  laws,  which may not be  available.  This
          qualification  would  increase  the cost of,  and  extend the time for
          completing, such private placement of securities.

          Commissions
          -----------
          During  May  1997,  the  Company  agreed  to pay two  shareholders  an
          aggregate  of 3% of  the  "net  profits"  of the  Company's  Brazilian
          operations.  For the year ended May 31, 1999 and 1998, no  commissions
          were paid.

          Legal Proceedings
          -----------------
          During  November  1996,  the Company filed a lawsuit in Nevada against
          its former  joint  venture  partners  in the Nevada  Properties  ("the
          Harvey  Entities").  The  complaint  originally  alleged,  among other
          things,  that the Harvey  Entities  breached their  obligations  under
          various   agreements.   The  action  as  amended   seeks   damages  of
          approximately  $4,000,000  resulting from the actions and inactions of
          the  defendants.  In a  counterclaim,  the  defendants  are seeking an
          injunction  preventing the Company from conducting  activities related
          to the mine and punitive  damages and other financial  relief based on
          breach of contract and other causes of action.

          The Company  subsequently  amended its  complaint,  seeking a judicial
          determination that the Joint Venture Agreement was null and void and a
          determination  that the Harvey Entities have forfeited all interest in
          the Nevada  properties.  After a hearing in September  1997, the court
          refused  to issue an  injunction  against  the  Company.  Pursuant  to
          stipulation,  the  parties  have  agreed  not to  interfere  with  one
          another's  operations  on the  Nevada  Properties.  Additionally,  the
          Company has agreed not to further encumber the Nevada property pending
          trial.

          If the Company is successful in obtaining specific  performance of the
          agreement alleged in the Action,  it will effectively  continue to own
          or  control  an  undivided  100%  interest  in  the  Nevada  property.
          Regardless of whether the Company is successful in the Action, it will
          continue  to own at  least  a 50%  undivided  interest  in the  Nevada
          Properties by virtue of its contractual rights.


                                      F-20

<PAGE>

                           NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 6 -  COMMITMENT AND CONTINGENCIES (continued

          Legal Proceedings (continued)
          -----------------
          In June 1996,  the Company  entered  into an agreement  with  Harrison
          Western Construction Corporation ("Harrison") to perform contract mine
          development  services on the Company's Nevada  Properties.  In October
          1997,  these services  ceased and a dispute arose between the parties.
          The  scope  of  work  estimated  at  the  time  of  commencement   was
          approximately  $600,000,  as projected by Harrison.  At termination of
          the  agreement,  Harrison  reportedly  furnished  a  total  amount  of
          services  and  materials  totaling  approximately  $1,684,000  without
          completion of the  objectives  for which the parties  entered into the
          agreement.  The Company paid in 1997 approximately  $1,155,000 in cash
          to  Harrison  and  in  November  1996  issued  100,000  shares  of the
          Company's  stock in payment of $250,000 of services.  In July 1997, an
          additional 65,000 shares were issued to Harrison as collateral for any
          unpaid  and  owing  amounts.  Subsequent  to  the  termination  of the
          agreement,  Harrison filed a mechanic's and materialman's  lien in the
          amount of $482,749 on the Company's  Nevada  property in January 1998.
          This filing was, in the opinion of the Company, in direct violation of
          specific clauses contained in the agreement between the parties.

          In  support  of its lien,  Harrison  filed a  lawsuit  in July 1998 in
          Federal  District  Court in Nevada.  In August  1998,  the Company was
          granted a motion to stay the  proceedings and enter  arbitration.  The
          parties have been ordered to report to the Federal  District Court the
          status of the arbitration  proceedings on or before November 30, 1998.
          The Company  believes that any arbitration  agreement or damages would
          not have a material impact on the Company's financial  statements.  On
          March 23, 1999, the Company issued 135,000 restricted shares of Common
          Stock to Harrison Western  Construction  Company in consideration of a
          settlement agreement between the parties.

          In July 1998, the Company and several  stockholders filed a lawsuit in
          United States  District  Court for the Central  District of California
          against  its  debenture   holders.   The  lawsuit  contends  that  the
          defendants violated Section 10(b) and 13(g) of the Securities Exchange
          Act,   Section  1962(b)  of  the  Racketeer   Influenced  and  Corrupt
          Organizations  Act,  and  committed  fraud by engaging in a fraudulent
          scheme to manipulate  and  artificially  depress the market in and for
          the  Company's  common  stock  by  use of  massive  short  sales.  The
          Plaintiffs seek an unspecified  amount of damages,  including punitive
          damages,  a  judicial  declaration  that  the  terms,  conditions  and
          covenants  of certain  debentures  and  subscription  agreements  were
          violated and certain injunctive relief.

                                      F-21

<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 6 -  COMMITMENT AND CONTINGENCIES (continued)

          Legal Proceedings (Continued)
          -----------------
          In July 1998,  the Company and certain  board  members and officers of
          the Company  were named as  defendants  in  lawsuits  filed by certain
          debenture  holders.  Each suit  claims  that the  defendants  breached
          certain  debentures and  subscription  agreements and failed to file a
          registration  statement with the  Securities and Exchange  Commission.
          Also, the suits claim that the defendants were in violation of Section
          10(b) and 20(a) of the  Securities  and Exchange  Act. The Company and
          other defendants deny any wrong doings and intend to vigorously defend
          both these  lawsuits.  The impact of these  lawsuits on the  Company's
          financial position or operations cannot be determined presently.

          Regulations
          -----------
          The Company's mining operations, exploration and timber activities are
          subject  to  various  foreign,  federal,  state  and  local  laws  and
          regulations  governing  protection of the environment.  These laws are
          continually  changing  and, as a general  matter,  are  becoming  more
          restrictive.  Management  believes  that the  Company  is in  material
          compliance with all applicable laws and regulations.

          Investment Agreement
          --------------------
          During  the year  ended May 31,  1998,  the  Company  entered  into an
          agreement  for  an  investor  to  purchase  up to  $14,000,000  of the
          Company's  common  stock  over a period of three  years from March 28,
          1998. The principal terms of the agreement are as follows:


          -    The sale of the Company's common stock to the investor will be in
               the form of a Put Notice in which the Company will  designate the
               dollar amount of shares to be purchased by the investor. Each Put
               Notice must be in an amount not less than $50,000.  The number of
               shares  to be issued  under  each Put  Notice  shall be an amount
               equal to the Put amount  divided by 78% of the lowest  sale price
               of the common stock as listed on the  principal  exchange  during
               the ten trading days prior to the Put Notice.

          -    The  Company  may not  issue a Put  Notice if a)  trading  of the
               Company's  common stock is suspended or delisted,  b) the closing
               price of the Company's  common stock is less than $.25 per share,
               c)  a  registration  statement,   covering  the  shares,  is  not
               effective  or  is  subject  to  a  stop  order  or  is  otherwise
               suspended,  d) the Dow Jones Industrial  Average has dropped more
               than 3% within the preceding five business days, or e) the common
               stock is not then registered under the Exchange Act.

                                      F-22

<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 6 -  COMMITMENT AND CONTINGENCIES (continued)

          Investment Agreement (Continued)
          --------------------
          -    Also,  with the issuance of the shares the investor is to receive
               common  stock  purchase   warrants  to  purchase  shares  of  the
               Company's common stock. Each warrant shall be for the purchase of
               shares  in an  amount  equal to 12% of the  number  of  shares of
               common stock purchased and with an exercise price of equal to 94%
               of the average  closing bid price for the Company's  common stock
               on the exchange for ten trading days prior to the Put Notice. The
               warrant shall be  exercisable  for a five-year  period.

          -    To the extent that the Company has not  delivered  Put Notices to
               the investor on or before one year from the date of the agreement
               in  an  aggregate  dollar  amount  equal  to  the  lessor  of  a)
               $4,666,667 or b) the maximum  dollar amount with respect to which
               Put Notices could have been  delivered  prior to such date,  then
               any warrants  that have not been issued had such Put Notices been
               delivered  shall be issued.  The  exercise  price of the warrants
               shall be equal to 94% of the  average  closing  bid price for the
               Company's  common  stock on the  exchange  during the ten trading
               days prior to the one-year anniversary.

          -    To the extent that the Company has not  delivered  Put Notices to
               the  investor  on or  before  two  years  from  the  date  of the
               agreements  in an aggregate  dollar amount equal to the lessor of
               a)  $9,333,332  or b) the maximum  dollar  amount with respect to
               which Put Notices could have been  delivered  prior to such date,
               then any warrants  that have not been issued had such Put Notices
               been  delivered  shall  be  issued.  The  exercise  price  of the
               warrants  shall be equal to 94% of the average  closing bid price
               for the  Company's  common stock on the  exchange  during the ten
               trading days prior to the two-year anniversary.

          -    To the extent that the Company has not  delivered  Put Notices to
               the investor on or before the  termination of the agreement in an
               aggregate  dollar amount equal to  $14,000,000  or b) the maximum
               dollar  amount with respect to which Put Notices  could have been
               delivered  prior to such date,  then any warrants  which have not
               been  delivered to the investor  which would have been issued had
               such Put Notices  been  delivered  shall be issued.  The exercise
               price  of the  warrants  shall  be  equal  to 94% of the  average
               closing bid price for the Company's  common stock on the exchange
               during the ten trading days prior to the termination date. F-19

                                      F-23

<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 7 -  STOCKHOLDERS' EQUITY

          Preferred Stock
          ---------------
          The Company is authorized  to issue up to 250,000  shares of Preferred
          Stock with a par value of $1.00 per share.  The Preferred Stock may be
          issued from time to time in one or more series.

          In October 1995, the Board of Directors  authorized Series A Preferred
          Stock  ("Old  Series  A") for up to 250,000  shares.  The Old Series A
          holders are  entitled to receive an 8% per annum  cumulative  dividend
          and a liquidating  preference of $10 per share. The holders of the Old
          Series A shall have the right to  convert  each share of Series A into
          10 shares of the Company's common stock, for the period of issuance to
          December 31, 1997. The Old Series A shares automatically convert to 10
          shares of the Company's  common stock upon the earlier of December 31,
          1997 or the  Company's  successful  completion of an IPO for more than
          $5,000,000.

          In  January  1998,  the  Board  of  Directors  authorized  a  Series A
          Preferred  Stock ("New  Series A") for up to 250,000  shares.  The New
          Series A holders are  entitled  to receive an 8% per annum  cumulative
          dividend  payable  December 31, 1998 and a  liquidating  preference of
          $3.50 per share.  The New Series A shares  automatically  convert into
          one share of the  Company's  common stock on December 31, 1998.  Also,
          each New Series A share has a common stock purchase warrant  entitling
          the holder to purchase  two shares of the  Company's  common  stock at
          $3.00 per share on or before December 31, 1999.

          For the years ended May 31, 1996 and 1997,  the Company issued 132,510
          shares and 95,809 shares, respectively,  of Old Series A for aggregate
          proceeds of $1,791,425. As of May 31, 1999, 13,150 Old Series A shares
          have not been converted,  which have cumulative  dividends of $35,172.
          These  shares are being  converted  as the  holders  present  them for
          conversion.

          In December 1997, the Company  declared a dividend for shareholders of
          record as of December 31, 1997.  The dividend is to be paid in one New
          Series A for each 100 shares of the Company's  common stock. As of May
          31, 1999,  the Company has issued  approximately  166,474 New Series A
          shares of the total to be issued of 167,789. As of May 31, 1999 all of
          the  166,474  shares of New  Series A have been  converted  to 166,474
          shares of the Company's common stock.

          Preferred Dividends
          -------------------
          The Company has accrued and unpaid cumulative  preferred  dividends of
          $35,172 as of May 31, 1999.

                                      F-24

<PAGE>

                           NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 7 -  STOCKHOLDERS' EQUITY (continued)

          Common Stock
          ------------
          At the annual  meeting  of  stockholders  on  December  9,  1998,  the
          stockholders  approved an increase in the authorized common stock from
          49,750,000 shares to 250,000,000 shares.

          For the  year  ended  May 31,  1998,  the  Company  had the  following
          significant common stock transactions:

          -    Issued  814,378  shares  for  payment  of  services  rendered  by
               employees and unrelated  parties.  The shares have been valued at
               $1,553,170,  the fair  market  value of the shares at the date of
               issuance, in accordance with SFAS No. 123.

          -    Issued   338,302   shares  for  the   conversion  of  convertible
               debentures for $334,472 of discounted principal.

          -    Issued  2,280,199  shares  for the  conversion  of Old  Series  A
               Preferred  Stock  for  $207,444  of par  value  and  $205,244  of
               cumulative dividends.

          -    Issued  289,426  shares for the payment of liquidated  damages of
               $409,500 associated with the convertible debentures.

          -    Issued  5,000,000  shares for the  acquisition  of timberlands in
               Brazil for $3,984,375,  the fair market value of the stock at the
               date of  issuance.  The shares have been issued as escrow  shares
               per the Company's purchase contract.  The shareholder is required
               to perform certain financial  obligations prior to the release of
               the shares from escrow. Also, the Company has to complete its due
               diligence as to the proper  conveyance of the deeds for the land.
               The Company has not  recorded  the purchase as an asset until the
               Stockholder's  obligations  and the Company's due diligence  have
               been completed.

          -    Issued  2,743,698  shares as collateral for shareholder  notes of
               which  $436,088 of principal and interest and 355,000 shares have
               converted to common stock for the year ended May 31, 1998.

          -    Issued 582,575 shares for the conversion of shareholder notes and
               accrued  interest  for  $772,289,  of which  $436,088  represents
               principal  and interest for  shareholder  notes secured by common
               stock,  the fair  market  value of the  shares at the date of the
               issuance of the notes.

                                      F-25

<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 7 -  STOCKHOLDERS' EQUITY (continued)

          Common Stock (continued)
          ------------------------
          For the  year  ended  May 31,  1999,  the  Company  had the  following
          significant common stock transactions:

          -    Issued  5,500,000  shares  and an option to  purchase  70,000,000
               shares of the Company's  common stock at $0.335 in September 1998
               for a stock purchase agreement for $500,000.

          -    Issued  25,663,857  shares  for  $3,362,609  in  cash  and  stock
               subscription receivable of $1,378,850.

          -    Issued 9,194,967 shares for service rendered for a total value of
               $3,061,126.  The Shares were  valued at the fair market  value of
               the Company's common stock on the date of issuance, in accordance
               with SFAS No. 123.

          -    Issued  8,000,000  shares for the acquisition of the Chrustalynia
               Mining  Operations  for a total value of  $4,725,280.  The shares
               were  valued at the fair  market  value of the  Company's  common
               stock on the date of issuance.

          -    In 1998, the Company issued  5,000,000 shares for the acquisition
               of timberlands in Brazil for $3,984,375, the fair market value of
               the stock at the date of  issuance.  The  shares  were  issued as
               escrow shares per the Company's purchase  contract.  In 1999, the
               shareholder did not perform his requirements under the agreement,
               so the Company  obtained the shares from escrow and cancelled the
               shares.

          Warrants
          --------
          During the year ended May 31,  1998,  the  Company  had the  following
          significant issuances of warrants:

          -    Issued to a shareholder for services 200,000 warrants to purchase
               the  Company's  common stock at $2.50 per share for a period from
               date of grant to May 2000.  The Company  recognized  compensation
               expense of  $268,996,  the fair market  value of the  warrants at
               date of grant.

          -    Issued for services  350,000  warrants to purchase the  Company's
               common  stock at $4.06 per share for a period  from date of grant
               to June 2002.  The  Company  recognized  compensation  expense of
               $10,000, the fair market value of the services rendered.

          -    Issued  167,789  warrants to purchase two shares of the Company's
               common stock at $3.00 per share on or before December 31, 1999 in
               association with the New Series A shares.

                                        F-26

<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 7 -  STOCKHOLDERS' EQUITY (continued)

          Warrants (Continued)
          --------
          During the year ended May 31,  1999,  the  Company  had the  following
          significant issuances of warrants:

          -    In  connection  with the issuance of  5,500,000  shares of common
               stock,  issued  an option to  purchase  70,000,000  shares of the
               Company's common stock at $0.335, which expire in September 2005.

          -    Issued an  option to  purchase  500,000  shares of the  Company's
               common  stock at $0.15 per share,  which  expire  July 2000.  The
               option was issued in connection with a consulting  agreement that
               was valued at $177,050,  which was recorded as a prepaid  expense
               and is being amortized over the two-year period of the consulting
               agreement.  The fair value of this  options was  estimated at the
               date of grant using the Black-Scholes  option-pricing  model with
               the  following  assumptions:   dividend  yield  of  0%;  expected
               volatility  129%;  risk-free  interest  rate  of  5.74%;  and  an
               expected life of 2.0 years.

          Stock Options
          -------------
          The Company has adopted  only the  disclosure  provisions  of SFAS No.
          123. It applies Accounting Principles Bulletin ("APB") Opinion No. 25,
          "Accounting   for   Stock   Issued   to   Employees",    and   related
          interpretations  in  accounting  for its plan  and does not  recognize
          compensation expense for its stock-based  compensation plan other than
          for  restricted  stock and  options/warrants  issued to outside  third
          parties. If the Company had elected to recognize  compensation expense
          based upon the fair value at the grant date for awards  under its plan
          consistent  with  the  methodology  prescribed  by SFAS No.  123,  the
          Company's  net income and  earnings  per share would be reduced to the
          pro forma amounts  indicated below for the year ended May 31, 1998 (no
          amounts are disclosed for 1999, because no stock options were issued):

          Net Loss
             As Reported                                        $(12,918,695)
                                                                ============
             Pro forma                                          $(12,951,016)
                                                                ============
          Loss Per Share - Basic and Diluted
             As Reported                                        $(     0.86)
                                                                ============
             Pro forma                                          $(     0.87)
                                                                ============

                                      F-27


<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 7 -  STOCKHOLDERS' EQUITY (continued)

          Stock Options (Continued)
          -------------
          These  pro  forma  amounts  may  not  be   representative   of  future
          disclosures   because   they  do  not  take  into   effect  pro  forma
          compensation  expense  related to grants  made before  1995.  The fair
          value of these  options was  estimated  at the date of grant using the
          Black-Scholes option-pricing model with the following weighted average
          assumptions  for the years ended May 31, 1998:  dividend  yield of 0%;
          expected  volatility  129%;  risk-free  interest rate of 5.74%; and an
          expected life of 3.0 years.

          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. In addition, option valuation
          models require the input of highly  subjective  assumptions  including
          the expected stock price  volatility.  Because the Company's  employee
          stock options have characteristics  significantly different from those
          of  traded  options,  and  because  changes  in the  subjective  input
          assumptions  can  materially  affect  the  fair  value  estimate,   in
          management's opinion, the existing models do not necessarily provide a
          reliable  single  measure  of the  fair  value of its  employee  stock
          options.

          The following summarizes the stock option and warrant transactions:
<TABLE>
<CAPTION>
                                 Officers and      Weighted      Others       Weighted
                                  Directors        Average       Options      Average
                                 Stock Options     Exercise       and         Exercise
                                  Outstanding       Price        Warrants      Price
                                 -------------     --------     ---------     --------
   <S>                           <C>               <C>         <C>            <C>
    Balance, May 31, 1997              380,000     $   1.70       512,500     $   3.49
     Granted                            50,000     $   1.00       793,039     $   3.80
     Exercised                              -                   ( 100,000)    $   1.00
     Canceled                               -                           -
                                 -------------                  ---------
     Outstanding and Exercisable,
     Balance, May 31, 1998             430,000     $   1.70     1,205,539      $  3.90
     Granted                                -      $      -    70,500,000      $   .33
     Exercised                              -      $      -             -      $     -
     Canceled                               -      $      -      (125,000)     $  1.50
                                 -------------                 ----------

     Outstanding and Exercisable,
     Balance May 31, 1999             430,000      $   1.70    71,580,539      $   .39
                                  ============                 ==========
</TABLE>


                                      F-28

<PAGE>

                           NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 7 -  STOCKHOLDERS' EQUITY (continued)

          Stock Options (continued)
          -------------
          The weighted average  remaining  contractual lives of the Officers and
          Directors stock options is 6.3 years at May 31, 1999.

          The  following  table  summarizes  information  for other  options and
          warrants outstanding and exercisable at May 31, 1999:

                                                     Weighted       Weighted
                                                      Average       Average
               Range of           Outstanding        Remaining     Exercise
            Exercise Price        May 31, 1999         Life          Price
            --------------        ------------       ---------     ---------
            $0.15 - 0.34           70,500,000        4.9 years       $0.33
            $2.50 - 4.06              842,789        2.2 years       $3.35
            $6.75 - 8.00              237,750        2.2 years       $7.14

NOTE 8 -  INCOME TAXES

          The components of the provision for income taxes is as follows for the
          years ended May 31,:

                                                 1999              1998
                                              -----------       ----------
                   Current Tax Expense
                     U.S. Federal             $       --        $     --
                     State and Local                  --              --
                                              -----------       ----------
                       Total Current                  --              --
                   Deferred Tax Expense
                     U.S. Federal                     --              --
                     State and Local                  --              --
                                              -----------       ----------
                       Total Deferred                 --              --
                                              -----------       ----------
                   Total Tax Provision from
                   Continuing Operations      $       --         $    --
                                              ===========        =========


                                      F-29
<PAGE>


                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 8 -  INCOME TAXES (continued)

          The  reconciliation  of the  effective  income tax rate to the Federal
          statutory rate is as follows for the year ended May 31,:

                                                   1999           1998
                                                ---------      ----------
             Federal Income Tax Rate              (34.0)%         (34.0)%
             Effect of Valuation Allowance         34.0 %          34.0 %
                                                ---------      ----------

             Effective Income Tax Rate              0.0 %           0.0 %
                                                =========      ==========

          At December  31,  1999,  the Company  had net  carryforward  losses of
          approximately  $43,029,000.  A  valuation  allowance  equal to the tax
          benefit for deferred taxes has been established due to the uncertainty
          of  realizing  the  benefit  of the tax  carryforward.  The  valuation
          allowance increased by approximately  $5,100,000 and $4,400,000 during
          the years ended May 31, 1999 and 1998, respectively,

          Deferred  tax assets  and  liabilities  reflect  the net tax effect of
          temporary  differences  between  the  carrying  amount of  assets  and
          liabilities  for  financial  reporting  purposes  and amounts used for
          income tax purposes.  Significant components of the Company's deferred
          tax assets are as follows as of May 31, 1999:

               Deferred tax asset - loss
                 carryforwards                       $ 16,315,000
                    Less: Valuation Allowance          16,315,000
                                                     =============
               Net deferred tax asset                $         --
                                                     =============

          Net operating loss carryforwards expire starting in 2003.

Note 9 -  DISCONTINUED OPERATIONS

          Brazilian Timber Operations
          ---------------------------
          The Company owned and was  generating  revenue from timber  harvesting
          and production rights and facilities on up to 490,000 hectares located
          in the state of Para, Brazil  ("Brazilian  Operations").  In late 1998
          and early 1999,  the  president of the Brazilian  Operations  informed
          Company  management that without  additional  capital  provided by the
          Company, operations were in jeopardy as there were unpaid salaries and
          creditors.  Further,  if the Company did not provide  this  additional
          capital,  Brazilian  Operation  assets  were in  jeopardy  of  seizure
          through legal action by unpaid employees and creditors.  Management at
          the time deemed these operations uneconomic and elected not to provide
          additional  capital.  At approximately  the end of the Company's third
          quarter the Brazilian Operations ceased. All of the assets were seized
          by the local government and sold to extinguish  liabilities.  The loss
          from discontinued  operations  consists of the operations  through the
          third quarter of 1999. Also, the Company charged all of the assets and
          liabilities  as  of  February  28,  1999  to  loss  from  discontinued
          operations  since  the  assets  were  used  to  satisfy  all  existing
          creditors as of that date.

                                      F-30

<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

Note 9 -  DISCONTINUED OPERATIONS (Continued)

          Fishing Operations
          ------------------
          During the second  quarter of 1999,  the Company  began  acquiring and
          deriving  revenues  from fishing  operations in the Far East of Russia
          that  consisted of fishing,  processing and  distribution  of fish and
          other seafood  products.  The revenue  incurred  during the second and
          third  quarter was derived from the company  purchasing  and reselling
          seafood products. In order to enhance the fish operations, the Company
          entered into an agreement to purchase a fleet of fishing vessels and a
          fish processing and freezing  operations for approximately  $2,200,000
          in Far East of  Russian  for which  the  Company  paid an  approximate
          $1,200,000 deposit.  However, the Company was unable, due to cash flow
          requirements,  to pay the remaining $1,000,000. Since they were unable
          to pay the remaining  funds, the Company was in breach of its contract
          and lost the original deposit.  Since the current management is unable
          to  establish  the  contacts  and  distribution  channels of the prior
          management,  they have chosen not to continue  with these  operations.
          The loss  from  discontinued  operations  consists  of the  operations
          through the third quarter of 1999. The $2,097,190  loss on disposition
          of fishing operations consists primarily of a deposit for the fleet of
          fishing  vessels and a fish  processing,  and other  deposits for fish
          that was never received or sold.

                                                       For the Year Ended
                                                 -------------------------------
         Brazilian Operations:                        1999             1998
         --------------------                    -----------        ------------
         Net Sales                               $   515,951        $   381,365
                                                 ===========        ============
         Loss from discontinued operations:
            Before taxes                         $(1,311,460)       $(2,282,567)
            Provision for income taxes                     -                  -
                                                 ------------       ------------
         Net Loss                                $(1,311,460)       $(2,282,567)
                                                 ===========        ============

         Fishing Operations:
         Net Sales                               $ 3,096,120        $         -
                                                 ===========        ============
         Loss from discontinued operations:
            Before taxes                         $(  174,622)                 -
            Provision for income taxes                     -                  -
                                                 -----------        ------------
         Net Loss                                $(  174,622)       $         -
                                                 ============       ============

                                      F-31

<PAGE>

                          NEVADA MANHATTAN GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 1999 AND 1998

NOTE 10 - 1998 RESTATEMENT


          The Company has restated its  financial  statements as of May 31, 1998
          and for the year then ended to account for  impairment of its Domestic
          Mineral  Properties  ("Nevada  Properties") and its Timber  Concession
          ("Jonasa Concession") in accordance with SFAS No. 121, as described in
          Note  2.  The  effect  of the  restatement  was  decrease  to  Mineral
          Properties  of  $3,636,000,  as of May 31,  1998  and a  corresponding
          increase in the net loss for the year then ended.

NOTE 11 - SUBSEQUENT EVENTS


          Notes Payable
          -------------
          Subsequent  to May 31, 1999,  approximately  $100,000 of notes payable
          became due and are in default by the Company (see Note 4).

          Convertible Debentures
          ----------------------
          As of March 31, 2000, the Company became  delinquent and in default on
          the payment of $1,425,214 of convertible debentures.  The note holders
          have made no attempt to seize the  collatoral  or force the Company to
          make payment through the date of the report (see Note 4).

          Acquisition
          -----------
          In July 1999, the Company  entered into an agreement to purchase a 51%
          interest in the gold mining  operation of Transfor SIA ("Sellers") for
          $15,000,000.  The Company  made a down  payment of  $4,830,000,  which
          consisted of the $3,320,000  receivable that was subsequently reversed
          by current  management  (see  Independent  Aauditor's  Report) and the
          Company's  $1,100,000 stock subscription  agreement from Dalex Trading
          that was subsequently  expensed for the year ended May 31, 1999 due to
          lack of  collectibility.  The Company was in default as to the payment
          of the remaining  purchase price of $10,170,000,  and the Sellers have
          revoked the Company's 51% interest and the Company's  down payment was
          forfeited.

          Office Space
          ------------
          Subsequent to May 31, 1999,  the Company has vacated office spaces and
          has not satisfactorily negotiated a release of its liability under the
          lease.  The Company has moved into office  space which is being rented
          on a month-to-month basis.

                                      F-32

<PAGE>


                8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE

Changes in Certifying Accountants

    On July 7, 1998, the Company decided to change accountants to a firm located
closer to the Company's  executive  offices,  and requested the  resignation  of
Jackson & Rhodes P.C., the Company's independent auditors.

    In connection with its audits of the Company's financial  statements for the
Company's most recent fiscal years,  there were no disagreements  with Jackson &
Rhodes P.C. on any matters of  accounting  principles  or  practices,  financial
statement disclosure,  or auditing scope or procedures which, if not resolved to
the  satisfaction  of Jackson & Rhodes P.C.,  would have caused Jackson & Rhodes
P.C. to make  reference to the matter in their report.  Jackson & Rhodes' report
on the Company's financial statements for each period for which Jackson & Rhodes
performed an audit of the Company's financial statements contained no adverse or
disclaimer of opinion and was not modified or qualified as to uncertainty, audit
scope, or accounting principles. The decision to change accountants was approved
by the board of directors of the Company.

    On July 7, 1998, the board of directors appointed Merdinger, Fruchter, Rosen
& Corso, P.C. to serve as the Company's independent auditors for the fiscal year
ended May 31, 1998. Merdinger, Fruchter, Rosen & Corso, P.C. have also served as
the Company's independent auditors for the fiscal year ended May 31, 1999.


                                    PART III

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

Executive Officers and Directors

    The  Company's  Bylaws  authorize  the creation of the offices of President,
Treasurer (Chief Financial Officer), one or more Vice Presidents, Secretary, and
one or more  Assistant  Secretaries  and  Assistant  Treasurers  as the Board of
Directors  deems  proper.  The  Bylaws  also  provide  for not less  than  three
directors  and not more than seven  directors  who shall hold  office  until the
following  annual meeting of the  shareholders.  The Bylaws further provide that
the number of directors may be increased by the affirmative vote of the Board of
Directors or a majority in interest of the  shareholders at an annual or special
meeting. There are presently five directors and two vacancies on the Board.

    The executive officers and directors of the Company are as follows:


                                       21
<PAGE>


                                    Principal Occupation and        Director
  Name                       Age    Offices with the Company          Since
  -----------------          ---    -------------------------       -----------
  John  Deniken              61     Chief Executive Officer;        August 1999
                                    Chairman

  Dr. Joe C. Rude III        54     Diagnostic radiologist with     1995
                                    Quantum Radiology; Director

  William E. Wilson          83     Retired; Director               April 1998

  Yuri Belman                43     Engineer and consultant;        June 1999
                                    Director

  Dr. Lev N. Kuznetsov       63     Head of Mining and Metallurgy,  July 1999
                                    Ecologia Holdings, Moscow;
                                    Director


JOHN  DENIKEN  has been a director  and Chief  Executive  Officer of the Company
since  August  20,  1999.  For  the  last  five  years,  Mr.  Deniken  has  been
self-employed  as a practicing  Certified  Public  Accountant in Newport  Beach,
California.  He was  chief  financial  officer  for  International  Science  and
Technology  Center in Moscow,  Russia from July 1995 to July 1996. He has been a
consultant  for Ernst & Young,  an accounting  firm,  for several of their major
clients with operations in Moscow. Mr. Deniken is fluent in Russian. Mr. Deniken
received his Bachelor of Science, Accounting from the University of Pennsylvania
and his CPA from University of Illinois.

YURI BELMAN has been a director of the Company since June 1999. Mr. Belman,  who
became  a  permanent  resident  of the  U.S.  in 1991,  has  extensive  business
experience in the FSU and Commonwealth of Independent States ("CIS") and U.S. in
management,  as well as an engineer.  Prior to becoming a director, he served as
Executive  Assistant  to the CEO.  Mr.  Belman is bilingual  and  bicultural  in
Russian/English.

DR. LEV N.  KUZNETSOV  has been a director of the Company  since July 20,  1999.
From 1993 to the present he has been Head of mining and metallurgy department of
Ecologia  Holdings  Company,  a scientific and technology  center (Moscow).  Dr.
Kuznetsov  is the  author of  numerous  publications  in the field of mining and
metallurgy.

DR. JOE C. RUDE III has been a Director since 1995.  From 1977 to 1995, he was a
diagnostic  radiologist  associated  with Cobb  Radiology  Associates,  Austell,
Georgia,  which merged with Quantum  Radiology in 1995. Since 1995, Dr. Rude has
been a diagnostic radiologist at Quantum Radiology.  Dr. Rude also is a co-owner
of the Ambulatory Care Center, a medical care company.


                                       22
<PAGE>

WILLIAM E. WILSON was elected a director in April 1998. Mr. Wilson purchased his
own  insurance  agency in 1954,  which  was sold in 1985;  however,  Mr.  Wilson
remained an associate agent until his retirement in 1996.


      Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities  Exchange Act of 1934, as amended,  requires the
Company's directors and executive officers, and persons who own more than 10% of
the Company's  Common Stock to file with the Securities and Exchange  Commission
reports of ownership and of changes in beneficial  ownership of Common Stock and
other equity securities of the Company.  For the fiscal year ended May 31, 1999,
all reports were timely filed.


                           10. EXECUTIVE COMPENSATION

Executive Compensation

    The table set forth below identifies the compensation  paid to the Company's
executive  officers for the last three completed fiscal years (i.e. fiscal years
ending May 31, 1997; May 31, 1998; and May 31, 1999):

<TABLE>

                           SUMMARY COMPENSATION TABLE
<CAPTION>

                                                                                                  Long Term Compensation
                                                                                            Awards               Payouts
                                        Annual Compensation                        Restricted   Securities                 All
       Name and                                                      Other            Stock     Underlying      LTIP      Other
       Principal                                                    Annual          Award(s)     Optional/     Payouts  Compensation
       Position             Year       Salary($)   Bonus($)   Compensation($)(4)       ($)      SARs(#)(5)        ($)        ($)
---------------------    ----------  -----------------------  ------------------  ----------  ------------    --------  -----------
<S>                         <C>       <C>          <C>        <C>                   <C>         <C>            <C>      <C>

Christopher D. Michaels     1999      $224,400        --            $1,500               --           --          --             --
  President,  Chief         1998      $156,000        --            $5,408               --       10,000          --             --
  Executive Officer and     1997      $251,299        --            $6,264               --       10,000          --             --
  Chairman of the Board
  of Directors (1)

Jeffrey S. Kramer,          1999      $134,950        --            $1,500               --           --          --             --
Senior Vice President,      1998      $156,000        --            $6,056               --       10,000          --             --
Chief Financial Officer     1997      $224,397        --            $8,080               --       10,000          --             --
and Secretary-
Treasurer (2)

Richard Izumi, Chief        1999              0       --                 0               --           --          --             --
Executive Officer and
Chairman of the Board (3)
</TABLE>


                                       23
<PAGE>

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

(1)  Mr. Michaels  resigned as Chief Executive Officer and President in February
     1999 and as  Chairman  of the Board in April  1999.  He was  reappointed  a
     director of the Company in August 1999 and served until his  resignation in
     February 2000.

(2)  Mr.  Kramer was  replaced as the Chief  Financial  and  Operating  Officer,
     Secretary and Treasurer in September  1998, but remained an employee of the
     Company. Mr. Kramer resigned as a director in May 1999.

(3)  Mr. Izumi served as Chief  Executive  Officer and a director  from February
     1999 until his resignation in August, 1999.

(4)  The Company paid the annual cost of health  insurance for Messrs.  Michaels
     and Kramer and their  respective  dependents  until the Company  terminated
     this benefit for employees in January 1999.

(5)  In lieu of any other  compensation  the Company  annually grants options to
     purchase  10,000  shares of Common  Stock at a purchase  price of $1.00 per
     share to all  members  of the  Board of  Directors  for each  full  year of
     service  as an  active  member  of  the  Board.  In  general,  options  are
     exercisable  in full  upon  issuance  and may not be  exercised  after  the
     expiration of ten years from the date of the grant and are  nontransferable
     other  than by  inheritance.  (In 1996,  the  options  granted  to  Messrs.
     Michaels and Kramer were extended to be exercisable  through May 31, 2006.)
     No options were granted in the last fiscal  year.  As of May 31, 1999,  the
     Company has granted options  aggregating 120,000 shares to Mr. Michaels and
     90,000 shares to Mr. Kramer.

     Messrs.  Michaels and Kramer entered into  employment  agreements  with the
Company  as of  January  1995  employing  them  as  President  and  Senior  Vice
President,  respectively,  until June 2001, subject to their rights to terminate
their  agreements on 90 days notice.  Their annual  salaries were to be equal to
their  salaries at the time of  execution of the  agreements,  subject to annual
increases (or in limited cases decreases) at the Board of Directors' discretion.
The agreements  also provide for bonuses of from 25% (if the Company's cash flow
is at least  $1,000,000) to 75% (if the Company's cash flow exceeds  $3,000,000)
of their base  salaries.  If within 12 months of a change in control (as defined
in the  agreements)  their  employment is terminated  other than for cause or if
they   resign  and  their   compensation,   status,   title   and/or   reporting
responsibilities  were  diminished  after the  change in  control,  they will be
entitled to a payment equal to 36 times their highest  monthly salary during the
employment term. In addition, upon a change of control which effects a change in
incumbent  management they will have the right to purchase a number of shares of
Common  Stock  at a  price  of  $.05  per  share  equal  to 5% of the  Company's
outstanding  Common Stock prior to giving  effect to the exercise of the option,
and the Company will pay them an amount equal to their taxes in connection  with
such  exercise.  Substantially  all  of  the  Company's  obligations  under  the
agreements  continue if there is a  termination  of the employees as a result of
disability. In May, 1999 Jeffrey S. Kramer entered into a Settlement and Release
Agreement with the Company  wherein he waived his rights to purchase stock under
his  employment  agreement  (see Item 12 - "Certain  Relationships  and  Related
Transactions).


                                       24
<PAGE>

Options and Stock Appreciation Rights

                     OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

     No  Options/SAR  Grants  were  issued in the last fiscal year to any person
named in the  Summary  Compensation  Table  above  or to any  other  officer  or
director of the Company.

     The following  table sets forth certain  information  with regard to option
exercises  during  fiscal 1999 by each of the  executive  officers  named in the
"Summary Compensation Table" above:

<TABLE>

            AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND
                            FY-END OPTION/SAR VALUES
<CAPTION>

                                               Number Of Unexercised    Value Of Unexercised
                                               Securities Underlying        In-The-Money
                          Shares                  Options/SARS              Option/SARs
                         Acquired                at May 31, 1998            At May 31, 1999
                       On Exercise    Value       Exercisable/               Exercisable/
       Name                (#)      Realized      Unexercisable             Unexercisable
       ----            -----------  --------   ---------------------    ---------------------
<S>                    <C>          <C>        <C>                      <C>

Christopher Michaels        0            0            120,000                    --
Jeffrey S. Kramer           0            0             90,000                    --
</TABLE>


Compensation of Directors

     The  Company  has  granted  stock  options  to all  members of its board of
directors  pursuant to Stock Option Agreements  executed at various times. Under
the  terms of these  agreements,  each  director  has been  granted  options  to
purchase  10,000  shares of Common Stock per full year of service.  The exercise
price for such options is $1.00 per share. The years in which stock options were
initially  granted to each respective  board member are as follows:  Christopher
Michaels,  1986;  Jeffrey  Kramer,  1989; and Joe Rude' III.. In 1996, the Stock
Option Agreements relating to Messrs.  Michaels and Kramer were extended so that
they may be exercised  through May 31, 2006.  The remaining may not be exercised
after  the  expiration  of ten  (10)  years  from  the  date  of  grant  and are
nontransferable other than by inheritance.

     No options were  granted to any  directors in the fiscal year ended May 31,
1999



                                       25
<PAGE>

       11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


         The following  table sets forth certain  information  as of January 25,
2000  regarding the record and  beneficial  ownership of the Common Stock by (i)
any individual or group (as that term is defined in the federal securities laws)
of  affiliated  individuals  or  entities  who is known by the Company to be the
beneficial  owner of more than five percent of the outstanding  shares of Common
Stock;  (ii) each executive  officer and Director of the Company;  and (iii) the
executive officers and Directors of the Company as a group.  Except as otherwise
indicated,  the Company believes that the beneficial owners listed below,  based
upon information  provided by such owners, have sole voting and investment power
with respect to such shares.

                                                  AMOUNT OF
NAME AND ADDRESS                    TITLE OF      BENEFICIAL         PERCENT OF
OF BENEFICIAL OWNER                  CLASS        OWNERSHIP           CLASS (1)
-------------------               ------------   -----------         ----------

TiNV1, Inc.(2)                    Common Stock     5,500,000 (2)         7.6%
701 Ocean Avenue, Ste 108
Santa Monica, CA  90402

Alikhan Gakaev                    Common Stock     7,808,795            10.7%
Lomonosovsky 14
Moscow, Russia

LLC NPK Edikt                     Common Stock     8,000,000            11.0%
Mikhailova str. 39,1
Moscow, Russia

Dalex Trading Limited             Common Stock     6,000,000             8.2%
21 Demosthenis Severis Ave
Anna Court 2nd Floor Suite
P.O. Box 8978
CY 2084 Nicosia, Cyprus

John Deniken                      Common Stock            --               --
1512 Michelson, Suite 150
Irvine, CA  92612

Joe C. Rude III, M.D.             Common Stock     3,409,735 (3)         4.7%
3065 River N. Pkwy
Atlanta, Georgia 30328

William E. Wilson                 Common Stock       143,304 (4)          *
1819 E. Brainard Street
Pensacola, FL  32503


                                       26
<PAGE>

                                                  AMOUNT OF
NAME AND ADDRESS                    TITLE OF      BENEFICIAL         PERCENT OF
OF BENEFICIAL OWNER                  CLASS        OWNERSHIP           CLASS (1)
-------------------               ------------   -----------         ----------
Yuri Belman                       Common Stock            --              --
2151 Michelson, Suite 150
Irvine, CA  92612

Lev N. Kuznetsov                  Common Stock            --              --
2151 Michelson, Suite 150
Irvine, CA  92612

Christopher D. Michaels           Common Stock     1,049,500  (5)        1.4%
6188 Fleury Lane
Woodland Hills, CA  91367

Jeffrey S. Kramer                 Common Stock       800,000  (6)        1.1%
2151 Michelson, Suite 150
Irvine, CA  92612


All Officers and Directors        Common Stock     3,553,039  (7)        4.9%
as a Group
(five persons)

-----
* Less than 1%.

(1)  Based on  72,730,376  shares of Common Stock issued and  outstanding  as of
     January  25,  2000.  Does not  include  16,000,000  shares  to be issued in
     connection  with the conversion of a Note Payable in November,  1999 by the
     major   shareholder  of  an  unaffiliated   company  (see  Note  3  to  the
     Consolidated  Financial  Statements).  Does not include 6,569,104 shares of
     Common Stock issuable upon the alleged conversion of convertible debentures
     by parties to a lawsuit as described under "Legal Proceedings". The Company
     does not believe that it is currently  obligated to issue such Common Stock
     and, accordingly, does not consider such stock to be outstanding as of this
     date.

(2)  On  September  21, 1998 TiNV1,  Inc.  ("TiNV1"),  newly  formed  California
     corporation,  filed with the Securities and Exchange  Commission a Schedule
     13D (the  "Schedule  13D")  regarding  5,500,000  shares of Common Stock it
     purchased  from the Company.  The Schedule 13D  indicated  that TiNV1 was a
     wholly-owned subsidiary of SYMIC, Inc. ("SYMIC"), a California corporation,
     which  in turn  was a  wholly-owned  subsidiary  of RDI,  Inc.  ("RDI"),  a
     California corporation.  (The Schedule 13D further indicated that SYMIC had
     entered into  subscription  agreements  to issue 5% of its stock to each of
     the following  persons:  Tetsuo  Kitagawa,  elected a Director in December,
     1998,  but resigned in August 1999;  Hironao  Mutoh,  elected a Director in
     December,  1998 but resigned in January  1999,  and Richard Izumi elected a
     Director in April,  1999 but  resigned in August  1999.  During  September,
     1998,  Messrs.  Kitagawa,  Mutoh  and Izumi  had  become  5%  shareholders,
     respectively,  upon  providing  consideration  to SYMIC.) The  Schedule 13D
     stated  that RDI was in turn owned and  controlled  by Mr.  Movdy  Gakayev,
     whose address is 701 Ocean  Avenue,  Suite 108,  Santa  Monica,  California
     90402,  and that  Mr.  Kitagawa  was sole  Director  and  President,  Chief


                                       27
<PAGE>

     Financial  Officer and Secretary of TiNV1,  SYMIC and RDI. The Schedule 13D
     indicated  that the  source of the  funds  used to  purchase  the stock was
     capital  contributions  to RDI from  personal  funds of Mr. Movdy  Gakayev,
     TiNV1's  ultimate owner, and in turn as capital  contributions  from RDI to
     SYMIC to TiNV1.

(3)  Excludes  up to  70,000,000  shares  of  Common  Stock  which may be issued
     pursuant to an option  granted to TiNV1.  The 70,000,000  shares,  together
     with  the  5,500,000  shares  presently  held  by  TiNV1,  would  represent
     approximately 53% of the Company's presently  outstanding Common Stock on a
     pro forma basis as of January 25, 2000. [agreement to cancel the options]

(4)  Includes  shares  owned by Dr.  Carolyn  Rude  and  Quantum  Radiology  (an
     affiliate of Dr. Rude),  as well as 30,000 shares of Common Stock  issuable
     upon  exercise of stock  options which may be exercised in whole or in part
     within 60 days of the date of this Annual Report.

(5)  Includes  120,000  shares of Common Stock  issuable  upon exercise of stock
     options  which may be  exercised  in whole or in part within 60 days of the
     date of this Annual Report.

     Mr. Michaels  resigned as Chief Executive Officer and President in February
     1999 and as  Chairman  of the Board in April  1999.  He was  reappointed  a
     director of the Company in August 1999 and served until his  resignation in
     February 2000.

(6)  Includes  90,000  shares of Common Stock  issuable  upon  exercise of stock
     options  which may be  exercised  in whole or in part within 60 days of the
     date of this Annual Report.

     Mr. Kramer was replaced as Chief Financial and Operating Officer, Secretary
     and Treasurer in September  1998. Mr. Kramer  resigned as a director in May
     1999.

(7)  Includes  30,000  shares of Common Stock  issuable  upon  exercise of stock
     options held by all current  officers and Directors as a group which may be
     exercised  in whole or in part  within  60 days of the date of this  Annual
     Report.


                                       28
<PAGE>

               12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    During the fiscal year 1998, the Company  entered into certain  transactions
with  Jeffrey  S.  Kramer,  a  former  officer  and  Director  of  the  Company.
Specifically,  as of August 14,  1998,  Mr.  Kramer  had  loaned the  Company an
aggregate of $718,000  which was  evidenced by  promissory  notes payable in his
name (the "Notes").  The Notes were: payable in September 1998 and bear interest
at the rate of 8.0%. On October 23, 1998,  the Company issued Mr. Kramer 583,200
shares of restricted common stock in partial  settlement of the note. On May 25,
1999 Mr. Kramer entered into a Settlement and Release Agreement. Pursuant to the
terms of the  agreement,  the Company  issued an  additional  700,000  shares of
restricted  common stock to Kramer,  representing  an average price of $0.45 per
share,  reducing the amount owed to Mr. Kramer by the Company from $718,000 plus
accrued  interest to $141.604.  Mr.  Kramer was issued a Promissory  Note in the
amount of  $141,604,  due on November  26,  1999,  which  remains  unpaid by the
Company.

    On October  20,  1998,  Christopher  Michaels  purchased  929,500  shares of
restricted  common stock from the Company at a purchase price of $0.30 per share
through the issuance of a promissory  note in the amount of $278,850,  due on or
before  October  20,  2003 at an  interest  rate of prime  plus 1%.  The note is
collateralized by the Common Stock.

    During the fiscal year ended May 31, 1999, Dr. Rude purchased 180,000 shares
of Common  Stock from the Company for  $90,000.  As of May 31, 1999 Dr. Rude has
loans  outstanding  to the  Company of $85,000 at the  interest  rate of 10% per
annum.




                                       29
<PAGE>


                      13. EXHIBITS AND REPORTS ON FORM 8-K

EXHIBIT
 NUMBER        DESCRIPTION
--------  -----------------------------------------------------------

3.(i)     Articles of Incorporation of Epic Enterprises, Ltd., Filed June 10,
          1985*

3.(ii)    Certificate   of  Amendment  to  Articles  of   Incorporation   of
          Epic Enterprises, Ltd., Filed September 11, 1987*

3.(iii)   Certificate  of  Amendment  to  Articles  of  Incorporation  of
          Nevada Manhattan Mining Incorporated Filed October 26, 1987*

3.(iv)    Certificate of Amendment of Articles of Incorporation of Nevada
          Manhattan Mining Incorporated Filed August 31, 1995*

3.(v)     Certificate of  Determination of Preferences of Series A Preferred
          Stock of Nevada Manhattan Mining Incorporated Filed October 25, 1995*

3.(vi)    Bylaws of Epic Enterprises, Ltd.*

3.(ix)    Amended  Certificate  of  Determination  of  Preferences  of Series A
          Preferred Stock of Nevada Manhattan Mining Inc. Filed January 14,
          1998+

3.(x)     Certificate of Amendment of Articles of Incorporation of Terra Natural
          Resources Corporation Filed May 12, 1998+

3.(xi)    Amended  Bylaws of Terra  Natural Resources Corporation  as of August
          31, 1998#

3.(xii)   Restated Amended Bylaws of Terra Natural Resources Corporation as of
          Nov. 30, 1998##

3.(xiii)  Certificate  of  Amendment  of  Articles  of  Incorporation  of  Terra
          Natural Resources Corp. filed December 11, 1998##

4.(iii)   Stock Options Issued to Directors+

 4.(iv)   Subscription Agreement dated April 14, 1997 with Silenus Limited**

4.(v)      Warrant to  Purchase  Common  Stock**

4.(vi)    Deed of Trust in favor of Silenus Limited**

4.(vii)   Form of Debenture**


                                       30
<PAGE>

EXHIBIT
 NUMBER        DESCRIPTION
--------  -----------------------------------------------------------
4.(viii)  Subscription  Agreement dated July 15, 1997****

4.(ix)    Warrants to Purchase Common  Stock****

4.(x)     Form of Debenture****

10.(i)    Mining Agreement Dated April 4, 1987*

10.(ii)   Amendment to Mining Agreement Dated December 9, 1987*

10.(iii)  Manhattan Mining Property Agreement Dated March 2, 1989*

10.(iv)   Corporation Quitclaim Deed Filed March 9, 1989*

10.(v)    Deed of Trust and Assignment of Rents Recorded March 9, 1989*

10.(vi)   Joint Venture Agreement Dated June 1993*

10.(vii)  Letter Agreement Dated August 10, 1995*

10.(viii) Amendment to Joint Venture Agreement Dated October 20, 1995*

10.(ix)   Contract  Between Nevada  Manhattan  Mining, Inc. and Harrison Western
          Construction  Corp.*

10.(xi)   Employment  Agreement  Dated January 1, 1995 with Christopher D.
          Michaels*

10.(xii)  Employment  Agreement  Dated January 1, 1995 with Jeffrey Kramer*

10 (xxxvii)  Subscription  Agreement with TiNV1, Inc. dated as of August 28,
             1998++

10 (xxxix) Option Agreement with TiNV1, Inc. dated as of August 28, 1998++

10 (xl)   Letter  Agreement with TiNV1,  Inc. dated as of August 28,  1998++

10 (xliv) Letter  Agreement  for Asset  Acquisition  by and between Nevada
          Manhattan Group, Inc. and LLC NPK Edikt, re Chrustalnaya Mining,
          dated December 23, 1998##

10 (xlv)  General Agreement between Nevada Manhattan Group, Inc. and OAO
          "Sibnefteprovod" dated February 10, 1999+

10 (xlvi) Letter of Understanding between Phystechmed and the Company dated
          November 30, 1998+

                                       31
<PAGE>

EXHIBIT
 NUMBER        DESCRIPTION
--------  -----------------------------------------------------------
10 (xlvii)  Joint Venture/Representation Agreement between Nevada Manhattan
            Group, Inc. and Bauman Moscow State Technical University as of
            April 1, 1999.+

10 (xlviii) Joint Venture/Representation Agreement between Nevada Manhattan
            Group, Inc. and Novosibirsk State University as of March 6, 1999+

10 (xlix)   Jeffrey Kramer Settlement and Release Agreement dated May 25, 1999

27          Financial Data Schedule


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

+    Filed with Registration  Statement on Form 10-SB, as amended  (Registration
     No. 0-25117

*    Filed  with  Registration  Statement  on Form  SB-2  on  December  6,  1996
     (Registration No. 333-17423).

**   Filed  with   Registration   Statement   on  Form  SB-2  on  May  28,  1997
     (Registration No. 333-27923).

**** Filed  with   Registration   Statement  on  Form  SB-2  on  July  31,  1997
     (Registration No. 333-27923).

++   Filed with Form 10-KSB for the fiscal year ended May 31, 1998
#    Filed with Form 10-QSB for the quarter ended August 28, 1998
##   Filed with Form 10-QSB for the quarter ended November 30, 1998




Reports on Form 8-K
-------------------

     No 8-K  Reports  were filed in the fourth  quarter of fiscal year ended May
31, 1999.


                                       32
<PAGE>




                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                 NEVADA MANHATTAN GROUP, INCORPORATED


                                 /s/ John Deniken
Date:    April 7, 2000      By: --------------------------------------
                                 Chairman of the Board,
                                 Chief Executive Officer


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


  /s/ JOE RUDE III, M.D.                      Director       April 7, 2000
-----------------------------------------
    Joe C. Rude III, M.D.


  /s/ WILLIAM E. WILSON                       Director       April 7, 2000
-----------------------------------------
    William E. Wilson

  /s/ YURI BELMAN                             Director       April 7, 2000
----------------------------------------
   Yuri Belman



                                       33