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, 1996.

[  ]     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                                        88-0199674 
     -------------------------------                         ----------------
     (State or other jurisdiction of                         (I.R.S. Employer
      incorporation or organization)                         Identification No.)

4750 Kelso Creek Road, Weldon, California           93238
-----------------------------------------         ---------
 (Address of principal executive offices)         (Zip Code)

Issuer's telephone number, including area code:  (619) 378-3936

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, 1996 totaled -0-.

As of December 31, 1996, 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 $-0-. (Not Trading.)

As of May 30, 1997,  the registrant had  outstanding  18,782,445  shares of
Common Stock.

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

Exhibit index page number:  22-23
Total sequentially numbered pages in this document:  24


<PAGE>


                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

Introduction

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

Pursuant to the Plan, certain holders of Units of Beneficial  Interest ("UBI's")
in the Atlantic  Pacific Trust,  LLC,  formerly  Atlantic  Pacific Trust ("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.  APT had provided the necessary
capital  and  arranged  loans for the  successful  completion  of the Plan.  The
Managers of APT are also officers and directors of the Company.  See  "Conflicts
of Interest."

Additionally,  APT holders of  approximately  $29,278,000  face value of XPLORER
Debtor Notes converted their XPLORER Debtor Notes into approximately  14,639,750
shares of XPLORER Common Stock. Furthermore, holders of securities in the Debtor
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 year from the August 6,
1996 effective date of the Plan, at 70% of the market asking price. Such Warrant
must be exercised within 30 days of August 5, 1997.  Pursuant to Section 1143 of
the United  States  Bankruptcy  Code,  interest  holders  must  surrender  their
certificates  representing  the  securities of the Debtor 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 common shares 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.  Currently,  XPLORER owns
59.16% of APT.

The Company's  principal executive offices are located at 4750 Kelso Creek Road,
Weldon, California 93282, and its telephone number is (619) 378-3936.


                                        1

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

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.

                                        2

<PAGE>


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.

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."

                                        3

<PAGE>


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.  See "Item 12.  Certain  Relationships  and Related
Transactions." In accordance with the Agreement,  Emtec will 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.  Through March 31, 1997, APT has paid Emtec $548,318 for its developmental
work in the Evening Star Mine.

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

Phase I.

The  Registrant  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.


                                        4

<PAGE>


The  Registrant  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  Registrant  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  Registrant'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 Registrant  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 Registrant'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.





                                        5

<PAGE>


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 sold  $196,000 of  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).  As of March 31, 1997,  APT owed $337,500 on these
Bonds of which $112,500 is due on or before December 31, 1997.

Between June 1, 1996 and January 15, 1997,  APT sold  $735,000 of 9%  Investment
Certificates ("Certificates"). The Certificates were sold in Germany and Austria
by  Senator  and  by  Atlantic  Pacific   Finanzprodukte,   GmbH  ("APF"),   the
Registrant's  wholly-owned subsidiary.  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.  As of March  31,  1997,  APT owed
$1,130,200 on these  Certificates of which $529,500 is due on or before December
31, 1997.

Between  September,  1995 and  September,  1996,  APT sold  $444,000 of 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.  As of
March 31, 1997, there were $273,000 Contracts owing by APT, all of which are due
and payable on or before December 31, 1997.

                                        6

<PAGE>


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
DEM35,009,280,  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 DM600. 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 ounce for every
DM600 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. Through March 31, 1997, $316,611 9% Bonds were sold
of which $37,968 is due within one year.

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


                                       7

<PAGE>


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 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
Registrant.  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


                                       8
<PAGE>


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 Registrant
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
Registrant  potentially  could  experience  reductions  in  reserves  and  asset
write-downs.  Under certain  circumstances,  the Registrant 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 Registrant'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  Registrant'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 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  Registrant's  cash  costs of
production  and remain at such levels for any sustained  period,  the Registrant
could  determine  that it is not  economically  feasible to continue  commercial
production  at any or all of its mines.  Although the  Registrant  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 Registrant'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


                                       9
<PAGE>


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 Registrant's exploration programs
will result in new reserves or that the Registrant's development program will be
able to extend the life of the Registrant'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  Registrant's  mine
operator,  Emtec,  maintains insurance against certain risks that are typical in
the gold  mining  industry  and in amounts  that the  Registrant  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 Registrant 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.



                                       10

<PAGE>


ITEM 2.  DESCRIPTION OF PROPERTY

The   Registrant's   executive   offices  are  located  in  rented  premises  of
approximately  12,960 square feet at 4750 Kelso Creek Road,  Weldon,  California
93238.  The leased  facilities  are known as the Weldon  Research  Center.  They
include approximately 37.5 acres of chainlink fenced land, 12,960 square feet of
buildings,  including  a  scale  house,  guardhouse,  a 300' x 12"  water  well,
lab/shop,  refinery buildings and domestic power. The Registrant has a five-year
lease on the premises at $3,000 per month rental  renewable for like terms.  The
Registrant considers the facilities adequate for current needs.

Evening Star Mine Group

Registrant owns eight unpatented  mining claims located on Piute Mountain,  Kern
County, California. Unpatented mining claims only give the Registrant 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.


                                       11

<PAGE>


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 December 31,  1995,  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.

APT entered into a lease in July, 1995, with Sequoia Trust,  which is controlled
by some of the officers and directors of the  Registrant.  See "Item 12. Certain
Relationships  and Related  Transactions."  The lease  terminates in July, 2000,
unless renewed by mutual  consent of the parties,  so long as minerals are being
mined,  processed or marketed  from the  property on a continuous  basis with no
cessation of operations for more than 120  consecutive  days. APT is required to
pay $3,000 per month, plus a 12% royalty of the "gross value of metals and other
leased substances recovered from the refining of ores" from the property.

The leased  properties  consist of 57 acres and include  three  patented  mining
claims.  The Company plans to construct its main refinery and support  buildings
on this  land upon the  successful  completion  of Phase I. One of the  patented
mines was preliminarily explored by drilling eight 45-degree holes approximately
200 feet  apart  and to a depth of 700  feet.  A  commercial  grade ore body was
encountered  and  estimated  to be 17 to 36 feet wide.  The  Company  intends to
redrill this area in order to reconfirm and more precisely estimate the size and
quantity of such ore body.

Also  in  July,  1995,  APT  leased  from  Sequoia  Trust  property  in  Weldon,
California,  known as the Weldon Research Center, for $3,000 per month.  William
M. Moreland,  Chief Operating  Officer of the Company,  is a Trustee for Sequoia
Trust. The lease  terminates in July,  2000,  unless renewed under like terms by
mutual  consent of the parties.  The property  consists of 12,960 square feet of
mill   buildings,   a  laboratory,   office,   shops  and  refinery   buildings,
approximately  37.5 acres of fenced land.  The property also contains a 300-foot
water well, scale house, guardhouse and domestic power.




                                       12

<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, 1996.




































                                       13

<PAGE>


                                     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 March,
1997,  when it began  trading.  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  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.

         1997                                         Bid     Asked

         Quarter ending 3/31/97                      $5.00    $5.25
         Quarter to May 30, 1997                      6.50     7.00

(a)  Holders:
         The  approximate  number of holders of record of Common  Shares,  as of
         March 31, 1997, was 743.

(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.

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.




                                       14

<PAGE>


II.      Plan of Operation

         The  Registrant is 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 the  capital,  the Pilot  Plant  will  commence
simultaneously  with the Filing of the Form  10-KSB for the year ended  December
31, 1996. The Pilot Plant will  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  Registrant  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
$1.2 million negative working capital.

         It is not  anticipated  that income from the Pilot Plant will  commence
before  the  end of the  summer  of  1997.  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.

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

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


                                       15

<PAGE>


         Consolidated Statement of Operations for the year
            ended December 31, 1996.......................       F-3

         Consolidated Statement of Shareholders' Equity for the
            year ended December 31, 1996..................       F-4

         Consolidated Statement of Cash Flows for the year
            ended December 31, 1996.......................       F-5

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


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

None.




































                                       16
<PAGE>
                                  XPLORER, S.A.

                                DECEMBER 31, 1996



<PAGE>



                                  XPLORER, S.A.
                                DECEMBER 31, 1996





                                Table of Contents

                                                                 Page

Independent Auditors' Report                                      F-1

Consolidated Balance Sheet                                        F-2

Consolidated Statement of Operations                              F-3

Consolidated Statement of Stockholder's Equity                    F-4

Consolidated Statement of Cash Flows                              F-5

Notes to Consolidated Financial Statements                        F-6



<PAGE>





                             JAY J. SHAPIRO, C.P.A.
                           A Professional Corporation

                             16501 Ventura Boulevard
                                    Suite 650
                            Encino, California 91436
                     Tel. (818) 990-4878 Fax (818) 990-4944


                          INDEPENDENT AUDITORS' REPORT

The Board of Directors of XPLORER, S.A.:

         We have audited the accompanying consolidated balance sheet of XPLORER,
S.A. (the "Company"),  a development stage enterprise,  as of December 31, 1996,
and the related consolidated statements of operations,  shareholders' equity and
cash flows for the period from August 1, 1996  (Inception) to December 31, 1996.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our 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, 1996,  and the results of its  operations  and its cash flows
for the period August 15, 1996  (Inception)  to December 31, 1996, in conformity
with generally accepted accounting principles.

As of December 31, 1996, the Company has  significant  negative  working capital
and exposure to financial uncertainties (See Notes 1 and 2).


April 30, 1997


                                                JAY J. SHAPIRO, C.P.A.
                                                a professional corporation

                                      F-1
<PAGE>


                                  XPLORER, S.A.
                        (a development stage enterprise)
                           CONSOLIDATED BALANCE SHEET
                             As of December 31, 1996

Assets
Current Assets:
Cash                                                            $   166,000
Note receivable (Note 5)                                             16,000
Marketable securities (Note 4)                                      226,400
Prepaid commissions                                                 210,000
                                                                -----------
Total Current Assets                                                618,400

Property, plant & equipment - net (Notes 6, 8 & 12)               3,404,400
Other investments (Notes 7 and 11)                                1,019,000
                                                                -----------
Total Assets                                                    $ 5,041,800
                                                                ===========
Liabilities and Shareholders' Equity
Current Liabilities:
Gold contracts (Note 12)                                            273,000
Zero-coupon bonds - Current                                         915,000
Related party payable (Note 13)                                     149,000
Note payable (Notes 7 and 11)                                       450,000
Payroll obligations                                                   3,200
Other accrued expenses                                               38,000
                                                                -----------
Total Current Liabilities                                         1,828,200

Accrued legal fees (Note 10)                                        147,000
Long-term zero-coupon bonds,                                        552,700
Minority interest in consolidated subsidiary (Note 8)               852,000
                                                                -----------
                                                                  3,379,900
Commitments and contingencies (Notes 2, 7, 8, 9, 11, 12 & 13)

Shareholders' Equity :
Preferred stock, par value $0.001;
  authorized 15,000,000 shares;
  convertible beginning in 2006;
  1,280,550 shares issued and
  outstanding                                                         1,300
Common stock subscribed                                               1,000
Common stock, $0.001 par value; authorized
  60,000,000 shares; 18,554,000 shares
  issued and outstanding                                             17,600
Capital surplus                                                   2,546,000
Deficit accumulated during the development stage                   (904,000)
                                                                -----------
Total shareholders' equity                                        1,661,900
                                                                -----------
Total Liabilities and Shareholders' Equity                      $ 5,041,800
                                                                ===========

 The notes to the financial statements are an integral part of these statements

                                       F-2
<PAGE>



                 XPLORER, S.A. (a development stage enterprise)
                      CONSOLIDATED STATEMENT OF OPERATIONS
                          Year Ended December 31, 1996


                                                       
Revenue (Note 1)                                         $        0
                                                         ----------
Expenses:
  Compensation                            ($128,600)
  Professional fees                        (113,500)
  Commissions                              (450,900)
  Interest                                 (171,700)
  Administrative and depreciation          (207,000)
                                           ---------
     Total                                               (1,071,700)

Other income (expense):
  Gain on marketable securities-net                          37,000
  Interest income                                            48,400
  Loss on settlement of gold contracts                     (106,000)
                                                         ----------
      Total                                                 (20,600)

Net Loss Before Minority Interest in Loss of Company     (1,092,300)


Minority Interest in Loss of Company                        340,300
                                                         ----------


Net Loss                                                 ($752,000)
                                                         ==========



Net Loss per Share                                           ($.05)
                                                         ==========



Weighted Average Number of Shares                        16,800,000
                                                         ==========

The notes to the financial statements are an integral part of these statements


                                       F-3

<PAGE>



                 XPLORER, S.A. (a development stage enterprise)
      CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Notes 1, 2,3, and 8)
                          Year Ended December 31, 1996

<TABLE>
<CAPTION>
                                  Common stock      Preferred Stock
                                   ($.001 par)         ($.001 par)      Capital    Accumulated  During
                                Shares    Amount    Shares   Amount     Surplus     Development Stage    Total
                                ------    ------    ------   ------     -------    -------------------   -----
<S>                          <C>         <C>       <C>        <C>      <C>             <C>             <C>         

Balance, January 1,
1996                                                                       52,000        (52,000)               0

Balance,
August 15, 1996
reorganization with Gerant
pursuant to the Plan
(August, 1996)               15,603,000  $15,600   1,043,000  $1,000   $1,994,600                      $2,011,200

Stock issued to special
creditors pursuant to the
Plan (September, 1996)          996,000    1,000                           98,600                         $99,600

Preferred stock issuance
to Atlantic beneficiary
for 189,960 LLC's
(December, 1996)                                     237,550     300      207,300                         207,600          

Dividend waiver
on preferred stock
(December 1996)               1,000,000    1,000                           99,000       (100,000)               0

Stock issued to employees
and consultants for
professional services
(December, 1996)                955,000    1,000                           94,500                          95,500    

Net loss for period                                                                     (752,000)        (752,000)      
                             ----------  -------   ---------  ------  -----------      ---------        ---------
Balance, December
31, 1996                     18,554,000  $18,600   1,280,550  $1,300   $2,546,000      ($904,000)      $1,661,900
                             ==========  =======   =========  ======  ===========      =========        =========
</TABLE>


The notes to the financial statements are an integral part of these statements


                                       F-4




<PAGE>

                 XPLORER, S.A. (a development state enterprise)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                   For the Period August 15, 1996 (Inception)
                              to December 31, 1996

Net loss                                                    ($  752,000)
Adjustment to net cash used by operations:
Minority interest in net loss of Company                       (340,300)
Depreciation and amortization                                   181,900
Accretion of interest                                           160,400
Gain on marketable securities                                   (37,000)
Accrued expenses and other liabilities                           40,200
Related party payable                                           149,000
Accrued Gerant obligations                                     (140,000)
Prepaid commissions                                            (210,000)
Other                                                           (71,500)
                                                            -----------
  Total adjustments                                            (267,300)
                                                            -----------
Net cash used by operations                                  (1,019,300)

Financing activities:
  Sale of Atlantic units for cash                               458,300
  Proceeds from sale of investment contracts                  1,375,000
  Repayment of gold contracts                                  (325,000)
  Note payable                                                  450,000
                                                            -----------
  Net cash provided by financing activities                   1,958,300
                                                            -----------
Investing activities:
  Computer equipment purchases                                   (8,000)
  Mining property expenditures                                 (527,000)
                                                            -----------
  Acquisition of marketable securities                       (1,130,000)
  Proceeds from marketable securities                           911,000
  Gerant creditor expenditures                                 (355,000)
                                                            -----------
  Net cash used by Investing Activities                      (1,109,000)
                                                            -----------
Decrease in cash                                               (170,000)

Cash - August 15, 1996 (Note 3)                                 336,000
                                                            -----------
Cash - December 31, 1996                                    $   166,000
                                                            ===========
Supplemental cash flow information:
  Income taxes paid                                                 800
                                                            ===========
  Interest paid                                             $    11,300
                                                            ===========

During 1996,  Atlantic  exchanged  110,000 LLC units for  commercial  properties
($500,000 value) and professional  services. The Company issued 1,995,000 shares
of common stock for compensation and a preferred stock dividend.

 The notes to the financial statements are an integral part of these statements

                                       F-5
<PAGE>


                 XPLORER, S.A. (a development stage enterprise)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          Year Ended December 31, 1996

Note 1   Organization and Presentation:

         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  Gerant's 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 was to issue  16,500,000  shares of common stock and  1,043,000
         shares of preferred stock which were valued in aggregate at $53 million
         by the Court.  The  historical  determinable  value in accordance  with
         generally accepted accounting principles was $2,011,200 and the Company
         accounted for the transaction as a quasi-reorganization.

         The Company is a development  stage enterprise and has not achieved its
         intended operations or related revenue as of this date.

         The Company,  a development  stage  enterprise,  anticipates  obtaining
         sufficient   cash  resources  in  1997  from  the  sale  of  investment
         contracts, warrant exercise, operations, or private placement of equity
         securities.  Such  proceeds  are  necessary  to assure  the  funding of
         anticipated  operating  costs  and  satisfaction  of  $1.2  million  in
         negative working capital as of December 31, 1996.

         Presentation:
         ------------
         The Company  intends to engage in the  development of natural  resource
         properties.  As of  12/31/96  the Company  does not have any  operating
         properties and is a development stage enterprise owning 59% of Atlantic
         Pacific Trust, L.L.C. and its wholly-owned subsidiary  Atlantic-Pacific
         Finanzprodukte,  GmbH as of December  31,  1996.  The  accounts of this
         entity,  which made a $355,000 loan to Gerant as part of the Plan,  are
         included in these consolidated financial statements and all significant
         inter-company transactions have been eliminated. The loan was converted
         to common stock special units of the Company(Note 8).

                                       F-6


<PAGE>


                 XPLORER, S.A. (a development stage enterprise)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          Year Ended December 31, 1996


Note 1   Organization and Presentation (cont'd):

         Gerant   had  net  assets  of   approximately   $52,000   (Note 3)  and
         insignificant  operations  from January 1, 1994 to August 15, 1996. The
         quasi-reorganization  of this entity  resulted in retained  earnings of
         -0- as of January 1,1996.


Note 2   Summary of Significant Accounting Policies:

         Mining Properties:
         -----------------
         Mining  properties are reflected in property,  plant,  and equipment at
         cost of acquisition  and  development.  Costs include efforts to remove
         ore and waste, exploration,  development of new ore bodies and defining
         further mineralization in existing ore bodies. These costs are deferred
         and will be charged to operating costs utilizing the unit-of-production
         method in the period in which commercial production occurs.

         When a property is  identified  as having  development  potential,  the
         costs of engineering,  contract labor, financing, and professional fees
         related to  development  are  capitalized  as they are  incurred.  If a
         project is determined not to be  economically  feasible,  unrecoverable
         costs  are  expensed  in the year in which the  determination  is made.
         Mining  properties are reflected at net  realizable  value based on the
         Company's ability to generate future value.

         Revenue Recognition:
         -------------------
         Revenue is recognized  when title to delivered  gold or other  precious
         metals passes to the buyer.

         Reporting Currency:
         ------------------
         While the Company has significant financing transactions denominated in
         German  currency,  its operations are located in the U.S.  Accordingly,
         all financial  information  regarding these  transactions is translated
         into U.S. dollars and no material transaction effect exists at December
         31, 1996.

         Loss Per Share:
         --------------
         The loss per share is calculated  using the weighted  average number of
         shares outstanding.  Warrants outstanding are anti-dilutive and are not
         included.


                                       F-7



<PAGE>


                 XPLORER, S.A. (a development stage enterprise)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     For the period Ended December 31, 1996


Note 2   Summary of Significant Accounting Policies (cont'd):

         Property, Plant & Equipment and Depreciation:
         --------------------------------------------
         All property,  plant and equipment is stated at cost and depreciated on
         a  straight-line  basis  over  individual  useful  lives - three  years
         (computers),  five years (mining equipment),  and units-of-  production
         once mining property is at the operational level.

         Financial Uncertainties:
         ------------------------
         The Company is in the development  stage and has experienced a net loss
         of $752,000.  The loss is principally  due to commissions  and interest
         associated with the 1996 German  financing.  There is no assurance that
         commercial quantities of mineral resources can be developed and sold in
         a  profitable  market.  Also,  mining  production  could be delayed and
         uninsurable risks could be incurred (See Note 9).

         The  Company's  profitability  is subject to change in gold  prices and
         exchange rates. To reduce the impact of such changes, the Company locks
         in  the  future  value  of  certain  of  these  items  through  hedging
         transactions.  These  transactions are accomplished  through the use of
         financial instruments,  the value of which is derived from movements in
         the  underlying  gold  prices,  the  Company's  actual  production,  or
         exchange rates.

         The Company  intends to engage in financial  instruments  to reduce the
         financial  impact caused by  fluctuations  in the exchange rate of U.S.
         dollars to German Duetsch Mark liabilities.

         The carrying values of investment  contracts  involving gold settlement
         are  re-measured  using the market  value of gold at the balance  sheet
         date($369  per troy ounce).  The price of gold has  decreased as of the
         report date.

         Income Taxes:
         ------------
         XPLORER,  S.A.  and its  predecessor  company  have a  substantial  net
         operating  loss of an uncertain  amount as of December 31, 1996.  Prior
         year tax returns are now being prepared.

         Common Stock Issuance:
         ---------------------
         Shares issued to Gerant special creditors, employees,  consultants, and
         preferred shareholder of the Company are valued at the nominal value of
         $.10 per share.  Common  stock  Units  include one share of stock and a
         warrant to acquire an additional share at 70% of market value.


                                       F-8


<PAGE>


                 XPLORER, S.A. (a development stage enterprise)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          Year Ended December 31, 1996


Note 2   Summary of Significant Accounting Policies (cont'd):

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

Note 3   Quasi-Reorganization:

         Gerant  changed  its  corporate  name to  XPLORER,  S.A  pursuant to an
         exchange of stock and the provisions outlined in the Plan.

         The  Gerant's  balance  sheet  prior to the  execution  of the Plan and
         reorganization with newly-formed XPLORER, S.A. was:

                                                                 $000's
                                                                 ----
         Cash (Note 8)                                            335
         Other current assets                                      17
                                                                -----
                                                                  352
                                                                -----
         Net fixed assets                                           3
         Investments                                              500
                                                                -----
         Total Assets                                           $ 855

         Current liabilities                                     (298)
         Pre-petition liabilities                                (150)
         Atlantic advance (Note 8)                               (355)
                                                                -----
         Total liabilities                                       (803)
                                                                -----

         Net Assets                                             $  52
                                                                =====



         Under the Plan,  the  Company  would  realize  the assets of Gerant and
         assume the liabilities at Gerant basis,  and issue common and preferred
         stock in exchange for  1,005,000  units of Atlantic  equity held by the
         Company.   Such  units  had  a  nominal  book  value  of  $1.50.  These
         transactions  created a  valuation  for the  Company's  new  common and
         preferred stock issuance of $2,011,200.


                                       F-9

<PAGE>


                 XPLORER, S.A. (a development stage enterprise)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     For the Period Ended December 31, 1996


Note 4   Marketable Securities:

         The amounts  disclosed  below  represent  marketable  securities of the
         Company. All securities have been classified as "trading" and were sold
         as of 12/31/96.
                                                         Cost     Fair Value
                                                         ----     ----------
         Equity securities                            $ 211,400   $ 243,900

         Options - equity securities                    (15,000)    (17,500)
                                                      ---------   ----------

                                                      $ 196,400   $ 226,400
                                                      =========   ==========

         At December 31, 1996,  gross unrealized gains were $30,000 and realized
         gains were  $7,000.  Most options are covered  call  positions  thereby
         limiting any market risk to the Company.

         The  Company  does  not  use  derivatives   financial  instruments  for
         speculative  purposes.  The Company enters into gold equity investments
         to manage exposure to changes in gold prices.  Such agreements are used
         to  participate  in a rising gold price and the  Company's  undelivered
         commitments.


Note 5   Note Receivable:

         SYM-TEK  filed  Chapter  11  bankruptcy  proceedings  with  Gerant as a
         creditor.  The amount of $16,000  was  received on January 23, 1997 and
         used to pay legal obligations of Gerant's bankruptcy proceeding.

Note 6   Property, Plant and Equipment:

                                                         Accumulated    Net Book
                                                Cost     Depreciation    Value
                                                -----    ------------    -----
         Computer equipment                  $   11,100  ($    1,900) $    9,200
         Development costs - Evening  Star    2,666,000                2,666,000
         Mining equipment - Evening Star        909,200     (180,000)    729,200
                                             ----------  -----------  ----------
                                             $3,586,300  ($  181,900) $3,404,400
                                             ==========  ===========  ==========

         The  Company's  majority-owned  subsidiary  (Note 8) owns eight  claims
         known as the Evening Star Mine located in Piute Mountain,  Kern County,
         California.  Most of the  development  costs for Evening Star Mines are
         from related parties (Note 13).


                                      F-10


<PAGE>


                 XPLORER, S.A. (a development stage enterprise)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          Year Ended December 31, 1996

Note 7   Other Investments:

         The  Company  holds a  $500,000  full  recourse  promissory  note at 8%
         interest per annum,  payable monthly and principal due August 18, 1997.
         This note is secured by 500,000  Class C Units of United  Realty  Group
         Limited  Partnership  redeemable  by issuer at $1.00 per unit in August
         1997 and 75% tenant in common  interest  in the net  proceeds  from the
         Southwood  Plaza  Shopping  Center in Charlotte,  North  Carolina.  The
         property presently generates positive cash flow.  However,  the Company
         has  elected  not to reflect a $400,000  non-recourse  promissory  note
         secured  only by  400,000  units of United  Realty  Group  Partnership.
         Interest on the $500,000  note of $3,333 has been received on a monthly
         basis during 1996.

         Atlantic  owns  100% of the  common  stock  of a  company  that has two
         investments in commercial property located in Bakersfield,  California.
         The net realizable  value of this investment is $500,000 as of December
         31, 1996.

         Atlantic owns 466,000  shares of XPLORER,  S.A. This  investment is 59%
         eliminated  in  consolidated  financial  statements  and reflected at a
         nominal value of $.10 per share or $19,000.

Note 8   Atlantic Pacific Trust, L.L.C.:

         Atlantic Pacific Trust, L.L.C. ("Atlantic"), a Nevada limited liability
         company,  is a natural  resource  company owned by XPLORER and three of
         the Company's shareholders (the "Minority Interest").  Such corporation
         is the  successor to Atlantic  Pacific  Trust  ("APT") and is the legal
         owner of certain mining properties located in Kern County, California.

         These mining properties  (approximately 117 mining claims) were held by
         a trust controlled by William M. Moreland ("Moreland"), and transferred
         to a new entity, North Star Industries  ("North").  North was 30% owned
         by Moreland, 30% owned by Gardner, and 40% owned by Compania Comerciale
         Atlantis,   S.A.,  a  Costa  Rican  entity  ("CCA").  The  claims  were
         eventually  divided into four  separate  trusts.  One of these  trusts,
         Nevada  Trust,  which owned eight  claims  known as the  "Evening  Star
         Mine", was acquired at cost by APT.

         APT was funded by sale of investment contracts,  precious metal forward
         contracts,  and equity units ("LLC").  The Company owns  1.254,960  LLC
         units as of December 31, 1996(59%).


                                      F-11


<PAGE>


                 XPLORER, S.A. (a development stage enterprise)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          Year Ended December 31, 1996

Note 8   Atlantic Pacific Trust, L.L.C. (cont'd):

         APT made a loan to the  Company  for  $355,000  that was  converted  to
         Company  special units (one share of common stock and one B warrant and
         C warrant  each  exercisable  within  five years at $2.00 and $3.00 per
         share,  respectively)  and paid a Gerant creditor  $110,000 in exchange
         for 111,667 shares of the Company's  common stock These funds were used
         by the  Company  to pay  Gerant  creditors  according  to the Plan.  At
         December 31, 1996, the value of 275,334 shares(59% of 466,667) has been
         eliminated upon consolidation.

         The  Plan  provided  that  Compania  Comerciale  Atlantis,  S.A.  would
         exchange  500,000 of it's LLC units for 1,250,000  preferred  shares of
         the Company.  However,  only 417,200 units were exchanged for 1,043,000
         preferred  shares under this Plan. In December  1996,  this company did
         exchange  189,960 units for an additional  237,550  shares of preferred
         stock.  The preferred  stock is partially  convertible to ten shares of
         common  stock at the end of six years and had a  dividend  of 1.00% per
         month payable in common stock at time of conversion.  In December 1996,
         the  preferred  stockholder  agreed to waive  all  present  and  future
         preferred  dividend rights for the future issuance of 1,000,000  common
         shares of the Company.

         The  Plan  also  provided  that  585,560  LLC  units  held by  Atlantic
         beneficiaries be exchanged for Debtor Notes and converted to 14,639,000
         shares of common stock. In addition, the former Gerant shareholders had
         a reverse split to 400,000  shares which were to be exchanged  pursuant
         to the Plan for 400,000  common stock Units  (287,000 were issued as of
         12/31/96) of the Company

Note 9   Fair Market Information (Unaudited):

         Atlantic  Pacific Trust internal  financial  statements  reflect a fair
         market value of $110,000,000  that was accepted by the U.S.  Bankruptcy
         Court in the Plan. The result of these transactions with Gerant is that
         the Company is controlled by beneficial holders of Atlantic.

         Each year,  Atlantic  management  estimates  ore reserve and prepares a
         comprehensive  mining plan for the  then-anticipated  remaining life of
         the mining  property.  The gold price used in estimating  the Company's
         ore  reserves at December  31,  1996 was $369 per ounce.  Other  metals
         could also be present in the ore reserves.

                                      F-12
 


<PAGE>


                XPLORER, S.A. (a development stage enterprise)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          Year Ended December 31, 1996

Note 9  Fair Market Information (Unaudited) (cont'd):

         Significant  changes to the Company's  plans could occur as a result of
         mining experience, new ore discoveries,  changes in mining process, new
         investment  in  equipment  and  technology,  Also,  permits  may not be
         renewable  under the same terms and  conditions as originally  granted,
         exploration could not result in recoverable metals, and the anticipated
         pilot refinery could not be completed and other factors.

         The Company's management provides no assurance as to the outcome of any
         of these  matters and  resulting  adjustments  could be material to the
         Company's financial condition and operations.

         Given the above  uncertainties,  Atlantic  utilizes  the values for its
         gold  resources  based upon the updated report of Christopher L. Pratt,
         Geologist,   dated  December  31,  1996,  as  to  the  proven  reserves
         summarized as follows:
                                                
         Reserves in ounces of gold             
           (1.5 average ounces per ton)                         435,000
         Less 10% projected loss factor                        ( 43,500)
                                                                -------
         Projected recoverable ounces                           391,500
         Market price of gold (per ounce)
           @ 12/31/96                                          x   $369
                                                            -----------
         Projected gross revenue                           $144,463,000
         Less projected extraction cost of
           $210 per ton, times 290,000 tons                 (60,900,000)
                                                             ----------

         Net Projected Value                                $83,563,000
                                                            ===========
         The Company's projected share @ 59%                $49,302,000
                                                            ===========

         The  Company's  management  in  compliance  with  applicable  reporting
         guidelines has downgraded the proven  reserves  (measured  reserves) to
         Probable  Reserves  (indicated  reserves) until completion of the pilot
         ore refinery,  further mineralization studies,  additional drilling and
         sampling, and geological feasibility analyses.

Note 10  Accrued Legal Fees:
         Per the Plan,  Atlantic agreed to purchase an estimated  $257,000 legal
         fee administrative  claim of the law firm, Robinson,  Diamant,  Brill &
         Klausner (the" Firm"). Upon the purchase,  Atlantic intends to exchange
         the claim for 257,000 of its Xplorer,  S.A. common stock special units.
         During 1996,  the Firm was paid $159,000 and a bonus of 100,000  shares
         of Company common stock.

                                      F-13


<PAGE>


                 XPLORER, S.A. (a development stage enterprise)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          Year Ended December 31, 1996


Note 11  Note Payable:

         In  September,   1996  the  Company  borrowed   $450,000  from  Gardner
         Investments.  The  terms of the  note  are  10.00%  per  annum  payable
         monthly.  The principal is due and payable on September 25, 1997 and is
         secured by 500,000 Class C Units of United Realty Group,  L.P. The note
         is  convertible,  at the option of the holder,  at any time for 150,000
         shares of common stock of the Company.

Note 12  Investment Contracts Payable:

         Atlantic has issued investment  contracts under German securities laws.
         Such contracts are four types:

         a)  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.  As of December 31, 1996, the
             balance is  $273,000.  The  Company  has  covered  its gold risk on
             outstanding contracts up to $369 per ounce.

         b)  Zero-coupon contract of $12,500 payable in U.S. dollars and bearing
             interest at 9.00% per annum.  Such  contracts  are  repayable  with
             related  interest in one to five years. As of December 31, 1996 the
             balance is  $337,500  and  interest  expense  of  $28,100  has been
             accreted.

         c)  Zero-coupon  contract  payable in 5,000 German Duetsch Marks ("DM")
             units and bearing  interest at 9.00% per annum.  Such contracts are
             repayable  with  related  interest in DM in one to five years.  The
             balance as of December 31, 1996 is $1,129,500 and interest  expense
             of $132,300 has been accreted.

         d)  Zero-coupon  contract  payable  in DM or gold at the rate of 600 DM
             principal per 1 troy ounce of gold did not result in funding to the
             Company until January 1997.  This is the only type of contract that
             will be offered in the future.

         All bonds are secured by the  Company's  interest  in the Evening  Star
         mining claims per assignment to a bond trustee.

         The Company paid commissions of approximately 33% and raised $1,375,000
         in net funds during 1996.


                                      F-14


<PAGE>


                 XPLORER, S.A. (a development stage enterprise)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      For the Year Ended December 31, 1996

Investment contracts are due as follows:

          1997                                                  $1,188,000
          1998                                                     267,000
          1999                                                     150,000
          2000                                                      45,000
          2001                                                      86,700
          2002                                                       4,000
                                                                ----------
         Total                                                  $1,740,700
                                                                ==========

Note 13  Related Party Payable:

         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 $6000 per month.  These
         lease are renewable after a five year term and require a future minimum
         annual payment of $72,000 to Sequoia Trust.  Total charges  capitalized
         to development during 1996 were $104,000.

         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 analyses and other testing procedures.

         Atlantic  also has a cancellable  contract with EMTEC,  Inc., a related
         party,  for  development of the 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.  Total
         charges capitalized to development during 1996 were $459,000.

         As of December  31, 1996 the Company owes these  entities  $147,000 for
         past  services  and such amount is accrued into  development  costs for
         Evening Star Mine (See Note 6).

Note 14  New Accounting Pronouncements:

         Statement of Financial Accounting Standards No 121, "Accounting for the
         Impairment of Long-Lived  Assets to be Disposed Of" (SFAS 121) requires
         that long-lived  assets be reviewed for impairment  whenever changes in
         circumstances  indicate that the carrying amount of an asset may not be
         recoverable. The adoption of this statement as of December 31, 1996 had
         no material effect on the consolidated financial statements.


                                      F-15


<PAGE>


                 XPLORER, S.A. (a development stage enterprise)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      For the Year Ended December 31, 1996



Note 14  New Accounting Pronouncements (cont'd):

         Statement of Financial  Accounting  Standards Nos. 123, "Accounting for
         Stock-Based  Compensation" (SFAS 123) establishes  financial accounting
         and reporting standards for stock-based employee  compensation plans as
         well as transactions  in which an entity issues its equity  instruments
         to acquire  goods or  services  from  non-employees.  However,  it also
         allows an entity to continue to measure  compensation cost based on APB
         Opinion No. 25, "Accounting for Stock Issued to Employees". The Company
         has determined that the fair value of stock  transactions is similar to
         the issue price at the time of granting and accordingly, has elected to
         continue to apply the intrinsic value based method.

         In June,  1996,  Statement of Financial  Accounting  Standards No. 125,
         "Accounting  for  Transfers  and  Servicing  of  Financial  Assets  and
         Extinguishments   of  Liabilities"   (SFAS  No.  125),  which  provides
         accounting  and  reporting  standards  for  transfers  and servicing of
         financial  assets and  extinguishments  of liabilities  occurring after
         December  31,  1996 was  issued.  The  adopting  of SFAS No. 125 is not
         expected to have any impact on the financial statements of the Company.



















                                      F-16

<PAGE>


                                    PART III

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

Name                       Age                 Position
----                      ----                 -------- 
Steven B. Mortensen         36     Chairman of the Board and Secretary

Thomas C. Roddy, PE.        44     Director, President and Chief
                                   Executive Officer

William M. Moreland         48     Chief Operating Officer
                                   and Director

Jon W. Bice                 52     Director, Treasurer and Chief Financial
                                   Officer

Joyce J. Pellet             60     Director

Benjamin C. Rice            58     Director

Steven B.  Mortensen has been  Chairman of the Board and  Secretary  since July,
1996.  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.



















                                       17
<PAGE>


Thomas C. Roddy has been President, Chief Executive Officer and a director since
July, 1996. 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.

William M.  Moreland  has been Chief  Operating  Officer  and a director  of the
Company since April,  1997, and a consultant to the company since August,  1996.
Mr. Moreland has been in the mining business since he was a child,  working with
his father and  grandfather on the Moreland  Mines.  He has been a consultant to
several mining companies on various mining projects,  including platinum, silver
and gold. From 1971 through 1985, Mr. Moreland was the owner of a commercial and
residential  contracting company and held a Class A General Engineering License
and Class B General Building License from the State of California.  Mr. Moreland
has constructed  processing mills and has designed a proposed Pilot Mill for the
Company's  Evening Star Mine.  Mr.  Moreland is a Co-Manager of Emtec,  LLC, the
mine operator of the Evening Star Mine, and he is a Trustee of the Sequoia Trust
and a Co-Manager of Atlantic Pacific Trust, LLC, a majority-owned  subsidiary of
the Company.  Mr.  Moreland's  over 40 years of experience in assay  procedures,
precious metals refining, mine development and production is a valuable asset of
the Company.

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 shall, 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.

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 doctor 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.


                                       18
<PAGE>


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
Registrant.  Officers,  directors and greater than ten percent  stockholders are
required by SEC regulation to furnish the Registrant 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, 1996, 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 3s when they had become  directors,
officers and ten percent  shareholders of the Registrant 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  $10,000  during the
fiscal year ended  December 31, 1996.  All executive  officers as a group (three
persons) received cash  compensation of approximately  $30,000 during the fiscal
year ended December 31, 1996.  Beginning January 1, 1997, the Company has agreed
to pay to  Messrs.  Mortensen,  Roddy,  Moreland  and Bice an  annual  salary of
$60,000 for each person.  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.








                                       19

<PAGE>


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
              MANAGEMENT

The  following  table sets forth certain  information,  as of May 30, 1997,
with respect to the beneficial  ownership of the Registrant's  Common Stock, par
value $.001 per share, by holders of more than five percent of the  Registrant's
Common Stock, by each director and executive  officer of the Registrant,  and by
all directors and officers of the Registrant as a group.

Name and Address                     Number of Shares              Percent
of Beneficial Owner                 Beneficially Owned(1)        of Class(2)
-------------------            
Steven B. Mortensen                       425,000 (3)                2.4
Thomas C. Roddy                            50,000                     *
William M. Moreland                        50,000 (4)                 *
Jon W. Bice                                70,000                     *
Joyce J. Pellet                            35,000 (4)                 *
Benjamin C. Rice                           10,000                     *
Compania Comercial Atlantis, S.A.       1,000,000 (5)                5.4


*      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 18,782,445 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.

(4)    Does not include 750,000 shares held by the Sequoia  Irrevocable Trust of
       which  Mr.   Moreland's   and  Mrs.   Pellet's  adult  children  are  the
       beneficiaries. Mr. Moreland and Mrs. Pellet are the trustees of the trust
       and both disclaim any beneficial interest in these shares.

(5)    The address for this  beneficial  holder is P.O. Box 5747-1000, San Jose,
       Costa Rica, C.A.





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<PAGE>


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

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 intends 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.

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.

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 has paid Emtec $462,143.

Mr.  Moreland,  an officer  and  director of the  Company,  and Mrs.  Pellet,  a
director of the Company,  are 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.


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<PAGE>


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 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     Agreement and Plan of  Reorganization  between  Atlantic Pacific Trust
          and its  Beneficiaries  and Atlantic Pacific Trust, LLC dated December
          26, 1996.
  
  3.1(a)  Articles of Incorporation and Amendments thereto of Registrant.

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

  3.2     By-Laws of Registrant.

  4.1     Certificate of Designation of Series A Convertible  Preferred Stock of
          Registrant.

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

 

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<PAGE>

 
   4.2    $450,000 10%  Subordinated  Convertible  Note dated September 25, 1996
          between Registrant and Gardner Investments, Inc. (lender).
    
   4.3    Warrant Certificate for Common Stock issued to shareholders of the 
          Registrant pursuant to Third Amended Plan of Reorganization approved
          by the United States Bankruptcy Court on August 5, 1996.

   4.4    "B" Warrant  Agreement  between  Registrant and Atlantic Pacific Trust
          dated August 5, 1996.

   4.5    "C" Warrant  Agreement  between  Registrant and Atlantic Pacific Trust
          dated August 5, 1996.
       
  10.1    Lease Agreement between Sequoia Trust and Atlantic Pacific Trust dated
          July 15, 1995.

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

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

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

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

  10.6    Regulation "S" Stock Purchase Agreement between Stonehill Investments,
          Ltd. and Registrant.

  10.7    Security  Agreement  between Plaza Realty One Limited  Partnership and
          Registrant dated August 19, 1994, and $400,000 Promissory Note between
          Plaza Realty One Limited  Partnership and Registrant  dated August 19,
          1994.
-------------------------------
   (1)    Files as exhibits to Registrant's Form 8-K which was filed with the 
          Commission on September 12, 1996, and incorporated herein by this
          reference.

       b.  Reports on Form 8-K

A report on Form 8-K was filed by the registrant on November 15, 1996.         



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<PAGE>


                                   SIGNATURES

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


                                                          XPLORER, S.A.


Date:  June, 1997                                        By:/s/ Thomas C. Roddy
                                                         -------------------
                                                         Thomas C. Roddy
                                                         President


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

     Signature                       Title                        Date
     ---------            --------------------------         ----------------

/s/ Steven B. Mortensen    Chairman of the Board                June, 1997
-----------------------    and Secretary
Steven B. Mortensen       

/s/ Thomas C. Roddy        President, Chief Executive           June, 1997
-----------------------    Officer and Director
Thomas C. Roddy                   

/s/ William M. Moreland    Chief Operating Officer              June, 1997
-----------------------    and Director
William M. Moreland               

/s/ Jon W. Bice            Treasurer, Chief Financial           June, 1997
-----------------------    Officer and Director
Jon W. Bice                       

/s/ Joyce J. Pellet        Director                             June, 1997
-----------------------
Joyce J. Pellet

/s/ Benjamin C. Rice       Director                             June, 1997
-----------------------
Benjamin C. Rice




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