SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                   Form 10-KSB

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 1998.

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 for the transition period from to

                           Commission File No. 0-17874

                                  XPLORER, S.A.
           (Name of small business issuer as specified in its charter)

                                     Nevada
         (State or other jurisdiction of incorporation or organization)

                                   88-0199674
                      (I.R.S. Employer Identification No.)

                            2929 S. Maryland Parkway
                                Las Vegas, Nevada
                    (Address of principal executive offices)

                                      89109
                                   (Zip Code)

         Issuer's telephone number, including area code: (702) 699-5400

Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
                                                            $.001 par value.

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [ ]

Revenues  for the fiscal  year ended  December  31,  1998  totaled  $-0-.  As of
December  31,  1998,  the  aggregate  market  value of the voting  stock held by
non-affiliates  of the registrant (based upon the average of the closing bid and
asked prices on such date) was approximately $603,000.

As of September 30, 1999, the registrant had  outstanding  20,086,266  shares of
Common Stock.

Transitional Small Business Disclosure Format:  [ X ] Yes  [   ] No


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                                TABLE OF CONTENTS

                                     PART I

Item 1.   Business.............................................................3

Item 2.   Properties..........................................................11

Item 3.   Legal Proceedings...................................................12

Item 4.   Submission of Matters to a Vote of Security Holders.................12

                                     PART II

Item 5.   Market for Company's Common Equity and Related Stockholder matters..12

Item 6.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations...........................................14

Item 7.   Financial Statements................................................14

Item 8.   Change in and Disagreements With Accountants........................14

                                    PART III

Item 9.   Directors and Executive Officers....................................15

Item 10.  Executive Compensation..............................................16

Item 11.  Security Ownership of Certain Beneficial Owners and Management......18

Item 12.  Certain Relationships and Related Transactions......................19

                                     PART IV

Item 13.  Exhibits and Reports on Form 8-K....................................20

          Index to Consolidated Financial Statements and Schedules...........F-1

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                                     PART I

ITEM 1.   DESCRIPTION OF BUSINESS

Introduction

XPLORER,   S.A.   ("XPLORER"  or  the  "Company")  was   incorporated   as  L.A.
Entertainment,  Inc.  under  the laws of the  State of  Nevada  on May 2,  1984.
Effective   December  18,  1992,   the  Company   changed  its  name  from  L.A.
Entertainment,  Inc. to Gerant Industries,  Inc.  (Gerant).  On March 1, 1994,
Gerant filed a petition for reorganization under Chapter 11 of the United States
Bankruptcy Code in the United States  Bankruptcy  Court for the Central District
of California. Gerant operated as a debtor-in-possession until the United States
Bankruptcy  Court  entered  an  order  confirming  its  Third  Amended  Plan  of
Reorganization  (the  "Plan") on July 24,  1996,  and the Plan became  effective
August 5, 1996.  In  accordance  with the Plan,  Gerant  filed with the State of
Nevada Restated  Articles of Incorporation in August 1996 changing its name from
Gerant to XPLORER, S.A..

Included  in the Plan was the  valuation  utilized  by  Atlantic  Pacific  Trust
("APT") for its gold ore reserves.  These values are based upon a  comprehensive
geological  reserve study  conducted by Christopher L. Pratt,  Geologist,  which
said report was updated December 31, 1996.

     Pursuant  to the Plan,  certain  holders  of Units of  Beneficial  Interest
(UBI's) in the Atlantic  Pacific Trust, LLC (APT LLC), the successor in interest
in the corporate  reorganization  of APT,  exchanged  417,240 UBI's on August 5,
1996, the effective date of the Plan, for 1,043,000 shares of preferred stock of
XPLORER.  Prior to August 5, 1996 APT had  provided  the  necessary  capital and
arranged  loans for the  successful  completion of the Plan. The managers of APT
LLC and APT are also  officers and directors of the Company.  See  "Conflicts of
Interest."

     Additionally,  APT LLC holders of approximately $29,278,000 principal value
of XPLORER promissory notes issued pursuant to the Plan (Debtor Notes) converted
the Debtor Notes into  approximately  14,639,750 shares of XPLORER common stock.
Furthermore,  holders of  securities  in the Company  during the pendency of the
Gerant bankruptcy proceedings shared pro rata in a distribution of 400,000 Units
consisting  of one (1)  share of  XPLORER's  common  stock  and one (1)  Class A
Warrant entitling the holder to purchase one (1) share of XPLORER's Common Stock
one (1) year from the August 5, 1996  effective  date of the Plan, at 70% of the
asking price of the Company shares. Warrants need to be exercised within 30 days
of  August 5,  1997.  Subsequently  the Class A  Warrants  were  extended  until
February  1998,  at which time all  Warrants  were either  exercised or expired.
Pursuant to Section 1143 of the United States Bankruptcy Code,  interest holders
needed to  surrender  their  certificates  representing  the  securities  of the
Company within one (1) year of the Confirmation  Date of the Plan as a condition
to receiving  the  securities  pursuant to the Plan.  Certain  other  classes of
creditors  were  given the right to elect to receive  shares of common  stock of
XPLORER in lieu of cash in satisfaction of their claims.

     In November, 1996, the Company acquired an additional 189,960 UBI's of APT
in exchange for 237,550 shares of its preferred  stock. In  September,1997,  the
Company  acquired an  additional  20,000  UBIs of APT in  exchange  for 250,000
shares of its common stock. Currently, XPLORER owns 59.6% of APT LLC.

     The  Company's  principal  executive  offices  are  located  at 2929  South
Maryland  Parkway,  Las  Vegas,  Nevada,  89109,  and its  telephone  number  is
(702)699-5400.

     CAUTIONARY  "SAFE  HARBOR"   STATEMENT  UNDER  THE  UNITED  STATES  PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.

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     With the exception of  historical  matters,  the matters  discussed in this
report are forward- looking statements that involve risks and uncertainties that
could cause  actual  results to differ  materially  from  targeted or  projected
results.  Such  forward-looking  statements include statements regarding targets
for gold  production,  cash operating  costs and certain  significant  expenses,
schedules for completion of detailed feasibility studies and initial feasibility
studies, potential increases in reserves and production, the timing and scope of
future drilling and other exploration activities, expectations regarding receipt
of permits and commencement of mining or production,  anticipated recovery rates
and  potential  acquisitions  or increases in property  interests.  Factors that
could cause actual results to differ materially include,  among others,  changes
in  gold  and   other   mineral   prices,   unanticipated   grade,   geological,
metallurgical, processing, access, transportation of supplies or other problems,
results  of  current  exploration  activities,  results  of  pending  and future
feasibility  studies,  changes in project  parameters  as plans  continue  to be
refined,  political,  economic  and  operational  risks of  foreign  operations,
availability  of materials and equipment,  the timing of receipt of governmental
permits,  force majeure events, the failure of plant,  equipment or processes to
operate in accordance with  specifications  or  expectations,  accidents,  labor
relations,  delays in start-up dates, environmental costs and risks, the outcome
of acquisition  negotiations and general domestic and international economic and
political  conditions,  as well as  other  factors  described  herein  or in the
Company's  filings with the U.S.  Securities  and Exchange  Commission.  Many of
these  factors are beyond the Company's  ability to predict or control.  Readers
are cautioned not to put undue reliance on forward-looking statements. See "Risk
Factors" for items which could affect forward-looking statements.

General Business

Glossary

     The  following  terms are described to aid in  understanding  the Company's
Form 10-KSB.

     CORE DRILLING (OR DRILL HOLE).  Drilling with a hollow  diamond-studded bit
to cut out a solid  rock core.  A column of rock is  extracted  from  inside the
drill rod for geological examination and assay.

     GRADE. The metal content of ore. With precious  metals,  grade is expressed
as troy ounces per ton of ore.

KILO (KILOGRAM).  A measure of weight equal to 32.15 troy ounces.

     ORE BODY. A mineral  deposit  that can be mined at a profit under  existing
economic conditions.

     ORE  RESERVES.  The  tonnage  and  grade  of an  economically  and  legally
extractable ore body.

     OUNCE.  Throughout this report, the term "ounce" is used as an abbreviation
for the troy ounce measure of weight.  The troy ounce has been used  exclusively
as a previous metals measurement, probably since the 16th Century.

     PROVEN ORE  RESERVES.  "Proven ore" or "measured  ore" means that  material
which  tonnage is computed from  dimensions  revealed in outcrops or trenches or
underground workings or drill holes and for which the grade is computed from the
results of adequate sampling,  and for which sites for inspection,  sampling and
measurement are so spaced and the geological  character so well defined that the
size,  shape and mineral  content are  established,  and for which the  computed
tonnage and grade are judged to be accurate within limits which shall be stated.



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     PROBABLE  ORE  RESERVES.  "Probable  ore" or  "indicated  ore"  means  that
material  for  which  tonnage  and  grade  are  computed  partly  from  specific
measurements,  samples or  production  data,  and partly from  projection  for a
reasonable  distance on geological  evidence,  and for which the sites available
for   inspection,   measurement   and  sampling  are  too  widely  or  otherwise
inappropriately  spaced to outline the material  completely  or to establish its
grade throughout.

     TON. The short ton is used in this report.  It is a unit of weight equal to
2,000 pounds, or 907.2 kilograms.

     The Company is a  development  stage  company.  Through its  majority-owned
subsidiary,  APT,  the Company is engaged in the  acquisition,  exploration  and
development,  which will lead to operation and production of mineral properties.
Except  where  otherwise  noted,  the  "Company"   includes  its  majority-owned
subsidiary, APT.

     As a result  of a series  of  transactions,  between  1993  and  1995,  APT
acquired eight unpatented mineral claims located on Piute Mountain, Kern County,
California. This group of claims is commonly known as the Evening Star Mine. APT
also leases  approximately  95.45 acres of adjacent  property  containing  three
patented mining claims and the Weldon Research Center.  See "Item 2. Description
of Property."

     APT does, and continues to, finance its  exploration and development of the
Evening  Star Mine through the sale and  issuance of its  securities  in private
transactions  and through the sale in Germany  and Austria of  Convertible  Gold
Bonds, 9% Investment  Certificates and gold certificates.  See "Item 1. Business
Financing."

     To date, no gold or other precious metals have been mined commercially from
the Evening Star Mine.  There has been extensive  development  work conducted in
the past, including underground and surface sampling.  The Evening Star Mine has
a nine-foot wide and ten-foot tall tunnel.  This tunnel cross cuts several small
veins and ore bodies.  The tunnel system is  approximately  1,650 feet in length
and is  approximately  380 feet below the surface.  The Evening Star Mine tunnel
provides  access to the area where the ore has been  blocked  out  ("Proven  Ore
Reserves").  Proven Ore Reserves are determined  from exposure in  outcroppings,
cuts, pits, shafts,  mine workings,  drill holes or otherwise where measurements
are so closely  spaced that the  computed  tonnage and grades of ore will have a
high degree of accuracy.  Underground tunnel samples were taken every five feet.
The results of the  sampling  indicated  that the mine  contained  approximately
435,000 ounces of gold. The Company has  downgraded the  classification  of this
ore from Proven to Probable Ore Reserves.

     Upon the completion of the Pilot Plant,  feasibility studies and additional
drilling and sampling,  the Company will then upgrade the reserves from Probable
to  Proven  Ore  Reserves.  The 1996 ore  reserves  have  been  estimated  by an
independent company, Precious Metals Exploration. The reserves were estimated by
an  independent  geological  engineering   consultant,   Christopher  L.  Pratt,
President of Precious Metals Exploration.

Proposed Operations

     In July,  1995, APT entered into an Operating  Agreement (the  "Agreement")
with EMTEC, L.L.C.  ("Emtec") principally owned by officers and directors of the
Company and managers of APT LLC. See "Item 12. Certain Relationships and Related
Transactions."  In accordance  with the  Agreement,  Emtec was to provide a full
turn key mining and refining  operation for the Evening Star Mine.  APT will pay
Emtec all of its costs and expenses  plus 18% of same.  Costs are defined as all
costs  directly and  indirectly  related to Emtec  performing  its duties in the
exploration,  development, production and support facilities of the Evening Star
Mine. For the year 1997, APT had paid Emtec $200,000 for its developmental  work
in the Evening Star Mine.


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     In  December,  1997,  the Company and Emtec  mutually  agreed to cancel the
agreement.

     The Company intends to develop its mining properties in two phases.

     Phase I.

     The Company  will  continue  drilling  and sampling to block out Proven and
Probable  Ore  Reserves.  A core  drilling  rig will be used in order to produce
approximately  1,000  feet of drill hole  weekly.  Due to  seasonal  conditions,
drilling will only be conducted for approximately 36 weeks annually.

     The  Company  will also  construct  a pilot ore  processing  plant  ("Pilot
Refinery")  capable of processing up to two tons of ore per hour.  Included with
the Pilot Refinery will be the construction of all support facilities, including
laboratory, repair shops and storage bins.

     All  engineering  and  permits  necessary  for the  operation  of the Pilot
Refinery and for its expansion  are planned to be completed  during Phase I. APT
estimates  that Phase I will cost  between  $2.8 to $3.4  million  and will take
between nine and 12 months to complete.  There is no assurance  that the Company
will be able to raise the required capital to complete Phase I.

     Phase II.

     After the Pilot  Refinery is  operational  and gold and other  minerals are
successfully and cost effectively being processed, a larger ore processing plant
("Main  Refinery")  will be built.  Current plans provide for a Main Refinery to
process  anywhere from 125 to 250 tons of ore per day. The size and cost of such
Main Refinery is dependent upon several factors,  including a) test results from
the Pilot Refinery,  b) present and future Proven and Probable Ore Reserves that
have been blocked-out, and c) completion of a feasibility report.

     Phase II  development  is estimated to cost between $6.8 to $10 million and
will take between 14 to 18 months after Phase I to complete.

     There is no assurance that the Company will be able to raise the capital to
complete Phase I or, if Phase I is completed, to proceed with Phase II. To date,
the Company's  primary funds for operations have come from the sale of bonds and
gold contracts in Germany and Austria.  See "Item 1. Business - Financing."  The
Company  intends to continue to sell bonds in Germany and  Austria.  There is no
assurance that sales of bonds will continue in amounts  necessary to fund any of
the Company's planned operations, including completion of Phase II.

Transportation

     The Evening  Star Mine is located in the Piute  Mountains of Kern County at
an  elevation of 7,800 feet MSL.  Site access is provided via paved,  all season
highways (State Route 178 and Kelso Valley Road) terminating in approximately 17
miles of graded dirt and gravel road. This dirt road is well maintained and snow
removal by the Company for 17 miles during the winter provides year-round access
to the project site.  The Piute  Mountains  experience  only  moderate  snowfall
during the winter,  and it is estimated that snow removal would be limited to an
average of six episodes per year  clearing  approximate  four to twelve miles of
roadway.


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Power

     An existing Company-owned diesel power plant, producing approximately 400kW
of  power,  provides  electricity  necessary  for  the  operation  of the  mine.
Maintenance  of the access  roadways  will provide for timely truck  delivery of
fuels for the power plant.  The existing  storage  facility  will be expanded to
approximately 6,000 gallons, or one week of fuel supply.  Typical operation will
include semi-weekly fuel deliveries.

Water Supply and Waste Disposal

     Water for mining, dust control,  and domestic use will be provided by water
wells proximate to the project site. Domestic and process demand is estimated to
be 15,000 gallons per day (10.4gpm).  Storage tanks will allow for constant well
pumping rates and fluctuating demands.

     Domestic  wastewater  disposal  will be via standard  septic tank and leach
field systems located adjacent to their respective  sources.  Process wastewater
will be recycled  and reused in the  process,  with the only  process  discharge
comprising  the  moisture  contained  within the spent ore,  estimated  at 4,400
gallons per day.

Financing

     Between February 1, 1996 and August 6, 1996, APT issued Industrial  Revenue
Bonds  ("Bonds").  The  Bonds  were  sold in  Germany  and  Austria  by  Senator
Securities  Corporation,  Dusseldorf,  Germany  ("Senator").  The Bonds are zero
discount  bonds issued in  denominations  of $12,500 with maturity dates between
one to five years. Upon maturity, APT must pay $12,500 U.S., plus interest at 9%
per annum,  or deliver One Kilo of  Internationally  Hallmarked  99.99 Fine Gold
Bullion  (32.15 Troy Ounces).  At December 31, 1998,  APT owed $192,231 on these
bonds of which $77,438 is past due and $57,918 is due before December 31, 1999.

     Between  June  1,  1996  and  January  15,  1997,  APT  issued   Investment
Certificates ("Certificates"). The Certificates were sold in Germany and Austria
by Senator and by Atlantic Pacific  Finanzprodukte,  GmbH ("APF"), the Company's
wholly-owned  subsidiary,  a company  related  to APT by common  ownership.  The
Certificates  provide for  interest at 9% per annum  payable  with  principal at
maturity.  The  Certificates  mature  between  one and five  years  from date of
purchase.  At  December  31,  1998,  APT owed  $726,881  on these bonds of which
$346,303 is past due and $231,599 is due before December 31, 1999.

     Between September, 1995 and September,  1996, APT issued Gold Ore Contracts
("Contracts") in One Kilo Units. Each Unit was sold for $9,645.  There are 32.15
troy  ounces in one kilo.  All  contracts  were sold in Germany  and  Austria by
Senator.  All  Contracts  are due within one year of  purchase.  At December 31,
1998, APT owed $118,636 on these bonds of which $118,636 is past due.

     On   November  1,  1996,   APT  began   selling,   through   APF,  9%  Bond
Certificate/Convertible  to Gold (the "9% Bond"). The total face amount offering
is 45,000,000  Deutsche  Marks. At an exchange rate of 1.5 DEM (one and one-half
Deutsche Marks) to 1 (one) U.S. Dollar, the total face amount in U.S. Dollars is
$30,000,000.  From this  offering,  the total net capital to APT,  assuming  the
entire  offering was sold out, and assuming a 1.5 to 1 exchange  rate,  would be
DEM 35,009,280, or U.S.$23,339,540.  The 9% Bond is non-interest bearing, but is
issued to an  interest-bearing  account,  in which the  difference  between  the
issuing  price and face value meets an effective  yield of 9% per annum.  The 9%
Bonds  are  issuable  only as fully  registered  bonds in  denominations  of 600
Deutsche Marks ("DM600") and may be increased by  denominations  of DEM 600. The
9% Bonds mature between one and five years from date of purchase.  The Bearer of
the 9% Bond  shall,  within 60 days prior to the  maturity  date of the 9% Bond,
notify  APT of the  Bearer's  election  of  either  (A)  payment  in cash in the
Principal  Amount of the 9% Bond paid in Deutsche  Marks, or (B) receive payment
in the form of one ounce of gold bullion issued to Bearer at the rate of one

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     ounce for every DEM 600 owed to Bearer by AT, or (C) Bearer  shall  receive
payment  in cash in the amount of the  market  value of the gold  bullion at the
maturity date, with the cash payment being in Deutsche  Marks.  The 9% Bonds are
being issued and are subject to a Trust  Resolution  dated October 1, 1996 and a
Prospectus  dated October 28, 1996. Both the Trust Resolution and the Prospectus
were prepared by attorneys for the German selling agents.  The 9% Bonds are only
being  offered for sale in Germany and Austria.  At December 31, 1998,  APT owed
$737,305 on these bonds of which $352,104 is past due and $127,337 is due before
December 31, 1999.

Assignment of Assets

     In connection with the sale by APT of Bonds, Certificates, Contracts and 9%
Bonds (the  "Securities"),  APT has assigned its eight mineral claims,  known as
the Evening Star Mine, to Benjamin C. Rice, Esq. ("Trustee"),  a director of the
Company,  to be held in trust for a term of ten  years or until all  obligations
owed on the Securities are fully satisfied. The Trustee will allow APT to remove
and process  gold ore from the  Evening  Star Mine for  delivery  and payment of
Securities  as they  mature.  APT may also remove  additional  gold ore to cover
expenses  only but may not remove any gold ore for any other  purpose  until all
the  Securities  have been fully paid.  Upon default,  the Trustee may cause the
gold ore to be refined by a third party refiner or he may sell the claims to pay
all indebtedness evidenced by the Securities.
Regulation

     The  Company's  operations  are subject to  comprehensive  regulation  with
respect to  operational,  environmental,  safety and similar  matters by federal
agencies including the U.S.  Department of the Interior,  the U.S. Department of
Agriculture  (U.S.  Forest Service),  the U.S.  Environmental  Protection Agency
("EPA"),  the U.S.  Mine Safety and Health  Administration  ("MSHA") and similar
state and local agencies.  Failure to comply with applicable  laws,  regulations
and permits can result in  injunctive  actions,  damages and civil and  criminal
penalties. If the Company expands or changes its existing operations or proposes
any new operations,  it may be required to obtain  additional or amended permits
or  authorizations.  The Company intends to spend  substantial  time, effort and
funds in planning,  constructing and operating its proposed facilities to ensure
compliance  with U.S.  environmental  and other  regulatory  requirements.  Such
efforts and  expenditures  are common  throughout the U.S.  mining  industry and
generally should not have a material adverse effect on the Company's competitive
position.

     Legislation to change the general  mining laws  applicable to operations on
federal lands has been  introduced  into the 105th  Congress,  which convened in
January 1997,  and  additional  introductions  are expected.  The result of such
proposals is speculative.

Risk Factors

     Mining and Processing

     The Company's business operations are subject to risks and hazards inherent
in the mining industry, including but not limited to unanticipated variations in
grade and other geological  problems,  water conditions,  surface or underground
conditions,  metallurgical and other processing  problems,  mechanical equipment
performance problems, the unavailability of materials and equipment,  accidents,
labor force and force majeure factors,  unanticipated  transportation  costs and
weather  conditions,  any of which can  materially and adversely  affect,  among
other things,  the development of properties,  production  quantities and rates,
costs and expenditures and production commencement dates.

     In the case of  development  projects,  including  new pits or  underground
mines at currently operated properties or expansions of existing mines, although
the Company utilizes the operating history of its existing

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     mines  to  derive   estimates  of  future   operating   costs  and  capital
requirements,  such  estimates  may  differ  materially  from  actual  operating
results. The economic feasibility of any individual project is based upon, among
other things,  the  interpretation  of geological data obtained from drill holes
and other sampling  techniques,  feasibility  studies (which derive estimates of
cash  operating  costs  based upon  anticipated  tonnage and grades of ore to be
mined and processed), the configuration of the ore body, expected recovery rates
of metals from the ore,  comparable  facility and equipment  costs,  anticipated
climatic  conditions,  estimates of labor  productivity and other factors.  Such
development  projects  also are subject to the  successful  completion  of final
feasibility  studies,  issuance  of  necessary  permits  and receipt of adequate
financing.

     As a result of the foregoing risks, among other things, expenditures on any
and all projects,  actual production quantities and rates, and cash costs may be
materially and adversely  affected and may differ  materially  from  anticipated
expenditures,  production  quantities  and rates,  and costs,  just as estimated
production  dates may be  delayed  materially,  in each case  especially  to the
extent  development  projects are involved.  Any such events can  materially and
adversely  affect  the  Company's  business,  financial  condition,  results  of
operations and cash flows.

     Uncertainty of Reserve and Other Mineralization Estimates

     There are numerous uncertainties in estimating proven and probable reserves
and other  mineralization,  including  many  factors  beyond the  control of the
Company. The estimation of reserves and other mineralization involves subjective
judgments about many relevant factors,  and the accuracy of any such estimate is
a function of the quality of available  data and of  engineering  and geological
interpretation  and  judgment.  Results  of  drilling,  testing  and  production
subsequent  to the date of an estimate  may justify  revision of such  estimate.
Assumptions  about prices are subject to great  uncertainty  and gold and silver
prices  have  fluctuated  widely in recent  years.  See "Gold and  Silver  Price
Volatility."  No  assurance  can be given that the volume and grade of  reserves
mined and  processed  and  recovery  rates  will not be less  than  anticipated.
Declines in the market price of gold and related precious metals also may render
reserves  or  other  mineralization   containing   relatively  lower  grades  of
mineralization  uneconomic to exploit.  If the price realized by the Company for
its gold or silver  bullion  were to  decline  substantially  below the price at
which ore reserves were  calculated for a sustained  period of time, the Company
potentially could experience reductions in reserves and asset write-downs. Under
certain circumstances,  the Company may discontinue the development of a project
or mining at one or more of its  properties.  Further,  changes in operating and
capital  costs  and other  factors,  including  but not  limited  to  short-term
operating factors such as the need for sequential  development of ore bodies and
the processing of new or different ore grades and ore types,  may materially and
adversely affect reserves.

     Gold and Silver Price Volatility

     The profitability of the Company's  current  operations is directly related
and  sensitive  to the market price of gold and silver.  Gold and silver  prices
fluctuate  widely and are  affected by  numerous  factors  beyond the  Company's
control,  including  expectations  with  respect to the rate of  inflation,  the
exchange  rates of the  dollar and other  currencies,  interest  rates,  forward
selling by  producers,  central  bank sales and  purchases  of gold and  silver,
production and cost levels in major gold-producing  regions such as South Africa
and the former Soviet Union, global or regional political, economic or financial
situations and a number of other factors.

     The current demand for, and supply of, gold and silver affect the prices of
such  minerals,  but not  necessarily  in the same manner as current  demand and
supply  affect the prices of other  commodities.  The  potential  supply of gold
consists of new mine  production  plus existing stocks of bullion and fabricated
gold held by governments,  financial institutions,  industrial organizations and
individuals.  Since mine production in any single year  constitutes a very small
portion of the total potential supply of gold, normal variations in

                                                        [XPLORER\10KSB:123198]-3
                                        9
<PAGE>

     current  production do not  necessarily  have a  significant  effect on the
supply of gold or on its price.  If gold or silver prices  should  decline below
the  Company's  cash  costs of  production  and  remain at such  levels  for any
sustained  period,  the  Company  could  determine  that it is not  economically
feasible to continue commercial  production at any or all of its mines. Although
the Company has a hedging  program in place to reduce the risk  associated  with
gold and silver  price  volatility,  there is no  assurance  that the  Company's
hedging strategies will be successful.

     Exploration and Development

     Exploration for gold and related  precious metals is highly  speculative in
nature,  involves  many risks and  frequently is  unsuccessful.  There can be no
assurance that the Company's exploration efforts will result in the discovery of
significant gold or silver mineralization or that any mineralization  discovered
will result in an increase of the Company's Proven or Probable Ore Reserves.  If
Proven or Probable Ore Reserves are developed, it may take a number of years and
substantial expenditures from the initial phases of drilling until production is
possible,  during which time the economic  feasibility of production may change.
No assurance can be given that the Company's exploration programs will result in
new reserves or that the  Company's  development  program will be able to extend
the life of the Company's existing mines.

     Insurance and Mining Risks

     The business of gold and silver mining is generally  subject to a number of
risks and hazards,  including  environmental  conditions,  industrial accidents,
labor disputes, encountering unusual or unexpected geological conditions, ground
or slope failures,  cave-ins,  changes in the regulatory environment and natural
phenomena  such  as  inclement  weather   conditions,   floods,   blizzards  and
earthquakes.  Such  occurrences  could result in damage to, or  destruction  of,
mineral  properties  or  production   facilities,   personal  injury  or  death,
environmental  damage to  properties  or the  properties  of  others,  delays in
mining,  monetary  losses and  possible  legal  liability.  The  Company's  mine
operator,  Emtec,  maintains insurance against certain risks that are typical in
the gold  mining  industry  and in  amounts  that  the  Company  believes  to be
reasonable,  but which may not provide adequate  coverage in certain  unforeseen
circumstances.  However,  insurance  against  certain risks  (including  certain
liabilities  for  environmental  pollution  or  other  hazards  as a  result  of
exploration  and  production)  is not  generally  available to the Company or to
other companies within the industry on acceptable terms.

     Competition

     The  Company  operates  in an  industry  that is  characterized  by intense
competition  for  resources,  equipment  and  personnel.  Some of the  Company's
principal  competitors are  substantially  larger,  have  substantially  greater
resources,  and expend  considerably larger sums of capital than the Company for
exploration, rehabilitation and development.

     Subsequent Event

     In June,  1999, the Company  entered into an advisory  agreement with NuVen
Advisors,  Inc.  (NuVen)  whereby  NuVen has been  assisting  the  Company  by
developing  and  implementing  a  restructuring  plan  and then  assisting  such
restructuring,  including a plan to effect a business  combination with one of a
number of potential  Internet-related  businesses  that  management is currently
evaluating.





                                                        [XPLORER\10KSB:123198]-3
                                       10
<PAGE>

ITEM 2.   DESCRIPTION OF PROPERTY

     The Company's  executive offices are located in a rented executive suite at
2929 S.  Maryland,  Las Vegas,  Nevada  89109.  The facility is provided free of
charge to the Company by one of the Companys shareholders. The Company considers
the facilities adequate for current needs.

Evening Star Mine Group

     Atlantic  Pacific  Trust,  owns eight  unpatented  mining claims located on
Piute Mountain, Kern County, California.  Unpatented mining claims only give the
Company  possessory title.  Because title to unpatented mining claims is subject
to inherent  uncertainties,  it is difficult to determine conclusively ownership
of  such  claims.  Since  a  substantial  portion  of all  mineral  exploration,
development  and mining in the United  States  now occurs on  unpatented  mining
claims,  this  uncertainty is inherent in the mining industry.  In addition,  in
order to retain title to an unpatented  mining  claim,  a claim holder must have
met annual assessment work requirements  through September 1, 1992 and must have
complied with stringent state and federal  regulations  pertaining to the filing
of assessment work affidavits.  Moreover,  after September 1, 1992, the right to
locate or maintain a claim  generally is conditional  upon payment to the United
States of a maintenance fee of $100 per claim per year for each assessment year.
State law may, in some instances, still require performance of assessment work.

     The present status of the Company's  properties as unpatented mining claims
located on public lands of the U.S.  allows the claimant the exclusive  right to
mine  and  remove  valuable  minerals,  such as  precious  and base  metals  and
industrial  minerals,  found  therein,  and also to use the  surface of the land
solely for purposes related to mining and processing the  mineral-bearing  ores.
However, legal ownership of the land remains with the U.S. Accordingly,  with an
unpatented  claim,  the U.S. retains many of the incidents of ownership of land,
the U.S. regulates use of the surface,  and the Company remains at risk that the
claims may be forfeited either to the U.S. or to rival private  claimants due to
failure to comply with statutory  requirements as to location and maintenance of
the claims.  If there exists a valuable deposit of locatable  minerals (which is
the  requirement for the unpatented  claim to be valid in the first place),  and
provided  certain  levels of work and  improvements  have been  performed  on an
unpatented  mining claim,  the Mining Law of 1872  authorizes  claimants to then
seek to  purchase  the full title to the  claim,  thereby  causing  the claim to
become the private  property of the claimant.  Such full  ownership  expands the
claimant's  permissible  uses of the property (to any use authorized for private
property)  and  eliminates  the need to comply with  maintenance  and  reporting
requirements necessary to protect rights in an unpatented claim.

     For the last several  Congressional  sessions,  bills have been  repeatedly
introduced  in the U.S.  Congress  which would  supplant or radically  alter the
provisions  of the Mining Law of 1872.  As of September  30, 1999, no such bills
have passed,  although a number of differing and sometimes conflicting bills are
now pending. If enacted, such legislation could substantially  increase the cost
of holding unpatented mining claims and could impair the ability of companies to
develop  mineral  resources  on  unpatented  mining  claims.  Under the terms of
certain  proposed  legislation,  the ability of  companies to obtain a patent on
unpatented mining claims would be nullified or substantially impaired. Moreover,
certain forms of such proposed legislation contain provisions for the payment of
royalties to the federal  government  in respect of production  from  unpatented
mining claims,  which could  adversely  affect the potential for  development of
such claims and the economics of operating  existing mines on federal unpatented
mining claims. The Company's  financial  performance could therefore be affected
adversely by passage of such  legislation.  It is  impossible to predict at this
point what any  legislated  royalties  might be, but a  potential  three to four
percent gross  royalty,  assuming a gold price of $400 per ounce,  would have an
approximated  $12 to $16 per ounce impact on the  Company's  costs of production
from unpatented mining claims.



                                                        [XPLORER\10KSB:123198]-3
                                       11
<PAGE>

ITEM 3.   LEGAL PROCEEDINGS

     None.

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

     There were no matters  submitted to shareholders  during the fourth quarter
of the fiscal year ended December 31, 1998.


                                     PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

     The  Company's  Common  Stock was  inactive  for from June 23,  1984  until
September 22, 1997, when it began trading on the Bulletin Board Over-the-Counter
Market.  The trading  market is limited and sporadic and should not be deemed to
constitute an "established trading market".

     The  following  table  sets  forth the range of Bid and Ask  prices for the
Common Stock during the periods indicated,  and represents  inter-dealer prices,
which do not include retail  mark-ups and  mark-downs,  or any commission to the
broker-dealer, and may not necessarily represent actual transactions.

<TABLE>
<CAPTION>

                   1998                          Bid       Asked
<S>                                          <C>        <C>

Quarter ending December 31, 1998             $     .03  $     .10
Quarter ending September 30, 1998            $     .01  $     .10
Quarter ending June 30, 1998                 $     .03  $    1.00
Quarter ending March 31, 1998                $     .35  $    1.00
                   1997
Quarter ending December 31, 1997             $    0.50  $    1.75
Quarter ending September 30, 1997                  N/A        N/A
Quarter ending June 30, 1996                       N/A        N/A
Quarter ending March 31, 1996                      N/A        N/A

</TABLE>

a)   Holders:

     The approximate  number of holders of record of Common Shares, as of August
31, 1999, was 343.

(b)  Dividends:

     The  Company  has not paid cash  dividends  on its common  stock  since its
inception.  At the present  time,  the  Company's  anticipated  working  capital
requirements  are such  that it  intends  to follow a policy  of  retaining  any
earnings in order to finance the development of its business.


                                                        [XPLORER\10KSB:123198]-3
                                       12
<PAGE>

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     The  following  discussion  and analysis  should be read  together with the
financial statements and notes thereto included elsewhere herein.

I      Gerant  emerged from its Chapter 11 proceeding  in August 1996.  Prior to
that date,  the  reorganization  with Xplorer,  S.A.,  Gerant had no significant
operations,  cash flows,  or changes in  financial  condition,  and was inactive
since January 1, 1994.  Legal fees  incurred  during the  bankruptcy  period are
presently being paid by the Company.

II   Plan of Operation

     The Company has been  preparing  for the  construction  of a Pilot Plant to
process  both  new and  existing  ore of the  Evening  Star  Mine  (the  "Mine")
location.  Upon the receipt of capital,  construction of the Pilot Plant will be
commenced.  The Pilot  Plant is  expected  to  demonstrate  the  feasibility  of
extraction  of the  precious  metals  contained  within the ore. The Pilot Plant
should be in operation  continually  until the full operating plant is completed
and in operation.

III      Management's Discussion and Analysis of Financial Condition and Results
of Operations

     The Company is a development  stage  enterprise  and, as such, is incurring
expenses  related to the  development  of the Mine and the  preparation  for the
beginning of the Pilot Plant.  Funds for these purposes have been raised through
the sale of Forward Gold Contracts,  sale of Industrial Bonds in Europe, and the
strategic  placement of equity  securities.  These  activities  are necessary to
assure the funding of anticipated  operating  costs and the  satisfaction of the
$2.1 million negative working capital.

     At the present time,  management is uncertain  when the Pilot Plant will be
completed and operations commenced.  As a result, it is essential for management
to continue its fund raising  activities  until this income source commences and
continuing afterwards until the full operation is in progress.

     Company continues its efforts towards achieving a profitable operation and,
although  management is confident of achieving that goal,  Company cannot assure
its shareholders that it will be successful in operating a profitable business.

Results of Operations

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

     There  were no  revenue  generating  operations  during  1998 and 1997 and,
consequently, no operating revenues or cost of revenues were recorded.

     General and  administrative  expenses  were  $290,643  in 1998  compared to
$765,169 in 1997 as a result of only  limited  operations  in 1998.  General and
administrative  costs in 1997 included costs  associated  with the Gerant merger
and their evolving from Chapter 11, as well as costs  associated with the mutual
termination  of the  Operating  agreement  with  Emtec,LLC,  and the leases with
Sequoia  Trust.  As a result of these  termination  agreements  the  Company has
temporarily suspended preparations for the construction of a Pilot Plant.

     Total  expenses were $559,133 in 1998 compared to $5,119,690 in 1997 due to
only limited operations in 1998 while 1997 included impairment losses recognized
by the Company  based on new  information  regarding its mining  properties  and
certain investments of $3,303,500 and $500,000, respectively.

                                                        [XPLORER\10KSB:123198]-3
                                       13
<PAGE>

Liquidity and Capital Resources

     As of December  31, 1998 the Company had a working  capital  deficiency  of
$2.7 million,  an increase of $600,000 from 1997. The increase was  attributable
to the continued  operations  although  limited by the Company  without  revenue
producing operations. Company had $3,892 in cash at December 31, 1998 a decrease
of $67,232 from 1997. The decrease was due to continued development operations.

     The Companys plan is to keep  searching for  additional  sources of capital
and new  operating  opportunities.  In the interim,  the  Companys  existence is
dependent on continuing financial support from investors,  which with the scaled
operations  is estimated to be  approximately  $150,000 for the next fiscal year
based upon current operations.  Furthermore, the Company may have to utilize its
common stock for future financial  support to finance its needs. Such conditions
raise  substantial  doubt  about the  Companys  ability to  continue  as a going
concern.  As  such,  the  Companys  independent  accountants  have  included  an
explanatory paragraph with respect to the uncertainty.

     The  Company has no  commitments  for capital  expenditures  or  additional
equity or debt financing and no assurances can be made that its working  capital
needs can be met.

     Additionally,  as of December  31,  1998,  the Company had three  employees
including officers and directors.


ITEM 7.   FINANCIAL STATEMENTS

     The  following  financial  statements  are  included as a separate  section
following the signature page to this Form 10-KSB and are incorporated  herein by
reference:

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                            Page
         Report of Independent Auditor.......................................F-1

         Consolidated Balance Sheet..........................................F-2

         Consolidated Statement of Operations for the year ended
          December 31, 1998..................................................F-3

         Consolidated Statement of Shareholders' Equity for the year ended
          December 31, 1998..................................................F-4

         Consolidated Statement of Cash Flows for the year ended
          December 31, 1998..................................................F-7

         Notes to Financial Statements....................................F-9-17

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

          None


                                                        [XPLORER\10KSB:123198]-3
                                       14
<PAGE>

                                    PART III

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

<TABLE>
<CAPTION>

         Name            Age                    Position
<S>                       <C>    <C>
Steven B. Mortensen       38     Chairman of the Board and President
Jon W. Bice  (1)          54     Director, Treasurer and Chief Financial Officer
Thomas C. Roddy, PE. (1)  46     Director
Joyce J. Pellet  (1)      62     Director
Benjamin C. Rice  (1)     60     Director
Jeff Bice  (1)            46     Secretary
</TABLE>

______________________________


     (1)As part of a restructuring of Company in July 1999, Mr. Bice, Mr. Roddy,
Ms.  Pellet,  Mr. Rice and Mr. Bice  resigned  their  positions  as Officers and
Directors of Xplorer, S.A.

     Steven B.  Mortensen,  Chairman of the Board since July, 1996 and President
since June 1998. Mr.  Mortensen was Secretary from July,  1996 to June 1998. Mr.
Mortensen majored in computer science and math at Brigham Young University.  Mr.
Mortensen is also  responsible  for investor  relations  for the Company and its
subsidiaries, including overseeing its European operations. Mr. Mortensen served
as Trustee of Atlantic  Pacific Trust and as Manager of Atlantic  Pacific Trust,
LLC. Mr.  Mortensen's  experience  is in real estate,  mining  development,  and
public  relations.  He is also  co-trustee  of  Rocky  Mountain  Trust.  In that
capacity,  he is solely  responsible for asset  management and all  investments.
Previously,  in 1991,  Mr.  Mortensen was senior vice president of the "B" paper
division of Trump  Mortgage  Group Inc.  Mr.  Mortensen's  other past  positions
include:   President  of  North  Star  Industries,  a  mining,  residential  and
commercial contractor;  President and owner of Hillcrest Development and Land, a
land and mine  development  company;  Sales and Marketing  Director of Mortensen
Construction and Lifestyle Homes, Inc.

     Jon W. Bice has operated his own accounting and tax business since 1971. He
prepares  over  600  individual  tax  returns,  40  corporate  returns,  and  15
partnership  returns per year.  His tax practice is national  with clients in 29
states, ranging from small, individual businesses to $100 million multi-national
corporations.  Mr.  Bice is licensed to  practice  before the  Internal  Revenue
Service  and the  United  States  Tax  Court on tax  matters,  and  performs  an
estimated annual average of 100 to 125 tax and examination  audits. Mr. Bice has
been the CFO for other  corporations  in the past whose  sales  ranged  from $36
million per year to $100 million in international sales.

     Thomas C. Roddy has been a director since July,  1996 and President,  Chief
Executive  Officer from July, 1996 to June 1998. Mr. Roddy is a registered civil
engineer in the State of  California.  He  received a B.S. in civil  engineering
from California  State  University,  Fresno in 1978. From 1978 through 1985, Mr.
Roddy was a senior  engineer  for Boyle  Engineering  Corporation,  Bakersfield,
California. Since 1985, Mr. Roddy has been a consulting engineer in Bakersfield,
California.  His engineering  background is extensive and includes experience as
project  manager/engineer  for various mining projects in California and Nevada,
engineering  superintendent  for  construction  of the Almond  Power  Plant near
Modesto,  California,  extensive  experience in road,  sewer water, and drainage
system design,  and engineering  services related to Santa Fe Energy Company and
Shell Western  Exploration  and Production Co. for the  construction of enhanced
recovery  facilities.  Mr.  Roddy is a former  member  of the  Kern  County  Air
Pollution Control District Hearing Board.


                                                        [XPLORER\10KSB:123198]-3
                                       15
<PAGE>


     Joyce J. Pellet  presently  serves as trustee of Bedrock Trust,  which owns
and manages several rental  properties.  She also actively serves as trustee for
Sequoia Trust and was co-trustee of Atlantic Pacific Trust. Ms. Pellet presently
serves as one of the  Managers of EMTEC,  LLC,  which is the mine  operator  for
Atlantic Pacific Trust's mining properties.

     Benjamin C. Rice is an attorney licensed to practice in the State of Idaho.
He received a B.S. in psychology and economics from Brigham Young  University in
1964 and a Juris  Doctorate  degree from Golden Gate  university in 1971. He has
been  engaged  in the  private  practice  of law  since  1988,  specializing  in
constitutional  law, trust,  tax law, asset protection and mining law. He serves
as corporate  counsel for several  corporations and trusts,  including  Atlantic
Pacific  Trust and Emtec,  Inc.  Mr. Rice has been a law  professor  at National
University and has served as general  counsel for an operating  mining  company,
Toone- Mitchell Mining Company.

     Jeffrey A. Bice was  appointed  Secretary  of the  Company in June of 1998.
From September 1988 to the present he was an accountant  with  Accounting  Plus,
Bakersfield,  California, where was involved in compilation, review and analysis
of G/L to financial statements,  tax documentation  preparation and creation and
implementation of complete  marketing  programs for accounting  practices.  From
January  1990  to  February  1991,  he  served  as  Contract  Administrator  for
Convention  Marketing  Service and from 1987 to 1988 Mr. Bice was the  assistant
controller of American Growth Fund.

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

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange  Commission  ("SEC")  initial  reports of ownership  and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers,  directors and greater than ten percent  stockholders  are required by
SEC  regulation  to furnish the Company and Exchange  with copies of all Section
26(a) forms they file.

     Based  solely on its review of the copies of such forms  received by it, or
written  representations  from  certain  reporting  persons  that  no Form 5 was
required for such persons,  the Company  believes that,  other than as disclosed
below,  during the fiscal year ended December 31, 1997, all filing  requirements
applicable  to its officers,  directors and greater than ten percent  beneficial
owners were complied with.

     All of the  officers,  directors and ten percent  shareholders  , including
Messrs.  Moreland,  Roddy,  Mortensen,  Bice and Rice, Ms. Pellet,  and Atlantic
Pacific  Trust,  LLC,  failed to report  timely on Form 3's when they had become
directors,  officers  and  ten  percent  shareholders  of  the  Company  at  the
confirmation  by the Bankruptcy  Court of the Third Amended Plan in August 1996.
Procedures and controls have been  instituted to assure future  compliance  with
Section 16(a) of the Exchange Act.

ITEM 10.  EXECUTIVE COMPENSATION

     No executive  officer of the Company earned in excess of $60,000 during the
fiscal year ended December 31, 1998, less any stock incentives issued. Although,
beginning  January 1, 1997, the Company had agreed to pay to Messrs.  Mortensen,
Roddy,  and  Bice  an  annual  salary  of  $60,000  for  each  person,  no  cash
compensation  to  officers  was  paid in 1998 .  Bonuses,  based  on  sales  and
revenues,  may be paid to such  employees  at the  discretion  of the  Board  of
Directors.  There are no written employment  agreements with any employee of the
Company.
                                                        [XPLORER\10KSB:123198]-3
                                       16
<PAGE>

1997 Stock Incentive Plan

     On January 24, 1997, the Company's Board of Directors approved a 1997 Stock
Incentive Plan (the "1997 Plan").  The purpose of the 1997 Plan is to enable the
Company to recruit and retain selected officers and other employees by providing
equity  participation in the Company to such  individuals.  Under the 1997 Plan,
regular salaried employees, including directors who are full time employees, and
non-employee directors, may be granted options exercisable at not less than 100%
of the fair value of the share at the date of grant.  The exercise  price of any
option  granted to an optionee  who owns stock  possessing  more than 10% of the
voting  power of all  classes of stock of the  Company  must be 110% of the fair
market  value of the Common  Stock on the date of grant and the duration may not
exceed ten years.  Since there is no public market for the Company's shares, the
fair  market  value  has  been  determined  from  time to time by the  Board  of
Directors.  The duration of options may not exceed ten years.  Options under the
Plan are  nonassignable,  except in the case of death and may be exercised  only
while the optionee is employed by the Company,  said employment  shall include a
leave of absence,  with the consent of the  Company,  but shall not exceed three
months,  or death. The purchase price and number of shares that may be purchased
upon exercise of options are subject to adjustment in certain  cases,  including
stock splits, recapitalizations and reorganizations.

     The amount of options  granted and to whom,  are determined by the Board of
Directors  at their  discretion.  There are no  specific  criteria,  performance
formulas or measures.

     Under the 1997 Plan, of the 1,500,000 shares  available for grant,  680,000
were granted in January 1997 to officers, directors, consultants, and employees.

     The  following  table sets forth  certain  information  with respect to all
qualified  stock  options held as of March 31, 1999 by the  Company's  executive
officers  under the 1997 Plan.  All options are  exercisable at a price equal to
fair market  value on date of grant and  terminate  10 years from date of grant.
None of these options has been exercised.

<TABLE>
<CAPTION>

                                    Number of      Exercise        Expiration
           Name                      Options      Price/Share         Date
<S>                                  <C>           <C>                 <C>
Steven B. Mortensen                  150,000       $     .50           *
Thomas C. Roddy                       75,000             .50           *
Jon W. Bice                           75,000             .50           *
All executive officers as a group    300,000             .50           *
(3 persons)

</TABLE>

*        All options expire on January 30, 2007.

Non-Qualified Stock Options

     On January 31, 1997, 80,000 non-qualified stock options were granted to two
persons in  consideration  for services  rendered to the  Company.  The exercise
price  for all  options  is $.50  per  share.  None of  these  options  has been
exercised. All of these options expire on January 30, 2007.


                                                        [XPLORER\10KSB:123198]-3
                                       17
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain  information,  as of March 31, 1999,
with respect to the  beneficial  ownership of the Company's  Common  Stock,  par
value  $.001 per share,  by holders of more than five  percent of the  Company's
Common Stock, by each director and executive officer of the Company,  and by all
directors and officers of the Company as a group.

<TABLE>
<CAPTION>

      Name and Address of                Number of Shares           Percent
       Beneficial Owner              Beneficially Owned(1)(9)     of Class(2)
<S>                                       <C>                          <C>
Steven B. Mortensen                         615,000(3)                2.4
Thomas C. Roddy                             100,000(4)                *
Jon W. Bice                                 120,000(5)                *
Joyce J. Pellet                              55,000(6)                *
Benjamin C. Rice                                -0-(7)                *
Compania Comercial Atlantis, S.A.         1,000,000(8)                5.1
</TABLE>


*        Less than one percent (1%).

(1)      Unless otherwise  indicated,  all shares are beneficially owned and the
sole voting and investment  power is held by the person named in the table above
and the address for each beneficial holder is in care of the Company.

(2)      Based upon 20,086,266 shares of Common Stock outstanding.

(3)      Does not include 125,000 shares in the Hughes Irrevocable Trust for the
benefit of Mr. Mortensen's wife. Mr. Mortensen disclaims any beneficial interest
in these  shares.  Does not include  options to purchase  150,000  shares of the
Company's common stock.

(4)      Does not include  options to purchase  75,000  shares of the  Company's
common stock.

(5)      Does not include  options to purchase  75,000  shares of the  Company's
common stock.

(6)      Does not include 750,000 shares held by the Sequoia Irrevocable Trust
of which Mrs.  Pellet's adult children are the  beneficiaries.  Mrs. Pellet is a
trustee of the trust and  disclaims  any  beneficial  interest in these  shares.
Furthermore,  does not  include  options  granted to Mr.  Moreland  to  purchase
150,000 shares of the Company's  common stock nor options granted to Mrs. Pellet
to purchase 50,000 shares of the Company's common stock.

(7)      Does not include  options to purchase  50,000  shares of the  Company's
common stock.

(8)      The address for this beneficial holder is P.O. Box 5747-1000, San Jose,
Costa Rica, C.A. Does not include 12,805,500 shares of common stock to be issued
in charge for 1,280,550  shares of Preferred  Stock pursuant to a formal request
from Compania  Comercial  Atlants S.A. to convert the Preferred Stock dated July
28, 1999 .

                                                        [XPLORER\10KSB:123198]-3
                                       18
<PAGE>

(9)      Does not include  1,500,000  shares issued to NuVen  Advisors,  Inc. in
June 1999,  in connection  with the  execution of an advisory  agreement and the
restructuring of the Company.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     None.

     On July 15, 1995, the Company's majority-owned  subsidiary entered into the
following agreements:

a)      A lease from  Sequoia  Trust of  approximately  57 acres of land in Kern
County,  California,  containing  three  patented  mining  claims.  The  Company
intended to explore,  develop and operate  mines and extract,  sell and ship any
precious  metals  discovered on the property.  The lease  terminates on July 15,
2000,  unless renewed for like terms by mutual consent.  The Company pays $3,000
per month and is  obligated  to pay 12% of the gross  value of metals  and other
substances  recovered  from  refining of ore from the  property.  This lease was
canceled by mutual agreement in December, 1997.

b)      A lease  from  Sequoia  Trust of the  Weldon  Research  Center,  Weldon,
California,  consisting of several buildings,  including a laboratory,  offices,
repair  shops and storage  facilities.  The lease  terminates  on July 15, 2000,
unless renewed for like terms by mutual consent. The Company pays lease payments
of $3,000 per month.  The Trustees of the Sequoia Trust are William M. Moreland,
an officer and director of the Company,  and Joyce J. Pellet,  a director of the
Company. The beneficiaries of the Trust are the children of Mr. Moreland and the
children of Mrs. Pellet.  The children are all over 21 years old and do not live
with either Mr.  Moreland or Mrs.  Pellet and both Mr.  Moreland and Mrs. Pellet
disclaim any beneficial  interest in the Sequoia Trust.  This lease was canceled
by mutual agreement in December, 1997.

c)      The  Company  entered  into  an  Operating  Agreement  with  Emtec,  LLC
("EMTEC") wherein Emtec will perform all exploration, development and production
services  for the Evening  Star Mine.  Emtec will be the  operator  for all mine
operations.  The  Company  has  agreed  to pay to  EMTEC,  on a  monthly  basis,
reimbursement  of all  expenses  and costs of EMTEC  related to the Evening Star
mining  operations  plus 18%.  From July 15, 1995 through  March 31,  1997,  the
Company  had paid  Emtec  $462,143.  For the year 1997 the  company  paid  EMTEC
$200,000.This  Operating Agreement was canceled by mutual agreement in December,
1997.


     Mr.  Moreland,  a former  officer  and  director of the  Company,  and Mrs.
Pellet, a director of the Company,  were the Co-Managers of Emtec, LLC. Both Mr.
Moreland and Mrs. Pellet disclaim any beneficial ownership in Emtec, LLC.

     In each of the transactions  described in the preceding paragraphs in which
the Company purchased goods or services from an affiliate,  the Company believes
that the terms of the  transaction  were no less favorable to it than those that
could have been obtained in a comparable  transaction  with an unrelated  party.
Any future  transactions  between the Company and its  officers,  directors  and
affiliated parties will be subject to approval by a majority of the directors of
the Company, including a majority of the disinterested directors.

     Pursuant to the Company's Third Amended Plan of  Reorganization  filed with
the Bankruptcy Court in July, 1996 (the "Plan"),  Compania  Comercial  Atlantis,
S.A.  ("Compania")  exchanged  417,200 APT Units owned by Compania for 1,043,000
shares of the Company's  Series A Convertible  Preferred  Stock (the  "Preferred
Stock").  In December,  1996, the Company exchanged an additional 237,550 shares
of  its  Preferred  Stock  for  189,960  APT  Units.   The  Preferred  Stock  is
convertible, commencing October 1, 2002, into ten shares of the Company's Common
Stock for each share of Preferred  Stock.  Dividends are payable  quarterly at a
monthly
                                                        [XPLORER\10KSB:123198]-3
                                       19
<PAGE>

     rate of one percent of the Preferred  Stock held. The dividends are payable
in Common  Stock of the  Company on the basis of ten shares of Common  Stock for
each share of Preferred  Stock.  In addition,  the holder of the Preferred Stock
could,  upon  written  notice,  have any  dividends  due  payable in  additional
Preferred Stock instead of Common Stock.

     On December 11, 1996, the Company agreed to issue  1,000,000  shares of its
Common Stock to Compania and Compania waived its right to receive any dividends,
past, present or future, associated with the Preferred Stock. As of December 11,
1996, no dividends had been paid to Compania.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

     The following documents are filed as part of this report:

a.   Listing of Exhibits

     2.1(1)   Disclosure   Statement   For  Debtor's   Third   Amended  Plan  of
Reorganization.

     2.2(1) Order Confirming Debtor's Third Amended Plan of Reorganization.

     2.3(2) Agreement and Plan of Reorganization  between Atlantic Pacific Trust
and its Beneficiaries and Atlantic Pacific Trust, LLC., dated December 26, 1996.

     3.1(a)(2) Articles of Incorporation and Amendments thereto of Company.

     3.1(b)(2)  Articles of  Organization  of Atlantic  Pacific  Trust,  LLC and
Amendment thereto.

     3.2(2) By-Laws of Company.

     4.1(2)  Certificate of Designation of Series A Convertible  Preferred Stock
of Company.

     4.1(a)(2)  Waiver of  Preferred  Stockholder  between  Company and Compania
Comercial Atlantis, S.A. dated December 11, 1996.

     4.2(2) $450,000 10% Subordinated  Convertible Note dated September  25,1996
between Company and Gardner Investments, Inc. (lender).

     4.3(2) Warrant  Certificate  for Common Stock issued to shareholders of the
Company pursuant to Third Amended Plan of Reorganization  approved by the United
States Bankruptcy Court on August 5, 1996.

     4.4(2) "B" Warrant  Agreement  between  Company and Atlantic  Pacific Trust
dated August 5, 1996.

     4.5(2) "C" Warrant  Agreement  between  Company and Atlantic  Pacific Trust
dated August 5, 1996.

     10.1(2) Lease Agreement  between  Sequoia Trust and Atlantic  Pacific Trust
dated July 15, 1995.

     10.2(2) Lease Agreement  between  Sequoia Trust and Atlantic  Pacific Trust
dated July 15, 1995.

                                                        [XPLORER\10KSB:123198]-3
                                       20
<PAGE>

     10.3(2)  Operating  Agreement between Atlantic Pacific Trust and Emtec, LLC
dated July 25, 1995.

     10.4(2) Assignment of Assets by Atlantic Pacific Trust to Benjamin C. Rice,
Trustee dated October 25, 1995.

     10.5(2) Bill of Sale between Sequoia Trust and Atlantic Pacific Trust dated
July 15, 1995.

     10.6(2)   Regulation  "S"  Stock  Purchase   Agreement   between  Stonehill
Investments, Ltd. and Company.

     10.7(2) Security Agreement between Plaza Realty One Limited Partnership and
Company dated August 19, 1994, and $400,000 Promissory Note between Plaza Realty
One Limited Partnership and Company dated August 19, 1994.

     10.8(3) 1997 Stock Incentive Plan.


     (1)  Filed as  exhibits  to  Company's  Form 8K which  was  filed  with the
Commission on September 12, 1996, and incorporated herein by this reference.

     (2) Filed as exhibits to Company's  Form 10-KSB for the year ended December
31,  1996,  which  was  filed on June 3,  1997 and  incorporated  herein by this
reference.

     (3) Filed as exhibits to Company's  Form 10-KSB for the year ended December
31, 1997, which was filed on September 22, 1999 and incorporated  herein by this
reference.


b.   Reports on Form 8-K

     1) On February 4, 1998,  the Company filed a Form 8-K reporting a change in
independent accountant from Jay J. Shapiro to Brown, Armstrong, Randall & Reyes.
See Part II, Item 8.

     2) On May 13, 1998,  the Company filed a Form 8-K  reporting:  a) change in
corporate  domicile to Nevada, b) a change of address for the corporation and c)
engagement of new Chief Ecexutive officer and member of board of directors.

     3) On June 24,  1998,  the Company  filed a Form 8-K  reporting a change in
members of management and the board of directors.






                                                        [XPLORER\10KSB:123198]-3
                                       21
<PAGE>

                                   SIGNATURES


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

                                        XPLORER, S.A.

Date:    October 28, 1999               By: /s/Steven B. Mortensen
                                               Steven B. Mortensen, President



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

<TABLE>
<CAPTION>

          Signature                    Title                          Date
<S>                        <C>                                  <C>
/s/ Steven B. Mortensen    President and Chairman of the Board  October 28, 1999
    Steven B. Mortensen

/s/ Jon L. Lawver          Secretary and Director               October 28, 1999
    Jon L. Lawver

/s/ Leonard J. Roman       Treasurer/Financial Officer and      October 28, 1999
    Leonard J. Roman       Director
</TABLE>

                                                        [XPLORER\10KSB:123198]-3
                                       22
<PAGE>



                                  XPLORER, S.A.
                                DECEMBER 31, 1998



                                TABLE OF CONTENTS
                                                                           Page
Independent Auditors Report................................................. F-1

Consolidated Balance Sheet...................................................F-2

Consolidated Statement of Operations.........................................F-3

Consolidated Statement of Shareholders Equity (Deficit)......................F-4

Consolidated Statement of Cash Flows.........................................F-7

Notes to Consolidated Financial Statements...................................F-9



                                                    [XPLORER\10-KSB:123198fin-2]
                                        i
<PAGE>

                          INDEPENDENT AUDITORS REPORT



The Board of Directors of
Xplorer, S.A.
Las Vegas, Nevada

     We have audited the  accompanying  consolidated  balance  sheet of Xplorer,
S.A. (the Company), a development stage enterprise, as of December 31, 1998, and
the related consolidated statement of operations,  shareholders equity (deficit)
and cash flows for the two years in the period ended  December  31, 1998.  These
financial  statements are the  responsibility  of the Companys  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

     We conducted  our audit 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 audit provides a reasonable basis for our opinion.

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

     As of December  31,  1998,  the Company has  significant  negative  working
capital and exposure to financial uncertainties (see Notes 1 and 2).

     As discussed in Note 10 to the financial  statements,  the Company has been
unable to repay  $1,253,663  in debt  obligations  which  matured  subsequent to
December 31, 1998.

     The  accompanying  consolidated  financial  statements  have been  prepared
assuming that the Company will continue as a going concern. As discussed in Note
1, there are conditions which raise substantial doubt about the Companys ability
to  continue  as a going  concern,  including  the  Companys  ability  to  raise
additional  capital  to fund its  operations  and  development  programs  and to
establish  ore  reserves.  Managements  plans in  regard  to these  matters  are
described in Note 1. The  consolidated  financial  statements do not include any
adjustments  relating to the recoverability and classification of reported asset
amounts and  classification of liabilities that might result from the outcome of
these uncertainties.

                                                     BROWN ARMSTRONG RANDALL
                                                     REYES PAULDEN & McCOWN
                                                     ACCOUNTANCY CORPORATION




Bakersfield, California
September 22, 1999

                                                    [XPLORER\10-KSB:123198fin-2]
                                       F-1
<PAGE>

                                  XPLORER, S.A.
                        (A Development Stage Enterprise)
                           CONSOLIDATED BALANCE SHEETS
                                DECEMBER 31, 1998


<TABLE>
<S>                                                              <C>
ASSETS
  Current Assets
     Cash and cash equivalents                                   $        3,892
  Receivables                                                             3,495
     Total Current Assets                                                 7,387

Property and equipment                                                   77,535

Other investments                                                        13,170
TOTAL ASSETS                                                     $       98,092
LIABILITIES AND SHAREHOLDERS EQUITY
  Current Liabilities
     Accrued expenses                                            $      449,751
     Related party payable                                              364,675
     Note payable                                                       450,000
     Due to trustee                                                     131,603
     Current portion of long-term debt                                1,311,335
       Total Current Liabilities                                      2,707,364

Long-term debt                                                          463,658

Minority Interest                                                             -

       Total Liabilities                                              3,171,022
Shareholders Equity (Deficit)
  Preferred stock, par value $.001; authorized
  15,000,000 shares; convertible beginning in
  2001; 1,280,550 shares  issued and outstanding                          1,281
Common stock, par value $.001; authorized
  60,000,000 shares; 20,086,266 issued and
  outstanding                                                            20,087
Additional paid in capital                                            2,570,530
Accumulated deficit during development stage                         (5,664,828)
       Total Shareholders Equity (Deficit)                          (3,072,930)
TOTAL LIABILITIES AND SHAREHOLDERS
EQUITY (DEFICIT)                                                 $       98,092

</TABLE>

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


                                       F-2

<PAGE>

                                   XPLORER,S.A
                        (A Development Stage Enterprise)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                AND THE PERIOD FROM AUGUST 31, 1996 (Inception of
                Development Stage Enterprise Activities) THROUGH
                                DECEMBER 31, 1998
<TABLE>
<CAPTION>

                                                                              For the
                                                                             Period from
                                                                           August 15, 1996
                                              For the          For the      (Inception)
                                             Year Ended      Year Ended        Through
                                            December 31,    December 31,    December 31,
                                               1998             1997            1998
<S>                                        <C>             <C>            <C>
Revenues
Other income                               $        -      $     25,976   $      62,976
 Interest income                                    -            40,020          88,420
    Total revenues                                  -            65,996         151,396
Expenses
 Commission expense                            31,741           292,185         774,826
 General and administrative                   290,643           765,804       1,505,547
 Loss on impairment of mining assets                -         3,303,500       3,303,500
 Loss on impairment of other assets                 -           500,000         500,000
 Net loss on investments and settlement
  of gold contracts                           121,705           122,317         350,022
 Interest expense                             115,044           135,884         422,628
    Total expenses                            559,133         5,119,690       6,856,523
Net loss before minority interest            (559,133)       (5,053,694)     (6,705,127)

Minority interest                             123,711         1,817,000       2,281,011

Net loss                                   $ (435,422)     $ (3,236,694)  $  (4,424,116)

Net loss per common share                  $     (.02)     $       (.18)

Weighted average common shares             19,912,153        19,028,346
outstanding
</TABLE>


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


                                       F-3


                                                        [XPLORER\10KSB:123198]-3

<PAGE>

                                  XPLORER, S.A.
                        (A Development Stage Enterprise)
             CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY(DEFICIT)
                 FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>

                                                                                       Accumulated
                                                                                         Deficit
                                                                            Additional     During
                                   Common Stock        Preferred Stock       Paid-in     Development
                                    ($.001 par)           ($.001 par)        Capital        Stage       Total
                                 Shares     Amount     Shares      Amount
<S>                            <C>         <C>         <C>        <C>       <C>         <C>          <C>

Balance, January 1, 1996          336,218  $    336            -   $    -   $1,793,800  $ (104,001)  $1,690,135
August 15, 1996 merger with
  Gerant pursuant to the Plan
  (August 1996)                14,639,000    14,639    1,043,000    1,043      252,764      52,000      320,446
Stock issued to special
  creditors pursuant to the
  Plan (September 1996)         1,002,229     1,002            -        -       98,600           -       99,602
Preferred stock issuance to
  Atlantic beneficiary for
  189,960 LLCs (December 1996)          -         -      237,550      238      207,300           -      207,538
Dividend waiver on preferred
  stock (December 1996)         1,000,000     1,000            -        -       99,000    (100,000)           -
Stock issued to employees
  and consultants for
  professional services
  (December 1996)               1,805,000     1,805            -        -       94,500           -       96,305

Net loss for period                     -         -            -        -            -    (752,000)    (752,000)

Balance, December 31, 1996     18,782,447    18,782    1,280,550    1,281    2,545,964    (904,001)   1,662,026

</TABLE>
                                                                     (Continued)

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


                                       F-4
<PAGE>

                                  XPLORER, S.A.
                        (A Development Stage Enterprise)
            CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (DEFICIT)
                 FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>

                                                                                             Accumulated
                                                                                               Deficit
                                      Common Stock         Preferred Stock      Additional     During
                                       ($.001 par)            ($.001 par)         Paid-in    Development
                                   Shares       Amount     Shares     Amount      Capital       Stage           Total
<S>                             <C>         <C>         <C>        <C>          <C>           <C>            <C>
Shares issued for purchase
  of 20,000 units in Atlantic
  Pacific Trust (September
  1997)                            250,000       250            -        -               -              -            250
Stock issued to employees and
  consultants for professional
  services (September 1997)        830,000       830            -        -               -              -            830
Shares retired (September
  1997)                            (82,742)      (82)           -        -               -              -            (82)
Net loss for period                      -         -            -        -               -     (3,236,694)    (3,236,694)
Minority interest losses in
  excess of minority interest
  equity                                 -         -            -        -               -       (965,000)      (965,000)
Balance, December 31, 1997      19,779,705    19,780    1,280,550    1,281       2,545,964     (5,105,695)    (2,538,670)

Shares issued on stock options
  (March 1998)                       6,561         7            -        -           3,440              -          3,447

  1998)                            300,000       300            -        -          21,126              -         21,426
Net loss for period                      -         -            -        -               -       (435,422)      (435,422)
Minority interest losses in
  excess of minority interest
  equity                                 -         -            -        -               -       (123,711)      (123,711)

Balance, December 31, 1998      20,086,266  $ 20,087    1,280,550  $ 1,281      $2,570,530    $(5,664,828)   $(3,072,930)
</TABLE>



  The accompanying notes are an integral parts of these financial statements.
                                       F-5
<PAGE>




                          XPLORER, S.A. AND SUBSIDIARY
                        (A Development Stage Enterprise)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                AND THE PERIOD FROM AUGUST 15, 1996 (Inception of
                Development Stage Enterprise Activities) THROUGH
                                DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                                                  For the
                                                                                Period from
                                                                                 August 15,
                                                                                    1996
                                                    For the         For the      (Inception)
                                                  Year Ended      Year Ended       Through
                                                  December 31,    December 31,   December 31,
                                                      1998           1997            1998
<S>                                              <C>            <C>            <C>

Cash Flows from Operating Activities
  Net loss                                       $   (435,422)  $ (3,236,694)  $ (4,424,116)
  Adjustments to reconcile net loss to net cash
     used by operating activities:
       Minority interest in net loss of company      (123,711)    (1,817,000)    (2,281,011)
       Loss due to impairment of mining assets              -      3,303,500      3,303,500
       Loss due to impairment of other assets               -        500,000        500,000
       Loss on settlement of note receivable                -        256,487        256,487
       Depreciation and amortization                   21,185              -        203,085
       Accretion of interest                                -              -        160,400
       (Gain) loss on marketable securities                 -        226,400        189,400
       Accrued expenses and other liabilities         115,884        145,667        301,751
       Related party payables                               -        215,675        364,675
       Accrued Gerant obligations                           -              -       (140,000)
       Prepaid commissions                                  -        210,000             -
       Due to trustee                                 131,603              -        131,603
       Accounts receivable                             35,671        (22,042)       (57,871)
Net Cash Used by Operating Activities                (254,790)      (218,007)    (1,492,097)

Cash Flows from Financing Activities
  Sale of Atlantic units for cash                           -              -        458,300
     Proceeds from sale of investment contracts       240,538        695,288      2,310,826
  Payments on investment contracts                   (221,366)      (380,534)      (601,900)
  Repayment of gold contracts                               -       (154,364)      (479,364)
  Repayment of U.S. Bonds                                   -       (145,269)      (145,269)
  Proceeds from notes payable                               -              -        450,000
  Sale of common stock                                 24,873              -         24,873
Net Cash Provided by Financing Activities              44,045         15,121      2,017,466

</TABLE>
                                                                     (Continued)
   The accompanying notes are an integral parts of these financial statements.

                                       F-6
<PAGE>


                          XPLORER, S.A. AND SUBSIDIARY
                        (A Development Stage Enterprise)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                AND THE PERIOD FROM AUGUST 15, 1996 (Inception of
                Development Stage Enterprise Activities) THROUGH
                                DECEMBER 31, 1998

<TABLE>
<CAPTION>

                                                                                       For the
                                                                                     Period from
                                                                                      August 15,
                                                                                         1996
                                                        For the         For the       (Inception)
                                                      Year Ended      Year Ended        Through
                                                      December 31,    December 31,    December 31,
                                                         1998            1997            1998
<S>                                                  <C>              <C>            <C>

Cash Flows from Investing Activities
  Computer equipment purchases                                -                -          (8,000)
  Mining property expenditures                                -                -        (527,000)
  Sale of property and equipment                              -            2,180           2,180
  Acquisition of marketable securities                        -         (143,513)     (1,273,513)
  Proceeds from marketable securities                   143,513                -       1,054,513
  Gerant creditor expenditures                                             -                    -              (355,000)
  Proceeds of other investments                               -          249,343         249,343
Net Cash Provided (Used) by Investing Activities        143,513          108,010        (857,477)

Net Increase (Decrease) in Cash                         (67,232)         (94,876)       (332,108)

Cash Balance, Beginning of Year                          71,124          166,000         336,000

Cash Balance, End of Year                            $    3,892       $   71,124     $     3,892
Interest Paid                                        $   12,880       $  100,000     $   124,180

Income Taxes Paid                                    $      800       $      800     $     2,400
Non-Cash:
  Minority losses in excess of minority equity       $  123,711       $  965,000     $ 1,088,711
</TABLE>


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


                                       F-7
<PAGE>

                          XPLORER, S.A. AND SUBSIDIARY
                        (A Development Stage Enterprise)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 -  ORGANIZATION AND PRESENTATION

Organization

     Xplorer,  S.A. (the Company),  (successor to Gerant  Industries,  Inc.) was
organized by adoption of amended and restated  Articles of  Incorporation  dated
July 5, 1996,  which were  filed  with the office of the  Secretary  of State of
Nevada on August 15, 1996.

     Gerant Industries,  Inc. (Gerant) filed a petition for reorganization under
Chapter 11 of the United  States  Bankruptcy  Court (the  Court) for the Central
District of California on March 1, 1994. On July 24, 1996,  the Court  confirmed
Gerants Third Amended Plan of  Reorganization  (the Plan). The Plan approved the
amendment of the  Articles of  Incorporation  and  By-laws,  change of corporate
name,  authorization of common and preferred shares of stock,  payment of claims
and issuance of stock by the successors to this  debtor-in-possession,  Xplorer,
S.A.

     The Company is a  development  stage  enterprise  and has not  achieved its
intended operations or related revenue as of September 22, 1999.

     The Company owns 59% of Atlanta Pacific Trust,  LLC (APT). APT is the owner
of the  Evening  Star Mine and through  its  related  company,  Atlantic-Pacific
Finanzprodukte,  GMBH (APT Germany),  secures  financing for its exploration and
development activities.

     The Company's  consolidated financial statements have been presented on the
basis that it is a going  concern,  which  contemplates  the  realization of the
mineral  properties and other assets and the  satisfaction of liabilities in the
normal course of business.  The Company has incurred losses of $6,705,127 before
minority  interest  from  inception to December  31,  1998.  The Company has not
realized  economic  production  from its mineral  properties as of September 22,
1999.  These factors  raise  substantial  doubt about the  Company's  ability to
continue as a going concern.  Management  continues to actively seek  additional
sources of capital to fund current and future operations.  There is no assurance
that the Company will be successful in continuing to raise  additional  capital,
establishing  probable or proven ore  reserves,  or  determining  if the mineral
properties can be mined economically. These consolidated financial statements do
not  include  any  adjustments  that  might  result  from the  outcome  of these
uncertainties.

NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

     The consolidated  financial  statements include the accounts of the Company
and its 59% owned  subsidiary,  Atlantic  Pacific  Trust,  LLC  (APT),  and APTs
related company, Atlantic-Pacific Finanzprodukte,  GmbH. In consolidations,  all
significant intercompany balances and transactions are eliminated.


                                       F-8

<PAGE>

                          XPLORER, S.A. AND SUBSIDIARY
                        (A Development Stage Enterprise)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of Estimates

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

Mineral Properties and Mining Equipment

     Mineral  properties and mining equipment are carried at cost.  Depreciation
on  equipment is provided on a  straight-line  basis over its  estimated  useful
lives ranging from three years to five years. Mining equipment not in service is
not depreciated.

     In the past, the Company  deferred direct costs related to the acquisition,
exploration and development of mineral properties pending determination of their
economic viability which normally entails performing an in-depth  geological and
geophysical study. If no minable ore body was discovered, previously capitalized
costs were expensed in the period the property was abandoned.

     Although the Company has performed  drilling  samples,  and an  independent
engineer has deemed the gold properties contain profitable reserves in excess of
property and equipment costs incurred through December 31, 1998,  management has
chosen to follow the more  conservative  method of  accounting  by expending the
previously capitalized gold mineral costs of $2,665,500 as of December 31, 1996,
and expensing any development costs incurred in 1997 and 1998.

Office Furniture and Equipment

     Office  furniture  and  equipment  are  recorded at cost.  Depreciation  is
computed by the  straight-line  method based upon the estimated  useful lives of
the respective assets, generally three to five years.

Income (Loss) per Common Stock

     Income  (loss) per share of common stock is computed  based on the weighted
average  number  of  shares  outstanding.   Warrants,  options  and  convertible
debentures  have not been included in the  calculation  as their effect would be
anti-dilutive.

Income Taxes

     The Company  accounts  for income  taxes using the  liability  method which
requires  recognition  of deferred tax  liabilities  and assets for the expected
future tax  consequences  of events  that have been  included  in the  financial
statements or tax returns.  Deferred tax assets and  liabilities  are determined
based on the difference between the financial statements and tax basis of assets
and  liabilities  using  enacted  tax rates in effect  for the year in which the
differences are expected to reverse.


                                       F-9

<PAGE>

                          XPLORER, S.A. AND SUBSIDIARY
                        (A Development Stage Enterprise)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock Based Compensation

     In October 1995, the Financial  Accounting Standards Board issued Statement
of  Financial   Accounting   Standards  No.  123,  "Accounting  for  Stock-Based
Compensation,"  (SFAS  123),  which is  effective  for periods  beginning  after
December  15,  1995.   SFAS  123  requires  that  companies   either   recognize
compensation  expense  for  grants of stock,  stock  options,  and other  equity
instruments based on fair value or provide proforma  disclosure of the effect on
net income and earnings per share in the Notes to the Financial Statements.  The
Company  intends to continue to account for its stock-based  compensation  under
Accounting  Principles  Board No. 25;  however,  the  Company  has  adopted  the
disclosure provisions of SFAS 123 for the fiscal year ended December 31, 1998.

Cash and Cash Equivalents

     For purposes of reporting  cash flows,  cash and cash  equivalents  include
highly  liquid debt  instruments  purchased  with a maturity of three  months or
less.

Asset Impairment

     In accordance  with  Statement of Financial  Accounting  Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of," (SFAS 121),  management of the Company reviews the net carrying
value of the Evening Star mine and development  property on a regular  quarterly
basis.  Estimated  future  net cash flows  from each mine are  calculated  using
estimated  future  prices,  operating  capital,  and  reclamation  costs  on  an
undescended basis. Reductions in the carrying value of each mine are recorded to
the extent the net book value of the  investment  exceeds the estimate of future
discounted net cash flows.

     The  recoverability  of the  carrying  value  of  development  projects  is
evaluated based upon  persuasive  engineering  evidence of estimated  future net
cash flows from each property, determined as described above, using estimates of
contained  mineralization  expected to be classified  as proven and/or  probable
reserves  upon  completion of a  feasibility  study.  Reductions in the carrying
value of each  property are recorded to the extent that the  Company's  carrying
value in each property exceeds  management's  estimate of future  discounted net
cash flows. When mining equipment is idle, management decides if it will be used
productively in the future. For idle equipment that is unique to an abandoned or
impaired  property,  the  Company  reduces  its  carrying  value  following  the
impairment accounting principle.

     Management's  estimates  of gold  prices,  recoverable  proven and probable
reserves,  operating capital, and reclamation costs are subject to certain risks
and  uncertainties   which  may  affect  the  recoverability  of  the  Company's
investment in property,  plant, and equipment.  Although management has made its
best  estimate of these factors  based on current  conditions,  it is reasonably
possible that changes could occur in the near term which could adversely  affect
management's  estimate of the net cash flow  expected to be  generated  from its
operations.


                                      F-10

<PAGE>

                          XPLORER, S.A. AND SUBSIDIARY
                        (A Development Stage Enterprise)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings Per Share

     In February 1997, the Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Accounting  Standards  No. 128 (SFAS 128),  Earnings Per
Share,  which was adopted by the Company for the year ended  December  31, 1997.
SFAS 128  replaces  the  presentation  of  primary  earnings  per  share  with a
presentation of basic earnings per share based upon the weighted  average number
of common shares for the period.

New Accounting Pronouncements

     In June 1997, the FASB issued Statement of Financial  Accounting  Standards
No. 130 (SFAS 130), Reporting Comprehensive Income. This statement requires that
all items that are  required to be  recognized  under  accounting  standards  as
components of comprehensive  income be reported in a financial statement that is
displayed with the same prominence as other financial  statements.  SFAS 130 was
adopted by the  Company  for the year ended  December  31,  1998.  Prior  period
financial statements provided for comparative purposes will be reclassified,  as
required. Upon adoption, the Company does not expect SFAS 130 to have a material
effect upon the Companys financial condition or results of operations.

     In June 1997, the FASB issued Statements of Financial  Accounting Standards
No. 131 (SFAS 131),  Disclosures  about  Segments of an  Enterprise  and Related
Information. The statement requires the Company to report income/loss,  revenue,
expense and assets by  business  segment  including  information  regarding  the
revenues derived from specific  products and services and about the countries in
which the Company is  operating.  The  Statement  also requires that the Company
report  descriptive  information  about  the way that  operating  segments  were
determined,  the  products  and  services  provided by the  operating  segments,
differences  between the measurements used in reporting segment  information and
those used in the Companys general-purpose financial statements,  and changes in
the  measurement  of segment  amounts  from period to period.  SFAS 131 has been
adopted by the Company for the year ended December 31, 1998.  This statement has
no effect on financial  statements  traditionally  presented by the Company, but
increases required disclosures.

NOTE 3 -      AFFILIATES AND RELATED PARTIES

     Significant  relationships  with (1) companies  affiliated  through  common
ownership and/or management, and (2) other related parties are as follows:

     In 1995,  Atlantic  entered into  agreements  with Sequoia Trust, a related
     party,  to lease  surface  and mineral  rights  related to 57 acres of land
     adjacent to Evening Star Mine and certain  improved real property  known as
     the Weldon Research  Center for total cost of $6,000 per month.  This lease
     was canceled by mutual agreement in December 1997.

     These properties  provide the Company with the opportunity to develop three
     patented mining claims with probable  commercial grade ore (12% royalty due
     to Sequoia Trust), construct a primary ore processing refinery, and utilize
     13,000  square feet at the Weldon  Research  Center for its  mineralization
     analysis and other testing procedures.

                                      F-11

<PAGE>

                          XPLORER, S.A. AND SUBSIDIARY
                        (A Development Stage Enterprise)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 3 - AFFILIATES AND RELATED PARTIES (Continued)

     Atlantic also has a cancelable  contract with EMTEC, Inc., a related party,
     for development of all eleven mining claims and the future operation of the
     mine  and  refinery.  The  contract  requires  the  Company  to  pay  EMTEC
     bi-monthly at invoiced  cost plus 18% overhead.  This lease was canceled by
     mutual agreement in December 1997.

     At December 31, 1998, APT owed the above related entities development costs
     and accrued interest in the amount of $364,675.

     In the ordinary  course of business,  the Company had advanced and received
     advances from APT. Such advances to the Company amounted to $197,000.  This
     amount was subsequently forgiven by APT at December 31, 1997.

NOTE 4 -  PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31, 1998:
<TABLE>
<S>       <C>                                          <C>

          Computer equipment                           $    8,705
          Mining equipment                                909,415
                                                          918,120

          Less accumulated depreciation and allowance     840,585
                                                       $   77,535
</TABLE>
     During the year ended  December 31, 1997, the Company  expensed  previously
capitalized  development  costs  of its  Evening  Star  Mine  in the  amount  of
$2,665,500.

     During the year ended December 31, 1997, the Company  considered its mining
equipment to be impaired  and has provided an allowance  for 90% of its original
cost.  Impairment  on the  mining  equipment  recognized  during  the year ended
December 31, 1998 amounted to $638,000.

Depreciation expense for the year ended December 31, 1998 was $21,185.

NOTE 5 -  NOTE PAYABLE

     Note  payable in the amount of  $450,000,  with  interest  at 10% per annum
payable monthly,  with all outstanding principal and interest due on demand. The
note is  convertible  at any time for 150,000  shares of the common stock of the
Company at the option of the holder.


                                      F-12

<PAGE>

                          XPLORER, S.A. AND SUBSIDIARY
                        (A Development Stage Enterprise)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6 -  INVESTMENT CONTRACTS PAYABLE

     Atlantic has issued  investment  contracts  under German  securities  laws.
Investment contracts payable consist of the following at December 31, 1998:

<TABLE>

<S>                                                    <C>
Contract of $9,645 per kilo received in U.S.  dollars
for purchase of undelivered kilos (32.15 troy ounces)
of gold bullion.  All contracts have a one year
maturity.                                              $   118,636
Zero-coupon contract of $12,500 payable in U.S.
dollars and bearing interest at 9.00% per annum.
Such contracts are payable with related interest in
one to five years.                                         192,231
Zero-coupon contract payable in 5,000 German
Deutsche Marks (DM) units and bearing interest at
9.00% per annum. Such contracts are payable with
related interest in DM in one to five years.               726,821
Zero-coupon contract payable in DM or gold at the
rate of 600 DM principal per unit and bearing
interest at 9.00% per annum.  Contracts are payable
with related interest in DM in one to five years.          737,305
                                                         1,774,993
Less current portion of long-term debt                   1,311,335
                                                        $  463,658
</TABLE>

     As of September  22, 1999,  the Company was unable to repay  $1,253,663  in
contracts that matured subsequent to December 31, 1998.

     In connection with the sale by APT of Bonds, Certificates, Contracts and 9%
Bonds  ("Contracts")  APT has assigned its eight  mineral  claims,  known as the
Evening  Star Mine,  to Benjamin C. Rice,  Esq.  ("Trustee"),  a director of the
Company,  to be held in trust for a term of ten  years or until all  obligations
owed on the Contracts are fully satisfied.  The Trustee will allow APT to remove
and process  gold ore from the  Evening  Star Mine for  delivery  and payment of
Contracts  as they  mature.  APT may also  remove  additional  gold ore to cover
expenses  only but may not remove any gold ore for any other  purpose  until all
the Contracts  have been fully repaid.  Upon default,  the Trustee may cause the
gold ore to be refined by a third party refiner or he may sell the claims to pay
all indebtedness evidenced by the contracts.

     Accrued  interest on the above  contracts  amounted to $317,119 at December
31, 1998.



                                      F-13

<PAGE>

                          XPLORER, S.A. AND SUBSIDIARY
                        (A Development Stage Enterprise)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6 -  INVESTMENT CONTRACTS PAYABLE (Continued)


<TABLE>
Investment contracts are due as follows:
<CAPTION>


        For Years Ended
         December 31,                  Amount
          <S>                      <C>

          1999                     $ 1,311,335
          2000                         185,248
          2001                         208,454
          2002                          64,385
          2003                           5,571
                                 $   1,774,993
</TABLE>
The amount due for 1999 included $986,857 of 1998 maturities.


NOTE 7 -  INVESTMENT (GAINS) LOSSES

     The Company and its subsidiary incurred the following losses on investments
and other assets during the years ended December 31,:
<TABLE>
<CAPTION>

                                                                  1998         1997
<S>                                                           <C>          <C>

Net loss on investments:
     Loss on settlement of notes receivable                   $         -  $   256,487
     Gain on sale of Xplorer shares owned by APT                        -     (134,170)
     Loss on market value                                         121,705            -
                                                              $   121,705  $   122,317
Impairment losses on investments:
     Impairment of value of commercial property owned by APT  $         -  $   500,000

Impairment losses on mining assets:
     Mining equipment                                         $         -  $   638,000
     Development costs                                                  -    2,665,500

                                                              $         -  $ 3,303,500
</TABLE>

                                      F-14

<PAGE>

                          XPLORER, S.A. AND SUBSIDIARY
                        (A Development Stage Enterprise)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8 -  SHAREHOLDERS EQUITY

During fiscal year 1998, the following major equity transactions occurred:

     The Company  issued 6,561 shares of Common Stock with a value of $3,447 for
     stock warrants issued under the incentive stock option plan.

     The Company  issued  300,000 shares of Common Stock in exchange for certain
     professional services rendered to the Company totaling $21,426.

During fiscal 1997, the following major equity transactions occurred:

     The Company  issued  830,000 shares of Common Stock with a value of $830 in
     exchange for certain legal, engineering and employment services.

     The Company  issued  250,000 shares of Common Stock with a value of $250 in
     connection with its acquisition of 20,000 units in Atlantic Pacific Trust.

During fiscal 1996, the following major equity transactions occurred:

     Pursuant to the Plan of Reorganization, 336,218 shares of Common Stock were
     issued.

     Pursuant to the Plan of  Reorganization,  14,639,000 shares of Common Stock
     and 1,043,000 shares of Preferred Stock were issued.

     Pursuant to the Plan of Reorganization, the Company issued 1,002,229 shares
     of Common Stock to special creditors.

     The Company issued 237,550  shares of Preferred  Stock to Atlantic  Pacific
     Trust beneficiary.

     The Company issued 1,805,000 shares of Common Stock in exchange for certain
     legal and employment services rendered to the Company totaling $96,305.

     The  Company  declared  a  dividend  waiver on  Preferred  Stock and issued
     1,000,000 shares of the Companys Common Stock.

NOTE 9 -  STOCK OPTIONS

     The Company has an incentive stock option plan under which ten-year options
may be granted to key employees to purchase shares of the Company's common stock
at $.50 per  share on the date of  grant.  At  December  31,  1998,  options  to
purchase a total of 680,000 shares at $.50 were outstanding and exercisable,  of
the original 1,500,000 shares authorized under the 1997 Stock Option Plan.



                                      F-15

<PAGE>

                          XPLORER, S.A. AND SUBSIDIARY
                        (A Development Stage Enterprise)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 9 -  STOCK OPTIONS (Continued)

     The  Company  applies  APB  Opinion  25  and  related   interpretations  in
accounting for its stock option plan. The Company also applies  principles  from
the  consensus  reached in EITF 87-33 on stock option  re-pricing  transactions.
Accordingly,  compensation  cost has been recognized for the difference  between
the market value of the stock at the date of issuance and the exercise  price of
the  new  stock  options  granted.  Had  compensation  cost  for  the  Company's
stock-based  compensation  plan been  determined  based on the fair value at the
grant dates for awards under the plan consistent with the provision of SFAS 123,
the Company's  net income and earnings per share would not have been  materially
reduced as the theoretical value of the options were $.001.

NOTE 10 - SUBSEQUENT EVENT

     The Company has been unable to repay $1,044,775 in debt obligations,  which
matured subsequent to December 31, 1998, as of September 22, 1999.

     The  Company,  in a meeting  of the Board of  Directors  on July 30,  1999,
entered into the following agreement:

     Advisory   agreement   with  a  third   party  to  assist  the  Company  in
     restructuring the Company and/or obtain financing for its operations;

     Authorized the issuance of 150,000 shares of Xplorer,  S.A. common stock to
     Gardner Investment,  Inc. to convert the note payable of $450,000 to common
     stock.

     Approved the conversion of 1,280,550  Xplorer,  S.A. preferred shares owned
     by a single shareholder to 12,805,050 Xplorer, S.A. common stock;

     Issuance of 1,500,000 common stock with options for additional common stock
     to third party advisors in return for past and future consulting  services;
     and

     Xplorer,   S.A.  to  enter  into  a  stock   purchase  plan  and  plans  of
     reorganization  whereby  Xplorer,  S.A. will exchange  shares of its common
     stock for no less than 50% of the outstanding  common stock of an unrelated
     corporation.

NOTE 11 - INCOME TAXES

     At December 31, 1998,  the Company and its  subsidiary  had  available  net
operating  loss  carryforwards  for financial  statement and federal  income tax
purposes of approximately  $6,705,000.  These loss carryforwards  expire between
2016 and 2017.

     The  Company has  reported  income tax losses in prior  years.  In general,
income tax losses are carried  forward to future years to reduce  future  income
taxes.

     A valuation  allowance of  approximately  $2,280,000  has been  provided to
offset the benefit of  approximately  $2,280,000  from the remaining  $6,705,000
loss  carryforwards.  This valuation  allowance is necessary because at December
31, 1998, the available  benefits are more likely than not to expire before they
can be used.

                                      F-16

<PAGE>

                          XPLORER, S.A. ANDSUBSIDIARY
                        (A Development Stage Enterprise)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 12 - MINORITY INTEREST LOSSES IN EXCESS OF MINORITY INTEREST EQUITY

     During the year ended  December 31, 1998 and 1997,  the  majority  interest
absorbed  minority interest losses in excess of minority equity in the amount of
$123,711 and $965,000,  respectively.  These excess losses were charged directly
to the majority interest  accumulated  deficit in 1998.  Subsequently,  when the
loss  reverses,  the  majority  interest  will be  credited  with the  amount of
minority  interest  losses  previously  absorbed  before  credit  is made to the
minority interest.

                                      F-17